<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 5, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10
FILED PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
----------------
VLASIC FOODS INTERNATIONAL INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------
NEW JERSEY 52-2067518
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
----------------
CAMPBELL PLACE 08103-1799
CAMDEN, NEW JERSEY (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE
OFFICES)
----------------
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (609) 342-4800
----------------
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
TITLE OF EACH CLASS TO BE SO NAME OF EACH EXCHANGE ON WHICH EACH
REGISTERED: CLASS IS TO BE REGISTERED:
COMMON STOCK, NO PAR VALUE NEW YORK STOCK EXCHANGE
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
VLASIC FOODS INTERNATIONAL INC.
I. INFORMATION INCLUDED IN INFORMATION STATEMENT
AND INCORPORATED IN FORM 10 BY REFERENCE
<TABLE>
<CAPTION>
ITEM NO. ITEM CAPTION LOCATION IN INFORMATION STATEMENT
- -------- ------------ ---------------------------------
<S> <C> <C>
1. Business.................... "Summary," "Business" and "Management's Discussion
and Analysis of Results of Operations and Financial
Condition."
2. Financial Information....... "Summary," "Pro Forma Condensed Combined Financial
Information," "Selected Financial Data" and
"Management's Discussion and Analysis of Results of
Operations and Financial Condition."
3. Properties.................. "Business."
4. Security Ownership of
Certain Beneficial Owners
and Management.............. "Security Ownership By Certain Beneficial Owners,
Directors and Executive Officers of Vlasic."
5. Directors and Executive
Officers.................... "Management" and "Liability and Indemnification of
Officers and Directors of Vlasic."
6. Executive Compensation...... "Management."
7. Certain Relationships and
Related Transactions........ "Summary," "The Spin-Off" and "Arrangements Between
Campbell and Vlasic Relating to the Spin-Off."
8. Legal Proceedings........... "Business."
9. Market Price of and
Dividends on the
Registrant's Common Equity
and Related Stockholder
Matters..................... "Summary," "The Spin-Off" and "Dividend Policy."
11. Description of Registrant's
Securities to be
Registered.................. "Description of Capital Stock."
12. Indemnification of Directors
and Officers................ "Liability and Indemnification of Officers and
Directors of Vlasic."
13. Financial Statements and
Supplementary Data.......... "Summary," "Pro Forma Condensed Combined Financial
Information," "Selected Financial Data,"
"Management's Discussion and Analysis of Results of
Operations and Financial Condition" and "Index to
Financial Statements."
15. Financial Statements and
Exhibits.................... "Index to Financial Statements."
</TABLE>
I
<PAGE>
II. INFORMATION NOT INCLUDED IN INFORMATION STATEMENT
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
Vlasic Foods International Inc. ("Vlasic") was incorporated under the laws of
the State of New Jersey on November 26, 1997. Vlasic issued 100 shares of its
Common Stock, no par value, to Campbell Soup Company, a New Jersey corporation
("Campbell"), as of December 2, 1997 in consideration of Campbell's capital
contribution of $10.00. Such issuance was exempt from registration under the
Securities Act of 1933, as amended, pursuant to Section 4(2) thereof because
such issuance did not involve any public offering of securities.
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statement Schedules:
Schedules are omitted because of the absence of the conditions under which
they are required or because the information required by such omitted schedules
is set forth in the financial statements or the notes thereto.
(b) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
2.1 Form of Separation and Distribution Agreement between Campbell Soup
Company and Vlasic Foods International Inc.
3.1 Form of Certificate of Incorporation of Vlasic Foods International
Inc., to be in effect upon the effectiveness of the Spin-Off.
3.2 Form of Bylaws of Vlasic Foods International Inc., to be in effect
upon the effectiveness of the Spin-Off.
9.1 Major Stockholders' Voting Agreement dated June 2, 1990 among Dorrance
H. Hamilton, Charles H. Mott and John A. van Beuren, as Voting
Trustees, and certain related persons.
10.1 Form of Transition Services Agreement between Campbell Soup Company
and Vlasic Foods International Inc.
10.2 Form of Benefits Sharing Agreement between Campbell Soup Company and
Vlasic Foods International Inc.
10.3 Form of Swanson Trademark License Agreement between Campbell Soup
Company and Vlasic Foods International Inc.
10.4 Form of Technology Sharing Agreement between Campbell Soup Company and
Vlasic Foods International Inc.
10.5 Form of Tax Sharing and Indemnification Agreement between Campbell
Soup Company and Vlasic Foods International Inc. and certain of its
subsidiaries.
10.6 Credit Agreement dated February 20, 1998 among Campbell Soup Company
and The Chase Manhattan Bank and Morgan Guaranty Trust Company of New
York, as Agents, to be assigned to and assumed by Vlasic Foods
International Inc. upon the effectiveness of the Spin-Off.
10.7 Personal Choice Plan
10.8 Deferred Compensation Plan
10.9 1998 Long-Term Incentive Plan
10.10 Annual Incentive Plan
10.11 Director Compensation Plan
21 Subsidiaries of Vlasic Foods International Inc.
27 Selected Financial Data Schedule
</TABLE>
II
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized.
Vlasic Foods International Inc.
By: /s/ Robert F. Bernstock
----------------------------------
Robert F. Bernstock
President and Chief Executive
Officer
Date: March 3, 1998
<PAGE>
[LOGO OF CAMPBELL APPEARS HERE]
Fellow Campbell Shareowners:
These are exciting times at Campbell Soup Company.
As you may know, in September we announced our plans to spin off our Specialty
Foods businesses into an independent public company--Vlasic Foods International
Inc. This spin-off is a watershed event in the history of our great company.
Focus is a powerful idea for both companies. The spin-off allows Campbell to
focus on our most profitable businesses with the highest growth potential--soup
and sauces, biscuits and confectionery, and foodservice. At the same time it
gives great businesses like Vlasic pickles and Swanson frozen foods tremendous
opportunities for growth under a dedicated management team.
The spin-off will be completed on March 30, 1998. For every ten shares of
Campbell stock that you own as of March 9, 1998, you will become owner of one
share of Vlasic common stock. The spin-off will be tax-free to U.S.
shareowners.
The enclosed information provides you with more detail about the spin-off. We
encourage you to read these materials carefully to learn more about Vlasic
Foods International and its future plans.
What about our future plans? In the nineties Campbell Soup has risen to the top
of the food industry. Our aspirations, however, are much higher. We are
determined to be among the best consumer products companies in the world. It's
an ambitious goal--and with good reason. We have an outstanding financial
foundation and enormous growth potential. We have the brands, like Campbell's,
Godiva and Pepperidge Farm, the strategy, and most of all, a talented team of
people to get there.
We look forward to our growth journey as the New Campbell Soup Company.
Best Regards,
/s/ David W. Johnson /s/ Dale F. Morrison
David W. Johnson Dale F. Morrison
Chairman of the Board President and Chief Executive Officer
<PAGE>
[LOGO AND PHOTO TO APPEAR ON INSIDE FRONT COVER.]
<PAGE>
[VLASIC LOGO]
Fellow Shareowners:
Welcome to Vlasic Foods International, for now a part of Campbell Soup
Company and soon to be an independent public company. Vlasic Foods
International will become publicly-owned on March 30, 1998 and at that time you
will be credited with one share of Vlasic common stock for every ten shares of
Campbell stock that you own as of the close of business on March 9, 1998.
Vlasic common stock will trade on the New York Stock Exchange under the ticker
symbol "VL."
Vlasic Foods International starts public life with an incredibly strong
portfolio of businesses, having icon brand names such as Swanson, Vlasic,
Freshbake and Swift. Moreover, nearly three quarters of our sales come from
businesses in which we occupy the number one market share position,
representing a wonderful and continuing consumer vote of confidence. Our brands
and market positions are a superb foundation for building a lean, growth-
oriented company, committed to delivering superior earnings performance and to
seeking superior shareowner returns.
Vlasic Foods International also has a strong, proven leadership team with
whom I am excited to be working. That team and I have spent the past several
months building the strategies and prioritizing the tactical plans to
accomplish our goals. While there are many challenges, we are focused, and we
will work continuously to accomplish the most important objectives and
continuously raise the performance bar. From this vantage point, the business
building opportunities seem almost unlimited.
This is a wonderful time in our history! I look forward to working on your
behalf to make Vlasic Foods International a company about whose performance we
can all feel very proud.
Sincerely yours,
/s/ Robert F. Bernstock
Robert F. Bernstock
President and Chief Executive
Officer
<PAGE>
INFORMATION STATEMENT
CAMPBELL SOUP COMPANY'S SPIN-OFF
OF
VLASIC FOODS INTERNATIONAL INC.
THROUGH A 100% COMMON STOCK DISTRIBUTION
TO
SHAREOWNERS OF CAMPBELL STOCK
We are furnishing you with this Information Statement in connection with
Campbell Soup Company's spin-off of 100% of the outstanding common stock of
Vlasic Foods International Inc. to shareowners of Campbell stock.
Campbell will effect the spin-off by distributing all issued and outstanding
Vlasic shares to the holders of record of Campbell shares. Campbell will spin
off one Vlasic share for every ten Campbell shares held as of the close of
business on March 9, 1998. The actual total number of Vlasic shares to be
distributed will depend on the number of Campbell shares outstanding on that
date.
NO VOTE OF SHAREOWNERS IS REQUIRED IN CONNECTION WITH THE SPIN-OFF. WE ARE
NOT SOLICITING PROXIES, AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS
INFORMATION STATEMENT IS TRUTHFUL OR COMPLETE.
THIS INFORMATION STATEMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES.
----------------
THE DATE OF THIS INFORMATION STATEMENT IS MARCH , 1998.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE PAGE
---- ----
<S> <C> <C> <C>
SUMMARY.............................. 1 SELECTED FINANCIAL DATA.............. 27
Overview of Vlasic Businesses....... 1
Questions and Answers about the MANAGEMENT'S DISCUSSION AND
Spin-Off and Vlasic................ 2 ANALYSIS OF RESULTS OF OPERATIONS
What We Have Already Accomplished to AND FINANCIAL CONDITION............. 28
Prepare for the Spin-Off........... 5
Who Can Help Answer Your Questions.. 6 FINANCING............................ 41
CAUTIONARY STATEMENT................. 7 DIVIDEND POLICY...................... 41
THE SPIN-OFF......................... 7 MANAGEMENT........................... 42
Reasons for the Spin-Off............ 7 Directors........................... 42
Manner of Effecting the Spin-Off.... 8 Committees of the Vlasic Board...... 42
Results of the Spin-Off............. 9 Directors' Compensation............. 44
Tax Consequences of the Spin-Off.... 9 Executive Officers and Senior
Listing and Trading of Vlasic Common Operating Management............... 44
Stock.............................. 10 Summary of Executive
Conditions; Termination............. 11 Compensation....................... 47
Treatment of Outstanding Campbell
CERTAIN SPECIAL CONSIDERATIONS....... 11 Stock Awards....................... 49
No Operating History as an Vlasic Incentive Plans.............. 50
Independent Company................ 11 Pension and Other Plans............. 51
Potential Federal Income Tax
Liabilities........................ 11 SECURITY OWNERSHIP BY CERTAIN
Absence of Funding; Increased BENEFICIAL OWNERS, DIRECTORS AND
Leverage........................... 12 EXECUTIVE OFFICERS OF VLASIC....... 53
Absence of Dividends................ 13
No Prior Market for Vlasic Common ARRANGEMENTS BETWEEN CAMPBELL AND
Stock; Shares Available for Future VLASIC RELATING TO THE SPIN-OFF.... 55
Sale............................... 13 Distribution Agreement.............. 55
Possible Anti-Takeover Effects...... 13 Benefits Sharing Agreement.......... 56
Competition......................... 13 Tax Sharing and Indemnification
Risks Relating to International Agreement.......................... 57
Operations and Currency Trademark License Agreements........ 58
Fluctuations....................... 14 Technology Sharing Agreement........ 58
License of Trademarks............... 14 Transition Services Agreement....... 59
Availability and Prices of Supply Agreements; Co-Pack
Ingredients........................ 14 Agreements......................... 59
Costs of Governmental
Regulation/Environmental Matters... 14 DESCRIPTION OF CAPITAL STOCK......... 59
Fluctuations in Agricultural Authorized Capital Stock............ 59
Prices............................. 14 Vlasic Common Stock................. 59
Vlasic Preferred Stock.............. 60
BUSINESS............................. 15 Certain Other Provisions............ 60
Business Strategy................... 16
Products and Markets................ 16 LIABILITY AND INDEMNIFICATION OF
Marketing, Sales and Distribution... 18 OFFICERS AND DIRECTORS OF VLASIC.... 61
Competition......................... 18 Limitation of Liability............. 61
Ingredients......................... 19 Indemnification of Officers and
Seasonality......................... 19 Directors.......................... 61
Production and Facilities........... 19
Trademarks and Patents.............. 20 AVAILABLE INFORMATION................ 62
Research and Development............ 20
Governmental Regulation............. 21 INDEX TO DEFINED TERMS............... 63
Environmental Matters............... 21
Legal Proceedings................... 21 INDEX TO FINANCIAL STATEMENTS........ F-1
Employees........................... 21
PRO FORMA CONDENSED COMBINED
FINANCIAL INFORMATION............... 22
</TABLE>
ii
<PAGE>
SUMMARY
This summary highlights selected information from this document, but does not
contain all details concerning the spin-off or Vlasic, including information
that may be important to you. To better understand the spin-off and Vlasic, you
should carefully review this entire document.
References to "we," "us," "our" or "Vlasic" mean Vlasic Foods International
Inc. and its subsidiaries and divisions. References to "Campbell" mean Campbell
Soup Company and its subsidiaries and divisions. References to "fiscal years"
are to the fiscal years of Vlasic and Campbel1 which end on the Sunday nearest
to July 31 in the calendar year. Certain market data used in this document
reflect management estimates and independently-published market-share reports;
while we believe such estimates and reports are reliable, no assurance can be
given that they are accurate in all material respects.
OVERVIEW OF VLASIC BUSINESSES
After the spin-off, Vlasic will be an independent manufacturer and marketer
of high quality, branded convenience food products in the frozen food, grocery
product and agricultural product segments. Campbell will retain its core global
businesses: soup and sauces, biscuits and confectionery, and foodservice.
After the spin-off, Vlasic will own:
Frozen Foods
. Swanson frozen foods in the U.S. and Canada--including Swanson frozen
dinners and pot pies, the leading national brand in the U.S.
. Freshbake frozen foods in the U.K.--a leading brand for retail customers
in that country.
Grocery Products
. Vlasic retail and foodservice pickles and condiments in the U.S.--the
leading national brand in the retail category for pickles in the U.S.
. Open Pit barbecue sauce in the U.S.--the leading brand in the Midwest
U.S., with three of its varieties in the top ten in that regional market.
. SonA and Rowats pickles, canned beans and vegetables in the U.K.--which
management believes are leading brands for both retail and foodservice
customers in that country.
. Kattus specialty foods in Germany--which management believes is a leading
specialty foods distributor in that country.
. Swift canned meat pates and other grocery products in Argentina--where
Swift is the leading brand of canned meat pates.
Agricultural Products
. The largest fresh mushroom operation in the U.S.
. One of Argentina's largest exporters of processed beef products.
On a pro forma basis after giving effect to the spin-off, Vlasic would have
had net sales of approximately $1.5 billion in fiscal 1997 and $723.2 million
in the first six months of fiscal 1998, and net earnings of approximately $50.6
million in fiscal 1997 and $21.2 million in the first six months of fiscal
1998.
The Campbell Board believes that the spin-off is in the best interest of
shareowners.
1
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE SPIN-OFF AND VLASIC
Why is Campbell spinning . The spin-off should allow the management of
off Vlasic? each company to focus on the strategic
objectives of each company.
. Vlasic management will be able to consider
acquisitions that previously have not met
Campbell's acquisition criteria.
. The spin-off will enable each company to
develop an operating structure and
corporate culture appropriate to it without
being encumbered by approaches and
philosophies attributable to the different
businesses operated by the other company.
. Campbell and Vlasic expect that the spin-
off will produce significant cost savings
for both companies as they streamline
operations and rationalize administrative
and support functions.
. Although neither Campbell nor Vlasic has
recently experienced any notable
difficulties attracting or retaining key
employees, the spin-off will enhance each
company's ability to attract and retain the
best management personnel available for its
portfolio of businesses.
. Vlasic and its shareowners should benefit
from the positive effects of a direct link
between the incentive compensation
arrangements for key employees and the
performance of Vlasic common stock.
. The spin-off will enable each company to
devote capital to the most effective use
for that company, and the Vlasic businesses
will not have to compete for resources
within the Campbell group.
. The spin-off will give Vlasic direct access
to debt and equity capital markets to
finance growth opportunities.
. Following the spin-off, investors will be
able to assess the individual strengths of
each company and more accurately evaluate
its performance compared to companies in
the same or similar businesses.
What do I have to do to Nothing. No shareowner vote or other action
participate in the spin- is required. You do not need to surrender any
off? shares of Campbell stock to receive shares of
Vlasic common stock in the spin-off.
What will I receive in the Campbell will distribute one share of Vlasic
spin-off? common stock for every ten shares of Campbell
stock owned as of March 9, 1998. For example,
if you own 100 shares of Campbell stock, you
will receive ten shares of Vlasic common
stock. You will continue to own your Campbell
stock.
2
<PAGE>
How will Campbell If you own Campbell stock on the record date,
distribute Vlasic common the distribution agent will automatically
stock to me? credit your shares of Vlasic common stock to
a book-entry account established to hold your
Vlasic common stock on March 30, 1998 and
will mail you a statement of your Vlasic
common stock ownership. Following the spin-
off you may retain your shares of Vlasic
common stock in your book-entry account, sell
them, transfer them to a brokerage or other
account, or request a physical certificate
for whole shares.
You will not receive new Campbell stock
certificates.
What is the record date? The record date is March 9, 1998.
What if I hold my shares of If you hold your shares of Campbell stock
Campbell stock through my through your stockbroker, bank or other
stockbroker, bank or other nominee, you are probably not a shareowner of
nominee? record and your receipt of Vlasic common
stock depends on your arrangements with the
nominee that holds your shares of Campbell
stock for you. We anticipate that
stockbrokers and banks generally will credit
their customers' accounts with Vlasic common
stock on or about March 30, 1998, but you
should check with your stockbroker, bank or
other nominee. Following the spin-off you may
instruct your stockbroker, bank or other
nominee to transfer your shares of Vlasic
common stock into your own name to be held in
book-entry form through the direct
registration system operated by the
distribution agent.
What about fractional If you own fewer than ten shares of Campbell
shares? stock, you will receive cash instead of your
fractional share of Vlasic common stock. If
you own ten or more shares of Campbell stock,
your book-entry account will be credited with
all whole and fractional shares of Vlasic
common stock you should receive unless you
request physical certificates (in which case
you will receive physical certificates for
all whole shares of Vlasic common stock you
should receive and cash instead of any
fractional share interest). Fractional shares
to be cashed out will be aggregated and sold
by the distribution agent, which will
distribute to you your portion of the cash
proceeds promptly after the spin-off. No
interest will be paid on any cash distributed
in lieu of fractional shares.
What is Vlasic's dividend Vlasic currently anticipates that no cash
policy? dividends will be paid on Vlasic common stock
in the foreseeable future in order to
conserve cash for the repayment of debt,
future acquisitions and capital expenditures.
We expect that Vlasic's Board will
periodically re-evaluate this dividend policy
taking into account the company's operating
results, capital needs and other factors.
3
<PAGE>
How will Vlasic common We have applied to list Vlasic common stock
stock trade? on the New York Stock Exchange under the
symbol "VL" and expect that regular trading
will begin on March 31, 1998. A temporary
form of interim trading called "when-issued
trading" may occur for Vlasic common stock on
or before March 9, 1998 and continue through
March 30, 1998. A when-issued listing can be
identified by the "wi" letters next to Vlasic
common stock on the New York Stock Exchange.
If when-issued trading develops, you may buy
Vlasic common stock in advance of the March
30, 1998 spin-off. You may also sell Vlasic
common stock in advance of such date on a
when-issued basis. When-issued trading occurs
in order to develop an orderly market and
trading price for Vlasic common stock after
the spin-off. See pages 10 and 11.
Campbell stock will continue to trade on a
regular basis and may also trade on a when-
issued basis, reflecting an assumed post-
spin-off value for Campbell stock. Campbell
stock when-issued trading, if available,
could last from on or before March 9, 1998
through March 30, 1998. If this occurs, an
additional listing for Campbell stock,
followed by the "wi" letters, will appear on
the New York Stock Exchange.
Is the spin-off taxable for No. The Internal Revenue Service has ruled
U.S. tax purposes? that the spin-off will be tax-free for U.S.
tax purposes, except for taxes on any cash
received instead of a fractional share. To
review tax consequences in detail, see pages
9 and 10.
What are the risks involved The separation of Vlasic from Campbell
in owning Vlasic common presents certain risks. For example, Vlasic
stock? has no prior history of operating as an
independent company. Certain other risks are
associated with owning Vlasic common stock
due to the nature of its business and the
markets in which it competes. You are
encouraged to carefully consider these risks,
which are described in greater detail on
pages 11 to 14.
Will Campbell and Vlasic be Campbell will not own any Vlasic common stock
related in any way after after the spin-off. No director or executive
the spin-off? officer of Campbell will serve on the Vlasic
Board of Directors or as an executive officer
of Vlasic, and no director or executive
officer of Vlasic will serve on the Campbell
Board of Directors or as an executive officer
of Campbell. Campbell will, however, enter
into agreements with Vlasic to allocate
responsibility for liabilities (including
tax, employee, product and other contingent
liabilities associated with their respective
businesses or otherwise to be assumed by
Vlasic or Campbell), to separate their
businesses, to license rights to use certain
intellectual property, to provide for the
treatment of pension and other employee
benefit obligations and to provide for the
sharing of certain physical facilities,
services or products on a
4
<PAGE>
transitional basis. These agreements are
described in greater detail on pages 55 to
59.
WHAT WE HAVE ALREADY ACCOMPLISHED TO PREPARE FOR THE SPIN-OFF
Board Appointments The Campbell Board has appointed Donald J.
Keller as Chairman of the Board of Vlasic.
Mr. Keller is the Chairman of B. Manischewitz
Company, the former Chairman of Prestone
Products Corporation, a director of Dan River
Inc., Colorado Prime Corp. and Air Express
International and a former director of Sysco
Corp., General Foods Corp. and WestPoint
Pepperell Inc. The Campbell Board has also
appointed two additional directors to the
Vlasic Board. See page 42.
Senior Management The Campbell Board has enthusiastically
Appointments appointed Robert F. Bernstock as President
and Chief Executive Officer of Vlasic. Mr.
Bernstock has been a senior executive at
Campbell for more than seven years, most
recently serving as President of Campbell's
$3.5 billion U.S. Grocery Division. Mr.
Bernstock will be supported by a management
group consisting principally of senior
executives previously responsible for the
Vlasic businesses. See pages 44 to 46.
New Credit Facility On a historical basis, Vlasic was not
allocated any amount of Campbell's debt. A
five-year, $750 million unsecured revolving
credit facility has recently been established
by Campbell, and $500 million of borrowings
under this credit facility will be used by
Campbell prior to the spin-off to repay
certain of Campbell's debt obligations.
Vlasic will assume the repayment obligations
for Campbell's $500 million of borrowings in
connection with the spin-off. It is not
possible to determine what portion of the
debt obligations to be repaid by Campbell
with borrowings under this credit facility
was historically associated with the present
operations of Vlasic. Following its
assumption of Campbell's repayment
obligations under this credit facility,
Vlasic will have $250 million of borrowing
availability thereunder, approximately $58.7
million of which is expected to be used by
Vlasic for working capital purposes shortly
after the spin-off. Vlasic expects to use the
rest of the available credit for general
corporate purposes. See page 41.
U.S. Tax Ruling Campbell received a tax ruling from the IRS
stating that you will not recognize any U.S.
federal tax as a result of receiving Vlasic
common stock in the spin-off. If you receive
cash for a fractional share, you may have to
pay some federal tax if any gain is
recognized. The tax ruling also addresses how
to allocate your tax basis in the stock. See
pages 9 and 10.
5
<PAGE>
WHO CAN HELP ANSWER YOUR QUESTIONS
Shareowners of Campbell with questions relating to the spin-off should
contact:
Campbell Investor Relations
Campbell Soup Company
Campbell Place
Camden, NJ 08103-1799
(609) 342-6428
The distribution agent for Vlasic common stock in the spin-off and the
transfer agent and registrar for Vlasic common stock after the spin-off is:
First Chicago Trust Company of New York
P.O. Box 2569
Suite 4660-CSC
Jersey City, NJ 07303-2569
(800) 446-2617
6
<PAGE>
CAUTIONARY STATEMENT
We caution you that this document contains disclosures which are forward-
looking statements. All statements regarding Vlasic's or Campbell's expected
future financial position, results of operations, cash flows, dividends,
financing plans, business strategy, budgets, projected costs or cost savings,
capital expenditures, competitive positions, growth opportunities or existing
products, benefits from new technology, plans and objectives of management for
future operations and markets for stock are forward-looking statements. In
addition, forward-looking statements include statements in which we use words
such as "expect," "believe," "anticipate," "intend," or similar expressions.
These statements are included under the headings "Summary," "The Spin-Off--
Reasons for the Spin-Off," "Management's Discussion and Analysis of Results of
Operations and Financial Condition," "Business" and other headings in this
document. Although we believe the expectations reflected in such forward-
looking statements are based on reasonable assumptions, no assurance can be
given that such expectations will prove to have been correct, and actual
results may differ materially from those reflected in the forward-looking
statements.
Factors that could cause the actual results of Vlasic to differ from the
expectations reflected in the forward-looking statements in this document
include those set forth in "Certain Special Considerations" as well as those
risks relating to conducting operations in a competitive environment;
acquisition activities (including uncertainties associated with the
availability of financing to complete acquisitions); leverage and debt service
requirements (including sensitivity to fluctuations in interest rates);
general business and economic conditions; and the timing of restructuring and
other cost savings initiatives following the spin-off. Factors that could
cause the actual results of Campbell to differ from the expectations reflected
in the forward-looking statements in this document include uncertainties
associated with industry performance, general business and economic
conditions, raw material and product pricing levels, the timing of
restructuring and other cost savings initiatives, and the other factors
discussed in Campbell's filings under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and its 1997 Annual Report.
Neither Vlasic nor Campbell has any intention of or obligation to update
forward-looking statements, even if new information, future events or other
circumstances make them incorrect or misleading.
THE SPIN-OFF
REASONS FOR THE SPIN-OFF
The Campbell Board has determined that the distribution (the "Spin-Off") of
100% of the outstanding common stock, no par value, of Vlasic ("Vlasic Common
Stock") to owners of the capital stock, par value $.0375 per share, of
Campbell ("Campbell Stock") will enable the management of each of Campbell and
Vlasic to focus on the operational strategies appropriate for its businesses
so that each can accelerate growth, decrease overall costs and maximize wealth
for its shareowners. The Campbell Board believes that the Spin-Off is in the
best interest of shareowners.
Campbell believes that the Spin-Off will result in the following specific
benefits for the retained and distributed businesses:
. Appropriate Management Focus. Currently, Campbell's senior management
spends a disproportionate amount of time addressing issues relating to
the businesses (the "Vlasic Businesses") described under the heading
"Summary--Overview of Vlasic Businesses." As a consequence, Campbell
management is distracted from devoting full attention to its core
businesses, which have higher operating profit margins and significant
potential for worldwide growth. The Spin-Off should allow those core
businesses to achieve a higher rate of growth as the efforts of
Campbell's management are focused exclusively on
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these operations. At the same time, the management of Vlasic will be able
to devote its energies to the development of the Vlasic Businesses and the
pursuit of Vlasic's strategic objectives, including acquisitions that
previously have not met Campbell's acquisition criteria.
. Operating Structure and Cost Savings. The Spin-Off will enable each
company to develop an operating structure and corporate culture
appropriate to it without being encumbered by policies, approaches and
philosophies attributable to the different businesses operated by the
other company. Campbell and Vlasic expect that the Spin-Off will produce
significant cost savings for both companies. For Campbell, the cost
savings are expected to result from a reduction of selling, general and
administrative expenses presently incurred in managing and coordinating
the businesses of Campbell and Vlasic. For Vlasic, the cost savings are
expected to result from operating and selling, general and administrative
changes which will be facilitated by the Spin-Off and which are necessary
to achieve a leaner and more aggressive organization as Vlasic shifts to
a more suitable entrepreneurial operating model with lower costs within
its individual businesses.
. Key Personnel. Although neither Campbell nor Vlasic has recently
experienced any notable difficulties in attracting or retaining key
employees, the Spin-Off will enhance each company's ability to attract
and retain the best management personnel available for its portfolio of
businesses. Following the Spin-Off, Vlasic will be able to more closely
tie compensation incentives for its key employees to the performance of
Vlasic Common Stock, and the value of Vlasic Common Stock will more
closely correspond to the performance of the employees of Vlasic. Vlasic
and its shareowners should benefit from the positive effects of a direct
link between the incentive compensation arrangements for key employees
and the performance of Vlasic Common Stock.
. Access to Capital and Resources. The Spin-Off will enable each company to
devote capital to the most effective use for that company, and the Vlasic
Businesses will not have to compete for resources within the Campbell
group. The Spin-Off will give Vlasic direct access to debt and equity
capital markets to finance expansion and growth opportunities.
. Profile with Investors. Following the Spin-Off, investors will be able to
assess the individual strengths of each company and more accurately
evaluate its performance compared to companies in the same or similar
businesses. Further, investors will be able to more easily determine
whether each company has a management focus and approach to operations
and products suitable for achieving its strategic objectives.
MANNER OF EFFECTING THE SPIN-OFF
Campbell will effect the Spin-Off by distributing all issued and outstanding
shares of Vlasic Common Stock to holders of record of Campbell Stock as of the
close of business on March 9, 1998. The Spin-Off will be made on the basis of
one share of Vlasic Common Stock for every ten shares of Campbell Stock (the
"Distribution Ratio") held as of the close of business on March 9, 1998.
Since Vlasic will use a direct registration system to implement the Spin-
Off, First Chicago Trust Company of New York, as distribution agent (the
"Distribution Agent"), will credit the shares of Vlasic Common Stock
distributed on the date of the Spin-Off (the "Distribution Date"), including
fractional interests for those shareowners who receive at least one whole
share of Vlasic Common Stock, to book-entry accounts established for all
Vlasic shareowners and will mail an account statement to each shareowner
stating the number of shares of Vlasic Common Stock, including such fractional
interests, received by such shareowner in the Spin-Off. Following the Spin-
Off, shareowners may request transfer to a brokerage or other account or
physical stock certificates for their shares of Vlasic Common Stock.
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If a shareowner owns fewer than ten shares of Campbell Stock and therefore is
entitled to receive less than one whole share of Vlasic Common Stock, such
shareowner will receive cash instead of a fractional share of Vlasic Common
Stock. If a shareowner requests physical certificates for shares of Vlasic
Common Stock, such shareowner will receive physical certificates for all whole
shares of Vlasic Common Stock and cash instead of any fractional share
interest. The Distribution Agent will, promptly after the Distribution Date,
aggregate all such fractional share interests in Vlasic Common Stock with those
of other similarly situated shareowners and sell such fractional share
interests in Vlasic Common Stock at then-prevailing prices. The Distribution
Agent will distribute the cash proceeds to shareowners entitled to such
proceeds pro rata based upon their fractional interests in Vlasic Common Stock.
No interest will be paid on any cash distributed in lieu of fractional shares.
No owner of Campbell Stock will be required to pay any cash or other
consideration for shares of Vlasic Common Stock received in the Spin-Off or to
surrender or exchange any shares of Campbell Stock to receive shares of Vlasic
Common Stock. The actual total number of shares of Vlasic Common Stock to be
distributed will depend on the number of shares of Campbell Stock outstanding
on March 9, 1998. The shares of Vlasic Common Stock distributed in the Spin-Off
will be fully paid and nonassessable. The shares of Vlasic Common Stock will
not be entitled to preemptive rights. See "Description of Capital Stock."
RESULTS OF THE SPIN-OFF
After the Spin-Off, Vlasic will be a separate public company. The number and
identity of shareowners of Vlasic immediately after the Spin-Off will be the
same as the number and identity of shareowners of Campbell on March 9, 1998.
Immediately after the Spin-Off, Vlasic expects to have approximately 35,400
holders of record of Vlasic Common Stock and approximately 45,413,000 shares of
Vlasic Common Stock outstanding, based on the number of record shareowners and
issued and outstanding shares of Campbell Stock as of the close of business on
February 9, 1998 and the Distribution Ratio. The actual number of shares of
Vlasic Common Stock to be distributed will be determined as of March 9, 1998
and could be affected by, among other things, the exercise of Campbell stock
options, which as of February 9, 1998 could have been exercised for
approximately 13,000,000 shares of Campbell Stock. The Spin-Off will not affect
the number of outstanding shares of Campbell Stock or the rights of Campbell
shareowners.
TAX CONSEQUENCES OF THE SPIN-OFF
The following is a summary description of the material U.S. and Canadian tax
consequences associated with the Spin-Off, and is not intended to address every
shareowner's tax consequences. In particular, this summary description does not
cover state, local, municipal, provincial or non-U.S. (other than Canadian) tax
consequences. Shareowners are strongly encouraged to consult their own tax
advisors concerning the tax consequences of the Spin-Off applicable to them. In
addition, shareowners residing outside of the U.S. or Canada are encouraged to
seek tax advice regarding tax implications of the Spin-Off.
U.S. Tax Consequences to Campbell Shareowners. Campbell has received a ruling
(the "Tax Ruling") from the Internal Revenue Service (the "IRS"). The Tax
Ruling was issued based upon the accuracy of factual representations made by
Campbell and Vlasic and states, among other things, that the Spin-Off will
qualify as a tax-free spin-off under Section 355 of the U.S. Internal Revenue
Code of 1986, as amended (the "Code"), for federal income tax purposes. No gain
or loss will be recognized by Campbell shareowners as a result of their receipt
of Vlasic Common Stock in the Spin-Off except for any cash received in lieu of
a fractional share received by a shareowner owning less than one share of
Vlasic Common Stock or requesting physical certificates for his or her Vlasic
Common Stock. See "--Manner of Effecting the Spin-Off."
In connection with the Spin-Off, a shareowner's tax basis in Campbell Stock
will be apportioned between Campbell Stock and Vlasic Common Stock received in
the Spin-Off in accordance with the relative fair market
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values of such shares at the time of the Spin-Off. In April 1998, Campbell will
send a letter to shareowners that will explain the way to allocate tax basis
between Campbell Stock and Vlasic Common Stock distributed in the Spin-Off. The
holding period of the Vlasic Common Stock received in the Spin-Off will include
the holding period of the Campbell Stock with respect to which the Vlasic
Common Stock will be distributed, provided the Campbell Stock is held as a
capital asset on March 30, 1998.
Canadian Tax Consequences to Campbell Shareowners. The Spin-Off will be
considered to be a dividend for Canadian income tax purposes. The Income Tax
Act requires a Canadian resident shareowner to include in income the amount of
a dividend received. The amount of the dividend will be the fair market value
of the shares of Vlasic received on the date those shares are received by the
shareowner. This dividend will be subject to the rules in the Income Tax Act
applicable to dividends received from a foreign corporation and will not be
eligible for the gross-up and credit rules applicable to a dividend from a
taxable Canadian corporation. The Vlasic Common Stock received through the
Spin-Off will have a cost to a Canadian shareowner equal to the fair market
value of the shares on the date those shares are received. The cost and
adjusted cost basis of a Canadian shareowner's Campbell shares will not change
as a consequence of the Spin-Off.
LISTING AND TRADING OF VLASIC COMMON STOCK
There is not currently a public market for the Vlasic Common Stock. We have
applied to list the Vlasic Common Stock on the New York Stock Exchange, and we
expect that a when-issued trading market for Vlasic Common Stock will develop
on or before March 9, 1998.
The term "when-issued" means that shares can be traded prior to the time
certificates are actually available or issued. Prices at which the Vlasic
Common Stock may trade on a when-issued basis cannot be predicted. Until the
Vlasic Common Stock is fully distributed and an orderly market develops, the
prices at which trading in such stock occurs may fluctuate significantly and
may be lower or higher than the price that would be expected for a fully-
distributed issue.
The prices at which the Vlasic Common Stock will trade following the Spin-Off
will be determined by the marketplace and may be influenced by many factors,
including the depth and liquidity of the market for Vlasic Common Stock,
investor perceptions of Vlasic and its businesses, Vlasic's results, and
general economic and market conditions.
Prior to the Spin-Off, Campbell Stock will continue to trade on a regular
basis and may also trade on a when-issued basis, reflecting an assumed post-
Spin-Off value for Campbell Stock. Campbell Stock when-issued trading, if
available, could last from on or before March 9, 1998 through March 30, 1998.
If Campbell Stock when-issued trading is not available, the New York Stock
Exchange will require that shares of Campbell Stock that are sold or purchased
during the period beginning on March 9, 1998 and ending on March 30, 1998 be
accompanied by due bills representing the Vlasic Common Stock distributable
with respect to such shares and that during such period neither the Campbell
Stock nor the due bills may be purchased or sold separately.
The Transfer Agent and Registrar for the Vlasic Common Stock will be First
Chicago Trust Company of New York, P.O. Box 2569, Suite 4660-CSC, Jersey City,
New Jersey 07303-2569. As of February 9, 1998, there were approximately 35,400
record holders of Campbell Stock, which number approximates the number of
prospective record holders of Vlasic Common Stock immediately after the Spin-
Off.
Vlasic Common Stock distributed in the Spin-Off generally will be freely
transferable under the Securities Act of 1933, as amended (the "Securities
Act"), except for securities received by persons who may be deemed to be
affiliates of Vlasic pursuant to Rule 405 under the Securities Act. Persons who
may be deemed to be affiliates of Vlasic after the Spin-Off generally include
individuals or entities that control, are controlled by, or
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are under common control with Vlasic, including directors of Vlasic. Persons
who are affiliates of Vlasic will be permitted to sell their shares of Vlasic
Common Stock received in the Spin-Off pursuant to Rule 144 under the Securities
Act but without regard to its holding period requirements.
CONDITIONS; TERMINATION
It is expected that the Spin-Off will occur on March 30, 1998, provided that
certain conditions set forth in the Separation and Distribution Agreement
Campbell and Vlasic will enter into prior to the Spin-Off (the "Distribution
Agreement") shall have been satisfied or waived by the Campbell Board. These
include, among other customary conditions, the following:
. The Tax Ruling shall continue to be in effect.
. All material regulatory approvals necessary to consummate the Spin-Off
shall have been received and be in full force and effect.
. The Vlasic Common Stock shall have been accepted for listing on the New
York Stock Exchange, subject to official notice of issuance.
. The Vlasic Board of Directors, as named under "Management--Directors,"
shall have been elected, and Vlasic's Amended and Restated Certificate of
Incorporation and Bylaws (the "Vlasic Charter" and the "Vlasic Bylaws,"
respectively) shall be in effect.
Satisfaction of such conditions will not create any obligation on the part of
Campbell, Vlasic or any other person to effect or seek to effect the Spin-Off
or alter the consequences of any termination of the Distribution Agreement from
those set forth in the Distribution Agreement. See "Arrangements Between
Campbell and Vlasic Relating to the Spin-Off--Distribution Agreement."
CERTAIN SPECIAL CONSIDERATIONS
NO OPERATING HISTORY AS AN INDEPENDENT COMPANY
We do not have an operating history as an independent company. Our businesses
have historically relied on Campbell for various financial, managerial and
administrative services and have been able to benefit from the earnings, assets
and cash flows of Campbell's other businesses. Campbell will not be obligated
to provide assistance or services to Vlasic after the Spin-Off, except as
described in the Distribution Agreement, the Transition Services Agreement and
the other agreements entered into by the companies in connection with the Spin-
Off. See "Arrangements Between Campbell and Vlasic Relating to the Spin-Off."
Following the Spin-Off, we will incur the costs and expenses associated with
the management of a public company and will incur interest expense
significantly in excess of that incurred historically. While we have been
profitable as part of Campbell, there can be no assurance that, as a stand-
alone company, our future profits will be comparable to historical combined
results before the Spin-Off. The Spin-Off may result in some temporary
dislocation to the business operations, as well as to the organization and
personnel structure, of Vlasic.
POTENTIAL FEDERAL INCOME TAX LIABILITIES
The IRS has issued a Tax Ruling to the effect that, among other things, the
Spin-Off would be tax free to Campbell and Campbell shareowners under Section
355 of the Code except to the extent that cash is received in lieu of
fractional shares. The Tax Ruling, while generally binding upon the IRS, is
based upon certain factual representations and assumptions. If such factual
representations and assumptions were incomplete or untrue in a
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material respect, or the facts upon which the Tax Ruling is based are
materially different from the facts at the time of the Spin-Off, the IRS could
modify or revoke the Tax Ruling retroactively.
If the Spin-Off failed to qualify under Section 355 of the Code, a corporate
tax would be payable by the consolidated group of which Campbell is the common
parent based upon the difference between the aggregate fair market value of the
Vlasic Businesses and the adjusted tax bases of such businesses to Campbell
prior to the Spin-Off. The corporate level tax would be payable by Campbell. We
have agreed to indemnify Campbell for this and other tax liabilities if they
result from certain actions taken by, or the acquisition of, Vlasic. See
"Arrangements Between Campbell and Vlasic Relating to the Spin-Off--Tax Sharing
and Indemnification Agreement." In addition, under the Code's consolidated
return regulations, each member of Campbell's consolidated group (including
Vlasic) is severally liable for these tax liabilities. If Vlasic is required to
indemnify Campbell for these liabilities or otherwise is found liable to the
IRS for such liabilities, the resulting obligation could exceed the net worth
of Vlasic.
If the Spin-Off were not to qualify under Section 355 of the Code, then each
owner of Campbell Stock who receives shares of Vlasic Common Stock in the Spin-
Off would be treated as if such shareowner received a taxable distribution in
an amount equal to the fair market value of Vlasic Common Stock received, which
would result in tax treatment as a dividend.
ABSENCE OF FUNDING; INCREASED LEVERAGE
In the past, our working capital needs have been satisfied under Campbell's
corporate-wide cash management policies. Following the Spin-Off, however,
Campbell will no longer provide funds to finance our operations. We believe
that our cash flow from operations, together with availability under the credit
facility referred to below, will be sufficient to satisfy our future working
capital, capital expenditure and debt service requirements. However, there can
be no assurance that this will prove to be the case.
On a historical basis, Vlasic was not allocated any amount of Campbell's
debt. A five-year, $750 million unsecured revolving credit facility has
recently been established by Campbell, and $500 million of borrowings under
this credit facility will be used by Campbell prior to the Spin-Off to repay
certain of Campbell's debt obligations. Vlasic will assume the repayment
obligations for Campbell's $500 million of borrowings in connection with the
Spin-Off. It is not possible to determine what portion of the debt obligations
to be repaid by Campbell with borrowings under this credit facility was
historically associated with the present operations of Vlasic. Following its
assumption of Campbell's repayment obligations under this credit facility,
Vlasic will have $250 million of borrowing availability thereunder,
approximately $58.7 million of which is expected to be used by Vlasic for
working capital purposes shortly after the Spin-Off. Vlasic expects to use the
rest of the available credit for general corporate purposes. See "Financing."
The $500 million of indebtedness to be incurred by Vlasic in connection with
the Spin-Off, the $58.7 million of debt that Vlasic will incur under this
credit facility shortly after the Spin-Off and the associated interest expense
are not reflected in Vlasic's historical financial statements. Assuming that
the transactions contemplated by the Spin-Off had been consummated on February
1, 1998, Vlasic's pro forma debt at February 1, 1998 would have been
approximately $572.6 million (consisting of $502 million of long-term debt, the
$58.7 million payable to Campbell from subsidiaries of Vlasic and $11.9 million
of notes payable). Vlasic's pro forma interest expense would have been
approximately $40.7 million in fiscal 1997 and $20.5 million in the first six
months of fiscal 1998 had the Spin-Off been consummated as of the beginning of
fiscal 1997. See "Pro Forma Condensed Combined Financial Information."
Vlasic's increased debt will have important implications. We will need to
generate a minimum level of cash flow from operations in order to meet required
repayments of interest and principal under the credit
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facility. In addition, the credit facility will impose certain restrictions on
the conduct of the Vlasic Businesses following the Spin-Off.
ABSENCE OF DIVIDENDS
Although Campbell has historically paid dividends to its shareowners on a
regular basis, we will not be adopting such a policy. We currently anticipate
that no cash dividends will be paid on the Vlasic Common Stock in the
foreseeable future in order to conserve cash for the repayment of debt, future
acquisitions and capital expenditures. It is expected that Vlasic's Board will
periodically re-evaluate this dividend policy taking into account the company's
operating results, capital needs and other factors.
NO PRIOR MARKET FOR VLASIC COMMON STOCK; SHARES AVAILABLE FOR FUTURE SALE
There has been no prior trading market for Vlasic Common Stock, and it is
impossible to predict, estimate or give assurances about what its trading price
will be after the Spin-Off. Until the Vlasic Common Stock is fully distributed
and an orderly market develops, the trading prices for Vlasic Common Stock may
fluctuate significantly. Prices for the Vlasic Common Stock will be determined
in the trading markets and may be influenced by many factors, including, among
others, the depth and liquidity of the market for Vlasic Common Stock, investor
perceptions of Vlasic and its businesses, Vlasic's results, and general
economic and market conditions.
The shares of Vlasic Common Stock distributed to Campbell shareowners in the
Spin-Off will be freely transferable under the Securities Act, except for
securities received by persons who may be deemed affiliates of Vlasic. See "The
Spin-Off--Listing and Trading of Vlasic Common Stock" and "Security Ownership
By Certain Beneficial Owners, Directors and Executive Officers of Vlasic." The
sale of a substantial number of shares of Vlasic Common Stock after the Spin-
Off could adversely affect the market price of Vlasic Common Stock.
POSSIBLE ANTI-TAKEOVER EFFECTS
We have agreed to certain restrictions on our future actions to assure that
the Spin-Off will be tax-free, including restrictions with respect to an
acquisition of shares of Vlasic Common Stock. If we fail to abide by such
restrictions and, as a result, the Spin-Off fails to qualify as a tax-free
reorganization, then Vlasic will be obligated to indemnify Campbell for any
resulting tax liability. The tax liability that potentially could arise from an
acquisition of shares of Vlasic Common Stock, together with our related
indemnification obligations, could have the effect of delaying, deferring or
preventing a change of control of Vlasic. See "Arrangements Between Campbell
and Vlasic Related to the Spin-Off--Tax Sharing and Indemnification Agreement."
Under the Vlasic charter, certain actions, including mergers and the sale of
all or substantially all of Vlasic's assets, require the affirmative vote of
two-thirds of the outstanding shares of Vlasic Common Stock. See "Description
of Capital Stock--Certain Other Provisions." In addition, the substantial
ownership interest of certain descendants of Dr. John T. Dorrance, a founder of
Campbell, could also have the effect of delaying or preventing a change in
control of Vlasic if such shareowners did not support the change in control.
COMPETITION
The food industry is highly competitive. We compete with a significant number
of companies of varying sizes, including divisions or subsidiaries of larger
companies in each of our product lines. Many of these companies have multiple
product lines and well-known brand names, and have significant financial
resources available to them. Vlasic's ability to grow its businesses could be
impacted by strong competitive response to its efforts to leverage its brand
power with new products, product innovation and new advertising.
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In addition, from time to time we experience price pressure in certain
markets as a result of competitors' pricing practices. There can be no
assurance that we will be able to compete successfully as an entity independent
from Campbell or that actions taken by other companies will not have a material
adverse effect on our businesses, financial condition or results of operations.
See "Business--Competition."
RISKS RELATING TO INTERNATIONAL OPERATIONS AND CURRENCY FLUCTUATIONS
Our operations in Canada, the U.K., Germany and Argentina accounted for
approximately 35% of fiscal 1997 net sales. We are subject to risks associated
with operating in foreign countries, primarily risks of fluctuating currency
exchange rates. Other risks may include possible limitations on conversion of
foreign currencies into dollars or payments by foreign subsidiaries, imposition
of withholding or other taxes, other restrictions by foreign governments and
hyperinflation. There can be no assurance that these risks will not have a
material adverse effect on our businesses, financial condition or results of
operations.
LICENSE OF TRADEMARKS
We will license the Swanson trademark and related logos, symbols and marks
from Campbell for use on frozen food products on a perpetual, royalty-free
basis after the Spin-Off. Campbell will continue to own these rights and use
them in its core business. Because Campbell will continue to use the rights
with respect to its products, adverse developments with respect to Campbell or
those products could adversely impact the value of the rights to Vlasic. See
"Arrangements Between Campbell and Vlasic Relating to the Spin-Off--Trademark
License Agreements" for a description of the terms and conditions of this
arrangement.
AVAILABILITY AND PRICES OF INGREDIENTS
We purchase agricultural products, other raw materials and ingredients from
growers, commodity processors and other food companies. While all such
materials are available from numerous independent suppliers, raw materials are
subject to fluctuations in price attributable to a number of factors, including
changes in crop size, cattle cycles, government-sponsored agricultural programs
and weather conditions during the growing and harvesting seasons. Recent
adverse weather conditions in Argentina, coupled with a rebuilding cattle
cycle, have resulted in a decrease in the availability of beef used in our
agricultural products segment and higher cattle costs. Although we enter into
advance commodity purchase agreements from time to time, increases in raw
material costs could have a material adverse effect on our businesses,
financial condition or results of operations. See "Business--Ingredients."
COSTS OF GOVERNMENTAL REGULATION/ENVIRONMENTAL MATTERS
We are subject to numerous federal, state and local environmental laws and
regulations of the U.S. and other countries in which we have operations. Our
operations are also governed by laws and regulations relating to the
preparation and marketing of food products and worker health and workplace
safety. Based on Campbell's experience to date, we believe that liability for
environmental conditions and the future cost of compliance with existing
environmental, food safety or occupational health and safety laws and
regulations will not have a material adverse effect on our businesses,
financial condition or results of operations. However, the impact of any future
changes in laws and regulations cannot be predicted. See "Business--
Governmental Regulation" and "--Environmental Matters."
FLUCTUATIONS IN AGRICULTURAL PRICES
We are actively engaged in the production of mushrooms and processing of
beef. These products are subject to significant price fluctuations. There can
be no assurance that the existing price levels for the agricultural products
that we produce or process will be maintained in the future.
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BUSINESS
The Vlasic Businesses manufacture and market high-quality, branded
convenience food products. We group the Vlasic Businesses into three operating
segments: frozen foods, grocery products and agricultural products. On a pro
forma basis after giving effect to the Spin-Off, the Vlasic Businesses had net
sales of approximately $1.5 billion in fiscal 1997 and $723.2 million in the
first six months of fiscal 1998, and net earnings of approximately $50.6
million in fiscal 1997 and $21.2 million in the first six months of fiscal
1998.
Frozen Foods. The frozen foods segment manufactures frozen dinners and other
frozen products and accounted for approximately 40%, 39% and 40% of our net
sales in fiscal 1997, 1996 and 1995. The frozen foods segment derives the
largest portion of its earnings from manufacturing frozen dinners and pot pies
marketed in the U.S. and Canada under the Swanson brand name. The products of
this segment include:
. Swanson frozen foods in the U.S.--including Swanson frozen dinners and
pot pies, the leading national brand in the U.S.
. Freshbake frozen foods in the U.K.--a leading brand for retail customers
in that country.
Grocery Products. The grocery products segment manufactures and distributes a
diverse portfolio of food products in the U.S., the U.K., Germany and
Argentina, most of which have leading national or regional market positions.
The grocery products segment accounted for approximately 36%, 37% and 36% of
our net sales in fiscal 1997, 1996 and 1995, most of which were from sales of
pickles, relishes and other products marketed under the Vlasic brand. The
products of this segment include:
. Vlasic retail and foodservice pickles and condiments in the U.S.--the
leading national brand in the retail category for pickles in the U.S.
. Open Pit barbecue sauce in the U.S.--the leading brand in the Midwest
U.S., with three of its varieties in the top ten in that regional market.
. SonA and Rowats pickles, canned beans and vegetables in the U.K.--which
management believes are leading brands for both retail and foodservice
customers in that country.
. Kattus specialty foods in Germany--which management believes is a leading
specialty foods distributor in that country.
. Swift canned meat pates and other grocery products in Argentina--where
Swift is the leading brand of canned meat pates.
Agricultural Products. Our agricultural products consist mainly of fresh
mushrooms and frozen cooked beef. We also perform certain contract
manufacturing services. Our agricultural products segment accounted for
approximately 24% of our net sales in each of fiscal 1997, 1996 and 1995. The
major operations of this segment include:
. The largest fresh mushroom operation in the U.S.
. One of Argentina's largest exporters of processed beef products.
Vlasic was incorporated under the laws of the State of New Jersey in November
1997. For a transitional period following the Spin-Off, we will lease office
space at Campbell's corporate headquarters located at Campbell Place, Camden,
New Jersey 08103. We expect to relocate our corporate headquarters to Cherry
Hill, New Jersey in the near future.
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BUSINESS STRATEGY
Vlasic's objective is to enhance revenue growth and profitability by
delivering quality products to its customers, expanding its strong market
positions and maximizing operating efficiencies. Vlasic plans to achieve its
objective through the following key strategies:
. Improve Performance of Low Margin Businesses. Vlasic recognizes that
certain of its businesses are not now achieving the profitability that it
believes they could. Vlasic believes that this is at least partially due
to the complex operating and reporting requirements placed upon the
businesses as a part of Campbell, and the relative lack of management
focus that was devoted to improving the businesses prior to the formation
of Vlasic. This impacts all aspects of the business, including
manufacturing efficiency, sales force effectiveness and administrative
costs. Vlasic believes that with focused management it will be able to
operate these businesses more productively. Further, Vlasic management
believes that such productivity improvements will provide funds which
will enable it to invest in brand development and marketing across all
businesses without unduly risking financial performance.
. Invest in Consumer Marketing and Product Development to Profitably Grow
Branded Businesses. Vlasic management believes that Vlasic's sales have
historically not grown due to a lack of innovation and relatively low
consumer marketing investment. The selective innovation which has
occurred, such as horizontally sliced pickles introduced by Vlasic under
its Sandwich Stackers brand, have shown the potential to increase growth
and profitability. However, while a part of Campbell the Vlasic
Businesses were viewed as relatively low margin, non-strategic businesses
and therefore did not gain sufficient attention to sustain top-line
growth. Vlasic management, in contrast, has significant experience in
profitably accelerating growth of other branded consumer food products
and believes there are significant growth opportunities within the Vlasic
portfolio.
. Pursue Selective Acquisitions. A third strategy will be to carefully
select additional businesses which can be acquired at attractive prices
that fit with our existing portfolio or which extend our breadth in other
branded food products. Vlasic expects that it will be able to acquire
businesses profitably due to its existing positions and due to the broad
range of skills and experience that it has in senior management.
PRODUCTS AND MARKETS
Frozen Foods. We manufacture and market frozen food products in the U.S. and
Canada, primarily frozen dinners and pot pies, under the Swanson, Hungry Man,
Lunch and More, Great Starts and Fun Feast brands. We also manufacture and
distribute a variety of frozen food products in the U.K. under our Freshbake
brand.
The Swanson brand is the leading national brand of frozen dinners, with
approximately 31% of the $1.3 billion frozen dinner market. In addition,
Swanson frozen pot pies are the market leader in their product category with
approximately 30% of the $290 million frozen pot pie market. Overall, we are
the nation's third largest producer of frozen dinners and entrees, pot pies and
breakfasts, with 13% of this $4.6 billion market.
Swanson introduced frozen beef and chicken pot pies in 1951. Shortly
thereafter, the first frozen dinner was introduced under the Swanson brand
name. The original line of frozen dinners, which consisted of sliced turkey and
gravy with dressing and potatoes, has expanded to include 20 varieties of
frozen dinners marketed with an updated line of contemporary packaging. Swanson
also markets frozen dinners under the Hungry Man brand, which targets consumers
who desire larger portions, and the Fun Feasts brand, which are frozen dinners
designed to appeal to children. We market a line of frozen breakfasts under our
Great Starts brand and a line of smaller dinner or lunch portions under our
Lunch and More brand.
16
<PAGE>
Our U.K. operations manufacture and distribute frozen food products such as
sausages, meat pies, pastries and pies under our Freshbake brand as well as the
private label brands of certain of our customers. Our primary customers are
retail grocery chains and foodservice customers such as restaurants and
cafeterias.
Grocery Products. Our grocery products businesses consist of three main
product offerings: pickles and relishes, barbecue sauce and international
grocery products.
Pickles and Relishes. Our Vlasic brand is the leading national retail brand
of bottled, shelf-stable pickles with approximately 34% of the $717 million
national retail market. We also manufacture and sell bottled, shelf-stable
relishes, peppers and sauerkraut under the Vlasic and Milwaukee's brand names.
We sell shelf-stable pickles and other condiments to foodservice customers in
the U.S., including restaurants such as McDonald's.
Campbell acquired the Vlasic brand in 1978. By that time, Vlasic was already
a leading national brand due in large part to its successful marketing campaign
featuring the Vlasic stork, which has consumer awareness of 93%. Since then,
Vlasic has become the industry leader in introducing innovative products that
have expanded the national pickle market as a whole. Approximately 35% of
Vlasic's sales come from products introduced during the past five years. For
example, in 1994 we introduced horizontally sliced pickles under our Sandwich
Stackers brand. We estimate that more than half of all pickles are consumed
with sandwiches but that only 6% of all sandwiches are eaten with pickles.
Sandwich Stackers is an ideal product for sandwich making because it makes it
easier for consumers to add pickles to their sandwiches. Consumer sales of
shelf-stable pickles rose 8%, or $50 million, as a result of the Sandwich
Stackers innovation, with Sandwich Stackers capturing approximately 65% of
these new sales.
Barbecue Sauce. Our Open Pit barbecue sauce is the leading retail brand of
barbecue sauce in the Midwest U.S., with a 29% market share in this region. We
plan to grow this brand through packaging and product innovation.
International Grocery Products. We operate consumer foods businesses in the
U.K., Germany and Argentina. In the U.K., we manufacture pickles, canned beans
and vegetables under our SonA and Rowats brands, which we distribute through
the retail and foodservice channels. We also manufacture private label brand
grocery products for large supermarket chains.
In Germany, we do not manufacture foods but instead distribute a variety of
branded consumer food products under our Kattus and other brands. We believe
that we are one of the largest distributors of specialty foods in Germany. Our
customers include most German grocery chains, where we actively manage and
maintain shelf space. Products distributed under the Kattus brand name include
pasta, canned vegetables, exotic fruit products, condiments and other specialty
foods imported from other European countries, the U.S. and the Far East. Other
products include vegetables, olives, spices, canned fish products, vinegars and
fine vegetable oils distributed under the United Oceans and Probare brands and
Asian specialty foods distributed under the Bamboo Garden brand. We also
distribute a number of Campbell products, including soup and salsa, as well as
third party branded food products.
We manufacture and distribute a broad array of consumer goods in Argentina
under our Swift brand. Sales of these grocery products have benefited from the
recent economic growth in Argentina. The well-known Swift brand is the leading
brand of canned meat pate products in Argentina. Other products include hot
dogs, hamburgers, cold cuts and edible oils. Although Swift products are sold
primarily to grocery chains and other retail customers in Argentina, we export
limited quantities to other countries in South America.
17
<PAGE>
Agricultural Products. We believe that we are the largest producer of fresh
mushrooms in the U.S. In Argentina, we are one of the leading exporters of
processed beef products.
Mushrooms. We own and operate eight mushroom farms across the U.S. Our
mushroom sales account for approximately 15% of the U.S. mushroom market, which
makes us the largest fresh mushroom operation in the U.S. Approximately 85% of
the mushrooms we grow are traditional white button mushrooms. The remaining
mushrooms we grow are fancy mushrooms such as portobellos, oyster and cremini
mushrooms. Consumer demand for fancy mushrooms has grown in recent years, and
the margins on these products are higher than on the white button type.
Processed Beef Products. Our Swift-Armour operations in Argentina produce
chilled and frozen beef, frozen cooked beef and canned corned beef, which is
sold mainly to wholesale customers such as manufacturers and foodservice
customers. We are among the largest exporters of frozen cooked beef and canned
corned beef in Argentina, selling to more than 60 countries around the world.
Campbell is a major customer of our mushrooms and beef. Sales to Campbell of
mushrooms accounted for approximately 25% of our total mushroom sales in fiscal
1997 and sales to Campbell of frozen cooked beef accounted for approximately
16% of Swift-Armour's fiscal 1997 net sales. Campbell uses our mushrooms and
frozen beef in soups and sauces. In connection with the Spin-Off, we will enter
into supply agreements with Campbell under which we will continue to supply
Campbell with mushrooms and beef. See "Arrangements Between Campbell and Vlasic
Relating to the Spin-Off--Supply Agreements; Co-Pack Agreements."
MARKETING, SALES AND DISTRIBUTION
We manage the sales and distribution of our products based on the channels
through which they are sold. Except for Campbell, none of our customers
accounted for 10% or more of Vlasic's net sales in fiscal 1997.
We use an independent broker sales force to sell frozen foods and grocery
products directly to large grocery chains, mass merchandisers and club stores
in the U.S. and Canada. We use independent commercial carriers to distribute
these products from our manufacturing facilities directly to our customers.
Historically, our frozen foods and grocery products have been sold through the
same brokers. While the delivery of all of the domestic retail grocery products
has been integrated into a single system, frozen foods are delivered separately
because of the special need for refrigeration during shipping. Brokers also
sell frozen foods to frozen food distributors and grocery products to grocery
distributors, both of whom in turn sell and deliver the products to smaller
grocery chains and retailers.
In the U.K., we distribute frozen foods marketed under the Freshbake brand in
the same manner as our frozen foods are distributed in the U.S. and Canada. We
sell grocery products marketed under the SonA and Rowats brands directly to
foodservice customers or through grocery wholesalers. Our distribution business
in Germany uses a direct store distribution system that delivers products to
the stores and physically stocks their shelves.
COMPETITION
We face intense competition in each of our product lines. We compete with
other producers of similar products on the basis of product quality, price,
customer service, effective promotional activities and the ability to identify
and satisfy emerging consumer preferences. Our ability to grow our business
could be impacted by strong competitive response to our efforts to leverage our
brand power with new products, product innovation and new advertising. In
addition, from time to time we experience price pressure in certain markets as
a result of competitors' pricing practices. Although we compete in a highly
competitive industry for representation in
18
<PAGE>
the retail food and foodservice channels, we believe that our brand strength
has resulted in a strong competitive position in the food products industry.
INGREDIENTS
We believe that sources of raw materials used in the frozen foods businesses
are readily available. Our frozen foods business uses beef produced by our
Swift-Armour operations in Argentina as well as beef and poultry which we
obtain from third party suppliers. In addition, we purchase packaging
materials, including aluminum containers and cardboard boxes, from a variety of
suppliers.
Our grocery products businesses rely primarily on cucumbers, peppers and
other produce which are supplied by third party growers. We purchase many of
these ingredients during the warmer growing seasons, when they are readily
available and are of top quality. We buy from a variety of growers, and
alternate sources of supply are readily available. However, factors beyond our
control such as weather and general growing conditions may cause prices and
quality to fluctuate. We use a large quantity of glass bottles and cans to
package our grocery products, which we believe are readily available from a
number of suppliers.
We purchase beef and mushrooms from third parties to fulfill seasonal
requirements of the agricultural products segment. Packaging materials used in
the processing of our agricultural products are purchased on an as-needed basis
and are readily obtainable in the local markets from a number of suppliers.
For additional discussion of the availability of raw materials for our
operations, see "Certain Special Considerations--Availability and Prices of
Ingredients."
SEASONALITY
Sales of frozen foods tend to be marginally higher during the cold weather
months. Sales of grocery products, particularly pickles, relishes and barbecue
sauce, tend to be higher in the summer months.
PRODUCTION AND FACILITIES
We currently own or lease 18 production facilities in the U.S., the U.K. and
Argentina. We believe that these facilities are suitable for our operations and
provide sufficient capacity to meet our requirements for the foreseeable
future. The chart below lists the location and principal products produced at
our key production facilities.
<TABLE>
<CAPTION>
FACILITY LOCATION PRINCIPAL PRODUCTS
----------------- ------------------
<S> <C>
FROZEN FOODS
Fayetteville, Arkansas Frozen Foods
Omaha, Nebraska Frozen Foods
Salford, England Frozen Foods
Peterlee, England Frozen Foods
Glasgow, Scotland Frozen Foods
GROCERY PRODUCTS
Bridgeport, Michigan Pickles and Condiments
Imlay City, Michigan Pickles and Condiments
Millsboro, Delaware Pickles and Condiments
Stratford, England Pickles, Canned Beans and Vegetables
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
FACILITY LOCATION PRINCIPAL PRODUCTS
----------------- ------------------
<S> <C>
AGRICULTURAL PRODUCTS
Blandon, Pennsylvania Mushrooms
West Chicago, Illinois Mushrooms
Brighton, Indiana Mushrooms
Dublin, Georgia Mushrooms
Fennville, Michigan Mushrooms
Hillsboro, Texas Mushrooms
Jackson, Ohio Mushrooms
Pescadero, California Mushrooms
Rosario, Argentina Processed Beef
</TABLE>
Historically, Campbell operated the Vlasic Businesses from its corporate
headquarters in Camden, New Jersey. Following the Spin-Off, we will lease
office space in the Campbell corporate headquarters for a transition period. We
expect to relocate our corporate headquarters to Cherry Hill, New Jersey in the
near future.
In the Spin-Off, we will acquire ownership of or the right to use all of the
facilities used to manufacture our products except the facilities that house
our Canadian frozen foods production and our Open Pit barbecue sauce
production. Vlasic will enter into a co-packing arrangement with Campbell under
which Campbell will continue to manufacture these products for an interim
period. See "Arrangements Between Campbell and Vlasic Relating to the Spin-
Off--Supply Agreements; Co-Pack Agreements."
TRADEMARKS AND PATENTS
We own numerous popular trademarks registered in various countries, including
Vlasic, Hungry Man, Sandwich Stackers, Great Starts, Freshbake, SonA, Rowats,
Kattus and Swift. All of our trademarks are very important to the Vlasic
Businesses. We protect our trademarks by obtaining registrations where
appropriate and aggressively opposing any infringement.
In connection with the Spin-Off, Campbell will grant us a perpetual, royalty-
free license to use the Swanson trademark for certain products. See
"Arrangements Between Campbell and Vlasic Relating to the Spin-Off--Trademark
License Agreements." In addition, Vlasic will have the right to continue to
sell fresh mushrooms under the Campbell's brand for a transition period of up
to three years following the Spin-Off.
Although we own a number of patents covering certain manufacturing processes,
we do not believe the Vlasic Businesses depend on any of these patents to a
material extent.
RESEARCH AND DEVELOPMENT
Historically, Campbell conducted research and development for the Vlasic
Businesses at its headquarters in Camden, New Jersey and at other locations in
the U.S. and foreign countries. Research and development expenditures relating
to the Vlasic Businesses totaled approximately $8.6 million in fiscal 1997,
$8.1 million in fiscal 1996 and $8.8 million in fiscal 1995.
Vlasic's research and development will initially be conducted at multiple
sites within and outside the U.S. The research and development organization is
expected to consist of approximately 75 people, 49 of whom will be located in
the U.S. and 26 of whom will be located outside the U.S.
20
<PAGE>
GOVERNMENTAL REGULATION
Our operations are subject to extensive regulation by the federal Food and
Drug Administration, the U.S. Department of Agriculture and other federal,
state and local authorities of the U.S. and other countries in which we have
operations. Such authorities regulate the processing, packaging, storage,
distribution and labeling of our products and periodically inspect our
processing facilities and products. We believe that we are in substantial
compliance with all governmental laws and regulations.
ENVIRONMENTAL MATTERS
We are subject to numerous federal, state and local environmental laws and
regulations of the U.S. and other countries in which we have operations. Our
operations are also governed by laws and regulations relating to worker health
and workplace safety. We believe that our operations are in substantial
compliance with such environmental and occupational health and safety laws and
regulations.
As is the case with many companies, we face exposure to actual or potential
claims or lawsuits involving environmental matters. We believe that any
liabilities resulting therefrom, after taking into consideration amounts
already provided for, should not have a material adverse effect on our
businesses, financial position or results of operations. Of course, we cannot
predict what environmental or occupational health and safety laws and
regulations will be enacted in the future or the amount of future expenditures
we may be required to make in order to comply with such new laws.
LEGAL PROCEEDINGS
We are not aware of any pending claims or litigation the outcome of which
would have a material adverse effect on our businesses, financial position or
results of operations.
EMPLOYEES
Our work force consists of approximately 9,200 employees. Of the total number
of employees, approximately 8,600 are engaged in manufacturing, approximately
150 are engaged in marketing and sales and approximately 450 are engaged in
administration.
Our U.S. work force consists of approximately 5,500 employees, approximately
3,600 of whom are represented by collective bargaining agreements with various
unions. Such collective bargaining agreements expire on various dates on and
after October 4, 1998. Outside of the U.S., our work force consists of
approximately 3,700 employees, the substantial majority of whom are represented
by unions. A prolonged work stoppage or strike at any facility with union
employees could have a material adverse effect on our businesses, financial
condition or results of operations. In addition, there can be no assurance that
upon the expiration of existing collective bargaining or similar agreements new
agreements will be reached without union action or that any such new agreements
will be on terms satisfactory to us.
We consider our employee relations to be good.
21
<PAGE>
PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
(UNAUDITED)
The following unaudited Pro Forma Condensed Combined Statements of Earnings
for the fiscal year ended August 3, 1997 and for the first six months ended
February 1, 1998 and the unaudited Pro Forma Condensed Combined Balance Sheet
as of February 1, 1998 present the combined results of operations and financial
position of Vlasic assuming that the transactions contemplated by the Spin-Off
had been completed as of the beginning of fiscal 1997 with respect to the Pro
Forma Condensed Combined Statements of Earnings and as of February 1, 1998 with
respect to the Pro Forma Condensed Combined Balance Sheet. In the opinion of
management, they include all material adjustments necessary to reflect, on a
pro forma basis, the impact of transactions contemplated by the Spin-Off on
Vlasic's historical financial information. The adjustments are described in the
Notes to the Pro Forma Condensed Combined Financial Information and are set
forth in the "Pro Forma Adjustments" columns.
The unaudited Pro Forma Condensed Combined Financial Information of Vlasic
should be read in conjunction with the historical financial statements of
Vlasic and the notes thereto (beginning on page F-1 in the latter portion of
this document). We have presented the pro forma financial information to give
you a better picture of what our financial statements might have looked like if
Vlasic had been operated independently during fiscal 1997 and the first six
months of fiscal 1998. Actual results may have differed from pro forma results
if we had operated independently. You should not rely on the pro forma
financial information as being indicative of results we would have had or of
future results after the Spin-Off.
22
<PAGE>
VLASIC FOODS INTERNATIONAL INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF EARNINGS
FISCAL YEAR ENDED AUGUST 3, 1997
(000 OMITTED, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA PRO FORMA
1997(1) ADJUSTMENTS(2) 1997
---------- -------------- ----------
<S> <C> <C> <C>
NET SALES............................... $1,508,285 $1,508,285
---------- ----------
Costs and expenses
Cost of products sold................. 1,048,433 1,048,433
Marketing and selling expenses........ 266,475 266,475
Administrative expenses............... 53,050 53,050
Research and development expenses..... 8,620 8,620
Other expense......................... 2,446 2,446
Restructuring charge.................. 12,634 12,634
---------- ----------
Total costs and expenses............ 1,391,658 1,391,658
---------- ----------
EARNINGS BEFORE INTEREST AND TAXES...... 116,627 116,627
Interest expense........................ 1,600 $ 39,108 (a) 40,708
Interest income......................... 588 588
---------- -------- ----------
Earnings before taxes................... 115,615 76,507
Taxes on earnings....................... 37,475 (11,615)(b) 25,860
---------- -------- ----------
NET EARNINGS............................ $ 78,140 $(27,493) $ 50,647
========== ======== ==========
PRO FORMA EARNINGS PER SHARE--BASIC(4).. $ 1.12
Pro Forma Shares Outstanding--Basic..... 45,413
==========
PRO FORMA EARNINGS PER SHARE--ASSUMING
DILUTION............................... $ 1.10
Pro Forma Shares Outstanding--Assuming
Dilution............................... 45,941
==========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Condensed Combined Financial
Information on page 26.
23
<PAGE>
VLASIC FOODS INTERNATIONAL INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF EARNINGS
SIX MONTHS ENDED FEBRUARY 1, 1998
(000 OMITTED, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
SIX MONTHS PRO FORMA SIX MONTHS
1998(1) ADJUSTMENTS(3) 1998
---------- -------------- ----------
<S> <C> <C> <C>
NET SALES............................... $723,169 $723,169
-------- --------
Costs and expenses
Cost of products sold................. 519,224 519,224
Marketing and selling expenses........ 114,821 114,821
Administrative expenses............... 28,732 28,732
Research and development expenses..... 3,948 3,948
Other (income) expense................ (91) (91)
-------- --------
Total costs and expenses............ 666,634 666,634
-------- --------
EARNINGS BEFORE INTEREST AND TAXES...... 56,535 56,535
Interest expense........................ 911 $ 19,554 (a) 20,465
Interest income......................... 145 145
-------- -------- --------
Earnings before taxes................... 55,769 36,215
Taxes on earnings....................... 20,858 (5,807)(b) 15,051
-------- -------- --------
EARNINGS BEFORE CUMULATIVE EFFECT OF
ACCOUNTING CHANGE...................... $ 34,911 $(13,747) $ 21,164
======== ======== ========
PRO FORMA EARNINGS BEFORE CUMULATIVE
EFFECT OF ACCOUNTING CHANGE PER SHARE--
BASIC(4)............................... $ .47
Pro Forma Shares Outstanding--Basic..... 45,413
========
PRO FORMA EARNINGS BEFORE CUMULATIVE
EFFECT OF ACCOUNTING CHANGE PER SHARE--
ASSUMING DILUTION...................... $ .46
Pro Forma Shares Outstanding--Assuming
Dilution............................... 45,941
========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Condensed Combined Financial
Information on page 26.
24
<PAGE>
VLASIC FOODS INTERNATIONAL INC.
PRO FORMA CONDENSED COMBINED BALANCE SHEET
(000 OMITTED)
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
FEBRUARY 1, PRO FORMA FEBRUARY 1,
1998(1) ADJUSTMENTS(5) 1998
----------- -------------- -----------
<S> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents............ $ 1,456 $ 1,456
Accounts receivable.................. 160,119 160,119
Inventories.......................... 163,689 163,689
Other current assets................. 15,070 15,070
-------- --------
Total current assets............... 340,334 340,334
-------- --------
Plant assets, net of depreciation.... 507,532 507,532
Other assets, principally intangible
assets, net of amortization......... 89,221 89,221
-------- --------
Total assets....................... $937,087 $937,087
======== ========
CURRENT LIABILITIES
Notes payable........................ $ 11,944 $ 11,944
Payable to suppliers and others...... 82,470 82,470
Overdrafts........................... 9,058 9,058
Accrued liabilities.................. 63,024 63,024
Payable to Campbell.................. 0 $ 58,681 (c) 58,681
-------- --------- --------
Total current liabilities.......... 166,496 58,681 225,177
-------- --------- --------
Long-term debt....................... 2,018 500,000 (a) 502,018
Deferred income taxes................ 36,892 (14,000)(b) 22,892
Other liabilities.................... 12,293 36,000 (b) 48,293
-------- --------- --------
Total liabilities.................. 217,699 580,681 798,380
-------- --------- --------
SHAREOWNERS' EQUITY
Campbell net investment.............. 719,660 (500,000)(a)
(22,000)(b)
(58,681)(c)
(138,979)(d)
Preferred Stock; no par value;
authorized 4,000 shares; none issued
Common stock; no par value;
authorized 56,000 shares;
issued 45,413 shares................ 138,979 (d) 138,979
Cumulative translation adjustments... (272) (272)
-------- --------- --------
Total shareowners' equity.......... 719,388 (580,681) 138,707
-------- --------- --------
Total liabilities and shareowners'
equity............................ $937,087 $937,087
======== ========= ========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Condensed Combined Financial
Information on page 26.
25
<PAGE>
VLASIC FOODS INTERNATIONAL INC.
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
(000 OMITTED)
(UNAUDITED)
NOTE 1--The historical financial statements of Vlasic reflect periods during
which Vlasic did not operate as a separate, independent company; certain
estimates, assumptions and allocations were made in preparing such financial
statements. Therefore, such historical financial statements do not necessarily
reflect the results of operations or financial position that would have existed
had Vlasic been a separate, independent company.
NOTE 2--The pro forma adjustments to the accompanying historical combined
statement of earnings for the fiscal year ended August 3, 1997 were:
(a) To record interest expense (at 7%) on incremental debt of $558,681
consisting of $500,000 to be assumed by Vlasic at the Distribution Date and
$58,681 to be used for working capital purposes shortly after the Spin-Off.
A 1/8 percentage point change in the assumed interest rate would change
interest expense by $698 (changing net earnings by $490) annually.
(b) To record the tax effect of the pro forma interest expense adjustment
at a tax rate of 29.7%, which gives effect to non-deductibility of a
portion of the interest expense.
NOTE 3--The pro forma adjustments to the accompanying historical combined
statement of earnings for the six months ended February 1, 1998 were:
(a) To record interest expense (at 7%) on incremental debt of $558,681
consisting of $500,000 to be assumed by Vlasic at the Distribution Date and
$58,681 to be used for working capital purposes shortly after the Spin-Off.
A 1/8 percentage point change in the assumed interest rate would change
interest expense by $349 (changing net earnings by $246) for the six months
ended February 1, 1998.
(b) To record the tax effect of the pro forma interest expense adjustment
at a tax rate of 29.7%, which gives effect to non-deductibility of a
portion of the interest expense.
NOTE 4--In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128 (SFAS 128)--"Earnings per
Share." The standard requires dual presentation of "basic" and "diluted"
earnings per share. Vlasic will adopt SFAS 128 in its first quarterly earnings
statement issued after the effective date of the Spin-Off. The earnings per
share information included in the Pro Forma Condensed Combined Statements of
Earnings on pages 23 and 24 has been calculated in accordance with SFAS 128.
SFAS 128 revised the standards for the computation and presentation of earnings
per share ("EPS"), requiring the presentation of both basic EPS and EPS
assuming dilution. Basic EPS is based on the weighted average shares
outstanding during the applicable period. EPS assuming dilution reflects the
potential dilution that could occur if securities or other contracts to issue
common stock were exercised or converted into common stock. For the periods
presented in the Pro Forma Condensed Combined Statements of Earnings, the
calculations of basic EPS and EPS assuming dilution vary in that the pro forma
shares outstanding assuming dilution include the incremental effect of stock
options.
NOTE 5--The pro forma adjustments to the accompanying historical combined
balance sheet at February 1, 1998 were:
(a) To record incremental debt of $500,000 to be assumed by Vlasic at the
Distribution Date.
(b) To record the transfer of pension and postretirement obligations and
the related deferred tax impact.
(c) To reclassify intercompany payables of Vlasic subsidiaries to
Campbell which will remain outstanding obligations of such subsidiaries of
Vlasic to Campbell after Spin-Off.
(d) To record the planned liquidation of the remaining investment by
Campbell and the issuance of Vlasic Common Stock.
26
<PAGE>
SELECTED FINANCIAL DATA
The following table summarizes certain selected financial data of Vlasic. The
Summary of Operations historical data set forth below for each of the three
years in the period ended August 3, 1997 and the Balance Sheet Data at August
3, 1997 and July 28, 1996 are derived from audited combined financial
statements of Vlasic. The Summary of Operations historical data set forth below
for each of the six month periods ended February 1, 1998 and January 26, 1997
and the two years in the period ended July 31, 1994 and the Balance Sheet Data
at February 1, 1998 and January 26, 1997 and at July 30, 1995, July 31, 1994
and August 1, 1993 are derived from unaudited combined financial statements of
Vlasic. The historical selected financial data may not necessarily be
indicative of Vlasic's past or future performance as an independent company.
Such historical data should be read in conjunction with "Management's
Discussion and Analysis of Results of Operations and Financial Condition" and
Vlasic's Combined Financial Statements and notes thereto included elsewhere in
this document. Per share data has not been presented because Vlasic was not a
publicly held company during the periods presented.
<TABLE>
<CAPTION>
FISCAL YEAR SIX MONTHS ENDED
------------------------------------------------------------ --------------------------
FEBRUARY 1, JANUARY 26,
1997(1) 1996 1995 1994 1993 1998 1997
---------- ---------- ---------- ---------- ---------- ----------- -----------
(000 OMITTED)
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Net sales............... $1,508,285 $1,498,967 $1,504,318 $1,320,632 $1,340,531 $ 723,169 $ 750,176
Earnings before
cumulative effect of
accounting changes..... $ 78,140(2) $ 60,867(3) $ 70,982 $ 53,277 $ 2,188 (4) $ 34,911 $ 29,515(2)
Cumulative effect of
accounting changes..... $ (39,500)(4) $ (600)(5)
Net earnings (loss)..... $ 78,140 $ 60,867 $ 70,982 $ 53,277 $ (37,312) $ 34,311 $ 29,515
BALANCE SHEET DATA
Total assets............ $ 895,108 $ 923,331 $ 923,659 $ 855,411 $ 854,391 $ 937,087 $ 974,885
Long-term debt.......... $ 2,252 $ 3,166 $ 3,591 $ 12,226 $ 15,648 $ 2,018 $ 2,633
Shareowner's equity..... $ 632,298 $ 659,866 $ 693,736 $ 615,267 $ 559,496 $ 719,388 $ 722,573
</TABLE>
- --------
(1) Fiscal 1997 includes 53 weeks compared to 52 weeks in fiscal 1993 through
fiscal 1996.
(2) Includes after-tax restructuring charges of $7,757.
(3) Includes after-tax restructuring charges of $22,842.
(4) Includes after-tax restructuring charges of $56,358. Also includes the
cumulative effect of changes of $39,500 in accounting for postemployment
costs, postretirement costs and income taxes.
(5) Includes the cumulative effect of an accounting principle for business
process reengineering costs of $600.
27
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
FOR THE FISCAL YEARS ENDED AUGUST 3, 1997, JULY 28, 1996 AND JULY 30, 1995
The following discussion is based upon and should be read in conjunction with
the unaudited Pro Forma Condensed Combined Financial Information, Selected
Financial Data and the audited Combined Financial Statements, including the
notes thereto, included elsewhere in this document.
GENERAL
The following discussion addresses the Vlasic Businesses to be spun off by
Campbell. The businesses operate in three operating segments: frozen foods,
grocery products and agricultural products. These operating segments are
managed as strategic units due to their distinct manufacturing processes,
marketing strategies and distribution channels. The frozen foods segment
consists of Swanson frozen foods in the U.S. and Canada and Freshbake frozen
foods in the U.K. The grocery products segment includes Vlasic retail and
foodservice pickles and condiments in the U.S., Open Pit barbecue sauce in the
U.S., SonA and Rowats pickles, canned beans and vegetables in the U.K., Kattus
specialty foods distribution in Germany and Swift canned meat pates and other
grocery products in Argentina. The agricultural products segment includes the
fresh mushroom business in the U.S., chilled and frozen beef, frozen cooked
beef and canned corned beef exported from Argentina and short-term contract
manufacturing of frozen foodservice finished product for Campbell's Foodservice
in the U.S.
On a historical basis, Vlasic's interest income and interest expense reflect
minor levels of local subsidiary temporary investments or borrowings. Most of
the capital for the Vlasic Businesses was provided by Campbell's net investment
in these businesses, for which no interest was charged. Furthermore, Vlasic was
not allocated any amount of Campbell's debt. A five-year, $750 million
unsecured revolving credit facility (the "New Credit Facility") has recently
been established by Campbell, and $500 million of borrowings thereunder will be
used by Campbell prior to the Spin-Off to repay certain of Campbell's debt
obligations. Vlasic will assume the repayment obligations for Campbell's $500
million of borrowings in connection with the Spin-Off. It is not possible to
determine what portion of the debt obligations to be repaid by Campbell with
borrowings under the New Credit Facility was historically associated with the
present operations of Vlasic. Following its assumption of Campbell's repayment
obligations under the New Credit Facility, Vlasic will have $250 million of
borrowing availability thereunder, approximately $58.7 million of which is
expected to be used by Vlasic for working capital purposes shortly after the
Spin-Off. Vlasic expects to use the rest of the available credit for general
corporate purposes. See "Financing." The $500 million of indebtedness to be
incurred by Vlasic in connection with the Spin-Off, the $58.7 million of debt
that Vlasic will incur under the New Credit Facility shortly after the Spin-Off
and the associated interest expense are not reflected in Vlasic's historical
financial statements. Assuming that the transactions contemplated by the Spin-
Off had been consummated on February 1, 1998, Vlasic's pro forma debt and
shareowners' equity at February 1, 1998 would have been approximately $572.6
million (consisting of $502 million of long-term debt, the $58.7 million
payable to Campbell from subsidiaries of Vlasic and $11.9 million of notes
payable) and $138.7 million, respectively. Vlasic's pro forma interest expense
would have been approximately $40.7 million in fiscal 1997 and $20.5 million in
the first six months of fiscal 1998 had the Spin-Off been consummated as of the
beginning of fiscal 1997. See "Pro Forma Condensed Combined Financial
Information."
Vlasic and Campbell will enter into a number of agreements providing for the
separation of the companies and governing various relationships between Vlasic
and Campbell, including a Separation and Distribution Agreement, a Benefits
Sharing Agreement (regarding employee benefits), a Tax Sharing and
Indemnification
28
<PAGE>
Agreement, a Trademark License Agreement, a Technology Sharing Agreement, a
Transition Services Agreement and various Supply Agreements. See "Arrangements
Between Campbell and Vlasic Relating to the Spin-Off."
The audited Combined Financial Statements may not necessarily be indicative
of the results of operations, financial position and cash flows of Vlasic in
the future or had it operated as a separate, independent company during the
periods presented. The audited Combined Financial Statements do not reflect any
changes that may occur in the financing and operations of Vlasic as a result of
the Spin-Off.
RESULTS OF OPERATIONS
Overview
Net sales in fiscal 1997 were $1.508 billion, an increase of 0.6% from fiscal
1996 (down 1.3% from fiscal 1996 on a comparable 52 week basis). Net earnings
were $78.1 million, an increase of 28% from fiscal 1996. Both years included
restructuring charges, as discussed below. Excluding the restructuring charges
from both years, net earnings increased 2.6% in fiscal 1997. Fiscal 1997 was a
53-week year compared to 52 weeks in fiscal 1996 and fiscal 1995.
Net sales in fiscal 1996 were $1.499 billion, a decrease of 0.4% from fiscal
1995. Net earnings were $60.9 million, a decrease of 14% from fiscal 1995 due
to restructuring charges. Excluding the fiscal 1996 restructuring charges, net
earnings increased 18% in fiscal 1996.
Assuming that the transactions contemplated by the Spin-Off had been
consummated as of the beginning of fiscal 1997, Vlasic's pro forma interest
expense would have been approximately $40.7 million and its pro forma net
earnings would have been approximately $50.6 million in fiscal 1997. See "Pro
Forma Condensed Combined Financial Information."
Combined Statement of Earnings
The following table sets forth certain items in Vlasic's combined statements
of earnings as percentages of its net sales for the fiscal years indicated:
<TABLE>
<CAPTION>
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
Net sales............................................. 100.0% 100.0% 100.0%
Cost of products sold................................. 69.5% 70.3% 71.4%
Marketing and selling expenses........................ 17.7% 17.1% 17.2%
Administrative expenses............................... 3.5% 3.6% 3.6%
Research and development expenses..................... 0.6% 0.6% 0.6%
Other expense......................................... 0.2% 0.0% 0.0%
Restructuring charges................................. 0.8% 2.5% 0.0%
------ ------ ------
Total costs and expenses............................ 92.3% 94.1% 92.8%
Earnings before interest and taxes.................... 7.7% 5.9% 7.2%
</TABLE>
Fiscal 1997 Compared to Fiscal 1996
-----------------------------------
Net sales of $1.508 billion in fiscal 1997 increased 0.6% from fiscal 1996
(down 1.3% from fiscal 1996 on a comparable 52 week basis). Volume declines
offset higher selling prices, and changes in foreign currency rates had no
impact. Overall volume was flat (down 1.9% on a comparable 52 week basis) as
strong growth in Swanson U.S. (particularly frozen dinners), contract
manufacturing for Campbell Foodservice and fresh
29
<PAGE>
mushrooms was more than offset by declines in the German foods distribution
business, Argentine frozen cooked beef and Vlasic pickles.
Cost of products sold as a percentage of net sales improved in fiscal 1997 by
0.8 points from 70.3% to 69.5%. Productivity gains in Swanson, Freshbake in the
U.K. and Vlasic pickles as well as the benefit of higher selling prices were
mitigated by higher mushroom and beef costs and lower margins in Germany.
Marketing and selling expenses increased in fiscal 1997 to 17.7% of net sales
from 17.1% in fiscal 1996. The principal cause was higher trade spending for
Swanson U.S.
Administrative and research and development expenses, as a percentage of net
sales, were down 0.1 points in fiscal 1997 to 3.5% and 0.6%, respectively.
Other expense, net, increased by $2.0 million in fiscal 1997 due to higher
accruals for long-term incentive plan charges related to the increase in the
market price of Campbell Stock.
See the discussion below for restructuring charges.
The effective income tax rate was 32.4% in fiscal 1997 compared to 31.0% in
fiscal 1996. Excluding restructuring charges, the rate was 33.0% in fiscal 1997
and 33.3% in fiscal 1996.
Vlasic has a full valuation allowance against its estimate of the amount of
deferred tax assets relating to tax loss carryforwards due to the uncertainty
of the ultimate realization of future benefits from such assets. These deferred
tax assets pertain to Vlasic's operations in Argentina and to its frozen foods
business in the U.K. The uncertainty surrounding the use of U.K. tax loss
carryforwards stems from significant tax law restrictions regarding their use.
Moreover, the limited tax loss carryforward periods and exclusion from current
taxable income of export rebates create uncertainty about whether Vlasic will
be able to utilize its tax loss carryforwards from operations in Argentina.
Fiscal 1996 Compared to Fiscal 1995
-----------------------------------
Net sales of $1.499 billion in fiscal 1996 were 0.4% below those for fiscal
1995. The effect of higher selling prices was offset by changes in foreign
exchange rates and a decline in volume. The volume decline was principally
attributable to lower Swanson U.S. net sales due to the timing of fiscal 1995
year-end marketing programs. Swanson Canada and Vlasic pickles, led by Sandwich
Stackers, showed volume increases.
Cost of products sold as a percentage of net sales improved in fiscal 1996 by
1.1 points to 70.3% from 71.4% in fiscal 1995, principally driven by higher
selling prices and manufacturing cost improvements offset by slightly weaker
product mix.
Marketing and sales expenses, as a percentage of net sales, were virtually
unchanged at 17.1% in fiscal 1996 compared to 17.2% in fiscal 1995.
Administrative and research and development expenses were approximately the
same percentage of net sales in fiscal 1996 as fiscal 1995.
Other expense, net, was essentially unchanged in fiscal 1996 compared to
fiscal 1995.
The effective income tax rate was 31.0% in fiscal 1996 compared to 33.5% in
fiscal 1995. Excluding restructuring charges, the rate was 33.3% in fiscal 1996
compared to 33.5% in fiscal 1995.
30
<PAGE>
Restructuring Program
A special charge of $12.6 million ($7.8 million after tax) was recorded in
the first quarter of fiscal 1997 to cover the costs of a restructuring program.
The restructuring program was designed to improve operational efficiency by
closing various pickle facilities and reducing approximately 50 administrative
and operational positions from the worldwide workforce. The restructuring
charge includes approximately $4.6 million in cash charges, primarily related
to severance and employee benefit costs, substantially all of which was paid by
the end of the first quarter of fiscal 1998. The balance of the restructuring
charge, amounting to $8.0 million, relates to non-cash charges for losses on
the disposition of plant assets. Vlasic substantially completed the program
during the first quarter of fiscal 1998.
A special charge of $37.2 million ($22.8 million after tax) was recorded in
the fourth quarter of fiscal 1996 to cover the costs of a restructuring program
designed to improve operational efficiency in the U.S. frozen foods segment (by
closing the former Modesto plant, with a reduction of approximately 500
employees, and increasing production at the Omaha and Fayetteville plants) and
in the foods distribution business in Germany (by combining certain sales
functions from two locations into the unit's headquarters). The restructuring
charge includes approximately $22.1 million in cash charges, primarily related
to severance and employee benefit costs, and $15.1 million in non-cash charges
for losses on disposition of plant assets. The program was completed in fiscal
1997.
The combination of the fiscal 1997 and fiscal 1996 restructurings are
expected to result in approximately $22 million in aggregate savings in fiscal
1997 and fiscal 1998 from reductions in employee salaries and benefits, plant
overhead and depreciation. The expected cash outflows should not adversely
affect Vlasic's liquidity. See Note 5 to the Combined Financial Statements for
the components of the restructuring liability and the related activity.
Results by Segment
The following table sets forth certain segment information for the fiscal
periods indicated:
<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- ----------
(000 OMITTED)
<S> <C> <C> <C>
NET SALES
Frozen Foods......................... $ 614,467 $ 583,384 $ 609,275
Grocery Products..................... 538,684 561,154 542,106
Agricultural Products................ 366,113 369,088 363,346
Eliminations......................... (10,979) (14,659) (10,409)
---------- ---------- ----------
Total.............................. $1,508,285 $1,498,967 $1,504,318
========== ========== ==========
EARNINGS BEFORE INTEREST AND TAXES
Frozen Foods......................... $ 56,268 $ 15,885 $ 46,757
Grocery Products..................... 49,513 53,748 38,747
Agricultural Products................ 10,846 19,337 23,000
---------- ---------- ----------
Total.............................. $ 116,627 $ 88,970 $ 108,504
========== ========== ==========
</TABLE>
Fiscal 1997 Compared to Fiscal 1996
-----------------------------------
The net sales of the frozen foods segment increased 5% in fiscal 1997 (up
3.5% on a comparable 52 week basis) to $614.5 million mainly due to increases
in Swanson U.S. and Freshbake in the U.K., which contributed equally to the
increase. Also, Swanson Canada registered a double-digit increase. This
segment's earnings
31
<PAGE>
before interest and taxes more than doubled in fiscal 1997 to $56.3 million.
Excluding restructuring charges from fiscal 1997 and fiscal 1996, earnings
before interest and taxes increased 20%, led by a double-digit gain in Swanson
U.S. (driven by improved productivity and lower manufacturing costs resulting
from prior-year restructuring programs) and by continued improvement in
manufacturing costs for Freshbake in the U.K.
The net sales of the grocery products segment decreased 4% in fiscal 1997
(down 6.3% on a comparable 52 week basis) to $538.7 million, driven principally
by weakness in the German foods distribution business. This weakness was
principally caused by difficulties in the transition to a new management
information system. These difficulties caused the unit to be unable to receive,
process and deliver a substantial number of orders for a period of time.
Management believes the difficulties have been corrected and that the business
is working to regain lost distribution. The fiscal 1997 net sales of most other
businesses included in this segment approximated those for fiscal 1996 (down
2.3% on a comparable 52 week basis). This segment's earnings before interest
and taxes decreased 8% in fiscal 1997 to $49.5 million. Excluding restructuring
charges from fiscal 1997 and fiscal 1996, earnings before interest and taxes
increased 3% as a 25% increase in Vlasic pickle earnings was largely offset by
the poor volume performance of the German foods distribution business, which
went from a profit in fiscal 1996 to a loss in fiscal 1997. Open Pit barbecue
sauce, Argentine retail and the U.K. pickle, canned bean and vegetable
businesses lagged in fiscal 1997.
The net sales of the agricultural products segment declined 1% in fiscal 1997
(down 2.9% on a comparable 52 week basis) to $366.1 million. Reduced overall
demand for beef products in Europe and reduced shipments to Campbell were
offset by increased contract manufacturing for Campbell Foodservice and
increased fresh mushroom sales. This segment's earnings before interest and
taxes declined 44% in fiscal 1997 to $10.8 million from $19.3 million in fiscal
1996. The decline was due in approximately equal parts from reduced sales of
frozen cooked beef and unfavorable mushroom costs.
Fiscal 1996 Compared to Fiscal 1995
-----------------------------------
The $583.4 million of net sales for the frozen foods segment in fiscal 1996
represented a decrease of 4% principally due to a decline in Swanson U.S.
attributable to the timing of marketing programs at the end of fiscal 1995. A
double-digit gain in Swanson Canada was offset by a 6% volume decline in
Freshbake in the U.K. which was principally due to reduced overall demand for
beef products in Europe. This segment's earnings before interest and taxes in
fiscal 1996 decreased 66% to $15.9 million due to restructuring charges.
Excluding the restructuring charges, earnings before interest and taxes
increased 5%. This was driven by Swanson Canada net sales increases and higher
relative earnings at Freshbake in the U.K. stemming from improved operating
efficiencies. Swanson U.S. was flat as cost improvements offset the sales
decline.
The net sales of the grocery products segment in fiscal 1996 were $561.2
million, an increase of 3.5% driven by a 9% increase in net sales of Vlasic
pickles resulting from the successful introduction of Sandwich Stackers. This
segment's earnings before interest and taxes increased 39% in fiscal 1996.
Excluding the fiscal 1996 restructuring charges, earnings before interest and
taxes increased 49% driven by higher net sales, improved manufacturing costs
and controlled marketing expenditures for Vlasic pickles. SonA weakened during
fiscal 1996 while Open Pit barbecue sauce and Argentine retail improved.
The net sales of the agricultural products segment increased 1.6% in fiscal
1996 to $369.1 million due principally to double-digit gains in contract
manufacturing for Campbell Foodservice. Fresh mushroom sales weakened in fiscal
1996 but Argentine beef sales increased slightly as higher sales to Campbell
offset export weaknesses related to overall reduced demand for beef products in
Europe. This segment's earnings before interest and taxes declined 16%
principally due to higher mushroom costs.
32
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Vlasic's principal capital requirements are to fund working capital needs and
capital expenditures and to meet required debt payments. Vlasic anticipates
that its operating cash flow, together with available borrowings under the New
Credit Facility, will be sufficient to meet its working capital requirements,
capital expenditure requirements and interest service requirements on its debt
obligations. Assuming that the transactions contemplated by the Spin-Off had
been consummated on February 1, 1998, Vlasic's pro forma debt and shareowners'
equity at February 1, 1998 would have been approximately $572.6 million
(consisting of $502 million of long-term debt, the $58.7 million payable to
Campbell from subsidiaries of Vlasic and $11.9 million of notes payable) and
$138.7 million, respectively. Vlasic's pro forma interest expense would have
been approximately $40.7 million in fiscal 1997 had the Spin-Off been
consummated as of the beginning of fiscal 1997. See "Pro Forma Condensed
Combined Financial Information."
Cash Flows
Net cash provided by operating activities was $178.4 million in fiscal 1997,
$152.2 million in fiscal 1996, and $111.2 million in fiscal 1995--a total cash
flow of $441.8 million over the three-year period. Cash flows from operations
are principally and consistently driven by net earnings before depreciation and
amortization and restructuring charges. However, strong working capital
management, particularly in the last two years, has added over $52 million to
cash flows from operations.
Vlasic's cash flows from operations provided adequate funding for capital
expenditures in all years and provided for substantial reductions in Campbell's
net investment in Vlasic of $104 million in fiscal 1997 and $94.6 million in
fiscal 1996. In fiscal 1995, the acquisition of Stratford-upon-Avon was funded
principally from cash flows from operations in excess of capital expenditures
and an increase in Campbell's net investment in Vlasic of $8.6 million.
Cash flows used in investing activities are principally for capital
expenditures, which were $79.3 million in fiscal 1997, $59.1 million in fiscal
1996 and $51 million in fiscal 1995. Capital expenditures have been somewhat
higher than normal ($50 million) in fiscal 1996 and fiscal 1997 due to
restructuring programs in the Swanson U.S. and Vlasic pickle businesses. Older,
inefficient plants were closed and new capacity added to newer, more modern
facilities as discussed under "--Restructuring Program" above. In addition to
capital expenditures, fiscal 1995 cash flows used in investing activities
included the $60 million acquisition of the SonA pickle, canned beans and
vegetables business in the U.K.
Financial Position
Vlasic's financial position has been relatively stable over the years.
Accounts receivable and inventories declined and accounts payable increased as
working capital levels were managed aggressively. Accrued liabilities declined
due principally to charges against the restructuring reserve.
Fixed assets reflect the excess of capital expenditures over depreciation and
asset sales.
MARKET RISK SENSITIVITY; DERIVATIVE FINANCIAL INSTRUMENTS
Vlasic does not enter into derivative financial instruments for trading
purposes, nor is it party to any leveraged derivative instrument. The use of
derivative financial instruments is monitored through regular communication
with senior management and the utilization of written guidelines.
Vlasic's use of derivative financial instruments is currently limited to
forward foreign exchange contracts, which are used to hedge firm sale and
purchase commitments denominated in foreign currencies. At August 3,
33
<PAGE>
1997 and July 28, 1996, open contracts and related deferred gains or losses
were not significant. All open contracts mature in fiscal 1998.
INFLATION
Inflation during recent years has not had a significant effect on Vlasic.
RECENT DEVELOPMENTS
In February 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 128 (SFAS 128)--"Earnings per
Share." The standard requires dual presentation of "basic" and "diluted"
earnings per share. Vlasic will adopt SFAS 128 in its first quarterly earnings
statement issued after the effective date of the Spin-Off. The earnings per
share information included in the Pro Forma Condensed Combined Statements of
Earnings on pages 23 and 24 have been calculated in accordance with SFAS 128.
In June 1997, the FASB issued Statement of Financial Accounting Standards No.
130 (SFAS 130)--"Reporting Comprehensive Income." This standard requires the
reporting and display of comprehensive income in a full set of general purpose
financial statements. The provisions of the statement are effective for fiscal
years beginning after December 15, 1997.
34
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
FOR THE SECOND QUARTERS AND SIX MONTH PERIODS ENDED
FEBRUARY 1, 1998 AND JANUARY 26, 1997
The following discussion is based upon and should be read in conjunction with
the Unaudited Interim Combined Financial Statements, including the notes
thereto, included elsewhere in this document.
GENERAL
See the "General" section of the Management's Discussion and Analysis of the
audited annual financial statements on pages 28 and 29 for a description of
businesses included, impact of assumption of debt by Vlasic under the New
Credit Facility and other arrangements between Campbell and Vlasic relating to
the Spin-Off.
The unaudited Interim Combined Financial Statements may not necessarily be
indicative of the results of operations, financial position and cash flows of
Vlasic in the future or had it operated as a separate, independent company
during the periods presented. The unaudited Interim Combined Financial
Statements do not reflect any changes that may occur in the financing and
operations of Vlasic as a result of the Spin-Off.
RESULTS OF OPERATIONS
Overview
Net sales in the second quarter of fiscal 1998 were $375.3 million, a
decrease of 2.5% from the second quarter of fiscal 1997. Comparability in net
earnings with the second quarter last year was impacted by the adoption of a
one-time accounting change. On November 20, 1997, the Emerging Issues Task
Force (EITF) released Issue 97-13 "Accounting for Costs Incurred in Connection
with a Consulting Contract that Combines Business Process Reengineering and
Information Technology Transformation." The impact of this required accounting
change was a charge of $0.6 million after-tax. Excluding the accounting change,
earnings before cumulative effect of accounting change in the second quarter
were $18.8 million, a decrease of 4.4% from last year. Including the accounting
change, net earnings in the second quarter were $18.2 million, a decrease of
7.5% from last year.
Net sales for the first six months of fiscal 1998 were $723.2 million, a
decrease of 3.6% compared to the first six months of fiscal 1997. Net earnings
for the first six months of fiscal 1998 were $34.3 million, an increase of
16.2% compared to the first six months of fiscal 1997, the latter of which was
impacted by a first quarter fiscal 1997 restructuring charge. Excluding the
accounting change discussed above from fiscal 1998 and the after-tax
restructuring charge of $7.8 million from fiscal 1997, net earnings declined
6.3% in the first six months of fiscal 1998.
Assuming that the transactions contemplated by the Spin-Off had been
consummated as of the beginning of fiscal 1997, Vlasic's pro forma interest
expense would have been approximately $20.5 million and its pro forma net
earnings before cumulative effect of accounting change would have been
approximately $21.2 million in the first six months of fiscal 1998. See "Pro
Forma Condensed Combined Financial Information."
35
<PAGE>
Combined Statement of Earnings
The following table sets forth certain items in Vlasic's combined statements
of earnings as percentages of its net sales for the fiscal quarters indicated:
<TABLE>
<CAPTION>
SECOND QUARTER SIX MONTHS
----------------------- -----------------------
FISCAL 1998 FISCAL 1997 FISCAL 1998 FISCAL 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales..................... 100.0% 100.0% 100.0% 100.0%
Cost of products sold......... 71.4% 70.8% 71.8% 70.8%
Marketing and selling ex-
penses....................... 15.5% 16.8% 15.9% 17.0%
Administrative expenses....... 3.7% 3.4% 4.0% 3.6%
Research and development ex-
penses....................... 0.5% 0.5% 0.5% 0.5%
Other (income) expense........ 0.4% 0.7% 0.0% 0.5%
Restructuring charge.......... 0.0% 0.0% 0.0% 1.8%
------ ------ ------ ------
Total costs and expenses.... 91.5% 92.2% 92.2% 94.2%
Earnings before interest and
taxes........................ 8.5% 7.8% 7.8% 5.8%
</TABLE>
Second Quarters
---------------
Net sales of $375.3 million in the second quarter of fiscal 1998 decreased
2.5% from the second quarter of fiscal 1997. Changes in selling prices
increased net sales 1.0% and changes in foreign currency rates reduced net
sales by 1.2%. Volume declines in Vlasic pickles, the German foods distribution
business and the edible oils business in Argentina resulted in a 2.3% decline
in net sales. Although the German foods distribution business continued to
experience a period-to-period decline in net sales as a result of the fiscal
1997 systems difficulties, the rate of the decline is moderating.
Cost of products sold as a percentage of net sales increased by 0.6 points to
71.4% in the second quarter of fiscal 1998, up from 70.8% in the second quarter
of fiscal 1997, as the highest cattle costs in over a decade in Argentina
offset improvements in other manufacturing operations, principally Swanson
frozen foods and Vlasic pickles which benefited from the fiscal 1996 and fiscal
1997 restructuring programs.
Marketing and selling expenses as a percentage of net sales declined in the
second quarter of fiscal 1998 to 15.5% from 16.8% in the second quarter of
fiscal 1997, principally due to lower couponing and advertising in Swanson U.S.
and Vlasic pickles.
Administrative expenses, as a percentage of net sales, increased 0.3 points
in the second quarter of fiscal 1998 to 3.7% from 3.4% in the second quarter of
fiscal 1997, as a result of increased service fees from Campbell.
Research and development expenses, as a percentage of net sales, were
unchanged in the second quarter of fiscal 1998 compared to the second quarter
of fiscal 1997.
Other expense in the second quarter of fiscal 1998 was $1.4 million compared
to $2.3 million in the second quarter of fiscal 1997. The decline is
attributable to reduced expense associated with Campbell's long-term incentive
plan.
Earnings before interest and taxes as a percentage of net sales were 8.5% in
the second quarter of fiscal 1998 compared to 7.8% in the second quarter of
fiscal 1997. The increased margin was driven by reduced marketing expenses and
improved manufacturing efficiencies in the U.S., offset by the higher cattle
costs in Argentina.
The effective income tax rate was 40.7% in the second quarter of fiscal 1998
compared to 33.0% in the second quarter of fiscal 1997. The higher tax rate in
fiscal 1998 is driven by lower earnings in Argentina where the tax rate is
lower due to export rebates which are excludable from taxable income.
36
<PAGE>
Six Months
----------
Net sales of $723.2 million in the first six months of fiscal 1998 decreased
3.6% from the first six months of fiscal 1997. Changes in selling prices
increased net sales 0.5% and changes in foreign currency rates reduced net
sales by 1.0%. Volume declines in Vlasic pickles, the German foods distribution
business and the edible oils business in Argentina resulted in a 3.1% decline
in net sales. Although the German foods distribution business continued to
experience a period-to-period decline in net sales as a result of the fiscal
1997 systems difficulties, the rate of the decline is moderating.
Cost of products sold as a percentage of net sales increased by 1.0 points to
71.8% in the first six months of fiscal 1998, up from 70.8% in the first six
months of fiscal 1997, as the highest cattle costs in over a decade in
Argentina offset improvements in other manufacturing operations, principally
Swanson frozen foods and Vlasic pickles which benefited from the fiscal 1996
and fiscal 1997 restructuring programs.
Marketing and selling expenses as a percentage of net sales declined in the
first six months of fiscal 1998 to 15.9% from 17.0% in the first six months of
fiscal 1997, principally due to lower couponing and advertising in Swanson U.S.
and Vlasic pickles.
Administrative expenses, as a percentage of net sales, increased 0.4 points
in the first six months of fiscal 1998 to 4.0% from 3.6% in the first six
months of fiscal 1997, as a result of increased service fees from Campbell.
Research and development expenses, as a percentage of net sales, were
unchanged in the first six months of fiscal 1998 compared to the first six
months of fiscal 1997.
Other (income) expense in the first six months of fiscal 1998 was $0.1
million income compared to $4.0 million expense in the first six months of
fiscal 1997. The variance is attributable to a gain on a fire insurance
settlement in the first quarter of fiscal 1998 as well as reduced expense
associated with Campbell's long-term incentive plan.
Earnings before interest and taxes as a percentage of net sales were 7.8% in
the first six months of fiscal 1998 compared to 5.8% in the first six months of
fiscal 1997. Excluding the first quarter fiscal 1997 restructuring charge,
earnings before interest and taxes would have been 7.4% of net sales. The
increased margin was driven by reduced marketing expenses and improved
manufacturing efficiencies in the U.S., offset by the higher cattle costs in
Argentina.
The effective income tax rate was 37.4% in the first six months of fiscal
1998 compared to 31.3% in the first six months of fiscal 1997. Excluding 1997's
restructuring charge, the tax rate would have been 33.0%. The higher tax rate
in fiscal 1998 is driven by lower earnings in Argentina where the tax rate is
lower due to export rebates which are excludable from taxable income.
Restructuring Program
A special charge of $12.6 million ($7.8 million after tax) was recorded in
the first quarter of fiscal 1997 to cover the costs of a restructuring program.
The restructuring program was designed to improve operational efficiency by
closing various U.S. pickle facilities and reducing approximately 50
administrative and operational positions from the worldwide workforce. The
restructuring charge included approximately $4.6 million in cash charges,
primarily related to severance and employee benefit costs. The balance of the
restructuring charge, amounting to $8.0 million, relates to non-cash charges
for losses on the disposition of plant assets. The program is now substantially
completed.
37
<PAGE>
The fiscal 1997 restructuring program is expected to result in approximately
$10 million in aggregate savings in fiscal 1997 and fiscal 1998 from reductions
in employee salaries and benefits, plant overhead and depreciation. See Note 6
to the Unaudited Interim Combined Financial Statements for the components of
the restructuring liability and the related activity.
Results by Segment
The following table sets forth certain segment information for the fiscal
periods indicated:
<TABLE>
<CAPTION>
SECOND QUARTER SIX MONTHS
----------------------- -----------------------
FISCAL 1998 FISCAL 1997 FISCAL 1998 FISCAL 1997
----------- ----------- ----------- -----------
(000 OMITTED)
<S> <C> <C> <C> <C>
NET SALES
Frozen Foods................ $161,939 $160,508 $319,593 $319,189
Grocery Products............ 122,088 137,698 224,283 250,134
Agricultural Products....... 93,811 88,917 185,480 186,146
Eliminations................ (2,521) (2,263) (6,187) (5,293)
-------- -------- -------- --------
Total..................... $375,317 $384,860 $723,169 $750,176
======== ======== ======== ========
EARNINGS BEFORE INTEREST AND
TAXES
Frozen Foods................ $ 19,336 $ 14,847 $ 38,138 $ 27,130
Grocery Products............ 14,101 13,324 19,087 12,122
Agricultural Products....... (1,430) 1,800 (690) 4,281
-------- -------- -------- --------
Total..................... $ 32,007 $ 29,971 $ 56,535 $ 43,533
======== ======== ======== ========
</TABLE>
Second Quarters
---------------
The net sales of the frozen foods segment increased 0.9% in the second
quarter of fiscal 1998 compared to the second quarter of fiscal 1997. Swanson
U.S. sales increased 3.4% due to the timing of marketing programs. Swanson
Canada was up slightly, excluding the impact of foreign exchange rates.
Freshbake declined due to lower donut and private label sales. This segment's
earnings before interest and taxes increased 30% in the second quarter,
principally due to higher sales, to improved manufacturing costs and reduced
marketing expense in Swanson U.S. and to improved manufacturing costs at
Freshbake.
The net sales of the grocery products segment declined 11.3% in the second
quarter of fiscal 1998 compared to the second quarter of fiscal 1997, due to
lower volume in the German foods distribution business, softness in the U.S.
pickle category and lower sales of edible oils in Argentina. Although the
German foods distribution business continued to experience a period-to-period
decline in net sales as a result of the fiscal 1997 systems difficulties, the
rate of the decline is moderating. This segment's earnings before interest and
taxes increased 5.8% in the second quarter driven by improved manufacturing
costs and reduced marketing in Vlasic pickles.
The net sales of the agricultural products segment increased 5.5% in the
second quarter of fiscal 1998 compared to the second quarter of fiscal 1997,
due to higher beef exports from Argentina and contract manufacturing sales to
Campbell Foodservice. This segment incurred a loss of $1.4 million in the
second quarter of fiscal 1998 compared to earnings of $1.8 million in the
second quarter of fiscal 1997 due to the highest cattle costs in over a decade
in Argentina.
Six Months
----------
The net sales of the frozen foods segment increased 0.1% in the first six
months of fiscal 1998 compared to the first six months of fiscal 1997. Swanson
U.S. increased 1.4% as second quarter marketing programs
38
<PAGE>
offset the decline in the first quarter. Swanson Canada had a double digit
increase driven by a strong first quarter. Freshbake declined due to lower
donut and private label sales. This segment's earnings before interest and
taxes increased 41% in the first six months. Excluding fiscal 1997's
restructuring charge, the increase was 28%, driven by improved manufacturing
costs and reduced marketing in Swanson U.S., increased Swanson Canada sales,
and improved manufacturing costs at Freshbake.
The net sales of the grocery products segment decreased 10% in the first six
months of fiscal 1998 compared to the first six months of fiscal 1997, due to
lower volume in the German foods distribution business, softness in the U.S.
pickle category and lower sales of edible oils in Argentina. Although the
German foods distribution business continued to experience a period-to-period
decline in net sales as a result of the fiscal 1997 systems difficulties, the
rate of the decline is moderating. This segment's earnings before interest and
taxes increased 57% in the first six months of fiscal 1998. Excluding fiscal
1997's restructuring charge, the earnings before interest and taxes declined
13.5%. The majority of the decline was in the German foods distribution
business and in Argentina due to the higher cattle prices. Vlasic pickle
earnings improved due to improved manufacturing costs and reduced marketing.
The net sales of the agricultural products segment declined 0.4% in the first
six months of fiscal 1998 compared to the first six months of fiscal 1997, as
declines in contract manufacturing sales to Campbell Foodservice in the first
quarter and lower fresh mushroom sales were not fully offset by higher sales of
beef exported from Argentina. This segment incurred a loss of $0.7 million in
the first six months of fiscal 1998 compared to earnings before interest and
taxes of $4.3 million in the first six months of fiscal 1997 due to the higher
cattle prices in Argentina. Mushroom costs improved in the six month period.
LIQUIDITY AND CAPITAL RESOURCES
Vlasic's principal capital requirements are to fund working capital needs and
capital expenditures and to meet required debt payments. Vlasic anticipates
that its operating cash flow, together with available borrowings under the New
Credit Facility, will be sufficient to meet its working capital requirements,
capital expenditure requirements and interest service requirements on its debt
obligations. Assuming that the transactions contemplated by the Spin-Off had
been consummated on February 1, 1998, Vlasic's pro forma debt and shareowners'
equity at February 1, 1998 would have been approximately $572.6 million
(consisting of $502.0 million of long-term debt, the $58.7 million payable to
Campbell from subsidiaries of Vlasic and $11.9 million of notes payable) and
$138.7 million, respectively. Vlasic's pro forma interest expense would have
been approximately $20.5 million in the first six months of fiscal 1998 had the
Spin-Off been consummated as of the beginning of fiscal 1998. See "Pro Forma
Condensed Combined Financial Information."
Cash Flows
Net cash used in operating activities was $46.8 million in the first six
months of fiscal 1998 compared to net cash provided of $0.2 million in the
first six months of fiscal 1997. The variance in cash flow from operations was
driven by changes in working capital. The increase in working capital was
higher in the first six months of fiscal 1998 compared to the first six months
of fiscal 1997 due to a larger increase in receivables resulting from the
timing of sales and a larger decrease in accounts payable.
Cash used in investing activities principally results from capital
expenditures. Capital expenditures were $23.3 million in the first six months
of fiscal 1998 compared to $35.4 million in the first six months of fiscal
1997. Capital expenditures were higher in the prior year due to new capacity
added to newer, modern facilities related to the fiscal 1996 and fiscal 1997
restructuring programs. Capital expenditures for the fiscal year 1998 are
expected to be $45 million compared to $79 million in fiscal 1997.
Cash provided by financing activities was principally funded from Campbell
and was used primarily for seasonal working capital requirements.
39
<PAGE>
Financial Position
Vlasic's financial position has been relatively stable over the years.
However, seasonality drives working capital increases in the first six months.
The increase in the first six months of fiscal 1998 was higher than that of the
first six months of fiscal 1997 due to higher receivables resulting from the
timing of sales and lower accounts payable, as well as lower accrued
liabilities due to the completion of the fiscal 1996 and fiscal 1997
restructuring programs.
YEAR 2000
The year 2000 issue results from computer systems which process dates based
on two digits for the year of a transaction rather than a full four digits.
Accordingly, these systems are unable to properly process transactions with
dates in the year 2000 and beyond. Vlasic has developed and is currently
executing an implementation plan to address this issue by replacing or
modifying its key financial information and operational computer systems.
Vlasic believes that all systems necessary to manage the business effectively
will be implemented, modified or upgraded before the year 2000 dating issue
impacts these systems. The anticipated costs associated with modifying current
systems to be year 2000 compliant will be expensed as incurred and are not
expected to be significant to Vlasic's financial results. In addition, Vlasic
has assessed its relationships with customers and vendors and does not
anticipate any significant problems to occur as a result of the year 2000
issue.
RECENT DEVELOPMENTS
In the second quarter of fiscal 1998, Vlasic adopted the provisions of
Emerging Issues Task Force Bulletin 97-13 (EITF 97-13)--"Accounting for Costs
Incurred in Connection with a Consulting Contract That Combines Business
Process Reengineering and Information Technology Transformation." The
transition provisions of EITF 97-13 require that companies that previously
capitalized business process reengineering costs incurred in connection with an
overall information technology project identify remaining unamortized costs.
These unamortized costs were charged off to the statement of earnings as a
cumulative effect of a change in accounting principle in the second quarter of
fiscal 1998. The cumulative effect of this change in accounting principle is
$0.6 million, net of an income tax benefit of approximately $0.4 million. See
Note 2 to the Unaudited Interim Combined Financial Statements.
Vlasic is currently reviewing opportunities to streamline certain operational
and administrative staff functions which, if approved, would result in special
charges in the range of approximately $25 to $30 million before taxes.
40
<PAGE>
FINANCING
Prior to the Spin-Off, the Vlasic Businesses will continue to be financed
through Campbell. In connection with the Spin-Off, a portion of Campbell's
outstanding indebtedness will effectively be transferred to Vlasic as of the
Distribution Date in the following manner:
(i) Campbell will borrow approximately $500 million under a new five-year
$750 million unsecured revolving credit facility. The New Credit Facility
will provide that, upon effectiveness of the Spin-Off, the repayment
obligations of Campbell thereunder will be assumed by Vlasic with the
effect that Campbell will have no further such obligations thereunder;
(ii) The amount borrowed by Campbell will be used to repay outstanding
third-party indebtedness of Campbell;
(iii) Vlasic will indemnify Campbell against all liabilities under the
New Credit Facility, including the obligation to repay the amounts
initially borrowed by Campbell;
(iv) All intercompany receivables, payables, loans or advances between
Campbell and Vlasic will be deemed contributed to capital and canceled
without the payment of any cash by either Campbell or Vlasic to the other,
except for certain intercompany payables representing advances from
Campbell to subsidiaries of Vlasic which will remain outstanding
obligations of such subsidiaries of Vlasic to Campbell (approximately $58.7
million);
(v) Vlasic will have the sole right to make further borrowings under the
New Credit Facility; and
(vi) Campbell will not be obligated with respect to, and will have no
right to make, any such further borrowings under the New Credit Facility.
The New Credit Facility has been filed as an exhibit to the Exchange Act
registration statement of which this Information Statement is a part (the
"Registration Statement"). The following summary is qualified in its entirety
by reference to the New Credit Facility as filed.
The interest rate applicable to borrowings under the New Credit Facility will
be, at Vlasic's option, indexed to (i) the Base Rate (as defined in the New
Credit Facility), or (ii) the adjusted London Interbank Offering Rate, plus an
appropriate spread over such rate during the period of the New Credit Facility.
The New Credit Facility also provides for a facility fee on the $750 million
commitment. Such spread and fee may change should Vlasic's debt ratings change.
There is also an annual administration fee.
Vlasic may enter into interest rate swap agreements with a selected number of
creditworthy financial institutions in order to reduce its interest rate
exposure. Vlasic would likely use interest rate swaps to fix the interest rate
on a portion of the amounts outstanding under the New Credit Facility.
The New Credit Facility contains certain restrictive covenants applicable to
Vlasic that will limit its ability or the ability of its subsidiaries to create
or allow to exist certain liens. The New Credit Facility also contains
restrictive covenants that will restrict Vlasic's ability to merge or dispose
of all or a substantial portion of its assets. The covenants of the New Credit
Facility also require Vlasic to maintain a minimum fixed charge coverage ratio
of 3.00 : 1.00 and a maximum leverage ratio declining from 4.50 : 1.00 in the
first three quarters of fiscal 1998 to 3.75 : 1.00 in fiscal 2001.
DIVIDEND POLICY
Although Campbell has historically paid dividends to its shareowners on a
regular basis, Vlasic will not be adopting such a policy. Vlasic currently
anticipates that no cash dividends will be paid on the Vlasic Common Stock in
the foreseeable future in order to conserve cash for the repayment of debt,
future acquisitions and capital expenditures. We expect that Vlasic's Board
will periodically re-evaluate this dividend policy taking into account
operating results, capital needs and other factors.
41
<PAGE>
MANAGEMENT
DIRECTORS
It is contemplated that the Vlasic Board of Directors will consist of seven
directors. The three initial directors named below will be elected by Campbell,
as sole shareowner of Vlasic, prior to the Distribution Date. The remaining
four directors will be either elected by the Vlasic Board of Directors
following the Spin-Off pursuant to the provisions of the Vlasic Bylaws
governing the filling of vacancies or nominated for election at Vlasic's first
annual meeting of shareowners.
Donald J. Keller, Chairman
Shaun F. O'Malley
Robert F. Bernstock
Biographies of those members of the Vlasic Board of Directors who will be
elected prior to the Distribution Date follow.
DONALD J. KELLER, age 65, will be elected Chairman. Mr. Keller is currently
the Chairman of B. Manischewitz Company, the former Chairman of Prestone
Products Corporation, a director of Dan River Inc., Colorado Prime Corp. and
Air Express International and a former director of Sysco Corp., General Foods
Corp. and WestPoint Pepperell Inc. Immediately prior to his retirement in 1986
after 23 years, Mr. Keller was Executive Vice President of General Foods
Corporation in addition to being a director.
SHAUN F. O'MALLEY, age 62, will be elected a Director. Mr. O'Malley is
Chairman Emeritus of Price Waterhouse LLP and serves on a number of corporate,
civic, educational and cultural boards, including The Wharton School at the
University of Pennsylvania, Horace Mann Educators Corporation, Coty, Inc., the
Curtis Institute of Music and the World Affairs Council of Philadelphia. During
his tenure at Price Waterhouse, Mr. O'Malley was named U.S. Senior Partner
(1988) and the World Firm Co-CEO (1990). In 1992, he was appointed Joint
Chairman of Price Waterhouse and became Chairman in 1993. Mr. O'Malley retired
in 1995.
For biographical information concerning ROBERT F. BERNSTOCK, see "--Executive
Officers and Senior Operating Management."
The role of the Board is to provide independent corporate governance and
company oversight. Areas of emphasis include
. Selection, motivation and evaluation of the Chief Executive Officer;
. Corporate and Board organization, staffing and succession planning;
. Compensation programs and personnel evaluation;
. Long-range goals, strategies and plans;
. Business reviews, financial performance and reporting;
. Significant investment or disinvestment; and
. Optimization of shareowner wealth.
COMMITTEES OF THE VLASIC BOARD
Vlasic will have an Audit Committee, a Compensation and Organization
Committee and a Governance Committee of the Board of Directors. The membership
of each of such committees will be determined following the Spin-Off.
42
<PAGE>
Audit Committee
The Audit Committee will
. Recommend the appointment of Vlasic's independent accountants;
. Review the scope and results of the audit plans of the internal auditors
and the independent accountants;
. Oversee the scope and adequacy of Vlasic's internal accounting control
and record-keeping systems;
. Review compliance with Vlasic's Conflict of Interest Program;
. Review the objectivity, effectiveness and resources of the internal audit
function, which will report directly to the Committee;
. Confer independently with the internal auditors and the independent
accountants;
. Review non-audit services to be performed by the independent accountants;
and
. Determine the appropriateness of fees for audit and non-audit services
performed by the independent accountants.
Compensation and Organization Committee
The Compensation and Organization Committee will
. Be responsible for the Chief Executive Officer evaluation process;
. Review and recommend to the Board salary and incentive compensation,
including bonus and stock options, for the Chief Executive Officer;
. Review and approve the salaries and incentive compensation for all
corporate officers and senior executives whose annual salary is $150,000
or more;
. Review and approve the short-term and long-term incentive compensation
programs, including the performance goals thereunder;
. Review the salary structure and apportionment of compensation among
salary and short-term and long-term incentive compensation;
. Review and approve the incentive compensation to be allocated to
employees; and
. Review, prior to becoming effective, any major organization change that
the Chief Executive Officer intends to implement.
Governance Committee
The Governance Committee will review and make recommendations to the Board
regarding
. Organization and structure of the Board;
. Qualifications for director candidates;
. Candidates for election to the Board;
. Candidates for the position of Chairperson of the Board;
. Chairpersons and members for appointment to Board Committees;
. The role and effectiveness of the Board and each Committee in Vlasic's
corporate governance process;
. Evaluations of the Board and each of the directors; and
. Remuneration for non-employee directors.
43
<PAGE>
DIRECTORS' COMPENSATION
Donald J. Keller will receive a retainer of $100,000 and a grant of options
valued at $150,000 for his first year of service as Chairman, and it is
presently contemplated that Mr. Keller will receive similar compensation for
subsequent years of service. Mr. Keller will also receive a special grant of
options valued at approximately $80,000 to compensate him for the loss of
certain options to acquire Sysco Corp. stock, which he will forfeit as a result
of becoming Chairman of Vlasic. Other non-employee directors will receive an
annual grant of options valued at $40,000, a fee of $2,000 for each regular
meeting of the Board of Directors attended and a fee of $1,500 for each
committee meeting attended. Employee directors of Vlasic will not receive
additional compensation for serving on the Board of Directors. Directors will
be reimbursed for actual travel costs.
EXECUTIVE OFFICERS AND SENIOR OPERATING MANAGEMENT
The following persons are expected to serve as the executive officers of
Vlasic as of the Distribution Date: Robert F. Bernstock, Norma B. Carter, James
M. Dorsch, Carlos Oliva Funes, Murray S. Kessler, William R. Lewis, Mark I.
McCallum and Rolf B. Richter.
Biographies of the executive officers and the other members of senior
operating management of Vlasic as of the Distribution Date follow.
ROBERT F. BERNSTOCK, age 47, has been elected President and Chief Executive
Officer. Mr. Bernstock was most recently an Executive Vice President of
Campbell. He joined Campbell in March 1985 and was elected Corporate Vice
President and President for U.S. Soup (1990), then was promoted to President of
Campbell Soup Company, Ltd. in Canada (1992), President of International Soup
(1993), President of International Grocery (1994) and President of U.S. Grocery
(1996). Prior to joining Campbell, Mr. Bernstock was Vice President of
Marketing for Multimate International Inc., one of the largest computer
software companies in the nation, and Vice President of Marketing for United
Satellite Communications Inc., overseeing the launch of the first direct
broadcast satellite service. From 1974 to 1983 he held several positions with
General Foods' Main Meal Division, concluding as Group Product Manager. Mr.
Bernstock graduated with Honors from Hamilton College (1972) and received an
MBA from Harvard University (1974).
NORMA B. CARTER, age 50, will be elected Vice President, General Counsel and
Corporate Secretary. Ms. Carter has served in the Legal Department of Campbell
since January 1981, most recently as Vice President-Legal. As a member of
Campbell's legal department she has had full legal generalist responsibilities,
while specializing in antitrust and global strategic alliances. Ms. Carter
joined Campbell after six years as a trial lawyer for the Antitrust Division of
the U.S. Department of Justice. She received her undergraduate degree from
William Smith College and her law degree from Rutgers University.
JAMES M. DORSCH, age 52, will be elected Vice President and General Manager--
Vlasic. Mr. Dorsch currently serves as the General Manager for the Vlasic
division of Campbell. Prior to that, Mr. Dorsch served as the Vice President of
Condiments for the Frozen and Specialty division of Campbell. He joined
Campbell in October 1977 and was promoted through director positions in
Marketing, including major brands such as Prego and V8, and marketing
responsibility for Europe and Asia. Mr. Dorsch received his undergraduate
degree from Northwestern University and his MBA from the University of
Wisconsin.
CARLOS OLIVA FUNES, age 55, will be elected Vice President and will continue
to serve as President of Swift-Armour in Argentina. Mr. Oliva Funes was named
President of Swift-Armour in 1983 and in 1989 was appointed President of
Campbell South America, also holding the additional title of Corporate Vice
President of Campbell. Mr. Oliva Funes served as Chairman for the Argentine
Meat Packers Association from 1992-
44
<PAGE>
1995, and is now the Vice Chairman. He is a member of the Argentine Chamber of
Commerce and the Argentine Management Council. Before joining Swift-Armour in
1977 as Executive Vice President, Mr. Oliva Funes was Vice President of the
Huancayo Group from 1971 to 1977. Mr. Oliva Funes received his undergraduate
degree from the Catholic University of Cordoba Province and completed one year
of postgraduate education in Business Administration at the University of
California.
MURRAY S. KESSLER, age 38, will be elected Vice President and General
Manager--Swanson. Mr. Kessler currently serves as General Manager for the
Swanson division of Campbell. Prior to that, he served as the Vice President of
Sales and Marketing for the Pace Foods division of Campbell. He joined Campbell
in December 1986 and was promoted through various positions, including Vice
President of Sauces and Vice President--National Sales Manager for the Meal
Enhancement Group of Campbell. Prior to that, Mr. Kessler spent three years in
brand management with The Clorox Company. He received his undergraduate degree
from Villanova University and earned his MBA from New York University.
WILLIAM R. LEWIS, age 56, will be elected Chief Financial Officer. Most
recently, Mr. Lewis served as the Chief Financial Officer of 3D Ultrasound,
Inc., Air & Water Technologies Corporation, and other similar assignments in
association with Allen & Company. Prior to that, Mr. Lewis was Chief Financial
Officer of Simplicity Holdings, Inc. and the Culbro Corporation. He has also
served as Vice President and Treasurer for Columbia Pictures, Inc. and in
various financial positions with PepsiCo Inc. Prior to January 22, 1993, Mr.
Lewis was Chief Financial Officer of Nutri/System, Inc., a privately-held
company which filed a petition under Chapter 11 of the United States Bankruptcy
Code in May 1993. Mr. Lewis earned his undergraduate degree at Dartmouth
College and his MBA in Finance from Columbia University.
MARK I. MCCALLUM, age 43, will be elected Vice President and General
Manager--Grocery. Mr. McCallum currently serves Campbell as General Manager for
the same grocery products businesses for which he will be responsible at
Vlasic. Prior to that, he served as Vice President and General Manager for the
Sanwa, Campbell Fresh and the Prepared Foods divisions of Campbell. He joined
Campbell in January 1993 as the General Manager for Campbell Australia and
progressed to become the Managing Director for Campbell Asia in Hong Kong. For
fifteen years prior, he worked in production, sales and marketing positions in
his native Australia with Cadbury Schweppes and General Foods. Mr. McCallum
earned his undergraduate degree at Western Sydney University in Australia.
ROLF B. RICHTER, age 44, will be elected Vice President and General Manager--
Europe. Mr. Richter currently serves Campbell as the Managing Director for the
same set of businesses in Europe for which he will be responsible at Vlasic.
Prior to that, he served in various positions with Campbell including Managing
Director of the Frozen Division in the United Kingdom; General Manager for the
Ramen Division; Vice President and General Manager at Campbell Canada for
Frozen Foods and Foodservice; and General Manager--Grocery Group. Mr. Richter
joined Campbell in 1985. He earned his undergraduate degree from the Ryerson
Polytechnical Institute in Canada.
JOSEPH ADLER, age 43, will be elected Vice President--Controller. He
currently serves as the Controller for the Specialty Foods division of
Campbell. Prior to that, he was Vice President--Finance and Controller for the
Meal Enhancement Group of Campbell's U.S. Grocery division, and served as the
interim controller of the U.S. Grocery division. Previous to that, Mr. Adler
was Campbell's Assistant Corporate Controller--Business Planning and Assistant
Corporate Controller--Financial Reporting. Before joining Campbell in February
1982, Mr. Adler was responsible for financial reporting for SPS Technologies,
Inc. and was senior auditor with Deloitte & Touche. A Certified Public
Accountant, Mr. Adler received both a Bachelor of Science and an MBA from Rider
University.
45
<PAGE>
LYNNE A. ALVAREZ, age 41, will be elected Vice President--Marketing Services.
Currently, Ms. Alvarez serves as Vice President of Customer Marketing, Planning
and Promotion with Campbell which she joined in May 1996. Previous to that, Ms.
Alvarez served six years as the principal in the management consulting firm
L.A. Associates, following five years at American Consulting Corporation where
she was Executive Vice President and a member of the Operating Committee. She
has an undergraduate degree from Yale University and an MBA from Harvard
University.
MITCHELL GOLDSTEIN, age 37, will be elected Vice President--Strategic
Planning and Corporate Development. Currently, Mr. Goldstein serves as the head
of Strategic Planning for the Specialty Foods division of Campbell. Prior to
that, Mr. Goldstein served as the Director of Strategic Planning for the U.S.
Grocery Division of Campbell. He joined Campbell in March 1995 as Director of
Strategic Planning at the corporate level, where he helped develop the
company's strategic growth plan. Prior to that, Mr. Goldstein worked with
Mercer Management Consulting for eleven years, most recently as a Vice
President and Partner. He earned his undergraduate degree from The Wharton
School of the University of Pennsylvania and his MBA from Harvard University.
MAURICE J. LANE, age 41, will be elected Vice President--Sales. Currently,
Mr. Lane serves as the Vice President of National Sales for the Frozen and
Specialty Foods Division of Campbell. Mr. Lane joined Campbell in January 1979
and held various field sales positions in New York, the Southeast and Mid-
Central areas, followed by headquarters sales planning and customer development
positions. Mr. Lane earned his undergraduate degree from the State University
of New York.
ELIZABETH SHUTTLEWORTH, age 46, will be elected Vice President--Information
Technology. Currently, Ms. Shuttleworth serves as the Director of MIS for the
Specialty Foods division of Campbell. Previous to that, she served as the
Director of Business Systems for the U.S. Grocery Division of Campbell. She
joined Campbell in November 1994. Previous to that, for twelve years Ms.
Shuttleworth worked in software development of business process applications in
South Africa, before moving to the United States where she served as a business
analyst and in large project management for Bell Atlantic and as a strategic
consultant for SmithKline Beecham. She earned her undergraduate degree at the
University of South Africa.
RICHARD M. VOSBURGH, age 44, will be elected Vice President--Human Resources.
He currently serves as the Vice President of Human Resources for the Specialty
Foods division. Prior to that, he was the corporate Director of Management
Development and Training for Campbell. Previous to joining Campbell in January
1996, Mr. Vosburgh was Vice President-Human Resources for Hyatt Hotels and
Resorts and Vice President Human Resources for Mervyn's retail stores, a
division of Dayton Hudson Corporation. He was Vice President of The Gallup
Organization and Chief of Organizational Development for Volkswagen AG in
Germany. For eight years, Mr. Vosburgh was in human resources with Pizza Hut
and Taco Bell, divisions of PepsiCo. He earned an undergraduate degree from New
College (Sarasota, Florida) and a Masters and Ph.D. in
Industrial/Organizational Psychology from the University of South Florida.
GREGORY L. WADE, age 49, will be elected Vice President--Technology,
responsible for Research and Development, Quality Assurance and Engineering
Services. He currently serves as the Group Director-Research and Development
and Quality Assurance for the International Grocery Division of Campbell.
Previous to that, he served as the Senior Director-Research and Development for
Canada. Dr. Wade joined Campbell in November 1974. He earned an undergraduate
chemistry degree from Rutgers University, a Masters degree in chemistry from
Saint Joseph's University and a Doctorate in Food Science from Rutgers
University.
46
<PAGE>
SUMMARY OF EXECUTIVE COMPENSATION
The following table sets forth the compensation received by Vlasic's
President and Chief Executive Officer and the four other executive officers of
Vlasic who, based on employment with Campbell, were the most highly compensated
for fiscal 1997. William R. Lewis was recently elected Chief Financial Officer
of Vlasic and was not employed by Campbell during fiscal 1997. Accordingly, he
does not appear in the following table.
SUMMARY COMPENSATION
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM AWARDS
------------------------ -------------------------------------
SECURITIES
RESTRICTED UNDERLYING
NAME AND FISCAL STOCK OPTIONS(3) ALL OTHER
PRINCIPAL POSITION(1) YEAR SALARY BONUS AWARDS(2) (#) COMPENSATION(4)
--------------------- ------ -------- -------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Robert F. Bernstock..... 1997 $336,875 $282,093 $1,880,177 100,000 $18,352
President and Chief 1996 $304,167 $237,751 $ 181,236 91,200 $16,257
Executive Officer 1995 $275,000 $228,800 $ 853,600 31,800 $15,114
Carlos Oliva Funes...... 1997 $430,500 $ 95,696 $ 468,988 10,700 $30,000
Vice President and
President--Swift-Armour
Rolf B. Richter......... 1997 $168,920 $ 87,599 $ 201,856 5,625 $ 0
Vice President and
General Manager--Europe
Murray S. Kessler....... 1997 $165,958 $ 61,696 $ 189,606 4,500 $ 6,830
Vice President and
General Manager--
Swanson
Norma B. Carter......... 1997 $151,667 $ 75,172 $ 231,488 6,750 $ 6,805
Vice President, General
Counsel and Corporate
Secretary
</TABLE>
- --------
(1) The principal position set forth for each named executive officer reflects
his or her anticipated position with Vlasic as of the Distribution Date.
(2) Dollar values of stock awards are based on market price at the time of
grant. The stock awards listed in this column represent awards of Campbell
Stock and do not reflect the adjustments described in "--Treatment of
Outstanding Campbell Stock Awards." As discussed under that heading,
earnouts of stock awards listed in the above table depend entirely upon the
attainment by Campbell of financial goals for cash return on assets and
earnings per share. The aggregate number of restricted stock or units held
and their value as of the end of the fiscal year for the named executive
officers were as follows: Robert F. Bernstock, 65,316 shares/$3,355,610;
Carlos Oliva Funes, 23,800 shares/$1,222,725, Rolf B. Richter, 10,900
shares/$559,988; Murray S. Kessler, 10,900 shares/$559,988 and Norma B.
Carter, 7,500 shares/$408,123. Campbell pays regular quarterly cash
dividends on restricted stock.
(3) The options listed in this column are options to purchase Campbell Stock
and do not reflect the adjustments discussed in "--Treatment of Outstanding
Campbell Stock Awards." See also "Arrangements Between Campbell and Vlasic
Relating to the Spin-Off--Benefits Sharing Agreement."
(4) "All Other Compensation" consists of Campbell contributions or allocations
to savings plans (tax-qualified and supplemental) or, in the case of Mr.
Oliva Funes, consulting fees for services rendered to other Campbell
businesses in Latin America.
47
<PAGE>
The following table shows option grants by Campbell to the named executive
officers during fiscal 1997.
OPTION GRANTS IN LAST FISCAL YEAR(1)
<TABLE>
<CAPTION>
GRANT DATE
INDIVIDUAL GRANTS VALUE(2)
---------------------------------------------- -------------
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS
OPTIONS GRANTED TO EXERCISE OR GRANT DATE
GRANTED(3) EMPLOYEES IN BASE PRICE EXPIRATION PRESENT VALUE
NAME (#) FISCAL YEAR ($/SH) DATE ($)
---- ---------- ------------ ----------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Robert F. Bernstock..... 100,000 3.8% $48.31 6/26/07 $1,565,000
Carlos Oliva Funes...... 10,700 0.4% $48.31 6/26/07 $ 167,455
Rolf B. Richter......... 5,625 0.3% $48.31 6/26/07 $ 88,031
Murray S. Kessler....... 4,500 0.2% $48.31 6/26/07 $ 70,425
Norma B. Carter......... 6,750 0.3% $48.31 6/26/07 $ 105,638
</TABLE>
- --------
(1) The options shown in this table are options to purchase Campbell Stock
(such options generally, "Campbell Options"). See "--Treatment of
Outstanding Campbell Stock Awards" for a discussion of the treatment in the
Spin-Off of Campbell Options. The Campbell Options listed above do not
reflect the adjustments discussed under that heading.
(2) In accordance with the rules of the Securities and Exchange Commission (the
"Commission"), the Black-Scholes option pricing model was chosen to
estimate the grant date present value of the options set forth in this
table. The use of this model should not be construed as an endorsement of
its accuracy at valuing options. All stock option pricing models require a
prediction about the future movement of stock price. The following
assumptions were made for purposes of calculating the grant date present
value: option term of 10 years, volatility of 17.5% (calculated monthly
over the three preceding calendar years), dividend yield of 1.9%,
forfeiture risk rate of 9% and interest rate of 6.8% (ten-year Treasury
note rate at January 2, 1997). The real value of options in this table
depends upon the actual performance of Campbell Stock and, as described in
"--Treatment of Outstanding Campbell Stock Awards," the actual performance
of Vlasic Common Stock during the applicable period and upon when they are
exercised. See also "Arrangements Between Campbell and Vlasic Relating to
the Spin-Off--Benefits Agreement."
(3) Campbell Options have a ten-year term and vest cumulatively over three
years at the rate of 30%, 60% and 100%, respectively, on the first three
anniversaries following the date of grant. Unvested options to purchase
Campbell Stock will be converted into options to purchase Vlasic Common
Stock ("Vlasic Options"), as discussed in "--Treatment of Outstanding
Campbell Stock Awards." Under the terms of the long-term incentive plan
that Vlasic will adopt on or prior to the Distribution Date, such options
will be subject to the same vesting schedule as provided at the time of
grant with the holder receiving full credit for service at Campbell prior
to the Spin-Off. Vlasic Options will vest immediately in the event of a
change in control of Vlasic.
48
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES(1)
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FY-END AT FY-END ($)(2)
----------------------- ---------------------
SHARES VALUE
ACQUIRED ON REALIZED EXER- UNEXER- EXER- UNEXER-
NAME EXERCISE (#) ($)(3) CISABLE CISABLE CISABLE CISABLE
---- ------------ -------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Robert F. Bernstock..... 4,000 $156,437 176,940 176,560 $5,585,409 $1,710,231
Carlos Oliva Funes...... 20,000 $471,600 44,460 35,940 $1,242,044 $ 515,943
Rolf B. Richter......... -- $ 0 41,340 39,685 $1,319,739 $ 657,094
Murray S. Kessler....... 3,500 $ 98,890 15,245 39,505 $ 403,668 $ 669,389
Norma B. Carter......... 5,600 $209,104 39,100 18,700 $1,253,668 $ 245,025
</TABLE>
- --------
(1) See "--Treatment of Outstanding Campbell Stock Awards" for a description of
the effect of the Spin-Off on unexercised Campbell Options.
(2) Value of unexercised options equals fair market value of a share into which
the option could have been converted at August 3, 1997 (market price
$51.375), less exercise price, times the number of options outstanding.
(3) Value realized equals pretax market value of the stock on date of exercise,
less the exercise price, times the number of shares acquired. Shares may be
used to pay withholding taxes under Campbell's existing long-term incentive
plan and the long-term incentive plan to be adopted by Vlasic prior to the
Distribution Date.
TREATMENT OF OUTSTANDING CAMPBELL STOCK AWARDS
Effective on the Distribution Date, holders of outstanding options to
purchase Campbell Stock and grantees of restricted stock awards under
Campbell's existing long-term incentive plan will have their interests
adjusted. The purpose of these adjustments is to maintain the value of the
outstanding Campbell Options and restricted stock awards taking into account
the Spin-Off. The Compensation and Organization Committee of Campbell's Board
of Directors has approved formulae to adjust the exercise price and award size
of Campbell Options and restricted stock awards pursuant to the terms and
provisions of each such grant and the Campbell long-term incentive plan.
Stock Options. Employees of Vlasic who hold Campbell Options under the
Campbell long-term incentive plan that have not become exercisable on or prior
to the Distribution Date will have such Campbell Options entirely converted
into Vlasic Options. For these converted options, the exercise price of each
such Vlasic Option will equal the exercise price of the corresponding Campbell
Option prior to the Spin-Off, multiplied by a fraction (the "Vlasic Conversion
Ratio") where the numerator is the composite volume-weighted average price of
Vlasic Common Stock for the trading days during a pricing period to be
determined at a future date (the "Per Share Vlasic Common Stock Price") and the
denominator is the composite volume-weighted average price of Campbell Stock
trading with Vlasic for the trading days during the pricing period to be
determined at a future date (the "Per Share Pre-Spin-Off Campbell Stock
Price"). The number of shares of Vlasic Common Stock subject to each such
Vlasic Option will equal the number of shares subject to the corresponding
Campbell Option prior to the Spin-Off divided by the Vlasic Conversion Ratio.
All other terms of such Vlasic Options shall be the same as the terms of the
Campbell Options from which they were converted.
While the precise number of shares is yet to be determined, it is expected
that Vlasic will grant non-qualified stock options on up to 3,000,000 shares
contemporaneously with the Spin-Off to provide for the
49
<PAGE>
conversion of Campbell Options into Vlasic Options. For information on
anticipated additional grants of Vlasic Options in connection with the Spin-
Off, see "--Vlasic Incentive Plans" below.
Employees of Vlasic who hold Campbell Options that are exercisable as of the
Distribution Date will retain the Campbell Options, subject to the following
adjustments to the exercise price and number of shares subject to each such
option (each, an "Adjusted Campbell Option"). The exercise price of each
Adjusted Campbell Option shall be determined by multiplying the Campbell Option
exercise price prior to the Spin-Off by a fraction, which shall be no greater
than 1.0 (the "Campbell Conversion Ratio"), where the numerator is the
composite volume weighted average price of Campbell Stock trading without
Vlasic for the trading days during the pricing period to be determined at a
future date (the "Per Share Post-Spin-Off Campbell Stock Price") and the
denominator is the Per Share Pre-Spin-Off Campbell Stock Price. The number of
shares of Campbell Stock subject to each Adjusted Campbell Option will equal
the number of shares subject to such Campbell Option prior to the Spin-Off
divided by the Campbell Conversion Ratio. All other terms of the Adjusted
Campbell Options shall be the same as the terms of the pre-adjustment Campbell
Options.
Employees of Campbell who will continue to be employed by Campbell after the
Distribution Date and hold any Campbell Options, and holders of any Campbell
Options who retire or who have retired from Campbell on or prior to the
Distribution Date, will retain such options, subject to the adjustments to the
exercise price and number of shares described in the previous paragraph. All
other terms of such Adjusted Campbell Options will remain the same.
Performance-Based Restricted Stock Awards. Performance-based restricted stock
awards under the fiscal 1996 through fiscal 1998 program will be payable in
Campbell restricted stock and will be adjusted by dividing the number of
Campbell restricted shares held on the Distribution Date by the Campbell
Conversion Ratio. In addition, the performance goals under such awards for
periods following the Spin-Off will be adjusted to reflect the Spin-Off. If the
adjusted earning per share goal for Campbell for fiscal 1998 is met, adjusted
awards will be paid to employees of Vlasic and are expected to be paid out on
schedule in October 1998. If the adjusted earnings per share goal for Campbell
for fiscal 1998 is not met, the adjusted awards to employees who will be
employed by Vlasic after the Distribution Date will be pro-rated, based on the
number of completed months in the performance period that such employees were
employees of Campbell. All such pro-rated awards will be paid out in October
1998.
Restricted stock awards granted by Campbell under the fiscal 1998 through
fiscal 2000 program to employees who will be employed by Vlasic after the Spin-
Off will be forfeited. Awards to employees who remain with Campbell following
the Spin-Off will be adjusted by dividing the number of Campbell restricted
shares held on the Distribution Date by the Campbell Conversion Ratio. The
performance goals under such awards for periods following the Spin-Off will be
adjusted to reflect the Spin-Off.
VLASIC INCENTIVE PLANS
On or prior to the Distribution Date, the Vlasic Board will adopt, and
Campbell, as sole shareowner of Vlasic will approve, the following incentive
compensation plans.
Long-Term Incentive Plan
The Vlasic long-term incentive plan is expected to provide for the grant of
various types of long-term incentive awards to selected employees of Vlasic,
consistent with the objectives and restrictions of the plan. Although these
awards may include non-qualified stock options, incentive stock options under
the Code, stock appreciation rights, and restricted and unrestricted share
awards, it is expected that only stock options will be granted under the plan
initially. The term of the plan is expected to be ten years.
50
<PAGE>
The plan will vest broad powers in the Compensation and Organization
Committee of Vlasic's Board of Directors to administer and interpret the plan.
This power will include the authority to select the persons to be granted
awards, to determine the terms, goals and conditions of awards, and to
determine whether such goals and conditions have been met.
While the precise number of shares is yet to be determined, it is anticipated
that Vlasic will grant options for up to 1,800,000 shares of Vlasic Common
Stock to senior management of Vlasic following the Spin-Off in addition to
those options granted in connection with the conversion of Campbell Options
described above in "--Treatment of Outstanding Campbell Stock Awards." A total
of 5,800,000 shares of Vlasic Common Stock will be available for issuance under
Vlasic's long-term incentive plan.
Annual Incentive Plan
The Vlasic annual incentive plan is expected to give the Compensation and
Organization Committee of the Vlasic Board the discretion to determine the
aggregate amount of money to be used for awards based upon competitive
compensation practices and such measures of Vlasic's performance as the
Committee selects from time to time. Individual awards will be determined
annually by the Committee in accordance with performance goals established by
the Committee at the beginning of the fiscal year.
Deferred Compensation Plan
It is anticipated that Vlasic will implement a deferred compensation plan
that will allow certain Vlasic executives to defer all or a portion of their
annual salary and annual incentive plan awards, as well as amounts due under
certain other plans or programs maintained by Vlasic. A participant's deferred
benefit will be credited with earnings based on one or more hypothetical
investments available under the plan.
PENSION AND OTHER PLANS
Pension Plans
Many of Vlasic's salaried employees will have been participants in the
Campbell Soup Company Retirement and Pension Plan for Salaried Employees. On or
prior to the Distribution Date, Vlasic intends to adopt the Vlasic Salaried
Pension Plan on terms substantially similar to the Campbell salaried plan, as
well as similar pension plans for non-salaried employees and employees covered
by collective bargaining agreements. The annual benefits payable under these
Vlasic pension plans to most participating employees retiring at or after age
65 will be calculated under the following formulas:
. For those employees who were employees of Campbell on March 1, 1988, and
retire subsequently from Vlasic (i) with 30 years of service, an annual
benefit that, when added to one-half of primary Social Security, equals
50% of "final pay," i.e., the average annual earnings in the five
calendar years of highest earnings during the last ten calendar years of
employment, (ii) with less than 30 years service, an annual benefit equal
to the benefit for 30 years service reduced pro rata for years less than
30, and (iii) with more than 30 years service, an annual benefit equal to
the benefit for 30 years service, supplemented at the rate of 1/2 of 1%
of final pay for each year of service over 30. Alternatively, such
employees are entitled to an annual benefit calculated in accordance with
the formula below if that benefit would be greater than the one
calculated under the foregoing formula.
. For those employees who became employees of Campbell after March 1, 1988,
and retire subsequently from Vlasic, an annual benefit equal to 1% of
final pay up to the Social Security covered compensation amount plus 1
1/2% of final pay in excess of the Social Security covered compensation
amount for each year of service up to 30 years, and 1/2 of 1% of final
pay for each year of service over 30.
51
<PAGE>
The following table illustrates the approximate annual pension that may
become payable to an employee of Vlasic in the higher salary classifications
under Vlasic's regular and supplemental pension plans.
<TABLE>
<CAPTION>
AVERAGE PAY IN ESTIMATED ANNUAL PENSIONS(1)
HIGHEST 5 YEARS OF
LAST 10 YEARS OF
EMPLOYMENT(2) YEARS OF SERVICE
- ------------------ --------------------------------------------------------------
20 25 30 35 40
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 200,000 $ 57,070 $ 71,337 $ 85,604 $ 90,604 $ 95,604
300,000 87,070 108,837 130,604 138,104 145,604
400,000 117,070 146,337 175,604 185,604 195,604
500,000 147,070 183,837 220,604 233,104 245,604
600,000 177,070 221,337 265,604 280,604 295,604
700,000 207,070 258,837 310,604 328,104 345,604
800,000 237,070 296,337 355,604 375,604 395,604
900,000 267,070 333,837 400,604 423,104 445,604
1,000,000 297,070 371,337 445,604 470,604 495,604
</TABLE>
- --------
(1) The estimated amounts assume retirement at age 65 (normal retirement age)
with a straight-life annuity without reduction for a survivor annuity or
for optional benefits. They are not subject to deduction for Social
Security benefits.
(2) Includes annual salary and bonus awards under the Campbell Management
Worldwide Incentive Plan. The portion of any pension attributable to
deferred bonus awards under that Plan will be paid as supplementary pension
benefits from Campbell's (or, following the Spin-Off, Vlasic's) general
funds and not from the pension plan.
The pay covered by the pension plan referred to above is based on the salary
and bonus shown in the Summary Compensation Table above for each of the named
executive officers of Vlasic. The years of credited service as of December 31,
1997 for the following named executive officers are: Robert F. Bernstock, 21
years; Rolf B. Richter, five years; Murray S. Kessler, 11 years; and Norma B.
Carter, 17 years. Carlos Oliva Funes does not participate in the Campbell
pension plan. The years of service for Mr. Bernstock include additional years
of service pursuant to Campbell's (or, following the Spin-Off, Vlasic's) mid-
career hire arrangement.
Savings Plus Plans
It is anticipated that Vlasic will establish a defined contribution 401(k)
program for its employees on terms substantially similar to the Campbell
Savings Plus Plans and that account balances of affected employees under each
Campbell Plan will be transferred directly to the applicable Vlasic Plan. After
the Spin-Off, both the Campbell Plans and the Vlasic Plans will offer, along
with mutual funds, two common stock funds as investment alternatives: (i) a
Vlasic common stock fund and (ii) a Campbell common stock fund. Vlasic Plan
participants will not be able to increase their holdings in the Campbell stock
fund but will be allowed to transfer their account balances out of that fund.
To the extent that the plan fiduciaries have not already done so, on December
31, 1999, all remaining investments in the Campbell stock fund under the Vlasic
Plans will be automatically liquidated and the proceeds transferred to another
investment fund available under the applicable Vlasic Plan. A similar
investment restriction and automatic liquidation will apply to the Vlasic stock
fund available under the Campbell Plans.
52
<PAGE>
Other Benefit Plans
It is expected that Vlasic will adopt a number of plans to provide certain
employee welfare benefits to active employees of Vlasic as well as retirees of
Vlasic after the Distribution Date, including medical, dental, vision,
prescription drug, short and long-term disability, life insurance, severance
and other benefits, and the Vlasic Board will reserve the right to amend,
suspend or terminate any of these welfare plans.
SECURITY OWNERSHIP BY CERTAIN BENEFICIAL OWNERS,
DIRECTORS AND EXECUTIVE OFFICERS OF VLASIC
None of the present executive officers or directors of Vlasic currently owns
any shares of Vlasic Common Stock. All such shares are currently owned by
Campbell. However, the executive officers and directors of Vlasic will, by
virtue of their ownership of Campbell stock, receive shares of Vlasic Common
Stock in the Spin-Off. In addition, as discussed under "Management," certain
existing options to purchase shares of Campbell Stock awarded under Campbell
incentive plans will be converted into comparable options to purchase shares of
Vlasic Common Stock, and it is anticipated that additional grants of options to
purchase Vlasic Common Stock will be granted to senior management of Vlasic.
The following table sets forth the number of shares of Campbell Stock
beneficially owned on September 22, 1997 by each of the persons expected to
serve as directors of Vlasic after the Spin-Off, the executive officers of
Vlasic listed in the Summary Compensation Table in "Management--Summary of
Executive Compensation" and all directors and executive officers of Vlasic as a
group. The table does not reflect the adjustments to Campbell Options referred
to in the preceding paragraph.
<TABLE>
<CAPTION>
AGGREGATE TOTAL NUMBER OF
NUMBER OF SHARES CAMPBELL STOCK SHARES AND DEFERRED
NAME BENEFICIALLY OWNED(1) DEFERRED(2) STOCK(3)
---- --------------------- -------------- -------------------
<S> <C> <C> <C>
Donald J. Keller........ -- -- --
Shaun F. O' Malley...... -- -- --
Robert F. Bernstock..... 227,812 68,439 296,251
Carlos Oliva Funes...... 136,900 4,790 141,690
Rolf B. Richter......... 60,175 160 60,335
Murray S. Kessler....... 28,206 48 28,254
Norma B. Carter......... 52,162 3,637 55,799
All directors and
executive officers as a
group (10 persons)..... 551,948 82,808 634,756
</TABLE>
- --------
(1) Amounts in this column reflect any shares of Campbell Stock that could have
been acquired within 60 days of September 22, 1997 under Campbell Options.
No individual director or named executive officer of Vlasic beneficially
owns 1% or more of the outstanding Campbell Stock, nor do the directors and
executive officers as a group.
(2) Deferred stock units were awarded at the election of the individuals to
defer previously earned compensation and pending awards of restricted
performance stock. The individuals are fully at risk as to the price of
Campbell Stock in their deferred stock accounts. Additional stock units are
credited to the accounts to reflect accrual of dividends. The stock units
do not carry any voting rights.
(3) None of the amounts in this column exceeds 1% of the outstanding Campbell
Stock.
53
<PAGE>
The following table sets forth the owners of more than 5% of the outstanding
Campbell Stock as of September 22, 1997.
<TABLE>
<CAPTION>
AMOUNT/NATURE OF PERCENT OF
NAME/ADDRESS BENEFICIAL OWNERSHIP OUTSTANDING STOCK
- ------------ -------------------- -----------------
<S> <C> <C>
Bennett Dorrance 52,350,272(1) 11.4%
DMB Associates
4201 North 24th Street
Suite 120
Phoenix, AZ 85016
Mary Alice Malone 54,119,028(2) 11.8%
Iron Spring Farm
R.D. #3
Coatesville, PA 19320
Dorrance H. Hamilton, Charles H. Mott 62,880,525(4) 13.7%
and John A. van Beuren, Voting Trustees
under the Major Stockholders' Voting
Trust dated as of June 2, 1990 and
related persons
P.O. Box 4098
Middletown, RI 02842(3)
</TABLE>
- --------
(1) Bennett Dorrance is a member of the Campbell Board of Directors. He is a
grandson of Dr. John T. Dorrance, the brother of Mary Alice Malone, and a
cousin of George Strawbridge and Charlotte C. Weber, who are also directors
of Campbell. Share ownership shown does not include 306,944 shares held by
the Estate of his father, John T. Dorrance, Jr., of which he is an
Executor, and as to which shares he disclaims beneficial ownership. Does
not include 491,188 shares held as guardian for one of his children nor
491,232 shares held as trustee for one of his children, as to which shares
he disclaims beneficial ownership. Does not include 450,700 shares held by
the Dorrance Family Foundation.
(2) Mary Alice Malone is a member of the Campbell Board of Directors. She is a
granddaughter of Dr. John T. Dorrance. Share ownership shown does not
include 306,944 shares held by the Estate of her father, John T. Dorrance,
Jr., of which she is an Executor and as to which shares she disclaims
beneficial ownership. Does not include 29,108 shares held by her cousin as
trustee of a trust for her children, as to which shares she disclaims
beneficial ownership.
(3) The June 2, 1990 Voting Trust (the "Voting Trust") was formed by certain
descendants (and spouses, fiduciaries and a related foundation) of the late
Dr. John T. Dorrance. The participants have indicated that they formed the
Voting Trust as a vehicle for acting together as to matters which may arise
affecting Campbell's business, in order to attain their objective of
maximizing the value of their shares.
The Trustees act for participants in communications with the Campbell Board
of Directors. Participants believe the Voting Trust may also facilitate
communications between the Campbell Board and the participants. Under the
Voting Trust, all shares held by the trust will be voted by the Trustees
whose decision must be approved by at least two Trustees if there are three
Trustees then acting. In the event of a disagreement among the Trustees
designated by the family groups participating in the trust, the shares of
the minority may be withdrawn. The Voting Trust continues for ten years
from June 2, 1990, unless it is sooner terminated or extended.
In September 1990, the Trustees of the Voting Trust requested the
Governance Committee of Campbell's Board to nominate Charles Mott as a
candidate for election as a director. Mr. Mott currently serves as a
director of Campbell.
54
<PAGE>
The terms of the Voting Trust provide that the shares of Vlasic Common
Stock distributed in the Spin-Off in respect of the shares of Campbell
Stock subject to the trust will also be subject to the terms of, and will
be held by, the Voting Trust following the Spin-Off.
(4) Includes 60,870,900 shares (13.3% of the outstanding shares) held by the
Trustees under the Voting Trust with sole voting power and 2,009,625 shares
held by participants outside the trust or by persons related to them, for a
total of 62,880,525 shares (13.7% of the outstanding shares). Includes
29,551,970 shares (6.5% of the outstanding shares) with sole dispositive
power held by the Dorrance H. Hamilton Trust (Mrs. Hamilton is the sole
Trustee of the Dorrance H. Hamilton Trust), 200 Eagle Road, Suite 316,
Wayne, PA 19087. Also includes 13,476,788 shares with sole dispositive
power and 987,568 shares with shared dispositive power held by Hope H. van
Beuren, wife of John A. van Beuren, P.O. Box 4098, Middletown, RI 02842.
John A. van Beuren also has shared dispositive power over the same 987,568
shares, and holds 13,440,000 shares with sole dispositive power. Also
includes 2,010,768 shares held by John A. van Beuren with shared
dispositive power. Participants in the Voting Trust have certain rights to
withdraw shares deposited with the Trustees including the right to withdraw
these shares prior to any annual or special meeting of Campbell
shareowners. Dispositive power as used above means the power to direct the
sale of the shares; in some cases it does not include the power to direct
how the proceeds of sale can be used.
The foregoing information relating to owners of Campbell Stock is based upon
Campbell's existing stock records and data supplied to Campbell by such owners
as of September 22, 1997.
ARRANGEMENTS BETWEEN CAMPBELL AND
VLASIC RELATING TO THE SPIN-OFF
To govern certain of the ongoing relationships between Campbell and Vlasic
after the Spin-Off and to provide mechanisms for an orderly transition,
Campbell and Vlasic, or their respective subsidiaries, as applicable, will
enter into the various agreements described below. Certain of the agreements
summarized below will be included as exhibits to the Registration Statement,
and the following summaries are qualified in their entirety by reference to the
agreements as filed.
DISTRIBUTION AGREEMENT
The Distribution Agreement will provide for, among other things, the
principal corporate transactions required to effect the Spin-Off and certain
other matters governing the relationship between Vlasic and Campbell with
respect to or in consequence of the Spin-Off.
The Distribution Agreement contains provisions designed principally to place
with Vlasic, on an "as is, where is" basis, the assets currently related to the
Vlasic Businesses and financial responsibility for known and contingent or
unknown liabilities of the Vlasic Businesses. In addition, certain other assets
and liabilities of Campbell described in the Distribution Agreement will be
contributed to, or assumed by, Vlasic. These additional liabilities include,
among others, liabilities associated with the New Credit Facility to be assumed
by Vlasic on or prior to the Distribution Date, as described under "Financing."
The Distribution Agreement further provides that all intercompany
receivables, payables and loans between Campbell and Vlasic will be released
and discharged effective on the Distribution Date, except for certain
intercompany payables representing advances from Campbell to subsidiaries of
Vlasic which will remain outstanding obligations of such subsidiaries of Vlasic
to Campbell following the Spin-Off (approximately $58.7 million). Each of
Vlasic and Campbell will release the other from all other obligations
55
<PAGE>
and liabilities owed to such party existing on the Distribution Date, other
than liabilities and obligations arising under the Distribution Agreement and
the other agreements entered into in connection with the Spin-Off and certain
other specified liabilities. Likewise, each of Campbell and Vlasic will
indemnify the other for liabilities arising from a breach of such agreements or
the failure to pay or discharge the liabilities assumed by such party under the
Distribution Agreement.
The Distribution Agreement will contain a non-competition covenant that will
prohibit Vlasic from engaging in certain of Campbell's core businesses in the
U.S. for a period of three years following the Distribution Date. This covenant
has been negotiated to protect the interests of Campbell shareowners in view of
the close familiarity of Vlasic's senior management with the proprietary
business and marketing plans and strategies (and other confidential
information) associated with Campbell's U.S. Grocery operations, as well as the
transfer to Vlasic pursuant to the Distribution Agreement of assets and
resources which could be used in such businesses. Under the terms of the
covenant, for a period of three years after the Distribution Date Vlasic will,
in general, be prohibited from manufacturing, distributing, marketing or
selling the following products in the U.S. to the extent such products are
substantially similar to those products manufactured or sold by Campbell in the
U.S. as of the Distribution Date: soups, broths, vegetable juices, salsa and
picante and other Mexican sauces or dips, Italian sauces, heat processed
prepared pasta and gravies.
Under the Distribution Agreement and other related agreements, Campbell and
Vlasic will agree that Vlasic will have the right to use a portion of
Campbell's headquarters in Camden, New Jersey for a transition period. Vlasic
will be obligated to pay its share of the costs and expenses associated with
the operation and maintenance of the facility.
Vlasic is currently an additional named insured under all applicable Campbell
insurance policies and claim service agreements. Under the Distribution
Agreement, Vlasic will be entitled to the benefit of coverage from Campbell's
property and liability insurance policies to the extent coverage is applicable
or potentially available and where limits of liability have not been exhausted,
either on a per occurrence or aggregate basis. To the extent that these
policies feature a deductible or self-insured retention, Vlasic will assume
legal and financial responsibility for such deductibles or retentions.
Applicable insurance policies include, but are not limited to, Workers'
Compensation, Commercial General Liability (including product liability),
Commercial Automobile Liability, Commercial Excess/Umbrella Liability,
Directors' and Officers' Liability, Fiduciary Liability, Commercial
Comprehensive Crime, Property, and Ocean Marine Insurance. The terms and
conditions of these policies, including limits of liability, will not be
amended as a consequence of the Spin-Off.
Vlasic is expected to collateralize or secure financial obligations to other
parties reflecting deductibles or self-insured retentions. This may be in the
form of either an irrevocable letter of credit or surety bond, or a combination
of both. It is not anticipated that the amount of these obligations will be
material.
The Distribution Agreement will provide that the Spin-Off is subject to a
number of conditions which are described under "The Spin-Off--Conditions;
Termination." The Distribution Agreement may be amended or terminated, and the
Spin-Off may be canceled, or certain conditions to the Spin-Off may be waived,
at any time prior to the Distribution Date, in the sole discretion of the
Campbell Board.
BENEFITS SHARING AGREEMENT
Prior to the date of the Spin-Off, Campbell and Vlasic will enter into a
Benefits Sharing Agreement (the "Benefits Agreement") to set forth the manner
in which assets and liabilities under employee benefit plans and other
employment-related liabilities will be divided between them, and to help ensure
a smooth transition for
56
<PAGE>
employees' benefits in the Spin-Off. In general, Vlasic will be responsible for
compensation and employee benefits relating to its employees. It is intended
that Vlasic will receive corresponding plan assets under the plans that are
qualified under the Code, but will receive no assets with respect to
liabilities under non-qualified plans. In addition, Campbell will generally
remain responsible for liabilities relating to retired employees of the Vlasic
Businesses (along with, in certain cases, any corresponding plan assets),
including (i) liabilities and assets for pension and savings plan benefits,
(ii) unfunded liabilities for medical plan benefits, and (iii) unfunded
deferred compensation liabilities.
The Benefits Agreement will also provide for the treatment of outstanding
Campbell Options. At the time of the Spin-Off, vested Campbell Options held by
employees who will be employed by Vlasic after the Spin-Off will be unaffected
by the Spin-Off and will be retained by such employees, except that the terms
of such options will be adjusted in the manner described in "Management--
Treatment of Outstanding Campbell Stock Awards." Unvested Campbell Options held
by such employees will be canceled and replaced by a new grant of options to
purchase Vlasic Common Stock at a number of shares and an exercise price
designed to preserve, but not increase, the intrinsic value of the canceled
Campbell Options based upon the relative trading values of Campbell Common
Stock before giving effect to the Spin-Off and Vlasic Common Stock after giving
effect to the Spin-Off. Campbell Options held by employees who will be employed
by Campbell after the Spin-Off will be unaffected by the Spin-Off and will be
retained by such employees, except that the terms of such options will be
adjusted in the same manner as the vested Campbell Options held by Vlasic
employees. For additional information with respect to the treatment of Campbell
Options in the Spin-Off, see "Management--Treatment of Outstanding Campbell
Stock Awards." Following the Spin-Off, Vlasic will be responsible for
delivering shares of Vlasic Common Stock upon exercise of Vlasic Options, and
Campbell will be responsible for the delivery of shares of Campbell Stock upon
exercise of Campbell Options.
In general, as a result of the Spin-Off, holders of restricted shares of
Campbell Stock (whether employed by Campbell or Vlasic after the Spin-Off) will
be entitled to receive additional shares of restricted Campbell Stock with
respect to their restricted shares in lieu of receiving shares of Vlasic Common
Stock in the Spin-Off. See "Management--Treatment of Outstanding Campbell Stock
Awards" for a more detailed description of the effect of the Spin-Off on
unexercised Campbell Options.
TAX SHARING AND INDEMNIFICATION AGREEMENT
On or prior to the Distribution Date, Vlasic and Campbell will enter into a
Tax Sharing and Indemnification Agreement that will set forth each party's
rights and obligations with respect to payment and refunds, if any, with
respect to taxes for periods before and after the Distribution Date and related
matters such as the filing of tax returns and the conduct of audits or other
proceedings involving claims made by taxing authorities.
In general, Campbell will be responsible for filing consolidated U.S. federal
and consolidated, combined or unified state income tax returns for periods
through the Distribution Date, and for paying the taxes relating to such
returns including any subsequent adjustments resulting from the redetermination
of such tax liability by the applicable taxing authorities. The Tax Sharing and
Indemnification Agreement will also allocate liability between Campbell and
Vlasic for property taxes and for any taxes which may arise in connection with
separating the Vlasic Businesses from Campbell businesses.
Pursuant to the Tax Sharing and Indemnification Agreement, Vlasic will agree
that for a two-year period following the Distribution Date (i) Vlasic will
continue to engage in the Vlasic Businesses, (ii) Vlasic will continue to own
and manage at least 50% of the assets which it owns directly or indirectly
immediately after the Distribution Date and (iii) Vlasic will not, unless it
obtains an IRS tax ruling or a legal opinion reasonably
57
<PAGE>
satisfactory to Campbell that such transaction will not cause the Spin-Off to
be taxable for U.S. federal income tax purposes, engage in a number of
specified transactions. Transactions subject to these restrictions will
include, among other things, issuances of Vlasic Common Stock (or certain
derivatives thereof) in amounts which would equal or exceed 20% of the
outstanding Vlasic Common Stock immediately after the Distribution Date,
issuances of instruments other than Vlasic Common Stock (or derivatives
thereof) constituting equity for U.S. federal tax purposes, certain redemptions
and other acquisitions of capital stock or equity securities of Vlasic, or the
merger, dissolution or liquidation of Vlasic.
In addition, under the Tax Sharing and Indemnification Agreement, Vlasic will
agree to indemnify Campbell for tax liabilities arising from a breach of the
foregoing provisions, as well as tax liabilities (including the tax liabilities
of Campbell's shareowners to the extent such liability is imposed upon or
assumed by Campbell) arising from acquisitions of Vlasic Common Stock, or
commencement of any tender or exchange offers for Vlasic Common Stock, during
the two-year period following the Spin-Off, the consummation of which result in
the Spin-Off being taxable for U.S. federal income tax purposes.
If the obligations of Vlasic under the Tax Sharing and Indemnification
Agreement were breached and the Spin-Off were to fail to qualify as tax-free
for U.S. federal income tax purposes as a result of such breach, Vlasic would
be required to indemnify Campbell for the tax liabilities described above. This
indemnification obligation could exceed the net worth of Vlasic at such time.
Though valid as between the parties thereto, the Tax Sharing and
Indemnification Agreement is not binding on the IRS and does not affect the
several liability of Campbell, Vlasic and their respective subsidiaries to the
IRS for all U.S. federal taxes of the consolidated group relating to periods
prior to the Distribution Date.
TRADEMARK LICENSE AGREEMENTS
On or prior to the Distribution Date, Campbell and Vlasic will enter into a
number of intellectual property license agreements, including a license
agreement pursuant to which Campbell will grant Vlasic a perpetual, royalty-
free license to use the Swanson trademark and related logos, symbols and marks
(collectively, "Swanson Marks") in connection with Vlasic's operations after
the Spin-Off. Under the terms of this license agreement, Vlasic will have the
right to use the Swanson Marks anywhere in the world in connection with the
manufacture, distribution, marketing, advertising, promotion and sale of
certain foods in the frozen food category.
Campbell will also grant Vlasic a license to use the Campbell's trademark for
up to three years in connection with Vlasic's U.S. retail mushroom business.
The license will be on royalty-free terms for its initial 18 months.
Thereafter, Vlasic will be obligated to pay a royalty on 1% of Vlasic's retail
net sales of mushrooms using the Campbell's trademark.
These license agreements will contain standard provisions, including those
dealing with quality control and termination upon, among other things, material
breach and bankruptcy.
TECHNOLOGY SHARING AGREEMENT
On or prior to the Distribution Date, Vlasic and Campbell will enter into a
Technology Sharing Agreement. Under the Technology Sharing Agreement, Campbell
will assign certain patents and patent applications relating to the Vlasic
Businesses to Vlasic. In addition, Campbell will grant Vlasic a license to use
certain patents, patent applications and proprietary manufacturing processes
used in the Vlasic Businesses, and to use certain technical information and
know-how relating to the Vlasic Businesses.
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<PAGE>
TRANSITION SERVICES AGREEMENT
On or prior to the Distribution Date, Campbell and Vlasic will enter into a
Transition Services Agreement pursuant to which Campbell and Vlasic will
provide each other with transitional administrative and support services for a
period of time not expected to exceed 12 months. The Transition Services
Agreement will provide that Vlasic will pay a fee to Campbell intended to
approximate Campbell's cost for such services.
The Transition Services Agreement will provide that Vlasic will indemnify
Campbell for all claims, losses, damages, liabilities and costs incurred by
Campbell to a third party arising in connection with the provision of a service
under the agreement, other than those costs resulting from Campbell's willful
misconduct or gross negligence. In general, Vlasic can terminate a transition
service after an agreed notice period.
SUPPLY AGREEMENTS; CO-PACK AGREEMENTS
On or prior to the Distribution Date, Campbell and Vlasic will enter into a
series of supply agreements whereby Vlasic will provide processed beef and
mushrooms to Campbell for the continued manufacture of Campbell's products.
The raw material supply agreements are anticipated to have a term of two
years. Vlasic will sell these materials under mutually agreed pricing
mechanisms designed to approximate arm's-length terms.
Campbell and Vlasic will also enter into a series of contract manufacturing
agreements whereby one party will manufacture and pack certain products for the
other party for a transition period pending transfer of the production
operations associated with such products. It is expected these agreements will
be for a term not to exceed two years and will otherwise reflect arm's-length
terms and conditions.
DESCRIPTION OF CAPITAL STOCK
AUTHORIZED CAPITAL STOCK
Vlasic's authorized capital stock presently consists of 100 shares of Vlasic
Common Stock, no par value. All of such shares are issued and outstanding and
are owned by Campbell. Under the Vlasic Charter, as amended and restated prior
to the Spin-Off by the Vlasic Board and by Campbell as sole shareowner of
Vlasic substantially in the form set forth as an exhibit to the Registration
Statement, the total number of shares of all classes of stock that Vlasic will
have authority to issue will be 60,000,000, of which 4,000,000 will be
Preferred Stock, without par value ("Vlasic Preferred Stock"), and 56,000,000
will be shares of Vlasic Common Stock. No shares of Vlasic Preferred Stock will
be issued in connection with the Spin-Off. Based on the number of shares of
Campbell Common Stock outstanding at February 9, 1998, approximately 45,413,000
shares of Vlasic Common Stock, constituting approximately 81.1% of the
authorized Vlasic Common Stock, will be issued to shareowners of Campbell in
the Spin-Off. All of the shares of Vlasic Common Stock issued in the Spin-Off
will be validly issued, fully paid and nonassessable. No holder of any capital
stock of Vlasic authorized as of the Distribution Date will have any preemptive
right to subscribe to any securities of Vlasic of any kind or class.
VLASIC COMMON STOCK
The owners of Vlasic Common Stock will be entitled to one vote for each share
on all matters voted on by shareowners, including elections of directors, and,
except as otherwise required by law or provided in any resolution adopted by
the Vlasic Board with respect to any class or series of Vlasic Preferred Stock,
the holders of Vlasic Common Stock will exclusively possess all voting power.
The Vlasic Charter does not provide for cumulative voting for the election of
directors. Subject to any preferential rights of any outstanding class or
59
<PAGE>
series of Vlasic Preferred Stock designated by the Vlasic Board from time to
time, the holders of Vlasic Common Stock will be entitled to such dividends as
may be declared from time to time by the Vlasic Board from funds available
therefor, and, upon liquidation, will be entitled to receive pro rata all
assets of Vlasic available for distribution to such holders. Vlasic, however
does not currently anticipate that any cash dividends will be paid on the
Vlasic Common Stock. See "Certain Special Considerations--Absence of
Dividends."
VLASIC PREFERRED STOCK
The Vlasic Board will be authorized to provide for the issuance of shares of
Vlasic Preferred Stock in one or more classes or series, and to fix for each
such class or series such voting powers, designations, preferences and
relative, participating, optional and other special rights, and such
qualifications, limitations or restrictions, as are stated in the resolutions
adopted by the Vlasic Board providing for the issue of such series and as are
permitted by the New Jersey Business Corporation Act (as amended, the "NJBCA").
Although Vlasic has no intention at the present time of doing so, it could
issue a series of Preferred Stock that could, subject to certain limitations
imposed by the securities laws and stock exchange rules, impede the completion
of a merger, tender offer or other takeover attempt.
CERTAIN OTHER PROVISIONS
Vlasic Charter. Under the Vlasic Charter, the following actions require the
affirmative vote of two-thirds of the votes cast by the holders of all
outstanding shares of stock entitled to vote thereon, and, in addition, if any
class or series is entitled to vote thereon as a class, the affirmative vote of
two-thirds of all of the votes which the holders of each such class or series
are entitled to cast thereon: (i) the adoption by the shareowners of a proposed
amendment of the Vlasic Charter; (ii) the adoption by the shareowners of a
proposed plan of merger or consolidation involving Vlasic; (iii) the approval
by the shareowners of a sale, lease, exchange, or other disposition of all, or
substantially all, of Vlasic's assets otherwise than in the usual and regular
course of business as conducted by Vlasic; and (iv) the dissolution of Vlasic.
Vlasic Bylaws. The Vlasic Bylaws will establish an advance notice procedure
with regard to the nomination, other than by or at the direction of the Vlasic
Board of Directors, of candidates for election as directors (the "Nomination
Procedure") and for certain matters to be brought before an annual meeting of
shareowners (the "Business Procedure"). Pursuant to the Vlasic Bylaws, the
Nomination Procedure provides that only persons who are nominated by the Board
of Directors or by a shareowner of record who has given timely written notice
to the Secretary of Vlasic prior to the meeting at which directors are to be
elected will be eligible for election as directors. The Business Procedure
provides that at an annual meeting only such business can be conducted as has
been brought before the meeting pursuant to the notice of the meeting, by the
Board of Directors or by a shareowner of record who has given timely prior
written notice to the Secretary of such shareowner's intention to bring such
business before the meeting. To be timely, notice must generally be received by
Vlasic not less than 60 days nor more than 90 days prior to the first
anniversary of the previous year's annual meeting. Notice of a shareowner
nomination to be made at a special meeting at which directors are to be elected
must be received not earlier than the 90th day before such meeting and not
later than the later of (i) the 60th day prior to such meeting and (ii) the
tenth day after public announcement of the date of such meeting is first made.
Under the Nomination Procedure, notice to Vlasic from a shareowner who proposes
to nominate a person at a meeting for election as director must contain certain
information about that person, including such person's consent to be nominated
and such information as would be required to be included in a proxy statement
soliciting proxies for the election of the proposed nominee, and certain
information about the shareowner proposing to nominate that person or the
beneficial owner, if any, on whose behalf the nomination is made. Under the
Business Procedure, notice relating to the conduct of business must contain
certain
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<PAGE>
information about such business and about the shareowner who proposes to bring
the business before the meeting.
New Jersey Business Corporation Act. Vlasic is subject to Section 14A:6-1 of
the NJBCA dealing with the fiduciary duties of directors of New Jersey business
corporations. Among other things, Section 14A:6-1 provides that directors of
such corporations may, in discharging their fiduciary duties, consider, among
other things, the effects of any action upon employees, suppliers, creditors
and customers of the corporation, and upon communities in which the corporation
operates, and also may consider the long-term as well as short-term interests
of the corporation and its shareholders, including the possibility that those
interests may best be served by the continued independence of the corporation.
Section 14A:6-1 further provides that if, on the basis of the foregoing
factors, the directors of a New Jersey corporation determine that any offer to
acquire the corporation is not in the best interests of the corporation, the
directors shall have no obligation to facilitate, to remove barriers (such as a
rights plan) to, or to refrain from impeding, the offer.
Vlasic is also subject to Sections 14A:10A-1 to 14A:10A-6 of the NJBCA, which
generally prohibit certain transactions between the corporation and any
"interested stockholder" (including generally shareowners beneficially owning
10% or more of the voting power of the corporation) for a period of five years
following the shareowner's attainment of such status, unless the Board approved
the transaction prior to the shareowner attaining the status of "interested
stockholder," and provide for limitations on such transactions at any other
time.
LIABILITY AND INDEMNIFICATION
OF OFFICERS AND DIRECTORS OF VLASIC
LIMITATION OF LIABILITY
The Vlasic Charter will provide that a director of Vlasic will not be
personally liable to Vlasic or its shareowners for monetary damages for breach
of any duty owed to Vlasic or its shareowners, except that such provision shall
not relieve a director from liability for any breach of duty based upon an act
or omission (i) in breach of such person's duty of loyalty to Vlasic or its
shareowners, (ii) not in good faith or involving a violation of law or (iii)
resulting in receipt by such director of an improper personal benefit. As used
in the Vlasic Charter, an act or omission in breach of a person's duty of
loyalty means an act or omission which that director knows or believes to be
contrary to the best interests of Vlasic or its shareowners in connection with
a matter in which such director has a material conflict of interest.
While the Vlasic Charter will provide directors with protection from awards
for monetary damages for certain breaches of their duty of care, it does not
eliminate such duty. Accordingly, the Vlasic Charter will have no effect on the
availability of equitable remedies such as an injunction or rescission based on
a director's breach of his or her duty of care. The provisions of the Vlasic
Charter described above apply to an officer of Vlasic only if he or she is a
director of Vlasic and is acting in his or her capacity as director, and do not
apply to officers of Vlasic who are not directors.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Vlasic Bylaws will provide that each person who is or was or has agreed
to become a director or officer of Vlasic, or each such person who is or was
serving or has agreed to serve at the request of Vlasic as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, will be indemnified by Vlasic in accordance with the
procedures set forth in the Vlasic Bylaws, to the fullest extent permitted from
time to time by the NJBCA, as the same exists or may hereafter be amended or
any other applicable laws as currently or hereafter in effect. Vlasic will be
required to indemnify any person seeking
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indemnification in connection with a proceeding (or part thereof) initiated by
such person only if such proceeding (or part thereof) was authorized by the
Vlasic Board or is an appropriate proceeding to enforce such person's claim to
indemnification pursuant to the rights granted by the Vlasic Bylaws or
otherwise by Vlasic's Board. In addition, Vlasic may enter into one or more
agreements with any person providing for indemnification greater than or
different from that provided in the Vlasic Bylaws.
AVAILABLE INFORMATION
Vlasic has filed the Registration Statement with the Commission concerning
the shares of Vlasic Common Stock being received by Campbell shareowners in the
Spin-Off. This document does not contain all of the information set forth in
the Registration Statement and the exhibits and schedules thereto. Statements
made in this document concerning the contents of any contract, agreement or
other document referred to herein are summaries of certain provisions thereof.
With respect to each such contract, agreement or other document filed as an
exhibit to the Registration Statement, reference is made to such exhibit for a
more complete description of the matter involved, and each such statement shall
be deemed qualified in its entirety by such reference.
The Registration Statement and the exhibits and schedules thereto filed by
Vlasic may be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, as well as at the Regional Offices of the Commission at Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and 7
World Trade Center, Suite 1300, New York, New York 10048. Copies of such
information can be obtained by mail from the Public Reference Branch of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates. Such material can also be inspected at the offices of the New York Stock
Exchange, 20 Broad Street, New York, New York 10005 or accessed electronically
by means of the Commission's home page on the Internet (http://www.sec.gov).
Following the Spin-Off, Vlasic will be required to comply with the reporting
requirements of the Exchange Act and will file annual, quarterly and other
reports with the Commission. Vlasic will also be subject to the proxy
solicitation requirements of the Exchange Act and, accordingly, will furnish
audited financial statements to its shareowners in connection with its annual
meetings of shareowners.
No person is authorized by Campbell or Vlasic to give any information or to
make any representations other than those contained in this document, and if
given or made, such information or representations must not be relied upon as
having been authorized.
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INDEX TO DEFINED TERMS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Adjusted Campbell Option... 50
Benefits Agreement......... 56
Business Procedure......... 60
Campbell................... 1
Campbell Conversion Ratio.. 50
Campbell Options........... 48
Campbell Stock............. 7
Code....................... 9
Commission................. 48
Distribution Agent......... 8
Distribution Agreement..... 11
Distribution Date.......... 8
Distribution Ratio......... 8
Exchange Act............... 7
IRS........................ 9
New Credit Facility........ 28
NJBCA...................... 60
Nomination Procedure....... 60
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Per Share Post-Spin-Off Campbell
Stock Price...................... 50
Per Share Pre-Spin-Off Campbell
Stock Price...................... 49
Per Share Vlasic Common Stock
Price............................ 49
Registration Statement............ 41
Securities Act.................... 10
Spin-Off.......................... 7
Swanson Marks..................... 58
Tax Ruling........................ 9
Vlasic............................ 1
Vlasic Businesses................. 7
Vlasic Bylaws..................... 11
Vlasic Charter.................... 11
Vlasic Common Stock............... 7
Vlasic Conversion Ratio........... 49
Vlasic Options.................... 48
Vlasic Preferred Stock............ 59
Voting Trust...................... 54
</TABLE>
63
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ANNUAL FINANCIAL STATEMENTS
Report of Independent Accountants........................................ F-2
Combined Statements of Earnings--fiscal years ended August 3, 1997, July
28, 1996 and July 30, 1995.............................................. F-3
Combined Balance Sheets--August 3, 1997 and July 28, 1996................ F-4
Combined Statements of Cash Flows--fiscal years ended August 3, 1997,
July 28, 1996 and July 30, 1995......................................... F-5
Combined Statements of Shareowner's Equity--fiscal years ended August 3,
1997, July 28, 1996 and July 30, 1995................................... F-6
Notes to Combined Financial Statements................................... F-7
INTERIM FINANCIAL STATEMENTS (UNAUDITED)
Combined Statements of Earnings (unaudited)--second quarters and six
months ended February 1, 1998 and January 26, 1997...................... F-21
Combined Balance Sheets--February 1, 1998 (unaudited) and August 3, 1997
(audited)............................................................... F-22
Combined Statements of Cash Flows (unaudited)--six months ended February
1, 1998 and January 26, 1997............................................ F-23
Combined Statements of Shareowner's Equity (unaudited)--six months ended
February 1, 1998 and January 26, 1997................................... F-24
Notes to Combined Financial Statements (unaudited)....................... F-25
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and
Shareowner of Vlasic Foods International Inc.
In our opinion, the accompanying combined balance sheets and the related
combined statements of earnings, of cash flows and of changes in shareowner's
equity present fairly, in all material respects, the financial position of
Vlasic Foods International Inc. at August 3, 1997 and at July 28, 1996, and the
results of their operations and their cash flows for each of the three years in
the period ended August 3, 1997, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
Price Waterhouse LLP
Philadelphia, Pennsylvania
November 21, 1997
F-2
<PAGE>
VLASIC FOODS INTERNATIONAL INC.
COMBINED STATEMENTS OF EARNINGS
FISCAL YEARS ENDED AUGUST 3, 1997, JULY 28, 1996 AND JULY 30, 1995
(000 OMITTED)
<TABLE>
<CAPTION>
1997 1996 1995
53 WEEKS 52 WEEKS 52 WEEKS
---------- ---------- ----------
<S> <C> <C> <C>
NET SALES (including $155,563, $144,902 and
$135,001 to related parties)............... $1,508,285 $1,498,967 $1,504,318
---------- ---------- ----------
Costs and expenses
Cost of products sold..................... 1,048,433 1,053,348 1,074,321
Marketing and selling expenses............ 266,475 256,666 258,236
Administrative expenses................... 53,050 54,558 54,517
Research and development expenses......... 8,620 8,064 8,767
Other expense............................. 2,446 159 (27)
Restructuring charges..................... 12,634 37,202
---------- ---------- ----------
Total costs and expenses................ 1,391,658 1,409,997 1,395,814
---------- ---------- ----------
EARNINGS BEFORE INTEREST AND TAXES.......... 116,627 88,970 108,504
Interest expense............................ 1,600 1,071 2,016
Interest income............................. 588 329 205
---------- ---------- ----------
Earnings before taxes....................... 115,615 88,228 106,693
Taxes on earnings........................... 37,475 27,361 35,711
---------- ---------- ----------
NET EARNINGS................................ $ 78,140 $ 60,867 $ 70,982
========== ========== ==========
</TABLE>
The accompanying Notes to Combined Financial Statements on pages F-7 to F-20
are an integral part of the financial statements.
F-3
<PAGE>
VLASIC FOODS INTERNATIONAL INC.
COMBINED BALANCE SHEETS
(000 OMITTED)
<TABLE>
<CAPTION>
AUGUST 3, JULY 28,
1997 1996
--------- --------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents................................. $ 9,409 $ 5,553
Accounts receivable....................................... 109,676 123,154
Inventories............................................... 163,852 181,947
Other current assets...................................... 12,339 20,935
-------- --------
Total current assets.................................. 295,276 331,589
-------- --------
Plant assets, net of depreciation......................... 515,646 502,161
Other assets, principally intangible assets, net of
amortization............................................. 84,186 89,581
-------- --------
Total assets.......................................... $895,108 $923,331
======== ========
CURRENT LIABILITIES
Notes payable............................................. $ 191 $ 257
Payable to suppliers and others........................... 95,684 91,513
Overdrafts................................................ 27,417 14,869
Accrued liabilities....................................... 88,914 108,071
-------- --------
Total current liabilities............................. 212,206 214,710
-------- --------
Long-term debt............................................ 2,252 3,166
Deferred income taxes..................................... 36,815 35,567
Other liabilities......................................... 11,537 10,022
-------- --------
Total liabilities..................................... 262,810 263,465
-------- --------
SHAREOWNER'S EQUITY
Campbell net investment................................... 633,168 659,057
Cumulative translation adjustments........................ (870) 809
-------- --------
Total shareowner's equity............................. 632,298 659,866
-------- --------
Total liabilities and shareowner's equity............. $895,108 $923,331
======== ========
</TABLE>
The accompanying Notes to Combined Financial Statements on pages F-7 to F-20
are an integral part of the financial statements.
F-4
<PAGE>
VLASIC FOODS INTERNATIONAL INC.
COMBINED STATEMENTS OF CASH FLOWS
FISCAL YEARS ENDED AUGUST 3, 1997, JULY 28, 1996 AND JULY 30, 1995
(000 OMITTED)
<TABLE>
<CAPTION>
1997 1996 1995
--------- -------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings................................... $ 78,140 $ 60,867 $ 70,982
Non-cash charges to net earnings
Restructuring charges........................ 12,634 37,202
Depreciation and amortization................ 44,808 45,585 45,464
Deferred income taxes........................ 9,199 (12,730) 2,454
Other, net................................... 1,515 1,220 (1,127)
Changes in working capital
Accounts receivable.......................... 11,016 19,540 (14,728)
Inventories.................................. 16,858 (1,422) 18,708
Other current assets and liabilities......... 4,269 1,905 (10,577)
--------- -------- ---------
Net cash provided by operating activities.. 178,439 152,167 111,176
--------- -------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of plant assets...................... (79,301) (59,053) (50,969)
Sales of plant assets.......................... 8,431 4,318 1,219
Business acquired.............................. (60,100)
Other, net..................................... 846 2,631 (5,191)
--------- -------- ---------
Net cash used in investing activities...... (70,024) (52,104) (115,041)
--------- -------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term borrowings............. (427) (425) (8,635)
Short-term borrowings.......................... 425
Repayments of short-term borrowings............ (17) (1,431)
Net transactions with Campbell................. (104,029) (94,555) 8,577
--------- -------- ---------
Net cash (used in) provided by financing
activities................................ (104,473) (96,411) 367
--------- -------- ---------
Effect of exchange rate changes on cash........ (86) 59 344
--------- -------- ---------
NET CHANGE IN CASH AND CASH EQUIVALENTS.... 3,856 3,711 (3,154)
Cash and cash equivalents at beginning of
year.......................................... 5,553 1,842 4,996
--------- -------- ---------
CASH AND CASH EQUIVALENTS AT END OF YEAR....... $ 9,409 $ 5,553 $ 1,842
========= ======== =========
</TABLE>
The accompanying Notes to Combined Financial Statements on pages F-7 to F-20
are an integral part of the financial statements.
F-5
<PAGE>
VLASIC FOODS INTERNATIONAL INC.
COMBINED STATEMENTS OF SHAREOWNER'S EQUITY
FISCAL YEARS ENDED AUGUST 3, 1997, JULY 28, 1996 AND JULY 30, 1995
(000 OMITTED)
<TABLE>
<CAPTION>
CUMULATIVE
CAMPBELL NET TRANSLATION
INVESTMENT ADJUSTMENTS TOTAL
------------ ----------- ---------
<S> <C> <C> <C>
SHAREOWNER'S EQUITY, JULY 31, 1994......... $ 613,186 $ 2,081 $ 615,267
1995 Net earnings.......................... 70,982 70,982
Translation adjustments.................... (1,090) (1,090)
Net transactions with Campbell............. 8,577 8,577
--------- -------- ---------
SHAREOWNER'S EQUITY, JULY 30, 1995......... 692,745 991 693,736
--------- -------- ---------
1996 Net earnings.......................... 60,867 60,867
Translation adjustments.................... (182) (182)
Net transactions with Campbell............. (94,555) (94,555)
--------- -------- ---------
SHAREOWNER'S EQUITY, JULY 28, 1996......... 659,057 809 659,866
--------- -------- ---------
1997 Net earnings.......................... 78,140 78,140
Translation adjustments.................... (1,679) (1,679)
Net transactions with Campbell............. (104,029) (104,029)
--------- -------- ---------
SHAREOWNER'S EQUITY, AUGUST 3, 1997........ $ 633,168 $ (870) $ 632,298
========= ======== =========
</TABLE>
The accompanying Notes to Combined Financial Statements on pages F-7 to F-20
are an integral part of the financial statements.
F-6
<PAGE>
VLASIC FOODS INTERNATIONAL INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
(000 OMITTED)
1. CAMPBELL SOUP COMPANY SPIN-OFF OF VLASIC FOODS INTERNATIONAL INC.
In September, 1997, the Board of Directors of Campbell Soup Company
("Campbell") approved the spin-off of Vlasic Foods International Inc.
("Vlasic") to Campbell shareowners as an independent, publicly-traded company
(the "Spin-Off"). The Spin-Off is subject to a tax ruling by the Internal
Revenue Service that would allow it to be tax-free to Campbell, Vlasic and
Campbell shareowners subject to U.S. federal income taxes, various regulatory
approvals, and the approval of a definitive plan by Campbell's Board of
Directors. Immediately following the Spin-Off, Campbell will no longer have a
financial investment in Vlasic.
Vlasic consists of Swanson frozen foods in the U.S. and Canada, Vlasic
pickles, Open Pit barbecue sauce, and Campbell's mushrooms businesses in the
U.S., Freshbake frozen foods and SonA and Rowats pickle and beans businesses in
the U.K., the Swift processed beef business in Argentina, and the Kattus
specialty foods distribution business in Germany.
A five-year $750 million unsecured revolving credit facility will be
established by Campbell, and $500 million of borrowings under the facility will
be used by Campbell prior to the Spin-Off to repay certain of Campbell's debt
obligations. Vlasic will assume this credit facility, including the repayment
obligations for Campbell's $500 million of borrowings, in connection with the
Spin-Off. Following the Spin-Off, Vlasic will have $250 million of borrowing
availability remaining, approximately $58.7 million of which is expected to be
used for working capital purposes shortly after the Spin-Off. In addition,
Vlasic and Campbell will enter into a number of agreements providing for the
separation of the companies and governing various relationships between Vlasic
and Campbell, including a Separation and Distribution Agreement, a Benefits
Sharing Agreement (regarding employee benefits), a Tax Sharing and
Indemnification Agreement, a Trademark License Agreement, a Technology Sharing
Agreement, a Transition Services Agreement and Supply Agreements.
The financial statements of Vlasic include the combined financial position,
results of operations and cash flows of the businesses described above.
Campbell's historical cost basis of assets and liabilities has been reflected
in the Vlasic financial statements. The financial information in these
financial statements are not necessarily indicative of results of operations,
financial position and cash flows that would have occurred if Vlasic had been a
separate stand-alone entity during the periods presented or of future results.
The combined financial statements included herein do not reflect any changes
that may occur in the financing and operations of Vlasic as a result of the
Spin-Off.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Combination. The combined financial statements include the accounts of the
businesses contributed by Campbell. See Note 1. Significant intercompany
transactions are eliminated in combination.
Fiscal Year. Vlasic's fiscal year ends on the Sunday nearest July 31. There
were 53 weeks in fiscal 1997 and 52 weeks in fiscal 1996 and 1995.
Cash and Cash Equivalents. All highly liquid debt instruments purchased with
an initial maturity of three months or less are classified as cash equivalents.
Inventories. Substantially all domestic inventories are priced at the lower
of cost or market, with cost determined by the last-in, first-out (LIFO)
method. Other inventories are priced at the lower of average cost or market.
F-7
<PAGE>
VLASIC FOODS INTERNATIONAL INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(000 OMITTED)
Plant Assets. Plant assets are stated at historical cost. Alterations and
major overhauls which extend the lives or increase the capacity of plant assets
are capitalized. The amounts for property disposals are removed from plant
asset and accumulated depreciation accounts and any resultant gain or loss is
included in earnings. Ordinary repairs and maintenance are charged to operating
costs.
Depreciation. Depreciation provided in costs and expenses is calculated using
the straight-line method. Buildings and machinery and equipment are depreciated
over periods not exceeding 45 years and 15 years, respectively. Accelerated
methods of depreciation are used for income tax purposes in certain
jurisdictions.
Intangibles. Intangible assets consist principally of excess purchase price
over net assets of businesses acquired and trademarks. Intangibles are
amortized on a straight-line basis over periods not exceeding 40 years.
Asset Valuation. The recoverability of plant assets and intangibles is
periodically reviewed based principally on an analysis of cash flows.
Income Taxes. Deferred taxes are provided in accordance with Statement of
Financial Accounting Standards (SFAS) No. 109.
Use of Estimates. Generally accepted accounting principles require management
to make estimates and assumptions that affect assets and liabilities,
contingent assets and liabilities, and revenues and expenses. Actual results
could differ from those estimates.
Advertising. Advertising costs include the cost of working media (running
advertising on television, radio or in print), the cost of producing
advertising, and the cost of coupon insertion and distribution. Working media
and coupon insertion and distribution costs are expensed in the period the
advertising is run or the coupons are distributed. The cost of producing
advertising is expensed as of the first date the advertisements take place.
Advertising included in Marketing and selling expenses was $21,125 in 1997,
$19,303 in 1996, and $20,253 in 1995. At August 3, 1997 and July 28, 1996,
there were no amounts of advertising included in assets in the balance sheets.
Earnings per share. Historical earnings per share are not presented since
Vlasic common stock was not part of the capital structure of Campbell for the
periods presented. See the Unaudited Pro Forma Combined Financial Information.
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128 (SFAS 128)--"Earnings per Share." The
standard requires dual presentation of "basic" and "diluted" earnings per
share. Vlasic will adopt SFAS 128 in its first quarterly earnings statement
issued after the effective date of the Spin-Off.
3. SEGMENT AND GEOGRAPHIC AREA INFORMATION
Vlasic groups its businesses in three operating segments: frozen foods,
grocery products and agricultural products. These operating segments are
managed as strategic units due to their distinct manufacturing processes,
marketing strategies and distribution channels. The frozen foods segment
consists of Swanson frozen foods in the U.S. and Canada and Freshbake frozen
foods in the U.K. The grocery products segment includes Vlasic retail and
foodservice pickles and condiments in the U.S., Open Pit barbecue sauce in the
U.S., SonA
F-8
<PAGE>
VLASIC FOODS INTERNATIONAL INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(000 OMITTED)
and Rowats pickles, canned beans and vegetables in the U.K., Kattus specialty
foods distribution in Germany and Swift canned meat pates and other grocery
products in Argentina. The agricultural products segment includes the U.S.
fresh mushroom business, chilled and frozen beef, frozen cooked beef and canned
corned beef exported from Argentina and contract manufacturing of frozen
foodservice finished product for Campbell's Foodservice in the U.S.
Segment Information:
<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
NET SALES
Frozen Foods.............................. $ 614,467 $ 583,384 $ 609,275
Grocery Products.......................... 538,684 561,154 542,106
Agricultural Products..................... 366,113 369,088 363,346
Eliminations.............................. (10,979) (14,659) (10,409)
---------- ---------- ----------
Total................................... $1,508,285 $1,498,967 $1,504,318
========== ========== ==========
EARNINGS BEFORE INTEREST AND TAXES
Frozen Foods.............................. $ 56,268 $ 15,885 $ 46,757
Grocery Products.......................... 49,513 53,748 38,747
Agricultural Products..................... 10,846 19,337 23,000
---------- ---------- ----------
Total................................... $ 116,627 $ 88,970 $ 108,504
========== ========== ==========
TOTAL ASSETS
Frozen Foods.............................. $ 259,132 $ 258,320 $ 245,141
Grocery Products.......................... 369,922 373,793 392,494
Agricultural Products..................... 266,054 291,218 286,024
---------- ---------- ----------
Total................................... $ 895,108 $ 923,331 $ 923,659
========== ========== ==========
DEPRECIATION AND AMORTIZATION
Frozen Foods.............................. $ 13,614 $ 14,017 $ 14,600
Grocery Products.......................... 16,061 16,255 15,992
Agricultural Products..................... 15,133 15,313 14,872
---------- ---------- ----------
Total................................... $ 44,808 $ 45,585 $ 45,464
========== ========== ==========
CAPITAL EXPENDITURES
Frozen Foods.............................. $ 35,576 $ 25,494 $ 19,435
Grocery Products.......................... 29,399 16,381 15,483
Agricultural Products..................... 14,326 17,178 16,051
---------- ---------- ----------
Total................................... $ 79,301 $ 59,053 $ 50,969
========== ========== ==========
</TABLE>
F-9
<PAGE>
VLASIC FOODS INTERNATIONAL INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(000 OMITTED)
The following presents information about operations in different geographic
areas:
Geographic Information:
<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
NET SALES
United States............................. $ 991,523 $ 963,896 $ 965,118
Europe.................................... 306,210 305,274 304,781
South America............................. 221,531 244,456 244,828
Eliminations.............................. (10,979) (14,659) (10,409)
---------- ---------- ----------
Total................................... $1,508,285 $1,498,967 $1,504,318
========== ========== ==========
EARNINGS BEFORE INTEREST AND TAXES
United States............................. $ 85,965 $ 48,979 $ 67,693
Europe.................................... 10,424 15,568 17,307
South America............................. 20,238 24,423 23,504
---------- ---------- ----------
Total................................... $ 116,627 $ 88,970 $ 108,504
========== ========== ==========
TOTAL ASSETS
United States............................. $ 453,935 $ 448,080 $ 431,438
Europe.................................... 205,496 212,961 226,647
South America............................. 235,677 262,290 265,574
---------- ---------- ----------
Total................................... $ 895,108 $ 923,331 $ 923,659
========== ========== ==========
</TABLE>
Transfers between segments and geographic areas are recorded at cost plus
markup or at market. Identifiable assets are those assets, including goodwill,
which are identified with the operations in each segment or geographic region.
The 1997 restructuring charge of $12,634 is allocated to segments as follows:
frozen foods $2,697 and grocery products $9,937, and to geographic areas as
follows: U.S. $11,334 and Europe $1,300. The 1996 restructuring charge of
$37,202 is allocated to segments as follows: frozen foods $33,202 and grocery
products $4,000, and to geographic areas as follows: U.S. $33,202 and Europe
$4,000.
4. RELATED PARTY TRANSACTIONS
Certain Vlasic businesses participate in Campbell's centralized cash
management system to finance operations. Cash deposits from Vlasic are
transferred to Campbell on a daily basis, and Campbell funds Vlasic
disbursement bank accounts as required. Unpaid balances of checks are included
in accounts payable. No interest has been charged on transactions with
Campbell.
Campbell provided certain selling, general and administrative services to
Vlasic including finance, legal, systems, research and development, benefits,
facilities and shared sales and distribution support. These expenses were
allocated to Vlasic based on net sales, utilization or other methods which
management believes to be reasonable. These allocations were $51,288 in 1997,
$43,878 in 1996 and $45,263 in 1995 and are included in the appropriate lines
of the Combined Statements of Earnings.
The expenses allocated to Vlasic for these services are not necessarily
indicative of the expenses that would have been incurred if Vlasic had been a
separate, independent entity and had managed these functions.
F-10
<PAGE>
VLASIC FOODS INTERNATIONAL INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(000 OMITTED)
Subsequent to the Spin-Off, Vlasic will be required to manage these functions
and will be responsible for the expenses associated with the management of a
public company.
Vlasic is included in the combined federal and certain state income tax
returns of Campbell. Income tax expense was calculated as if Vlasic had filed
separate income tax returns.
Vlasic sells to Campbell beef and mushrooms for use as ingredients in
Campbell's finished products and frozen foodservice finished product from its
agricultural products segment. Vlasic purchases from Campbell retail frozen
food finished product in Canada and Open Pit barbecue sauce in the U.S. These
transactions are at negotiated prices. Included in the Combined Statements of
Earnings are sales to Campbell of $155,563 in 1997, $144,902 in 1996 and
$135,001 in 1995. Included in the Combined Statements of Earnings are purchases
from Campbell of $26,255 in 1997, $27,310 in 1996 and $25,129 in 1995.
As discussed in Note 1 above, Campbell and Vlasic will enter into a multi-
year agreement for the continued (i) supply of beef and mushrooms, and
production of frozen foodservice products in the U.S. by Vlasic and (ii)
production of frozen retail products in Canada and Open Pit barbecue sauce in
the U.S. by Campbell.
5. RESTRUCTURING PROGRAMS
A special charge of $12,634 ($7,757 after tax) was recorded in the first
quarter of 1997 to cover the costs of a restructuring program. The
restructuring program is designed to improve operational efficiency by closing
various pickle facilities and reducing approximately 50 administrative and
operational positions from the worldwide workforce.
The restructuring charge includes approximately $4,643 in cash charges
primarily related to severance and employee benefit costs, substantially all of
which will be paid by the end of the first quarter of 1998. The balance of the
restructuring charge, amounting to $7,991, relates to non-cash charges for
losses on the disposition of plant assets. Vlasic plans to substantially
complete the program in the first quarter of 1998.
A summary of the original reserves and activity through August 3, 1997
follows:
<TABLE>
<CAPTION>
BALANCE
ORIGINAL 1997 AUG. 3,
RESERVES ACTIVITY 1997
-------- -------- -------
<S> <C> <C> <C>
Loss on asset dispositions........................ $ 7,991 $(2,467) $5,524
Severance and benefits............................ 3,253 (333) 2,920
Other............................................. 1,390 0 1,390
------- ------- ------
Total........................................... $12,634 $(2,800) $9,834
======= ======= ======
</TABLE>
A special charge of $37,202 ($22,842 after tax) was recorded in the fourth
quarter of 1996 to cover the costs of a restructuring program designed to
improve operational efficiency in the U.S. frozen food system by closing the
Modesto plant (a reduction of approximately 500 employees) and increasing
production at Omaha and Fayetteville and improve operational efficiency in the
specialty foods distribution business in Germany.
F-11
<PAGE>
VLASIC FOODS INTERNATIONAL INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(000 OMITTED)
The restructuring charge includes approximately $22,077 in cash charges
primarily related to severance and employee benefit costs and $15,125 in non-
cash charges for losses on disposition of plant assets. The program was
completed in fiscal 1997.
A summary of the original reserves and activity through August 3, 1997
follows:
<TABLE>
<CAPTION>
BALANCE BALANCE
ORIGINAL 1996 JULY 28, 1997 AUG. 3,
RESERVES ACTIVITY 1996 ACTIVITY 1997
-------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
Loss on asset dispositions... $15,125 $ (782) $14,343 $(14,343) 0
Severance and benefits....... 13,354 (4,202) 9,152 (9,152) 0
Other........................ 8,723 (2,674) 6,049 (6,049) 0
------- ------- ------- -------- ---
Total...................... $37,202 $(7,658) $29,544 $(29,544) 0
======= ======= ======= ======== ===
</TABLE>
6. OTHER EXPENSE
<TABLE>
<CAPTION>
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Campbell stock price related incentive
programs...................................... $ 8,628 $ 3,288 $ 2,597
Amortization of intangible and other assets.... 2,764 2,691 2,620
Gains on asset sales........................... (8,179) (5,496) (5,489)
Other, net..................................... (767) (324) 245
------- ------- -------
Total........................................ $ 2,446 $ 159 $ (27)
======= ======= =======
</TABLE>
7. ACQUISITIONS
During the first quarter of 1995, Vlasic acquired Stratford-upon-Avon Foods,
a pickle and bean business in the U.K. for $60,100. The acquisition was
accounted for as a purchase transaction and operations are included in the
financial statements from the date of acquisition. Pro forma financial
information would not have a material effect on Vlasic's net sales or net
earnings in 1995. The allocation of the purchase price to assets acquired and
liabilities assumed was based upon fair value estimates as follows:
<TABLE>
<CAPTION>
1995
-------
<S> <C>
Working capital...................................................... $16,900
Fixed assets......................................................... 21,500
Intangibles (goodwill)............................................... 21,700
-------
Total.............................................................. $60,100
=======
</TABLE>
8. PENSION PLANS AND RETIREMENT BENEFITS
Pension Plans. Substantially all U.S. employees of Vlasic participate in
Campbell sponsored non-contributory defined benefit pension plans. Benefits are
generally based on years of service and employees' compensation during the last
years of employment. All plans are funded and contributions are made in amounts
not less than minimum statutory funding requirements nor more than the maximum
amount that can be deducted for U.S. income tax purposes.
F-12
<PAGE>
VLASIC FOODS INTERNATIONAL INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(000 OMITTED)
It is intended that Vlasic will adopt funded and unfunded defined benefit
pension plans with terms that are identical in all material respects to those
of Campbell for active Vlasic U.S. employees as of the Distribution Date and
that Campbell will transfer certain trust assets, as described below, from its
funded plans to Vlasic's plans based upon actuarial determinations consistent
with regulatory requirements.
Net periodic U.S. pension expense allocated to Vlasic was $2,140 in 1997,
$3,428 in 1996 and $3,824 in 1995.
Pension benefits for Vlasic's operations outside the U.S. are provided
principally through government plans and also to a lesser extent by company
sponsored plans. Vlasic will assume company sponsored defined benefit plans and
any related assets will be transferred in accordance with regulatory
requirements. Pension expense for operations outside the U.S. was $5,089 in
1997, $5,993 in 1996 and $6,649 in 1995.
Retiree Benefits. Campbell provides postretirement benefits, including health
care and life insurance, to substantially all retired U.S. employees and their
dependents. Employees who have 10 years of service after the age of 45 and
retire from Vlasic are eligible to participate in the postretirement benefit
plans. Vlasic U.S. employees participate in these plans. Postretirement benefit
expense allocated to Vlasic was $2,667 in 1997, $8,383 in 1996 and $10,426 in
1995.
Pension Plans and Retiree Benefits. The related benefit assets and
liabilities have not been included in the combined financial statements.
Campbell will transfer liabilities for its unfunded pension plans and
postretirement health care and life insurance benefits for active Vlasic
employees. With respect to funded pension plans, Campbell intends to transfer
assets and liabilities to Vlasic's plans approximately equal to projected
benefit obligations accrued prior to the Distribution Date, consistent with
regulatory requirements.
Savings Plans. Vlasic U.S. employees participate in Campbell's savings plans.
After one year of continuous service, Vlasic matches 50% of employee
contributions up to five percent of compensation. In 1997, 1996 and 1995
Campbell increased its contribution to 60% because earnings goals were
achieved. Amounts charged to costs and expenses were $2,671 in 1997, $2,168 in
1996 and $2,079 in 1995.
F-13
<PAGE>
VLASIC FOODS INTERNATIONAL INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(000 OMITTED)
9. TAXES ON EARNINGS
The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
1997 1996 1995
-------- ------- --------
<S> <C> <C> <C>
Income taxes:
Currently payable
Federal........................................ $ 22,229 $29,457 $ 22,699
State.......................................... 3,521 4,371 3,397
Non-U.S........................................ 2,526 6,263 7,161
-------- ------- --------
28,276 40,091 33,257
-------- ------- --------
Deferred
Federal........................................ 7,258 (10,086) 1,939
State.......................................... 1,207 (1,677) 326
Non-U.S........................................ 734 (967) 189
-------- ------- --------
9,199 (12,730) 2,454
-------- ------- --------
Total........................................ $ 37,475 $27,361 $ 35,711
======== ======= ========
Earnings before income taxes:
United States.................................. $ 85,965 $48,979 $ 67,693
Non-U.S........................................ 29,650 39,249 39,000
-------- ------- --------
Total........................................ $115,615 $88,228 $106,693
======== ======= ========
</TABLE>
The following is a reconciliation of effective income tax rates with the U.S.
Federal statutory income tax rate:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Federal statutory income tax rate.......................... 35.0% 35.0% 35.0%
State income taxes (net of federal tax benefit)............ 2.6 2.0 2.3
Tax effect resulting from other foreign activities......... (1.1) (1.7) .5
Tax loss carryforwards..................................... (1.6) -- (.3)
Nontaxable export rebate................................... (2.7) (4.9) (4.3)
Other...................................................... .2 .6 .3
---- ---- ----
Effective income tax rate................................ 32.4% 31.0% 33.5%
==== ==== ====
</TABLE>
F-14
<PAGE>
VLASIC FOODS INTERNATIONAL INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(000 OMITTED)
Deferred tax liabilities and assets are comprised of the following:
<TABLE>
<CAPTION>
AUGUST 3, JULY 28,
1997 1996
--------- --------
<S> <C> <C>
Depreciation............................................. $30,992 $29,556
Capitalized interest..................................... 7,459 7,724
Other.................................................... 5,496 5,633
------- -------
Deferred tax liabilities............................... 43,947 42,913
------- -------
Benefits and compensation................................ 6,353 6,292
Restructuring accruals................................... 3,717 12,165
Tax loss carryforwards................................... 13,100 14,800
Other.................................................... 4,409 4,187
------- -------
Gross deferred tax assets................................ 27,579 37,444
Deferred tax asset valuation allowance................... (13,100) (14,800)
------- -------
Net deferred tax assets................................ 14,479 22,644
------- -------
Net deferred tax liability............................. $29,468 $20,269
======= =======
</TABLE>
For income tax purposes, certain non-U.S. subsidiaries of Vlasic have tax
loss carryforwards of approximately $41 million. Of these carryforwards, $19
million expire through 2001 and $22 million may be carried forward
indefinitely. The current statutory tax rates in these countries range from 31%
to 33%.
A full valuation allowance is recorded as a reduction to Vlasic's estimate of
the deferred tax assets relating to tax loss carryforwards due to the
uncertainty of the ultimate realization of future benefits from such assets.
These deferred tax assets pertain to Vlasic's operations in Argentina and to
its frozen business in the U.K. The uncertainty surrounding the use of U.K. tax
loss carryforwards stems from significant tax law restrictions regarding their
use. Moreover, the limited tax loss carryforward periods and exclusion from
current taxable income of export rebates create uncertainty about whether
Vlasic will be able to utilize its tax loss carryforwards from operations in
Argentina.
Income taxes have not been accrued on undistributed earnings of non-U.S.
subsidiaries of $6,502 which are invested in operating assets and are not
expected to be remitted. If remitted, tax credits are available to
substantially reduce any additional taxes.
10. ACCOUNTS RECEIVABLE
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Customers................................................ $ 99,407 $106,272
Allowances for cash discounts and bad debts.............. (5,241) (5,166)
-------- --------
94,166 101,106
Other.................................................... 15,510 22,048
-------- --------
Total.................................................. $109,676 $123,154
======== ========
</TABLE>
F-15
<PAGE>
VLASIC FOODS INTERNATIONAL INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(000 OMITTED)
11. INVENTORIES
<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Raw materials, containers and supplies................. $ 54,828 $ 74,116
Finished products...................................... 129,088 135,105
--------- ---------
183,916 209,221
Less: Adjustment to LIFO basis......................... (20,064) (27,274)
--------- ---------
Total................................................ $ 163,852 $ 181,947
========= =========
Inventories for which the LIFO method of determining cost is used represented
approximately 62% of combined inventories in 1997 and 58% in 1996.
12. OTHER CURRENT ASSETS
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Prepaid expenses....................................... $ 4,448 $ 4,584
Deferred taxes......................................... 7,347 15,298
Other.................................................. 544 1,053
--------- ---------
Total................................................ $ 12,339 $ 20,935
========= =========
13. PLANT ASSETS
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Land................................................... $ 19,715 $ 23,882
Buildings.............................................. 291,127 291,988
Machinery and equipment................................ 510,283 504,108
Projects in progress................................... 43,961 35,594
--------- ---------
865,086 855,572
Accumulated depreciation............................... (349,440) (353,411)
--------- ---------
Total................................................ $ 515,646 $ 502,161
========= =========
</TABLE>
Depreciation provided in costs and expenses was $42,044 in 1997, $42,894 in
1996 and $42,844 in 1995. Approximately $22 million of capital expenditures are
required to complete projects in progress at August 3, 1997.
F-16
<PAGE>
VLASIC FOODS INTERNATIONAL INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(000 OMITTED)
14. OTHER ASSETS, PRINCIPALLY INTANGIBLE ASSETS
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Purchase price in excess of net assets of businesses
acquired (goodwill).................................. $ 53,977 $ 56,194
Trademarks............................................ 14,000 14,000
Other intangibles..................................... 36,920 36,920
-------- --------
104,897 107,114
Accumulated amortization.............................. (21,522) (18,624)
-------- --------
Total intangible assets............................... 83,375 88,490
Other assets.......................................... 811 1,091
-------- --------
Total............................................... $ 84,186 $ 89,581
======== ========
15. ACCRUED LIABILITIES
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Employee compensation and benefits.................... $ 23,788 $ 29,960
Marketing............................................. 32,105 22,597
Restructuring......................................... 9,834 29,544
Other................................................. 23,187 25,970
-------- --------
Total............................................... $ 88,914 $108,071
======== ========
16. OTHER LIABILITIES
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Deferred compensation................................. $ 8,137 $ 6,622
Postemployment benefits............................... 3,400 3,400
-------- --------
Total............................................... $ 11,537 $ 10,022
======== ========
</TABLE>
17. FINANCIAL INSTRUMENTS
Vlasic does not enter into derivative financial instruments for trading
purposes, nor is it party to any leveraged derivative instruments. The use of
derivative financial instruments is monitored through regular communication
with senior management and the utilization of written guidelines.
Vlasic's use of derivative financial instruments is currently limited to
forward foreign exchange contracts, which are used to hedge firm sale and
purchase commitments denominated in foreign currencies. At August 3, 1997 and
July 28, 1996, open contracts and related deferred gains or losses were not
significant. All open contracts mature in 1998. Gains and losses on the
currency contracts are recognized and offset against exchange gains and losses
on the underlying exposure.
The carrying values of cash and cash equivalents, accounts receivable,
accounts payable and short-term and long-term debt approximate fair value.
F-17
<PAGE>
VLASIC FOODS INTERNATIONAL INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(000 OMITTED)
18. CAMPBELL LONG-TERM INCENTIVE PLAN
Campbell sponsors a long-term incentive compensation plan. Under the plan,
restricted stock and stock options may be granted to certain officers and key
employees. Options are granted at a price not less than the fair value of the
shares on the date of grant and expire not later than ten years after the date
of grant. Options vest over a three-year period. Vlasic's officers and key
employees participate in this plan.
Vlasic accounts for the stock option grants and restricted stock awards in
accordance with Accounting Principles Board Opinion No. 25 and related
interpretations. Accordingly, no compensation expense has been recognized in
the Combined Statements of Earnings for the options as all options are granted
at a price not less than the fair value of the shares on the date of the grant.
In 1997, Vlasic adopted the disclosure provisions of FASB Statement of
Financial Accounting Standards No.123 (SFAS 123)--"Accounting for Stock-Based
Compensation."
Had the compensation cost for the stock option plans been determined based on
the fair value at the grant dates for awards under the plans, consistent with
the alternative method set forth under SFAS 123, Vlasic's net earnings would
have been changed to the pro forma amounts set forth below:
<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
Net Earnings
Reported................................................... $78,140 $60,867
Pro Forma.................................................. 77,106 60,785
The fair value of each option grant is estimated on the date of the grant
using the Black-Scholes option-pricing model with the following weighted
average assumptions used for grants in 1997 and 1996:
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
Expected dividend yield...................................... 1.9% 2.2%
Expected volatility.......................................... 17.5% 16.0%
Risk-free interest rate...................................... 6.4% 6.6%
Expected life................................................ 6 years 6 years
</TABLE>
The weighted-average value of an option granted during the year was $12.90
and $8.43 for the years ended August 3, 1997 and July 28, 1996 respectively.
The pro forma amounts above are not necessarily representative of the effects
of stock-based awards on future pro forma net earnings because (1) future
grants of employee stock options by Vlasic management may not be comparable to
awards made to employees while Vlasic was a part of Campbell, (2) the
assumptions used to compute the fair value of any stock option awards will be
specific to Vlasic and therefore may not be comparable to the Campbell
assumptions used and (3) the pro forma net earnings were determined based upon
stock option grants in 1997 and 1996 only. Accordingly, since compensation
expense associated with such grants would be recognized over a three-year
vesting period, the initial impact of applying SFAS 123 on pro forma net
earnings may not be representative of the potential impact on pro forma net
earnings in future years.
F-18
<PAGE>
VLASIC FOODS INTERNATIONAL INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(000 OMITTED)
Information about Campbell stock options held by Vlasic employees and related
activity is as follows:
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
STOCK OPTION PLANS 1997 PRICE 1996 PRICE 1995 PRICE
- ------------------ ----- -------- ----- -------- ----- --------
<S> <C> <C> <C> <C> <C> <C>
Beginning of year.............. 2,344 $22.53 2,069 $15.20 2,124 $12.63
Granted........................ 306 48.02 683 34.63 295 24.60
Exercised...................... (363) 16.10 (367) 14.13 (321) 11.68
Terminated..................... (32) 24.45 (41) 20.32 (29) 19.82
----- ------ ----- ------ ----- ------
End of year.................. 2,255 $26.94 2,344 $22.53 2,069 $15.20
----- ----- -----
Exercisable at end of year... 1,200 1,156 1,270
===== ===== =====
</TABLE>
<TABLE>
<CAPTION>
STOCK OPTIONS OUTSTANDING EXERCISABLE OPTIONS
--------------------------- ---------------------
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
REMAINING AVERAGE AVERAGE
RANGE OF CONTRACTUAL EXERCISE EXERCISE
EERCISE PRICESX SHARES LIFE PRICE SHARES PRICE
- --------------- ------ ----------- -------- --------- ----------
<S> <C> <C> <C> <C> <C>
$ 7.59-$14.95................ 412 2.81 $13.07 338 $ 13.07
$17.69-$34.84................ 1,547 7.37 $26.60 862 $ 20.31
$38.06-$48.31................ 296 9.90 $48.10 -- --
----- ---------
2,255 1,200
===== =========
</TABLE>
In connection with the separation of Vlasic from Campbell, the following with
respect to restricted stock and stock options will occur:
Restricted stock. Restricted stock which vests by July 31, 1998, or on which
the earnings-based restriction period ends in 1998 will be issued in the form
of Campbell Stock. Restricted stock for Vlasic's employees with an earnings-
based restriction period ending in 2000 will be canceled.
Stock options. Vlasic's employees who hold stock options which are vested as
of the effective date of the Spin-Off will retain those options which will be
exercisable for Campbell Stock in accordance with the grants' original terms
and conditions as long as they remain employees of Vlasic, except that the
number of options and exercise price will be adjusted to preserve the inherent
economic value of the options taking into account the Spin-Off. Stock options
held by Vlasic's employees which are not vested as of the effective date of the
Spin-Off will be converted into options for Vlasic stock. The number of shares
subject to, and the exercise price of, each Campbell option that is converted
to a Vlasic option will be converted based upon a formula that preserves the
inherent economic value and vesting and term provisions of such Campbell
options. The exchange ratio and fair market value of the Vlasic common stock,
upon active trading, will also impact the number of options issued to Vlasic
employees. The number of Campbell stock options held by option holders expected
to become Vlasic employees at August 3, 1997 was 2.4 million with a range of
exercise price from $7.59 to $48.31. The ultimate number of Campbell stock
options to be held by Vlasic employees and the number and exercise price of the
Vlasic stock options to be issued, subject to the above calculation, cannot yet
be determined.
F-19
<PAGE>
VLASIC FOODS INTERNATIONAL INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(000 OMITTED)
Vlasic intends to establish its own long-term incentive plan which will
provide its Board of Directors the flexibility to grant restricted stock,
incentive stock options, stock appreciation rights and non-qualified stock
options to officers, employees and directors of Vlasic.
19. STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Interest Paid........................................ $ 1,600 $ 1,071 $ 2,016
Interest Received.................................... $ 588 $ 329 $ 205
Income Taxes Paid.................................... $28,276 $40,091 $33,257
</TABLE>
20. QUARTERLY DATA (UNAUDITED)
<TABLE>
<CAPTION>
1997
-----------------------------------
FIRST SECOND THIRD FOURTH
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net Sales................................ $365,316 $384,860 $357,152 $400,957
Cost of Products Sold.................... $258,518 $272,478 $248,967 $268,470
Net Earnings............................. $ 9,807 $ 19,708 $ 16,560 $ 32,065
</TABLE>
First quarter 1997 includes after-tax restructuring charges of $7,757. Fourth
quarter 1997 includes 14 weeks. See Note 2.
<TABLE>
<CAPTION>
1996
-----------------------------------
FIRST SECOND THIRD FOURTH
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net Sales................................ $352,483 $394,205 $380,847 $371,432
Cost of Products Sold.................... $256,165 $281,266 $269,680 $246,237
Net Earnings............................. $ 17,180 $ 16,686 $ 19,157 $ 7,844
</TABLE>
Fourth quarter 1996 includes after-tax restructuring charges of $22,842.
F-20
<PAGE>
VLASIC FOODS INTERNATIONAL INC.
COMBINED STATEMENTS OF EARNINGS
SECOND QUARTERS AND SIX MONTHS ENDED FEBRUARY 1, 1998 AND JANUARY 26, 1997
(000 OMITTED)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
----------------------- -----------------------
FEBRUARY 1, JANUARY 26, FEBRUARY 1, JANUARY 26,
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
NET SALES (including $43,815
and $39,669 to related parties
in the second quarters and
$83,632 and $83,831 to related
parties in the six month
periods)...................... $375,317 $384,860 $723,169 $750,176
-------- -------- -------- --------
Costs and expenses
Cost of products sold........ 267,884 272,478 519,224 530,996
Marketing and selling
expenses.................... 58,296 64,841 114,821 127,799
Administrative expenses...... 13,848 13,239 28,732 27,327
Research and development
expenses.................... 1,930 2,063 3,948 3,925
Other (income) expense....... 1,352 2,268 (91) 3,962
Restructuring charge......... 0 0 0 12,634
-------- -------- -------- --------
Total costs and expenses... 343,310 354,889 666,634 706,643
-------- -------- -------- --------
EARNINGS BEFORE INTEREST AND
TAXES......................... 32,007 29,971 56,535 43,533
Interest expense............... 286 735 911 901
Interest income................ 59 179 145 330
-------- -------- -------- --------
Earnings before taxes.......... 31,780 29,415 55,769 42,962
Taxes on earnings.............. 12,942 9,707 20,858 13,447
-------- -------- -------- --------
EARNINGS BEFORE CUMULATIVE
EFFECT OF ACCOUNTING CHANGE... 18,838 19,708 34,911 29,515
Cumulative Effect of Accounting
Change........................ (600) 0 (600) 0
-------- -------- -------- --------
NET EARNINGS................... $ 18,238 $ 19,708 $ 34,311 $ 29,515
======== ======== ======== ========
</TABLE>
The accompanying Notes to Combined Financial Statements on pages F-25 to F-27
are an integral part of the financial statements.
F-21
<PAGE>
VLASIC FOODS INTERNATIONAL INC.
COMBINED BALANCE SHEETS
(000 OMITTED)
<TABLE>
<CAPTION>
FEBRUARY 1, AUGUST 3,
1998 1997
(UNAUDITED) (AUDITED)
----------- ---------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents............................... $ 1,456 $ 9,409
Accounts receivable..................................... 160,119 109,676
Inventories............................................. 163,689 163,852
Other current assets.................................... 15,070 12,339
-------- --------
Total current assets................................ 340,334 295,276
-------- --------
Plant assets, net of depreciation....................... 507,532 515,646
Other assets, principally intangible assets, net of
amortization........................................... 89,221 84,186
-------- --------
Total assets........................................ $937,087 $895,108
======== ========
CURRENT LIABILITIES
Notes payable........................................... $ 11,944 $ 191
Payable to suppliers and others......................... 82,470 95,684
Overdrafts.............................................. 9,058 27,417
Accrued liabilities..................................... 63,024 88,914
-------- --------
Total current liabilities........................... 166,496 212,206
-------- --------
Long-term debt.......................................... 2,018 2,252
Deferred income taxes................................... 36,892 36,815
Other liabilities....................................... 12,293 11,537
-------- --------
Total liabilities................................... 217,699 262,810
-------- --------
SHAREOWNER'S EQUITY
Campbell net investment................................. 719,660 633,168
Cumulative translation adjustments...................... (272) (870)
-------- --------
Total shareowner's equity........................... 719,388 632,298
-------- --------
Total liabilities and shareowner's equity........... $937,087 $895,108
======== ========
</TABLE>
The accompanying Notes to Combined Financial Statements on pages F-25 to F-27
are an integral part of the financial statements.
F-22
<PAGE>
VLASIC FOODS INTERNATIONAL INC.
COMBINED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED FEBRUARY 1, 1998 AND JANUARY 26, 1997
(000 OMITTED)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
-----------------------
FEBRUARY 1, JANUARY 26,
1998 1997
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings........................................... $ 34,311 $ 29,515
Non-cash charges to net earnings
Cumulative effect of accounting change............... 600
Restructuring charge................................. 12,634
Depreciation and amortization........................ 23,059 20,232
Deferred income taxes................................ 627 941
Other, net........................................... 756 427
Changes in working capital
Accounts receivable.................................. (50,159) (38,020)
Inventories.......................................... 368 1,673
Other current assets and liabilities................. (56,369) (27,153)
-------- --------
Net cash (used in) provided by operating
activities........................................ (46,807) 249
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of plant assets.............................. (23,270) (35,385)
Sales of plant assets.................................. 4,635 1,058
Business acquired...................................... (6,350)
Other, net............................................. 146 249
-------- --------
Net cash used in investing activities.............. (24,839) (34,078)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term borrowings..................... (234) (319)
Short-term borrowings.................................. 11,753
Repayments of short-term borrowings.................... (23)
Net transactions with Campbell......................... 52,181 33,576
-------- --------
Net cash provided by financing activities.......... 63,700 33,234
-------- --------
Effect of exchange rate changes on cash................ (7) (38)
-------- --------
NET CHANGE IN CASH AND CASH EQUIVALENTS............ (7,953) (633)
Cash and cash equivalents at beginning of six months... 9,409 5,553
-------- --------
CASH AND CASH EQUIVALENTS AT END OF SIX MONTHS......... $ 1,456 $ 4,920
======== ========
</TABLE>
The accompanying Notes to Combined Financial Statements on pages F-25 to F-27
are an integral part of the financial statements.
F-23
<PAGE>
VLASIC FOODS INTERNATIONAL INC.
COMBINED STATEMENTS OF SHAREOWNER'S EQUITY
SIX MONTHS ENDED FEBRUARY 1, 1998 AND JANUARY 26, 1997
(000 OMITTED)
(UNAUDITED)
<TABLE>
<CAPTION>
CUMULATIVE
CAMPBELL TRANSLATION
NET INVESTMENT ADJUSTMENTS TOTAL
-------------- ----------- --------
<S> <C> <C> <C>
SHAREOWNER'S EQUITY, JULY 28, 1996........ $659,057 $ 809 $659,866
First six months 1997 net earnings........ 29,515 29,515
Translation adjustments................... (384) (384)
Net transactions with Campbell............ 33,576 33,576
-------- ----- --------
SHAREOWNER'S EQUITY, JANUARY 26, 1997..... $722,148 $ 425 $722,573
======== ===== ========
SHAREOWNER'S EQUITY, AUGUST 3, 1997....... $633,168 $(870) $632,298
First six months 1998 net earnings........ 34,311 34,311
Translation adjustments................... 598 598
Net transactions with Campbell............ 52,181 52,181
-------- ----- --------
SHAREOWNER'S EQUITY, FEBRUARY 1, 1998..... $719,660 $(272) $719,388
======== ===== ========
</TABLE>
The accompanying Notes to Combined Financial Statements on pages F-25 to F-27
are an integral part of the financial statements.
F-24
<PAGE>
VLASIC FOODS INTERNATIONAL INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
(000 OMITTED)
(UNAUDITED)
1. ADJUSTMENTS
The combined financial statements reflect all adjustments which are, in the
opinion of management, necessary for a fair presentation of the results for the
indicated periods. Except for the Cumulative Effect of Change in Accounting
Principle discussed in Note 2, all such adjustments are of a normal recurring
nature.
2. CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE
In the second quarter of fiscal 1998, the company adopted the provisions of
the Emerging Issues Task Force (EITF) consensus resulting on Issue 97-13,
"Accounting for Costs Incurred in Connection with a Consulting Contract that
Combines Business Process Reengineering and Information Technology
Transformation." The EITF, a sub-committee of the Financial Accounting
Standards Board, reached a consensus that costs of business process
reengineering activities that are part of a systems development project are to
be expensed as incurred. Furthermore, the consensus ruling stipulates that the
unamortized balance of such previously capitalized business process
reengineering costs are to be written off as a cumulative effect of accounting
change as of the beginning of the quarter which includes November 20, 1997. The
company previously capitalized certain consulting costs related to the purchase
and implementation of software for internal use. The cumulative effect of this
change in accounting principle is $600, net of an income tax benefit of
approximately $370.
3. ACQUISITION
During the second quarter of 1998, Vlasic acquired the trademark and certain
equipment for the SAFRA canned spreadable meats business in Argentina for
$6,350. The acquisition was accounted for as a purchase transaction and
operations are included in the financial statements from the date of
acquisition. The trademark will be amortized over the period of expected
benefit -- 40 years. Pro forma financial information would not have a material
effect on Vlasic's net sales or net earnings in 1998. The allocation of the
purchase price to assets acquired and liabilities assumed was based upon fair
value estimates as follows:
<TABLE>
<S> <C>
Fixed Assets...................................... $ 500
Intangibles (trademark)........................... 5,850
------
TOTAL........................................... $6,350
======
</TABLE>
F-25
<PAGE>
VLASIC FOODS INTERNATIONAL INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(000 OMITTED)
(UNAUDITED)
4. SEGMENT INFORMATION
See note 3 to the Combined Financial Statements on Pages F-8 to F-10 for a
description of the segments.
<TABLE>
<CAPTION>
SECOND QUARTERS ENDED SIX MONTHS ENDED
----------------------- -----------------------
FEBRUARY 1, JANUARY 26, FEBRUARY 1, JANUARY 26,
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Sales
Frozen Foods............. $161,939 $160,508 $319,593 $319,189
Grocery Products......... 122,088 137,698 224,283 250,134
Agricultural Products.... 93,811 88,917 185,480 186,146
Eliminations............. (2,521) (2,263) (6,187) (5,293)
-------- -------- -------- --------
Total.................. $375,317 $384,860 $723,169 $750,176
======== ======== ======== ========
Earnings Before Interest
and Taxes
Frozen Foods............. $ 19,336 $ 14,847 $ 38,138 $ 27,130
Grocery Products......... 14,101 13,324 19,087 12,122
Agricultural Products.... (1,430) 1,800 (690) 4,281
-------- -------- -------- --------
Total.................. $ 32,007 $ 29,971 $ 56,535 $ 43,533
======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
FEBRUARY 1, AUGUST 3,
1998 1997
----------- ---------
<S> <C> <C>
Total Assets
Frozen Foods......................................... $286,456 $259,132
Grocery Products..................................... 356,489 369,922
Agricultural Products................................ 294,142 266,054
-------- --------
Total.............................................. $937,087 $895,108
======== ========
</TABLE>
5. INVENTORIES
<TABLE>
<CAPTION>
FEBRUARY 1, AUGUST 3,
1998 1997
----------- ---------
<S> <C> <C>
Raw materials, containers and supplies................ $ 61,099 $ 54,828
Finished products..................................... 119,365 129,088
-------- --------
180,464 183,916
Less: Adjustment to LIFO basis........................ (16,775) (20,064)
-------- --------
Total............................................... $163,689 $163,852
======== ========
</TABLE>
6. RESTRUCTURING PROGRAM
A special charge of $12,634 ($7,757 after tax) was recorded in the first
quarter of 1997 to cover the costs of a restructuring program. The
restructuring program was designed to improve operational efficiency by closing
various pickle facilities and reducing approximately 50 administrative and
operational positions from the worldwide workforce.
F-26
<PAGE>
VLASIC FOODS INTERNATIONAL INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(000 OMITTED)
(UNAUDITED)
The restructuring charge included approximately $4,643 in cash charges
primarily related to severance and employee benefit costs. The balance of the
restructuring charge, amounting to $7,991, related to non-cash charges for
losses on the disposition of plant assets. The program is now substantially
completed.
A summary of the original reserves and activity through November 2, 1997
follows:
<TABLE>
<CAPTION>
LOSS ON SEVERANCE
ASSET AND
DISPOSITIONS BENEFITS OTHER TOTAL
------------ --------- ------- -------
<S> <C> <C> <C> <C>
Original reserves and Balance
October 27, 1996................ $ 7,991 $ 3,253 $ 1,390 $12,634
Second quarter fiscal 1997
activity........................ (252) (252)
------- ------- ------- -------
Balance January 26, 1997......... 7,991 3,001 1,390 12,382
Remainder fiscal 1997 activity... (2,467) (81) 0 (2,548)
------- ------- ------- -------
Balance August 3, 1997........... 5,524 2,920 1,390 9,834
First quarter fiscal 1998
activity........................ (5,524) (2,920) (1,390) (9,834)
------- ------- ------- -------
Balance November 2, 1997......... $ 0 $ 0 $ 0 $ 0
======= ======= ======= =======
</TABLE>
7. OTHER (INCOME) EXPENSE
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
----------------------- -----------------------
FEBRUARY 1, JANUARY 26, FEBRUARY 1, JANUARY 26,
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Gain on fire insurance
settlement................ $ 0 $ 0 $(3,357) $ 0
Campbell stock price
related incentive
programs.................. 961 1,391 2,038 2,348
Amortization of intangible
and other assets.......... 685 703 1,351 1,375
Other, net................. (294) 174 (123) 239
------ ------ ------- ------
Total.................... $1,352 $2,268 $ (91) $3,962
====== ====== ======= ======
</TABLE>
F-27
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
2.1 Form of Separation and Distribution Agreement between Campbell Soup
Company and Vlasic Foods International Inc.
3.1 Form of Certificate of Incorporation of Vlasic Foods International
Inc., to be in effect upon the effectiveness of the Spin-Off
3.2 Form of Bylaws of Vlasic Foods International Inc., to be in effect
upon the effectiveness of the
Spin-Off
9.1 Major Stockholders' Voting Agreement dated June 2, 1990 among Dorrance
H. Hamilton, Charles H. Mott and John A. van Beuren, as Voting
Trustees, and certain related persons
10.1 Form of Transition Services Agreement between Campbell Soup Company
and Vlasic Foods International Inc.
10.2 Form of Benefits Sharing Agreement between Campbell Soup Company and
Vlasic Foods International Inc.
10.3 Form of Swanson Trademark License Agreement between Campbell Soup
Company and Vlasic Foods International Inc.
10.4 Form of Technology Sharing Agreement between Campbell Soup Company and
Vlasic Foods International Inc.
10.5 Form of Tax Sharing and Indemnification Agreement between Campbell
Soup Company and Vlasic Foods International Inc. and certain of its
subsidiaries
10.6 Credit Agreement dated February 20, 1998 among Campbell Soup Company
and The Chase Manhattan Bank and Morgan Guaranty Trust Company of New
York, as Agents, to be assigned to and assumed by Vlasic Foods
International Inc. upon the effectiveness of the Spin-Off
10.7 Personal Choice Plan
10.8 Deferred Compensation Plan
10.9 1998 Long-Term Incentive Plan
10.10 Annual Incentive Plan
10.11 Director Compensation Plan
21 Subsidiaries of Vlasic Foods International Inc.
27 Selected Financial Data Schedule
</TABLE>
<PAGE>
EXHIBIT 2.1
FORM OF SEPARATION AND DISTRIBUTION AGREEMENT
dated as of
March __, 1998
between
CAMPBELL SOUP COMPANY
and
VLASIC FOODS INTERNATIONAL INC.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I DEFINITIONS...................................................... 1
Section 1.1 Definitions................................................. 1
ARTICLE II THE DISTRIBUTION................................................. 10
Section 2.1 Cooperation Prior to the Distribution....................... 10
Section 2.2 CSC Board Action; Conditions Precedent to the Distribution.. 11
Section 2.3 The Distribution............................................ 11
Section 2.4 Fractional Shares........................................... 12
ARTICLE III CONVEYANCE OF CERTAIN ASSETS; ASSUMPTION OF CERTAIN
LIABILITIES; CERTAIN OTHER ARRANGEMENTS.......................... 12
Section 3.1 Internal Transfer Transactions.............................. 12
Section 3.2 Conveyance of Assets; Assumption of Liabilities............. 12
Section 3.3 Financing Arrangements...................................... 15
Section 3.4 Conduct of Spinco Pending Distribution...................... 15
Section 3.5 Director Resignations....................................... 15
Section 3.6 Settlement of Intercompany Accounts......................... 15
Section 3.7 Termination of Intercompany Agreements...................... 15
Section 3.8 Guaranteed Spinco Liabilities............................... 16
Section 3.9 Covenants Regarding Domestic Grocery Business of CSC........ 16
Section 3.10 The Non-U.S. Plan........................................... 17
Section 3.11 Corporate Name.............................................. 17
ARTICLE IV MUTUAL RELEASES.................................................. 19
Section 4.1 Release of Pre-Distribution Claims.......................... 19
ARTICLE V INDEMNIFICATION.................................................. 20
Section 5.1 Spinco Indemnification of the CSC Group..................... 20
Section 5.2 CSC Indemnification of Spinco Group......................... 20
Section 5.3 Insurance and Third Party Obligations....................... 21
Section 5.4 Notice and Payment of Claims................................ 21
Section 5.5 Notice and Defense of Third-Party Claims.................... 21
Section 5.6 Exclusive Remedy; Waiver of Jury Trial...................... 22
Section 5.7 Existing Claims............................................. 22
ARTICLE VI INSURANCE........................................................ 23
Section 6.1 Insurance Policies and Rights............................... 23
Section 6.2 Claims...................................................... 24
Section 6.3 Administration and Reserves................................. 25
</TABLE>
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<TABLE>
<S> <C>
Section 6.4 Retrospectively-Rated Premium Adjustments................... 25
Section 6.5 Allocation of Insurance Proceeds; Cooperation............... 25
Section 6.6 Reimbursement of Expenses................................... 26
Section 6.7 Insurer Insolvency or Coverage Controversy.................. 26
Section 6.8 Direct Responsibility for Claims............................ 26
Section 6.9 Assistance, Waiver of Conflict and Shared Defense........... 27
ARTICLE VII SERVICES AND RELATED MATTERS..................................... 27
Section 7.1 Performance of Services..................................... 27
Section 7.2 Independence................................................ 27
ARTICLE VIII CERTAIN OTHER MATTERS............................................ 27
Section 8.1 Benefits Agreement.......................................... 27
Section 8.2 Tax Matters................................................. 27
Section 8.3 Intellectual Property Matters............................... 27
Section 8.4 Treatment of Assets Transferred and Liabilities Assumed..... 27
ARTICLE IX INFORMATION...................................................... 28
Section 9.1 Access to Information....................................... 28
Section 9.2 Litigation Cooperation...................................... 28
Section 9.3 Privilege Matters........................................... 28
Section 9.4 Reimbursement............................................... 29
Section 9.5 Retention of Records........................................ 29
Section 9.6 Confidentiality............................................. 29
ARTICLE X INTEREST ON PAYMENTS............................................. 30
Section 10.1 Interest on Payments........................................ 30
ARTICLE XI GENERAL.......................................................... 30
Section 11.1 Termination................................................. 30
Section 11.2 Effect of Termination....................................... 30
Section 11.3 Expenses.................................................... 30
Section 11.4 Notices..................................................... 30
Section 11.5 Amendment and Waiver........................................ 31
Section 11.6 Entire Agreement............................................ 31
Section 11.7 Survival.................................................... 31
Section 11.8 Parties in Interest......................................... 31
Section 11.9 Further Assurances and Consents............................. 32
Section 11.10 Severability................................................ 32
Section 11.11 Governing Law............................................... 32
Section 11.12 Counterparts................................................ 32
Section 11.13 Assignment.................................................. 32
Section 11.14 Disputes.................................................... 32
</TABLE>
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TABLE OF EXHIBITS
Exhibit A - Internal Transfer Transactions
Exhibit B - Spinco Balance Sheet
TABLE OF SCHEDULES
Schedule 1.1 - Specified Collective Bargaining Agreements
Schedule 2.1(i) - Non-U.S. Plan
Schedule 3.7(b)(ii) - Certain Intercompany Agreements
<PAGE>
SEPARATION AND DISTRIBUTION AGREEMENT
-------------------------------------
THIS IS A SEPARATION AND DISTRIBUTION AGREEMENT, dated as of March
___, 1998 (this AGREEMENT), by and between Campbell Soup Company, a New Jersey
corporation (together with its successors and permitted assigns, CSC), and
Vlasic Foods International Inc., a New Jersey corporation (together with its
successors and permitted assigns, SPINCO).
Background
----------
A. Spinco is presently a wholly-owned subsidiary of CSC.
B. The Board of Directors of CSC has determined that it is in the
best interest of CSC and the shareowners of CSC to make a distribution (the
DISTRIBUTION) to holders of CSC Common Stock (as defined herein), on the terms
set forth in this Agreement, of all of the outstanding shares of Spinco Common
Stock (as defined herein) at the rate of one share of Spinco Common Stock for
every ten shares of CSC Common Stock outstanding as of the Record Date (as
defined herein).
C. It is the intention of the parties that the Distribution will not
be taxable to the shareowners of CSC pursuant to Section 355 of the Code (as
defined herein).
D. The parties have determined that it is necessary and desirable to
set forth in this Agreement the principal corporate transactions required to
effect the Distribution and other terms and provisions that will govern certain
matters following such Distribution.
E. In connection with the Distribution, CSC and Spinco, and members
of their respective Groups, also intend to enter into the Benefits Agreement,
the Intellectual Property Agreements, the Tax Agreement, the Transition Services
Agreement and the other Ancillary Agreements (as such terms are defined herein)
to effect the separation of Spinco and CSC and to govern the relationship of
Spinco and CSC after the Distribution with respect to the matters covered by
such agreements.
Terms
-----
THEREFORE, in consideration of the foregoing premises and the mutual
agreements and covenants contained in this Agreement, and intending to be
legally bound, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. As used herein, the following terms have the
following meanings:
ACTION means any claim, suit, arbitration, inquiry, proceeding or
investigation by or before any court, governmental or other regulatory or
administrative agency or commission or any other tribunal.
AFFILIATE means a Person that controls, is controlled by, or is under
common control with such Person. As used herein, CONTROL means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such entity, whether through ownership of voting
securities or other interests, by contract or otherwise.
<PAGE>
ANCILLARY AGREEMENTS means all of the written agreements, instruments,
understandings, assignments and other arrangements entered into in connection
with the transactions contemplated hereby, including, without limitation, the
Benefits Agreement, the Intellectual Property Agreement, the Tax Agreement and
the Transition Services Agreement, and the agreements and instruments entered
into in connection with the Internal Transfer Transactions.
ASSETS means any and all assets, properties and rights (including
goodwill), wherever located (including in the possession of vendors or other
third parties or elsewhere), whether real, personal or mixed, tangible,
intangible or contingent in each case whether or not recorded or reflected or
required to be recorded or reflected on the books and records or financial
statements of any Person, including, without limitation, the following:
(i) all accounting and other books, records and files, including
audit files, whether in paper, microfilm, microfiche, computer tape or
disc, magnetic tape or any other form;
(ii) all apparatus, computers and other electronic data processing
equipment, fixtures, trade fixtures, machinery, equipment, capital and
other spares, furniture, office equipment, automobiles, trucks and
aircraft, rolling stock, vessels, motor vehicles, trailers and other
transportation equipment, special and general tools, test devices,
prototypes and models and any other tangible personal property;
(iii) all inventories of materials, raw materials, supplies, work-in-
process, consigned goods, finished goods, packaging and all products and
product samples;
(iv) all interests in real property of whatever nature, including
easements, leases and licenses, whether as owner, mortgagee or holder of a
Security Interest in real property, lessor, sublessor, lessee, sublessee or
otherwise;
(v) all buildings and other improvements to real property and all
leasehold improvements;
(vi) all bonds, notes, debentures, stock or other securities issued
by any Subsidiary or any other Person, all loans, advances or other
extensions of credit or capital contributions to any Subsidiary or any
other Person, all certificates of deposit, banker's acceptances,
certificates of interest or participation in profit sharing agreements,
collateral trust certificates, preorganization certificates or
subscriptions, transferable shares, investment contracts, voting trust
certificates, fractional undivided interests in oil, gas or other mineral
rights, puts, calls, straddles, options and other securities of any kind;
(vii) all license agreements, leases of personal property and other
leases, open purchase orders for raw materials, supplies, parts or
services, unfilled orders for the manufacture or sale of products, other
sales or purchase agreements, other commitments or arrangements, permits,
distribution arrangements, and other contracts, agreements, or commitments;
(viii) all deposits, letters of credit and performance and surety
bonds;
(ix) all technical information, data, specifications, research and
development information, engineering drawings, operating and maintenance
manuals, and materials and
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analyses prepared by consultants and other third parties; environmental
clean-up technology, safety and industrial hygiene methods and technology;
(x) all technology, domestic and foreign patents, statutory,
common law and registered copyrights, trade names, registered and
unregistered trademarks, service marks, service names, trade styles,
product bar codes and associated goodwill, and registrations and
applications for any of the foregoing, trade secrets, inventions, recipes,
formulas, processes, designs, know-how, or other confidential or
proprietary information and licenses from third Persons granting the right
to use any of the foregoing and other rights in, to and under the foregoing
(it being understood that any transfer of Assets described in this clause
(x) shall be made pursuant to the Intellectual Property Agreements);
(xi) all computer applications, programs and other software and
databases (including all embodiments or fixations thereof and related
documentation, registrations and franchises, and all additions,
improvements, enhancements, updates and accessions thereto), all technical
manuals and documentation made in connection with the foregoing, and the
right to sue for past infringement thereof, and all licenses and rights
with respect to the foregoing or of like nature, including operating
software, network software, design software, design tools, systems
documentation and instructions;
(xii) all cost information, sales and pricing data, customer
prospect lists, supplier records, customer and supplier lists, customer and
vendor data, correspondence and lists, product literature, artwork, design,
development and manufacturing files, vendor and customer drawings,
formulations and specifications, quality records and reports, lists of
advertisers, records pertaining to advertisers and accounts, and other
books, records, studies, surveys, reports, plans and document forms and any
other business information;
(xiii) all prepayments or prepaid expenses, trade accounts and other
accounts and notes receivable, deferred taxes and all other current assets;
(xiv) the right to receive mail, payments on accounts receivable and
other communications;
(xv) all rights under contracts, agreements, warranties or
guaranties, all claims or rights or judgments against any Person, all
rights in connection with any bids or offers and all claims, choses in
action, rights of recovery and rights of set-off or similar rights, whether
accrued or contingent, and refunds and deposits;
(xvi) all rights under insurance policies and all rights in the
nature of insurance, indemnification or contribution;
(xvii) all licenses, permits, approvals and authorizations which have
been issued by any governmental authority;
(xviii) advertising and marketing materials and other printed or
written materials;
(xix) employee contracts, including any rights thereunder to
restrict an employee or former employee from competing in certain respects,
and personnel and medical files and records;
3
<PAGE>
(xx) cash, cash equivalents, bank accounts, lock boxes and other
deposit arrangements; and
(xxi) interest rate, currency, commodity or other swap, collar, cap,
floor, or other hedging or similar agreements or arrangements.
ASSUMED SENIOR DEBT FACILITY AGREEMENTS means the Credit Agreement,
dated as of February 20, 1998, among CSC, Spinco and Morgan Guaranty Trust
Company of New York and the other parties thereto (and any ancillary agreements
thereto).
BENEFITS AGREEMENT means the Employee Benefits and Compensation
Agreement entered into on or prior to the Distribution Date between CSC and
Spinco, as amended from time to time.
CERCLA means the Comprehensive Environmental Response, Compensation
and Liability Act (42 U.S.C. Section 9601 et. seq.), as amended.
CLAIMS ADMINISTRATION means the processing of claims made under the
Insurance Policies, including the reporting of claims to the insurance carrier,
management and defense of claims and providing for the appropriate releases upon
settlement of claims.
CODE means the Internal Revenue Code of 1986, as amended.
COMMISSION means the United States Securities and Exchange Commission.
CONTINGENT GAIN means any claim or other right of CSC or Spinco or any
member of their respective Groups, whenever arising, against any Person other
than CSC or Spinco or any member of their respective Groups, if and to the
extent that (i) such claim or right has accrued as of the Distribution Date
(based on then existing law) and (ii) the existence or scope of the obligation
of such other Person as of the Distribution Date was not acknowledged, fixed or
determined in any material respect, due to a dispute or other uncertainty as of
the Distribution Date or as a result of the failure of such claim or other right
to have been discovered or asserted as of the Distribution Date. A claim or
right meeting the foregoing definition shall be considered a Contingent Gain
regardless of whether there was any proceeding pending, threatened or
contemplated as of the Distribution Date with respect thereto. For purposes of
the foregoing, a claim or right shall be deemed to have accrued as of the
Distribution Date if all the elements of the claim necessary for its assertion
shall have occurred on or prior to the Closing Date, such that the claim or
right, were it asserted in a proceeding on or prior to the Distribution Date,
would not be dismissed by a court on ripeness or similar grounds.
Notwithstanding the foregoing, none of (i) any proceeds from Insurance Policies,
(ii) any reversal of any litigation or other reserve, or (iii) any matters
relating to Taxes (which are governed by the Tax Agreement) shall be deemed to
be a Contingent Gain.
CSC ASSETS means all of the Assets, other than the Spinco Assets, held
on the Distribution Date by any member of either Group.
CSC BUSINESS means the business now or formerly conducted by CSC and
its present and former Subsidiaries, other than the Spinco Business.
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<PAGE>
CSC COMMON STOCK means the outstanding shares of capital stock, par
value $.0375 per share, of CSC.
CSC GROUP means CSC and its Subsidiaries, excluding any member of the
Spinco Group.
CSC LIABILITIES means (i) Liabilities of CSC under this Agreement or
any Ancillary Agreement, (ii) Liabilities, other than Spinco Liabilities,
incurred in connection with the conduct or operation of the CSC Business or the
ownership, leasing or use of the CSC Assets (including liabilities arising under
contracts, real property and leasehold interests), whether absolute or
contingent, liquidated or unliquidated, known or unknown, and whether arising
before, on or after the Distribution Date, (iii) Divested Business Liabilities
and (iv) Identified Non-Operating Real Property Liabilities.
DISTRIBUTION is defined in the Background to this Agreement.
DISTRIBUTION AGENT means First Chicago Trust Company of New York,
Jersey City, New Jersey, in its capacity as agent for CSC in connection with the
Distribution.
DISTRIBUTION DATE means the open of business on March 30, 1998, or
such other business day as of which the Distribution shall be effective, as
determined by the Board of Directors of CSC.
DIVESTED BUSINESS LIABILITIES means any Liabilities, whether arising
before, on or after the Distribution Date, relating to or associated with (i)
any business or operations sold or otherwise divested to an unaffiliated third
party by a member of either Group at any time prior to the Distribution Date or
(ii) any real property sold or otherwise divested to an unaffiliated third party
by a member of either Group at any time prior to the Distribution Date or (iii)
any real property (A) in which a member of either Group maintained a leasehold
interest at any time prior to the Distribution Date and (B) in which no member
of the Spinco Group maintains a leasehold interest (or otherwise occupies or has
any right to occupy) as of the Distribution Date.
ENVIRONMENTAL LAWS means all foreign, federal, state and local
environmental and employee protection laws, rules, regulations, common law,
judgments, orders, consent agreements, work practices and standards.
ENVIRONMENTAL LIABILITIES means any and all losses, claims, demands,
liabilities, obligations, causes of action, damages, costs and expenses, fines
or penalties (including attorney fees and other defense costs), known or
unknown, foreseen or unforeseen, whether contingent or otherwise, fixed or
absolute, whether arising before, on or after the Distribution Date arising out
of or related to (i) environmental conditions, including the presence, Release,
threat of Release, Management or exposure of or to Hazardous Materials, whether
into the air, soil, ground or surface waters on-site or off-site or arising from
the off-site transportation, storage, treatment, recycling or disposal of
Hazardous Materials Managed or Released, or any costs or expenses for any
Remediation; or (ii) any violation of any Environmental Law (including costs and
expenses for pollution control equipment required to bring into compliance with
Environmental Laws and fines, penalties and defense costs), including CERCLA.
EXCHANGE ACT means the Securities Exchange Act of 1934, as amended.
5
<PAGE>
CSC CONTINGENT GAIN means any Contingent Gain if such Contingent Gain
primarily relates to the CSC Business (ignoring, for this purpose, the
difference in the relative sizes of the CSC Business and the Spinco Business) or
if such Contingent Gain is expressly assigned to CSC pursuant to this Agreement
or any Ancillary Agreement.
FORM 10 means the registration statement on Form 10 filed by Spinco
with the Commission to effect the registration of the Spinco Common Stock
pursuant to the Exchange Act, as such registration statement may be amended from
time to time.
GROUP means the CSC Group or the Spinco Group.
GUARANTEED SPINCO LIABILITIES means all Spinco Liabilities on which
any member of the CSC Group is an obligor by reason of any guarantee, suretyship
or similar contractual commitment.
HAZARDOUS MATERIALS means any hazardous, toxic or polluting materials,
substances, wastes, pollutants or contaminants (including petroleum, petroleum
products, radioactive materials, asbestos or asbestos-containing materials)
which are defined or regulated under any Environmental Law or any other
compound, mixture, element, solution or substance which poses or may pose a
present or potential hazard to human health or the environment.
HEADQUARTERS FACILITY means the land, buildings and improvements owned
by CSC located at Campbell Place, Camden, New Jersey.
IDENTIFIED NON-OPERATING REAL PROPERTY LIABILITIES means any
Liabilities, whether arising before, on or after the Distribution Date, relating
to or associated with the non-operating real property identified on Exhibit A to
be transferred by Spinco or another member of the Spinco Group to CSC or another
member of the CSC Group.
INFORMATION STATEMENT means the information statement to be sent to
each holder of CSC Common Stock in connection with the Distribution.
INSURANCE ADMINISTRATION means, with respect to each Insurance Policy,
(i) the accounting for, and payment of, retrospectively-rated premiums, defense
costs, deductibles and retentions as appropriate under the terms and conditions
of each of the Insurance Policies, (ii) the reporting to excess insurance
carriers of any losses or claims which may cause the pre-occurrence or aggregate
limits of any Insurance Policy to be exceeded and (iii) the distribution of
Insurance Proceeds as contemplated by this Agreement.
INSURANCE POLICIES means the insurance policies and insurance
contracts of any kind that are owned or maintained by, or provide a benefit in
favor of, any member of either Group or any of its predecessors as the insured
interest, including, without limitation, primary and excess policies, commercial
general liability policies, commercial automobile insurance policies, aviation
and aircraft insurance policies, workers' compensation policies (including,
without limitation, occupational disease), property, casualty and officers'
liability insurance policies, fiduciary liability insurance policies, commercial
crime insurance policies, and self-insurance and captive insurance company
arrangements, together with the rights, privileges and benefits arising
thereunder.
INSURANCE PROCEEDS means monies received by or on behalf of an insured
from an insurance carrier or paid by an insurance carrier on behalf of an
insured.
6
<PAGE>
INSURED CLAIMS means those Liabilities and losses, damages and costs
that, individually or in the aggregate, are covered within the terms and
conditions of any of the Insurance Policies, whether or not subject to
deductibles, self-insured retention, coinsurance, uncollectibility or
retrospectively-rated premium adjustments, but only to the extent such
Liabilities are within applicable Insurance Policy limits, including aggregates.
INTELLECTUAL PROPERTY AGREEMENTS means the Swanson Trademark License
Agreement between CSC Brands Inc. and Vlasic International Brands Inc., the
Swanson Trademark License Agreement between CSC and Vlasic International Brands
Inc., the Trademark License Agreement between CSC Brands, Inc. and Vlasic
International Brands Inc., [the Trademark License Agreement between __________
and Vlasic International Brands Inc.,] and the Technology Sharing Agreement
between CSC and Spinco, each entered into on or prior to the Distribution Date,
as each may be amended from time to time.
INTERNAL TRANSFER TRANSACTIONS means, collectively, each of the
distributions, transfers, conveyances, contributions, assignments and other
transactions described and set forth on Exhibit A attached hereto, and, in
addition, those described or contemplated by the Information Statement and the
private letter ruling from the Internal Revenue Service described in Section
2.2(e) (or in the various private letter ruling request submissions made to the
Internal Revenue Service in connection therewith).
LIABILITIES means any and all claims, debts, liabilities and
obligations, including Environmental Liabilities, whether absolute or
contingent, matured or not matured, liquidated or unliquidated, accrued or
unaccrued, known or unknown, whenever arising, including all costs and expenses
relating thereto, and including, without limitation, those debts, liabilities
and obligations arising under this Agreement, any law, rule, regulation, action,
order or consent decree of any governmental entity or any award of any
arbitrator of any kind, and those arising under any contract, commitment or
undertaking.
MANAGE means use, possess, generate, treat, manufacture, process,
handle, store, recycle, transport or dispose, and MANAGEMENT means the analogous
noun forms of the foregoing verbs.
PERSON means an individual, a general or limited partnership, a
corporation, a trust, a joint venture, an unincorporated organization, a limited
liability entity, any other entity, including any governmental authority.
RECORD DATE means March 9, 1998, or such other date as is designated
by CSC's Board of Directors as the record date for determining the shareowners
of CSC entitled to receive the Distribution.
RELEASE means release, spill, leak, discharge, dispose of, pump, pour,
emit, empty, inject, leach, dump or allow to escape.
SECURITIES ACT means the Securities Act of 1933, as amended.
SECURITY INTEREST means any mortgage, security interest, pledge, lien,
charge, claim, option, right to acquire, voting or other restriction, right-of-
way, covenant, condition, easement, encroachment, restriction on transfer, or
other encumbrance of any nature whatsoever.
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<PAGE>
SPECIFIED COLLECTIVE BARGAINING AGREEMENTS means those collective
bargaining or similar agreements set forth on Schedule 1.1(a) hereto.
SPINCO ASSETS means all Assets that are (i) owned of record or held in
the name of a member of the Spinco Group as of the Distribution Date following
consummation of the Internal Transfer Transactions described on Exhibit A, (ii)
treated as owned by a member of the Spinco Group on the Spinco Balance Sheet,
subject to dispositions in the operation of the Spinco Business after the date
of the Spinco Balance Sheet, and any Assets acquired by either Group after the
date of the Spinco Balance Sheet and prior to the Distribution Date that would
have been included on the Spinco Balance Sheet had they been owned on the date
of the Spinco Balance Sheet, (iii) except as otherwise provided in any Ancillary
Agreement, used exclusively on the Distribution Date by one or more members of
the Spinco Group and which are owned, leased or held by a member of either Group
on the Distribution Date, other than any Assets located at or associated with
the Headquarters Facility, (iv) subject to Article VI, any rights of any member
of the Spinco Group under any of the Insurance Policies, (v) subject to Section
3.2(c), Spinco Contracts, (vi) any Assets (including pension Assets, pension
funds or other Assets) expressly contemplated to be transferred, licensed or
otherwise made available to any member of the Spinco Group pursuant to this
Agreement or any Ancillary Agreement, (vii) Spinco Contingent Gains and (viii)
books and records owned by a member of either Group on the Distribution Date
that are located at or associated with the Headquarters Facility and that relate
exclusively to the Spinco Business or the Spinco Assets.
SPINCO BALANCE SHEET means the pro forma condensed combined balance
sheet of Spinco as of February 1, 1998 set forth on Exhibit B attached hereto
and made a part hereof.
SPINCO BUSINESS means the business or businesses that, after giving
effect to the Internal Transfer Transactions set forth on Exhibit A are
conducted by Spinco or any other member of the Spinco Group, including any
business or operations of the Spinco Group following the Distribution Date.
SPINCO BYLAWS means the Bylaws of Spinco substantially in the form
filed as an exhibit to the Form 10 at the time it becomes effective.
SPINCO CERTIFICATE means the Certificate of Incorporation of Spinco
substantially in the form filed as an exhibit to the Form 10 at the time it
becomes effective.
SPINCO CLAIM means any claim with respect to any injury, loss,
Liability, damage or expense (i) that is or was incurred or asserted to have
been incurred prior to the Distribution Date in, or in connection with, the
Spinco Business or (ii) that is or was incurred, or asserted to have been
incurred, prior to the Distribution Date that is against any member of the
Spinco Group or any employee of any member of the Spinco Group; provided,
however, that such claim, such injury, loss, Liability, damage or expense is or
may be insured or insurable under one or more of the Insurance Policies and
represents a Spinco Liability.
SPINCO COMMON STOCK means the shares of Common Stock, without par
value, of Spinco.
SPINCO CONTINGENT GAIN means any Contingent Gain if such Contingent
Gain primarily relates to the Spinco Business (ignoring, for this purpose, the
difference in the relative sizes
8
<PAGE>
of the CSC Business and the Spinco Business) or if such Contingent Gain is
expressly assigned to Spinco pursuant to this Agreement or any Ancillary
Agreement.
SPINCO CONTRACTS means (i) contracts, leases and licenses existing on
the Distribution Date which have as a party a member of either Group and which
are used exclusively by one or more members of the Spinco Group, (ii) the Spinco
Interest in Shared Contracts, (iii) the Specified Collective Bargaining
Agreements and (iv) any such other contracts, leases and licenses as may be
provided in any Ancillary Agreement; provided, however, that none of the
Insurance Policies will constitute Spinco Contracts.
SPINCO GROUP shall mean Spinco and its Subsidiaries as of the
Distribution Date following consummation of the Internal Transfer Transactions
set forth on Exhibit A.
SPINCO INTEREST IN SHARED CONTRACTS means the portions of any
contracts, leases and licenses existing on the Distribution Date (other than the
Insurance Policies) which have as a party a member of either Group and which
relate to, and are material to, the Spinco Business.
SPINCO LIABILITIES means (i) Liabilities of Spinco or another member
of the Spinco Group under this Agreement or any Ancillary Agreement, (ii)
Liabilities incurred in connection with the conduct or operation of the Spinco
Business or the ownership, leasing or use of the Spinco Assets (including
liabilities arising under contracts, leases and licenses (including the Spinco
Contracts), real property and leasehold interests), whether absolute or
contingent, liquidated or unliquidated, known or unknown, and whether arising
before, on or after the Distribution Date, other than (A) Divested Business
Liabilities and (B) Identified Non-Operating Real Property Liabilities, (iii)
Liabilities set forth on the Spinco Balance Sheet as reduced in the operation of
the Spinco Business after the date of the Spinco Balance Sheet, and any
Liabilities of either Group incurred or arising after the date of the Spinco
Balance Sheet and prior to the Distribution Date that would have been included
in the Spinco Balance Sheet had they been incurred or arisen prior to the date
of the Spinco Balance Sheet, and (iv) Liabilities of Spinco arising under or in
connection with the Assumed Senior Debt Facility Agreements. Notwithstanding the
foregoing, the Spinco Liabilities shall not include any debt of the CSC Group
for money borrowed or evidenced by a note, debenture or other instrument, except
the indebtedness arising under or in connection with the Assumed Senior Debt
Facility Agreements and the other debt set forth on the Spinco Balance Sheet.
SUBSIDIARY means, with respect to any specified Person, any
corporation or other legal entity of which such Person or any of its
Subsidiaries controls or owns, directly or indirectly, more than 50% of the
stock or other equity interest entitled to vote on the election of members to
the board of directors or similar governing body.
TAX shall have the meaning given to such term in the Tax Agreement.
TAX AGREEMENT means the Tax Sharing and Indemnification Agreement
entered into on or prior to the Distribution Date between CSC and Spinco, as
amended from time to time.
TRANSITION SERVICES AGREEMENT means the Transition Services Agreement
entered into on or prior to the Distribution Date between CSC and Spinco, as
amended from time to time.
9
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ARTICLE II
THE DISTRIBUTION
SECTION 2.1 COOPERATION PRIOR TO THE DISTRIBUTION. Prior to the
Distribution,
(a) CSC and Spinco shall prepare, and CSC shall mail to the
holders of CSC Common Stock as of the Record Date, the Information
Statement. CSC and Spinco shall also prepare, and Spinco shall file with
the Commission, the Form 10, which shall include the Information Statement.
CSC and Spinco shall use all reasonable efforts to cause the Form 10 to
become effective under the Exchange Act as soon as practicable after the
filing thereof.
(b) CSC and Spinco shall cooperate in preparing, filing with the
Commission under the Securities Act and causing to become effective any
registration statements or amendments thereto that are appropriate to
reflect the establishment of or amendments to any employee benefit plan
contemplated by the Benefits Agreement.
(c) CSC and Spinco shall by means of a reclassification, stock
split or stock distribution or other means (including pursuant to the
Internal Transfer Transactions set forth on Exhibit A) cause the number of
outstanding shares of Spinco Common Stock held by CSC to be equal to the
number of shares to be distributed in the Distribution (as determined by
CSC).
(d) CSC and Spinco shall take all such action as may be necessary
or appropriate under the securities or blue sky laws of states or other
political subdivisions of the United States in connection with the
transactions contemplated by this Agreement or any Ancillary Agreement.
(e) Spinco shall prepare, file and use all reasonable efforts to
have approved an application to permit listing of the Spinco Common Stock
on the New York Stock Exchange or another mutually agreeable stock exchange
or quotations system.
(f) CSC and Spinco shall take all actions which may be required to
elect or otherwise appoint as directors of Spinco, on or prior to the
Distribution Date, the persons named in the Form 10 to constitute the Board
of Directors of Spinco on the Distribution Date.
(g) CSC shall cause a Certificate of Amendment and Restatement of
the Spinco Certificate of Incorporation substantially in the form filed
with the Form 10, to be filed for record with the New Jersey Secretary of
State and to be in effect on the Distribution Date, and (ii) the Board of
Directors of Spinco shall amend the Bylaws of Spinco so that the Spinco
Bylaws are substantially in the form filed with the Form 10.
(h) CSC and Spinco shall take all actions as may be necessary to
approve the stock-based employee benefit plans of Spinco in order to
satisfy the requirements of Rule 16b-3 under the Exchange Act and any
requirements of the NYSE (or any other stock exchange or quotations system
on which Spinco Common Stock is to be listed or traded).
(i) CSC and Spinco shall use all reasonable efforts to consummate
or cause to be consummated the transactions set forth on Schedule 2.1(i)
hereto.
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SECTION 2.2 CSC BOARD ACTION; CONDITIONS PRECEDENT TO THE DISTRIBUTION.
CSC's Board of Directors shall, in its sole discretion, establish the Record
Date and the Distribution Date and any appropriate procedures in connection with
the Distribution; provided, however, in no event shall the Distribution occur
unless the following conditions shall have been satisfied or shall have been
waived by CSC's Board of Directors in its sole discretion:
(a) all material regulatory approvals necessary to consummate the
Distribution shall have been received and be in full force and effect;
(b) the Form 10 shall have become effective under the Exchange
Act, and no stop order or similar Commission proceeding shall be in effect
with respect to such Form 10;
(c) Spinco's Board of Directors, as named in the Form 10, shall
have been elected by CSC, as sole shareowner of Spinco, and the Spinco
Certificate and Spinco Bylaws shall be in effect;
(d) the Spinco Common Stock shall have been accepted for listing
on the New York Stock Exchange or other mutually agreeable stock exchange
or quotations system, subject to official notice of issuance;
(e) a private letter ruling from the Internal Revenue Service
that, among other things, the Distribution will not be taxable to the
shareowners of CSC pursuant to Section 355 of the Code shall have been
obtained and continue in effect, and such ruling shall be in form and
substance satisfactory to CSC in its sole discretion;
(f) no order, injunction or decree issued by any court or agency
of competent jurisdiction or other legal restraint or prohibition
preventing consummation of the Distribution shall be in effect and no other
event shall have occurred or failed to occur that prevents consummation of
the Distribution;
(g) the CSC Board of Directors shall have formally approved the
Distribution; and
(h) the Internal Transfer Transactions shall have been consummated
and this Agreement and the Ancillary Agreements shall have been executed
and delivered;
provided, however, that satisfaction of such conditions shall not create any
obligation on the part of CSC, Spinco or any other person to effect or seek to
effect the Distribution or in any way limit CSC's right to terminate this
Agreement as set forth in Section 11.1 or alter the consequences of any such
termination from those set forth in Section 11.2.
SECTION 2.3 THE DISTRIBUTION. (a) On or before the Distribution Date,
subject to satisfaction or waiver of the conditions set forth in this Agreement,
CSC shall deliver to the Distribution Agent a certificate or certificates
representing all of the then outstanding shares of Spinco Common Stock held by
the CSC Group, endorsed in blank, and shall instruct the Distribution Agent to
distribute, or make book-entry credits for, one share of Spinco Common Stock in
respect of every ten shares of CSC Common Stock held by holders of record of CSC
Common Stock on the Record Date, all subject to paragraph (b) below and Section
2.4. Spinco agrees to provide all certificates for shares of Spinco Common
Stock and any information relating to Spinco that the Distribution Agent shall
require in order to effect the Distribution.
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(b) Notwithstanding paragraph (a) above, awards of restricted CSC
Common Stock granted under the Campbell Soup Company 1994 Long-Term Incentive
Plan shall, in lieu of receiving the distribution referred to above, be adjusted
all as more fully set forth in the Benefits Agreement.
SECTION 2.4 FRACTIONAL SHARES. Spinco will take all necessary actions to
adopt a book-entry stock transfer and registration system effective as of the
Distribution Date. No certificates or scrip representing fractional shares of
Spinco Common Stock will be distributed to holders of CSC Common Stock in the
Distribution. The Distribution Agent will, as soon as practicable after the
Distribution Date, (a) determine the number of whole shares and fractional
shares of Spinco Common Stock allocable to each holder of record of CSC Common
Stock as of the Record Date who (i) has requested a physical stock certificate
or (ii) owns less than one whole share of Spinco Common Stock, (b) aggregate all
fractional shares held by such holders, and (c) sell the whole shares
attributable to the aggregate of such fractional shares, in open market
transactions, in each case at the then prevailing trading prices, and to cause
to be distributed to each such holder, in lieu of any fractional share, without
interest, such holder's ratable share of the proceeds of such sale, after making
appropriate deductions of the amount required, if any, to be withheld for U.S.
federal income tax purposes.
ARTICLE III
CONVEYANCE OF CERTAIN ASSETS; ASSUMPTION OF CERTAIN
LIABILITIES; CERTAIN OTHER ARRANGEMENTS
SECTION 3.1 INTERNAL TRANSFER TRANSACTIONS. On or prior to the
Distribution Date (but in any event prior to the Distribution) and otherwise in
accordance with the terms and provisions of Exhibit A, each of CSC and Spinco
will, and will cause each of their respective Subsidiaries to, as applicable,
take such action or actions as are necessary to consummate the Internal Transfer
Transactions set forth on Exhibit A. Notwithstanding the foregoing, each of the
parties agrees that prior to the Distribution the Internal Transfer Transactions
may be amended, modified or supplemented in any manner determined to be
appropriate or necessary by CSC, including, without limitation, to qualify any
of such transactions for tax-free treatment under the Code.
SECTION 3.2 CONVEYANCE OF ASSETS; ASSUMPTION OF LIABILITIES. (a) Except
as otherwise expressly provided herein or in any of the Ancillary Agreements,
effective on or prior to the Distribution Date,
(i) CSC shall, on behalf of itself and its Subsidiaries,
transfer or cause to be transferred to Spinco or another member of the
Spinco Group, all of CSC's and the other members of the CSC Group's
right, title and interest in and to the Spinco Assets (except for
those Assets to be transferred at a later date as set forth in
paragraph (c) below).
(ii) Spinco shall, on behalf of itself and its Subsidiaries,
transfer or cause to be transferred to CSC or another member of the
CSC Group, all of Spinco's and the other members of the Spinco Group's
right, title and interest in and to the CSC Assets (except for those
Assets to be transferred at a later date as set forth in paragraph (c)
below); and
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(iii) Spinco shall, on behalf of itself and its Subsidiaries,
assume, or cause another member of the Spinco Group to assume, the
Spinco Liabilities (except for those Liabilities to be assumed at a
later date as set forth in paragraph (c) below).
(b) From and after the Distribution Date, (i) Spinco shall, or
shall cause another member of the Spinco Group to, pay, perform and discharge
all Spinco Liabilities, and (ii) CSC shall, or shall cause another member of the
CSC Group to, pay, perform and discharge all CSC Liabilities.
(c) (i) If any Asset or Liability may not be transferred by
reason of the requirement to obtain the consent of any third party (other than a
governmental authority) and such consent has not been obtained on or before the
Distribution Date, then such Asset or Liability shall not be transferred until
such consent has been obtained, and CSC or Spinco, as the case may be, shall
cause the owner or holder of such Asset or Liability to use reasonable efforts
to provide to the appropriate member of the other Group all the rights and
benefits under such Asset, or the control over disposition, compromise or
satisfaction of such Liability, as applicable. Both parties shall otherwise
cooperate and use all reasonable efforts to provide the economic and operational
equivalent of an assignment or assumption of the Asset or Liability, as
appropriate.
(ii) If any Asset or Liability may not be transferred by
operation of law or without the approval of any governmental authority, then
such Asset or Liability shall not be transferred until such approval has been
obtained, and the parties hereto shall reasonably cooperate (and shall cause
their respective Affiliates to cooperate) to seek to obtain any necessary
regulatory or governmental approvals for the transfer of such Asset or
Liability. CSC or Spinco, as the case may be, shall cause the owner or holder of
such Asset or Liability to use reasonable efforts to provide to the appropriate
member of the other Group all the rights and benefits under such Asset, or the
control over disposition, compromise or satisfaction of such Liability, as
applicable. Both parties shall otherwise cooperate and use all reasonable
efforts to provide the economic and operational equivalent of an assignment or
assumption of the Asset or Liability, as appropriate.
(iii) In the event that any conveyance of an Asset or
Liability required hereby or by any Ancillary Agreement is not effected on or
before the Distribution Date, the obligation to transfer such Asset or Liability
shall continue past the Distribution Date and shall be accomplished as soon
thereafter as practicable. Whether or not any required consent or governmental
authorization is obtained, or any Asset or Liability is transferred or assumed,
as the case may be, on or prior to the Distribution Date, nothing in this
paragraph (c) shall in any way limit the obligations of Spinco to indemnify the
CSC Indemnities (as defined in Section 5.1) for Spinco Liabilities pursuant to
Section 5.1 or the obligations of CSC to indemnify Spinco Indemnities (as
defined in Section 5.2) for CSC Liabilities pursuant to Section 5.2.
(iv) Without limiting the foregoing, it is understood and
agreed that with respect to the transfer to Spinco or another member of the
Spinco Group of the Spinco Interest in Shared Contracts, the parties shall use
their reasonable efforts to assign the underlying contract, lease or license in
part, so that each party will be entitled to the rights and benefits (and
liabilities and obligations) inuring to its business under such contract, lease
or license.
(d) (i) Each of CSC and Spinco, at the request of the other
party, shall use its reasonable efforts to obtain, or cause to be obtained, any
consent, substitution, approval or amendment required to novate or assign all
obligations under agreements, leases, licenses and other obligations or
Liabilities of any nature whatsoever that constitute Spinco Liabilities, or to
obtain in writing the unconditional release of any member of the CSC Group that
is a party to such
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arrangement, so that, in any such case, Spinco, or some other member of the
Spinco Group, will be solely responsible for such Liabilities; provided,
however, that no party will be obligated to pay any consideration therefor to
any third party from whom such consents, approvals, substitutions and amendments
are requested. Whether or not any such consent, approval, substitution or
amendment is obtained, nothing in this paragraph (d) shall in any way limit the
obligations of Spinco in respect of its assumption of the Spinco Liabilities
pursuant to this Agreement or any Ancillary Agreement or its indemnification of
CSC Indemnitees for the Spinco Liabilities pursuant to Article V hereof.
(ii) Each of CSC and Spinco, at the request of the other
party, shall use its reasonable efforts to obtain, or cause to be obtained, any
consent, substitution, approval or amendment required to novate or assign all
obligations under agreements, leases, licenses and other obligations or
Liabilities of any nature whatsoever that constitute CSC Liabilities, or to
obtain in writing the unconditional release of any member of the Spinco Group
that is a party to such arrangement, so that, in any such case, CSC, or some
other member of the CSC Group, will be solely responsible for such Liabilities;
provided, however, that no party will be obligated to pay any consideration
therefor to any third party from whom such consents, approvals, substitutions
and amendments are requested. Whether or not any such consent, approval,
substitution or amendment is obtained, nothing in this paragraph (d) shall in
any way limit the obligations of CSC in respect of its indemnification of Spinco
Indemnitees for the CSC Liabilities pursuant to Article V hereof.
(e) From and after the Distribution Date, each party shall
promptly transfer or cause the members of its Group promptly to transfer to the
other party or the appropriate member of the other party's Group, from time to
time, any property received that is an Asset of the other party or a member of
its Group. Without limiting the foregoing, funds received by a member of one
Group upon the payment of accounts receivable that belong to a member of the
other Group shall be transferred to the other Group by wire transfer not more
than 20 business days after receipt of such payment.
(f) Each of CSC (on behalf of itself and each member of the CSC
Group) and Spinco (on behalf of itself and each member of the Spinco Group)
understands and agrees that, except as expressly set forth in any Ancillary
Agreement, no party to any Ancillary Agreement or any other agreement or
document contemplated by any Ancillary Agreement either has or is representing
or warranting in any way as to the Assets, businesses or Liabilities retained,
transferred or assumed as contemplated hereby or thereby, as to any consents or
approvals required in connection therewith, as to the value or freedom from any
Security Interests of, or any other matter concerning, any Assets or Liabilities
of such party, or as to the absence of any defenses or right of setoff or
freedom from counterclaim with respect to any claim or other Asset, including
any accounts receivable, or any Liability of any party, or as to the legal
sufficiency of any assignment, document or instrument delivered hereunder to
convey title to any Asset or any other thing of value upon the execution,
delivery and filing hereof or thereof. Except as may expressly be set forth in
any Ancillary Agreement, all such Assets were, or are being, transferred, or are
being retained, on an "as is, where is" basis (and, in the case of any real
property, by means of a quitclaim or similar form deed or conveyance) and the
respective transferees shall bear the economic and legal risks that any
conveyance shall prove to be insufficient to vest in the transferee good and
marketable title, free and clear of any Security Interest. Without limiting the
foregoing, neither CSC nor any other party hereto, or to any Ancillary
Agreement, is making any representation or warranty to Spinco or any other
Person in respect of the Spinco Balance Sheet, including in respect of the
accuracy or presentation thereof, or the adequacy of accruals, reserves and
other amounts reflected thereon.
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SECTION 3.3 FINANCING ARRANGEMENTS. Each of the parties hereto
acknowledges that (a) CSC has arranged availability for up to $750 million in
senior unsecured financing pursuant to the Assumed Senior Debt Facility
Agreements, (b) that CSC has, prior to the date hereof, incurred $500 million in
indebtedness pursuant to such Assumed Senior Debt Facility Agreements and (c)
that CSC has used, or will use prior to the Distribution Date, such indebtedness
to refinance other outstanding indebtedness of CSC. Spinco agrees that,
following the Distribution Date, Spinco will indemnify CSC (and all the other
members of the CSC Group) and hold such parties harmless from and against all
the obligations of CSC (or Spinco) arising under the Assumed Senior Debt
Facility Agreements (including the obligation to repay such $500 million in
outstanding borrowings), with the effect that CSC (and all other members of the
CSC Group) shall have no further liability or obligation under the Assumed
Senior Debt Facility Agreements.
SECTION 3.4 CONDUCT OF SPINCO PENDING DISTRIBUTION. Prior to the
Distribution Date, the business of Spinco shall be operated for the sole benefit
of CSC as its sole shareowner. Without limiting the foregoing, prior to the
Distribution Date, Spinco shall not, without the prior consent of CSC, make any
public announcement concerning the Distribution and shall use its best efforts
not to take any action which may prejudice or delay the consummation of the
Distribution.
SECTION 3.5 DIRECTOR RESIGNATIONS. (a) CSC shall cause all of its
directors and all employees of the CSC Group to resign, effective as of the
close of business on the Distribution Date, from all boards of directors or
similar governing bodies of each member of the Spinco Group on which they serve,
except as otherwise mutually agreed to in writing by CSC and Spinco.
(b) Spinco shall cause all of its directors and all employees of
the Spinco Group to resign, effective as of the close of business on the
Distribution Date, from all boards of directors or similar governing bodies of
each member of the CSC Group on which they serve, except as otherwise mutually
agreed to in writing by CSC and Spinco.
SECTION 3.6 SETTLEMENT OF INTERCOMPANY ACCOUNTS. All intercompany
receivables, payables and loans between any member of the CSC Group, on the one
hand, and any member of the Spinco Group, on the other hand, shall, as of the
Distribution Date, be contributed to capital and deemed settled and discharged;
provided, however, that (a) the intercompany payable in the aggregate amount of
$________ on the books of Spinco due to CSC representing various costs and
expenses related to the Distribution that are attributable to Spinco and (b) the
amount of the change in CSC's net investment account for Spinco and the other
members of the Spinco Group since August 3, 1997, reduced by net earnings since
August 3, 1997 (but in no event more than the amount reflecting advances to the
Spinco subsidiaries for their working capital needs), shall in each case be
deemed converted into an ordinary trade payable and remain on the books of
Spinco in the case of clause of (a) and the appropriate Spinco subsidiary in the
case of clause (b), with payment due to CSC thereunder within 45 days of the
Distribution Date.
SECTION 3.7 TERMINATION OF INTERCOMPANY AGREEMENTS. (a) Spinco and each
member of the Spinco Group, on the one hand, and CSC and each member of the CSC
Group, on the other hand, hereby terminate any and all agreements, arrangements,
commitments or understandings, whether or not in writing, between or among
Spinco and/or any member of the Spinco Group, on the one hand, and CSC and/or
any member of the CSC Group, on the other hand, effective as of the Distribution
Date. No such terminated agreement, arrangement, commitment or understanding
(including any provision thereof which purports to survive termination) shall be
of any further force or effect after the Distribution Date. Each party shall,
at the reasonable request of any other party, take, or cause to be taken, such
other actions as may be necessary to effect the foregoing.
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(b) The provisions of Section 3.7(a) shall not apply to any of the
following agreements, arrangements, commitments or understandings (or to any of
the provisions thereof): (i) this Agreement or any of the Ancillary Agreements
(and each other agreement or instrument expressly contemplated by this Agreement
or any Ancillary Agreement to be entered into by any of the parties hereto or
any of the members of their respective Groups); (ii) any agreements,
arrangements, commitments or understandings listed or described on Schedule
3.7(b)(ii) hereto; (iii) any agreements, arrangements, commitments or
understandings to which any Person other than the parties hereto and their
respective Affiliates is a party; (iv) any agreements, arrangements, commitments
or understandings to which any non-wholly owned subsidiary of CSC or Spinco, as
the case may be, is a party (it being understood that directors' qualifying
shares or similar interests will be disregarded for purposes of determining
whether a subsidiary is wholly owned); and (v) any other agreements,
arrangements, commitments or understandings that this Agreement or any of the
Ancillary Agreements expressly contemplates will survive the Distribution Date.
SECTION 3.8 GUARANTEED SPINCO LIABILITIES. (a) Spinco shall use all
reasonable efforts (excluding payment of money or other significant
consideration) to obtain as promptly as practicable after the Distribution Date
the release of CSC from its obligations as guarantor or obligor with respect to
Guaranteed Spinco Liabilities. In no event shall any member of the Spinco Group
extend the term of any Guaranteed Spinco Liabilities (such as by exercising an
option to renew a lease) unless the guarantee of CSC is released as to any
future obligations under such Guaranteed Spinco Liabilities or CSC otherwise
consents in writing.
(b) In the event that CSC is required to pay any Guaranteed Spinco
Liabilities, without limiting any of CSC's rights and remedies against Spinco
under this Agreement or otherwise, Spinco shall, or shall cause a member of the
Spinco Group to, reimburse CSC as soon as practicable (but in no event later
than 30 days) following receipt of notice of such payment, and in order to
secure Spinco's obligations to CSC hereunder in respect of such Guaranteed
Spinco Liabilities, CSC shall be entitled to all the rights of the payee in any
property of any member of the Spinco Group pledged as security for such
Guaranteed Spinco Liabilities.
(c) In the event that at any time, whether prior to or after the
Distribution Date, CSC identifies any letters of credit, interest rate or
foreign exchange contracts or other financial or other contracts (other than
Guaranteed Spinco Liabilities) that relate primarily to the Spinco Business but
for which any member of the CSC Group has contingent, secondary, joint, several
or other Liability of any nature whatsoever, Spinco will at its expense take
such actions and enter into such agreements and arrangements as CSC may
reasonably request to effect the release or substitution of the member of the
CSC Group.
SECTION 3.9 COVENANTS REGARDING DOMESTIC GROCERY BUSINESS OF CSC. (a)
Spinco, on behalf of itself and the Spinco Group, agrees that neither it nor any
other member of the Spinco Group nor any of their Affiliates after the
Distribution Date shall, without the prior written consent of CSC, directly or
indirectly, as owner, partner, agent, consultant or otherwise, for a period of
three years following the Distribution Date, engage in the manufacturing,
distribution, marketing or selling of U.S. Grocery Products anywhere in the
United States. For this purpose, U.S. GROCERY PRODUCTS means the following
products to the extent such products are substantially similar to those products
manufactured or sold by CSC or another member of the CSC Group in the United
States as of the Distribution Date: soups, broths, vegetable juices, salsa and
picante and other Mexican sauces or dips, Italian sauces, heat processed
prepared pasta and gravies.
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(b) Spinco, on behalf of itself and the Spinco Group, acknowledges
and agrees that the covenants in paragraph (a) above are reasonable in
geographical and temporal scope and otherwise are necessary to protect the
legitimate interests of CSC in its domestic grocery business and that it and the
other members of the Spinco Group have received adequate and independent
consideration in respect of such covenants. Each of the parties agrees that to
the extent any provision or portion of paragraph (a) shall be held, found or
deemed to be unreasonable, unlawful or unenforceable by a court of competent
jurisdiction, then any such provision or portion thereof shall be deemed to be
modified to the extent necessary in order that any such provision or portion
thereof shall be legally enforceable to the fullest extent permitted by
applicable law; and the parties do further agree that any court of competent
jurisdiction shall, and the parties hereto do hereby expressly authorize,
require and empower any court of competent jurisdiction to, enforce any such
provision or portion thereof in order that any such provision or portion thereof
shall be enforced to the fullest extent permitted by applicable law.
(c) Spinco further acknowledges that its covenants under this Section
3.9 are of a special, unique, unusual and extraordinary character. As the
violation by Spinco or any member of the Spinco Group of the provisions of this
Section 3.9 would cause irreparable injury to CSC, and there is no adequate
remedy at law for such violation, CSC shall, notwithstanding anything to the
contrary herein, have the right in addition to any other remedies available, at
law or in equity, to seek to enjoin Spinco (or such other member of the Spinco
Group) in a court of equity from violating such provisions. Spinco, on behalf
of itself and the Spinco Group, hereby waives any and all defenses it may have
on the ground of lack of jurisdiction or competence of the court to grant an
injunction or other equitable relief, or otherwise. Without limiting the
foregoing, Spinco hereby waives the right to require CSC to post any bond or
other security with respect to any proceeding to enforce the provisions of this
Section 3.9. The existence of the rights of CSC set forth in this Section 3.9
shall not preclude any other rights and remedies at law or in equity which CSC
may have.
(d) Spinco acknowledges that the covenants contained in this Section
3.9 are independent covenants and that any failure by CSC or any member of the
CSC Group to perform its obligations under this Agreement or any Ancillary
Agreement shall not be a defense to enforcement of the covenants contained in
this Section 3.9. The covenants contained in this Section 3.9 shall survive any
termination of this Agreement. The time periods associated with the covenants
set forth in paragraph (a) shall be extended by the period equal to the duration
of any breach thereof by Spinco.
SECTION 3.10 THE NON-U.S. PLAN. Each of CSC and Spinco shall take, and
shall cause each member of its respective Group to take, such action as shall be
reasonably necessary to consummate the transactions contemplated on Schedule
2.1(i) hereto (whether prior to or after the Distribution Date).
SECTION 3.11 CORPORATE NAME. (a) Except as otherwise specifically
provided in any Ancillary Agreement:
(i) as soon as reasonably practicable after the Distribution
Date but in any event within one year thereafter, Spinco will, at its
own expense, remove (or, if necessary, on an interim basis, cover up)
any and all exterior signs and other identifiers located on any of
Spinco's property or premises or on the property or premises used by
Spinco or another member of the Spinco Group (except property or
premises to be shared with CSC or a member of the CSC Group after the
Distribution Date) which refer or pertain to CSC or which include the
CSC name,
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logo or any other trademark or the name of any member of the CSC Group
or any other CSC intellectual property; and
(ii) as soon as is reasonably practicable after the Distribution
Date but in any event within one year thereafter, Spinco will, and
will cause the other members of the Spinco Group to, remove from all
packaging materials, letterhead, envelopes, invoices and other
communications media of any kind, all references to CSC, including the
CSC name, logo and any other trademark or name of any member of the
CSC Group or any other CSC intellectual property (except that Spinco
shall not be required to take any such action with respect to
materials in the possession of customers and Spinco may, until the
first anniversary of the Distribution Date, continue to use existing
stock and supplies), and neither Spinco nor any other member of the
Spinco Group shall use or display the CSC name, logo or other
trademarks or name of any member of the CSC Group or any other CSC
intellectual property without the prior written consent of CSC.
(b) Except as otherwise specifically provided in any Ancillary
Agreement:
(i) as soon as reasonably practicable after the Distribution
Date but in any event within one year thereafter, CSC will, at its own
expense, remove (or, if necessary, on an interim basis, cover up) any
and all exterior signs and other identifiers located on any of CSC's
property or premises or on the property or premises used by CSC or
another member of the CSC Group (except property or premises to be
shared with Spinco or another member of the Spinco Group after the
Distribution Date) which refer or pertain to Spinco or which include
the Spinco name, logo or any other trademark or the name of any member
of the Spinco Group or any other Spinco intellectual property; and
(ii) as soon as is reasonably practicable after the Distribution
Date but in any event within one year thereafter, CSC will, and will
cause the other members of the CSC Group to, remove from all packaging
materials, letterhead, envelopes, invoices and other communications
media of any kind, all references to Spinco, including the Spinco
name, logo and any other trademark or name of any member of the Spinco
Group or any other Spinco intellectual property (except that CSC shall
not be required to take any such action with respect to materials in
the possession of customers and CSC may, until the first anniversary
of the Distribution Date, continue to use existing stock and
supplies), and neither CSC nor any of other member of the CSC Group
shall use or display the Spinco name, logo or other trademarks or name
of any member of the Spinco Group or any other Spinco intellectual
property without the prior written consent of Spinco.
(c) Each party acknowledges that it has no interest in nor any right
to use or display the name or any trademark or intellectual property of the
other party in any way, except to the extent specifically provided herein or in
any Ancillary Agreement and except for any use which is otherwise permissible as
"fair use" under applicable law.
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ARTICLE IV
MUTUAL RELEASES
SECTION 4.1 RELEASE OF PRE-DISTRIBUTION CLAIMS. (a) Except as provided
in Section 4.1(c), effective as of the Distribution Date, Spinco does hereby,
for itself and each other member of the Spinco Group, and their respective
Affiliates (other than any member of the CSC Group), successors and assigns,
remise, release and forever discharge CSC, the members of the CSC Group, their
respective Affiliates (other than any member of the Spinco Group), successors
and assigns, and their respective heirs, executors, administrators, successors
and assigns, from any and all Liabilities whatsoever, whether at law or in
equity (including any right of contribution), whether arising under any contract
or agreement, by operation of law or otherwise, existing or arising from any
acts or events occurring or failing to occur or alleged to have occurred or to
have failed to occur or any conditions existing or alleged to have existed on or
before the Distribution Date, including in connection with the actions or
decisions taken or omitted to be taken in connection with, and the other
activities relating to, the structuring or implementation of the Distribution
and the transfer of the Spinco Assets to the Spinco Group and the assumption by
the Spinco Group of the Spinco Liabilities.
(b) Except as provided in Section 4.1(c), effective as of the
Distribution Date, CSC does hereby, for itself and each other member of the CSC
Group, their respective Affiliates (other than any member of the Spinco Group),
successors and assigns, remise, release and forever discharge Spinco, the
respective members of the Spinco Group, their respective Affiliates (other than
any member of the CSC Group), successors and assigns, and their respective
heirs, executors, administrators, successors and assigns, from any and all
Liabilities whatsoever, whether at law or in equity (including any right of
contribution), whether arising under any contract or agreement, by operation of
law or otherwise, existing or arising from any acts or events occurring or
failing to occur or alleged to have occurred or to have failed to occur or any
conditions existing or alleged to have existed on or before the Distribution
Date, including in connection with the transactions and all other activities to
implement the Distribution and the transfer of the Spinco Assets to the Spinco
Group and the assumption by the Spinco Group of the Spinco Liabilities.
(c) Nothing contained in Section 4.1(a) or (b) shall impair any right
of any Person to enforce this Agreement or the Ancillary Agreements, or any
agreements, arrangements, commitments or understandings that are referred to
herein or therein as not terminating as of the Distribution Date, in each case
in accordance with its terms. Without limiting the foregoing, nothing contained
in Section 4.1(a) or (b) shall release any Person from:
(i) any Liability provided in or resulting from any agreement
among any members of the CSC Group or the Spinco Group that is
specified in Section 3.7(b) or in Schedule 3.7(b)(ii) as not to
terminate as of the Distribution Date;
(ii) any Liability, contingent or otherwise, assumed,
transferred, assigned or allocated to the Group of which such Person
is a member in accordance with, or any other Liability of any member
of any Group under, this Agreement or any Ancillary Agreement;
(iii) any Liability that the parties may have with respect to
indemnification or contribution pursuant to this Agreement or any
Ancillary Agreement, which Liability shall be governed by the
provisions of Article V, or, if applicable, by the appropriate
provisions of the Ancillary Agreements; or
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(iv) any Liability the release of which would result in the
release of any Person other than a Person released pursuant to this
Section 4.1.
(d) Spinco shall not make, and shall not permit any member of the
Spinco Group to make, any claim or demand, or commence any Action asserting any
claim or demand, including any claim of contribution or any indemnification,
against CSC, any member of the CSC Group, or any other Person released pursuant
to Section 4.1(a), with respect to any Liabilities released pursuant to Section
4.1(a). CSC shall not, and shall not permit any member of the CSC Group, to
make any claim or demand, or commence any Action asserting any claim or demand,
including any claim of contribution or any indemnification, against Spinco or
any member of the Spinco Group, or any other Person released pursuant to Section
4.1(b), with respect to any Liabilities released pursuant to Section 4.1(b).
(e) It is the intent of each of CSC and Spinco by virtue of the
provisions of this Section 4.1 to provide for a full and complete release and
discharge of all Liabilities existing or arising from all acts and events
occurring or failing to occur or alleged to have occurred or to have failed to
occur and all conditions existing or alleged to have existed on or before the
Distribution Date, between or among Spinco or any member of the Spinco Group, on
the one hand, and CSC or any member of the CSC Group, on the other hand
(including any contractual agreements or arrangements existing or alleged to
exist between or among any such members on or before the Distribution Date),
except as expressly set forth in Section 4.1(c). At any time, at the request
and expense of any other party, each party shall cause each member of its
respective Group to execute and deliver releases reflecting the provisions
hereof.
ARTICLE V
INDEMNIFICATION
SECTION 5.1 SPINCO INDEMNIFICATION OF THE CSC GROUP. On and after the
Distribution Date, Spinco shall indemnify, defend and hold harmless each member
of the CSC Group, and each of their respective directors, officers, employees
and agents (the CSC INDEMNITEES) from and against any and all damage, loss,
liability and expense (including, without limitation, reasonable expenses of
investigation and reasonable attorneys' fees and expenses in connection with any
and all Actions or threatened Actions, but expressly excluding any special or
consequential damages) (collectively, INDEMNIFIABLE LOSSES) incurred or suffered
by any of the CSC Indemnitees and arising out of or in connection with (a) any
of the Spinco Liabilities (including, without limitation, the failure by Spinco
or any member of the Spinco Group to pay, perform or discharge such Liabilities
in accordance with their terms), (b) any of the Guaranteed Spinco Liabilities,
(c) any breach by Spinco or any member of the Spinco Group of this Agreement or
any Ancillary Agreement and, (d) any Liability relating to, arising out of or
resulting from any actual or threatened Action or other claim brought by any
Person other than a member of the Spinco Group alleging that any Liability was
improperly allocated to the Spinco Group or that any Asset was improperly
withheld from the Spinco Group, in each case pursuant to this Agreement or any
of the Ancillary Agreements.
SECTION 5.2 CSC INDEMNIFICATION OF SPINCO GROUP. On and after the
Distribution Date, CSC shall indemnify, defend and hold harmless each member of
the Spinco Group and each of their respective directors, officers, employees and
agents (the SPINCO INDEMNITEES) from and against any and all Indemnifiable
Losses incurred or suffered by any of the Spinco Indemnitees and arising out of
or in connection with (a) any of the CSC Liabilities (including the failure by
CSC or any member of the CSC Group to pay, perform or discharge such Liabilities
in accordance with their
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terms) and (b) any breach by CSC or any member of the CSC Group of this
Agreement or any Ancillary Agreement.
SECTION 5.3 INSURANCE AND THIRD PARTY OBLIGATIONS. The amount which an
Indemnifying Party (as defined in Section 5.4 below) is required to pay to any
Indemnified Party (as so defined) pursuant to Section 5.1 or Section 5.2 shall
be reduced (including, without limitation, retroactively) by any Insurance
Proceeds and other amounts (including, without limitation, amounts actually
received from third parties in respect of indemnification or contribution
obligations of third parties) actually received by such Indemnified Party in
reduction of the Indemnifiable Loss, it being understood and agreed that each
member of the CSC Group and the Spinco Group shall use its reasonable efforts,
at the expense of the Indemnifying Party, to collect any such proceeds or other
such amounts to which it or any of its wholly-owned Subsidiaries is entitled,
without regard to whether it is an Indemnified Party hereunder. If an
Indemnified Party receives an indemnity payment pursuant to Section 5.1 or 5.2
in respect of an Indemnifiable Loss and subsequently receives Insurance Proceeds
or other amounts in reduction of such Indemnifiable Loss, then such Indemnified
Party shall pay to the Indemnifying Party an amount equal to the difference
between (x) the sum of the amount of such indemnity payment and the amount of
such Insurance Proceeds or other amounts actually received and (y) the amount of
such Indemnifiable Loss. No insurer or any other third party shall be (a)
entitled to a benefit it would not be entitled to receive in the absence of the
foregoing indemnification provisions, (b) relieved of the responsibility to pay
any claims to which it is obligated or (c) entitled to any subrogation rights
with respect to any obligation hereunder.
SECTION 5.4 NOTICE AND PAYMENT OF CLAIMS. If any CSC or Spinco Indemnitee
(the INDEMNIFIED PARTY) determines that it is or may be entitled to
indemnification by a party (the INDEMNIFYING PARTY) under this Article V (other
than in connection with any Action or claim subject to Section 5.5), the
Indemnified Party shall deliver to the Indemnifying Party a written notice
specifying, to the extent reasonably practicable, the basis for its claim for
indemnification and the amount for which the Indemnified Party reasonably
believes it is entitled to be indemnified (it being understood, however, that
the failure to give such notice shall not relieve the Indemnifying Party of its
obligations under this Article V except to the extent the Indemnifying Party is
materially prejudiced by the failure to give such notice). After the
Indemnifying Party shall have been notified of the amount for which the
Indemnified Party seeks indemnification, the Indemnifying Party shall, within 90
days after receipt of such notice, pay the Indemnified Party such amount in cash
or other immediately available funds (or reach agreement with the Indemnified
Party as to a mutually agreeable alternative payment schedule) unless the
Indemnifying Party objects to the claim for indemnification or the amount
thereof. If the Indemnifying Party does not give the Indemnified Party written
notice objecting to such claim and setting forth the grounds therefor within the
same 90 day period, the Indemnifying Party shall be deemed to have acknowledged
its liability for such claim and the Indemnified Party may exercise any and all
of its rights under applicable law to collect such amount.
SECTION 5.5 NOTICE AND DEFENSE OF THIRD-PARTY CLAIMS. Promptly (but in no
event later than 30 days) following the earlier of (a) receipt of notice of the
commencement by a third party of any Action against or otherwise involving any
Indemnified Party or (b) receipt of information from a third party alleging the
existence of a claim against an Indemnified Party, in either case, with respect
to which indemnification may be sought pursuant to this Agreement (a THIRD-PARTY
CLAIM), the Indemnified Party shall give the Indemnifying Party written notice
thereof. The failure of the Indemnified Party to give notice as provided in
this Section 5.5 shall not relieve the Indemnifying Party of its obligations
under this Article V, except to the extent that the Indemnifying Party is
materially prejudiced by such failure to give notice. Within 90 days after
receipt of such
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notice, the Indemnifying Party may by giving written notice thereof to the
Indemnified Party, either (i) acknowledge, as between the parties hereto,
liability for and, at its option (but only if the foregoing acknowledgment is
provided), elect to assume the defense of such Third-Party Claim at its sole
cost and expense or (ii) object to the claim of indemnification set forth in the
notice delivered by the Indemnified Party pursuant to the first sentence of this
Section 5.5; provided that if the Indemnifying Party does not within the same 90
day period give the Indemnified Party written notice objecting to such claim and
setting forth the grounds therefor or electing to assume the defense, the
Indemnifying Party shall be deemed to have acknowledged, as between the parties
hereto, its liability for such Third-Party Claim. Any contest of a Third-Party
Claim as to which the Indemnifying Party has elected to assume the defense shall
be conducted by attorneys employed by the Indemnifying Party and reasonably
satisfactory to the Indemnified Party; provided that the Indemnified Party shall
have the right to participate in such proceedings and to be represented by
attorneys of its own choosing at the Indemnified Party's sole cost and expense.
If the Indemnifying Party assumes the defense of a Third-Party Claim, the
Indemnifying Party may settle or compromise the claim without the prior written
consent of the Indemnified Party; provided that the Indemnifying Party may not
agree to any such settlement pursuant to which any such remedy or relief, other
than monetary damages for which the Indemnifying Party shall be solely
responsible hereunder, shall be applied to or against the Indemnified Party,
without the prior written consent of the Indemnified Party, which consent shall
not be unreasonably withheld. If the Indemnifying Party does not assume the
defense of a Third-Party Claim for which it has acknowledged (or is deemed to
have acknowledged) liability for indemnification under this Article V, the
Indemnified Party may require the Indemnifying Party to reimburse it on a
monthly basis for its reasonable expenses of investigation, reasonable
attorneys' fees and reasonable out-of-pocket expenses incurred in defending
against such Third-Party Claim and the Indemnifying Party shall be bound by the
result obtained with respect thereto by the Indemnified Party; provided that the
Indemnifying Party shall not be liable for any settlement effected without its
prior written consent, which consent shall not be unreasonably withheld. The
Indemnifying Party shall pay to the Indemnified Party in cash the amount for
which the Indemnified Party is entitled to be indemnified (if any) within 15
days after the final resolution of such Third-Party Claim (whether by the final
nonappealable judgment of a court of competent jurisdiction or otherwise) or, in
the case of any Third-Party Claim as to which the Indemnifying Party has not
acknowledged (or is not deemed to have acknowledged) liability, within 15 days
after such Indemnifying Party's objection has been resolved by settlement,
compromise or the final nonappealable judgment of a court of competent
jurisdiction.
SECTION 5.6 EXCLUSIVE REMEDY; WAIVER OF JURY TRIAL. Each party agrees on
behalf of itself and each member of its respective Group that the procedures set
forth in this Article V, together with Section 11.14 hereof, shall be the sole
and exclusive remedy in connection with any dispute, controversy or claim
relating to any of the matters set forth in Sections 5.1 and 5.2. Each party on
behalf of itself and each member of its respective Group irrevocably waives any
right to any trial by jury with respect to any claim, controversy or dispute
arising under this Agreement or any Ancillary Agreement.
SECTION 5.7 EXISTING CLAIMS. On the Distribution Date, Spinco shall
assume (or shall cause one of its wholly-owned Subsidiaries to assume) (a) the
prosecution of all claims which are Spinco Assets and are pending on the
Distribution Date and (b) the defense against all Third Party Claims which are
Spinco Liabilities and are pending on the Distribution Date.
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ARTICLE VI
INSURANCE
SECTION 6.1 INSURANCE POLICIES AND RIGHTS. (a) Prior to the Distribution
Date, CSC and Spinco will use reasonable efforts to obtain insurance (or binders
therefor) providing coverage to the Spinco Group similar to the coverage
provided by insurance in place prior to the Distribution Date. It is understood
and agreed that Spinco shall be responsible for payment of all premiums and
other amounts due under insurance policies so obtained, as well as the
performance of all other obligations of the insured party thereunder, including
any obligations to supply letters of credit, surety bonds or similar
arrangements.
(b) (i) The parties intend by this Agreement that Spinco and each
other member of the Spinco Group be successors-in-interest to all rights that
any member of the Spinco Group may have as of the Distribution Date as a
subsidiary, affiliate, division or department of CSC prior to the Distribution
Date under any policy of insurance issued to CSC or any member of the CSC Group
by any insurance carrier unaffiliated with CSC or under any agreements related
to such policies executed and delivered prior to the Distribution Date,
including any rights such member of the Spinco Group may have, as an insured or
additional named insured, subsidiary, affiliate, division or department, to
avail itself of any such policy of insurance or any such agreements related to
such policies as in effect prior to the Distribution Date. At the request of
Spinco, CSC shall take all reasonable steps, including the execution and
delivery of any instruments, to effect the foregoing; provided, however, that
CSC shall not be required to pay any amounts, waive any rights or incur any
Liabilities in connection therewith.
(ii) With respect to any policy of insurance that may be
transferred to Spinco (or any other member of the Spinco Group) pursuant to this
Agreement or any Ancillary Agreement, except as otherwise provided in any
Ancillary Agreement, the parties intend by this Agreement that CSC and each
other member of the CSC Group be successors-in-interest to all rights that any
member of the CSC Group may have as of the Distribution Date as an affiliate of
Spinco or otherwise prior to the Distribution Date under any policy of insurance
issued to Spinco or any member of the Spinco Group by any insurance carrier
unaffiliated with Spinco or CSC or under any agreements related to such policies
executed and delivered prior to the Distribution Date, including any rights such
member of the CSC Group may have, as an insured or additional named insured,
affiliate or otherwise, to avail itself of any such policy of insurance or any
such agreements related to such policies as in effect prior to the Distribution
Date. At the request of CSC, Spinco shall take all reasonable steps, including
the execution and delivery of any instruments, to effect the foregoing;
provided, however, that Spinco shall not be required to pay any amounts, waive
any rights or incur any Liabilities in connection therewith.
(iii) Except as otherwise contemplated by any Ancillary
Agreement, after the Distribution Date, none of CSC or Spinco or any member of
their respective Groups shall, without the consent of the other, provide any
such insurance carrier with a release, or amend, modify or waive any rights
under any such policy or agreement, if such release, amendment, modification or
waiver would adversely affect any rights or potential rights to coverage of any
member of the other Group thereunder; provided, however, that, except as
expressly provided herein, the foregoing shall not (A) preclude any member of
any Group from presenting any claim or from exhausting any policy limit, (B)
require any member of any Group to pay any premium or other amount or to incur
any Liability, or (C) require any member of any Group to renew, extend or
continue any policy in force. Each of Spinco and CSC will share such information
as is reasonably necessary in order to permit the other to manage and conduct
its insurance matters in an orderly fashion.
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(c) This Agreement shall not be considered as an attempted assignment
of any policy of insurance or as a contract of insurance and shall not be
construed to waive any right or remedy of any member of the CSC Group or the
Spinco Group in respect of any Insurance Policy or any other contract or policy
of insurance.
(d) Spinco does hereby, for itself and each other member of the
Spinco Group, agree that no member of the CSC Group or any CSC Indemnitee shall
have any Liability whatsoever as a result of the insurance policies and
practices of CSC and its Affiliates as in effect at any time prior to the
Distribution Date, including as a result of the level or scope of any such
insurance, the creditworthiness of any insurance carrier, the terms and
conditions of any policy, the adequacy or timeliness of any notice to any
insurance carrier with respect to any claim or potential claim or otherwise.
(e) Nothing in this Agreement shall be deemed to restrict any member
of the Spinco Group from acquiring at its own expense any other insurance policy
in respect of any Liabilities or covering any period to the extent such
insurance policy does not contravene or abrogate any rights of any member of the
CSC Group under any of CSC's insurance policies or increase (or potentially
increase) premiums thereunder, whether prospectively or retroactively.
SECTION 6.2 CLAIMS. (a) The parties agree that effective on the
Distribution Date, CSC shall be deemed: (i) to have assigned to the Spinco
Group, without need of further documentation, all of the CSC Group's rights, if
any, as an additional named insured party, including rights of indemnity and the
right to be defended by or at the expense of the insurer, under all of the
Insurance Policies with respect to such Spinco Claims as are pending on the
Distribution Date, and (ii) to the extent necessary to provide the Spinco Group
with the benefit of such insurance with respect to Spinco Claims, to designate
Spinco, without need of further documentation, as the agent and attorney-in-fact
to assert and to collect any Insurance Proceeds under such Insurance Policies;
provided, however, that nothing in this Section 6.2 shall be deemed to
constitute (or reflect) the assignment of any of the Insurance Policies to the
Spinco Group. If, subsequent to the Distribution Date, the Spinco Group shall
be entitled to payment or reimbursement with respect to a Spinco Claim or any
Person shall assert a Spinco Claim, then CSC shall at the time such Spinco Claim
arises or is asserted be deemed: (i) to assign, without need of further
documentation, to the Spinco Group all of the CSC Group's rights, if any, as an
additional named insured party, including rights of indemnity and the right to
be defended by or at the expense of the insurer, under the applicable Insurance
Policy with respect to such Spinco Claim; and (ii) to the extent necessary to
provide the Spinco Group with the benefit of such insurance with respect to
Spinco Claims, to designate Spinco, without need of further documentation, as
the agent and attorney-in-fact to assert and to collect any Insurance Proceeds
under such Insurance Policies, provided, however, that nothing in this Section
6.2 shall be deemed to constitute (or to reflect) the assignment of any of the
Insurance Policies to the Spinco Group. In the event an insurer refuses to
honor such agency or to pay such Insurance Proceeds to the Spinco Group, CSC
shall use all reasonable efforts to collect such Insurance Proceeds and forward
them to Spinco.
(b) In the event of payment of a Spinco Claim by the Spinco Group
after the Distribution Date, Spinco, or the applicable member of the Spinco
Group shall be subrogated to and stand in the place of CSC or the CSC Group as
to any rights, events or circumstances in respect of which Spinco or the
applicable member of the Spinco Group may have any right or claim under this
Agreement or otherwise against any such insurer relating to such Spinco Claim.
CSC shall cooperate with the Spinco Group in a reasonable manner in prosecuting
any subrogated right or claim.
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SECTION 6.3 ADMINISTRATION AND RESERVES. Consistent with the provisions
of Article V, from and after the Distribution Date:
(a) CSC shall be responsible for (i) Insurance Administration of the
Insurance Policies with respect to any CSC Liabilities, any CSC Assets or any
claims as to which the CSC Group has retained rights of reimbursement or
subrogation pursuant to this Agreement or any Ancillary Agreement; and (ii)
Claims Administration with respect to any CSC Liabilities, any CSC Assets or any
claims as to which the CSC Group has retained rights of reimbursement or
subrogation pursuant to this Agreement or any Ancillary Agreement. It is
understood that the physical possession of the Insurance Policies by CSC (other
than those transferred to Spinco hereunder or under any Ancillary Agreement) is
in no way intended to limit, inhibit or preclude any right to insurance coverage
for any Insured Claim or any other rights under the Insurance Policies,
including without limitation, claims of Spinco and any of its operations,
Subsidiaries and Affiliates for insurance coverage, reimbursement, subrogation
or otherwise; and
(b) Spinco shall be responsible for (i) Insurance Administration of
the Insurance Policies with respect to any Spinco Liabilities, any Spinco
Assets, or any claims as to which the Spinco Group has rights of reimbursement
or subrogation pursuant to this Agreement or any Ancillary Agreement, and (ii)
Claims Administration with respect to any Spinco Liabilities, any Spinco Assets,
or any claims as to which the Spinco Group has rights of reimbursement or
subrogation pursuant to this Agreement or any Ancillary Agreement.
SECTION 6.4 RETROSPECTIVELY-RATED PREMIUM ADJUSTMENTS. Each party shall
pay its share of retrospectively-rated premiums incurred after the Distribution
Date for coverage under the Insurance Policies with respect to their respective
Liabilities which are Insured Claims under the Insurance Policies. Such shares
will be determined consistent with the procedures and arrangements entered into
with the applicable insurers prior to the date of this Agreement. Either party
shall have the right but not the obligation to pay such premiums under the
Insurance Policies with respect to the other party's Liabilities which are
Insured Claims under the Insurance Policies to the extent that such other party
does not pay such premiums, whereupon the non-paying party shall forthwith (but
in no event more than 30 days following receipt of notice of such payment)
reimburse the payor for any premiums paid by the payor with respect to such non-
paying party's Liabilities.
SECTION 6.5 ALLOCATION OF INSURANCE PROCEEDS; COOPERATION. (a) Except as
otherwise provided in Section 5.3, Insurance Proceeds received with respect to
claims, costs and expenses under the Insurance Policies shall be paid to CSC
with respect to CSC Liabilities and to Spinco with respect to the Spinco
Liabilities. Payment of the allocable portions of indemnity costs of Insurance
Proceeds resulting from the Insurance Policies will be made to the appropriate
party upon receipt from the insurance carrier.
(b) Each of the parties hereto agrees to use reasonable efforts to
maximize available coverage under the Insurance Policies for all Insured Claims
whether or not such party is the expected beneficiary of Insurance Proceeds
under such Insurance Policies in respect of such Insured Claim. As part of such
efforts to maximize insurance coverage, each party agrees to take reasonable
steps to recover such amounts as are or might be due from all other responsible
parties in respect of an Insured Claim, including but not limited to Insured
Claims as to which coverage limits under the Insurance Policies would be or
would have been exceeded as a result of such Insured Claim and whether or not
such party is expected to benefit directly from such efforts.
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(c) Where CSC Liabilities and Spinco Liabilities, as applicable, are
covered under the same Insurance Policies for periods prior to the Distribution
Date, or covering claims made after the Distribution Date with respect to an
event or an occurrence prior to the Distribution Date, then the CSC Group and
the Spinco Group may claim coverage for Insured Claims under such Insurance
Policies as and to the extent that such insurance is available up to the full
extent of the applicable limits of liability or other coverage of such Insurance
Policies and subject to payment of any deductible, co-insurance amounts or
retentions by the party making the claim. Each party may receive Insurance
Proceeds in respect of its Insured Claims as and when payable under the terms of
the applicable Insurance Policies without regard to the relative amount of
deductible paid by either party after the Distribution Date with respect to an
Insured Claim for a Liability for which such party was responsible or the amount
of such Insurance Proceeds paid to either Group after the Distribution Date with
respect to its respective Liabilities. In the event that the aggregate limits
on any Insurance Policy are exceeded by the aggregate of paid Insured Claims,
there shall be no allocation of previously paid deductibles, retentions,
premiums or Insurance Proceeds between the Groups, and except as expressly
provided in this Agreement, neither Group shall be entitled to reimbursement
from the other Group for deductibles, premiums or Insurance Proceeds paid by an
insurer to or on behalf of such Group; provided, however, that in the event
additional insurance coverage for remaining unpaid Insured Claims may be
purchased or reinstated by CSC, the parties agree to share such costs of
reinstatement (including premium penalty adjustments) in the same proportion
which the Insurance Proceeds under such Insurance Policy (both received and
expected to be received by such party after the Distribution Date less
deductible paid by such party after the Distribution Date) bears to the total
Insurance Proceeds paid (and payable to the party with the pending claims under
the new coverage limits).
SECTION 6.6 REIMBURSEMENT OF EXPENSES. Spinco shall reimburse the
relevant insurer (or any relevant third-party administrator), to the extent
required under any Insurance Policy for any services performed after the
Distribution Date with respect to any and all Spinco Claims which are paid,
settled, adjusted, defended and/or otherwise handled by such insurer or third-
party administrator pursuant to the terms and conditions of such Insurance
Policy (or any service, claims handling or administration agreement with any
such third-party administrator).
SECTION 6.7 INSURER INSOLVENCY OR COVERAGE CONTROVERSY. The CSC Group
shall not be obligated to reimburse the Spinco Group for any Spinco Claim
covered under any Insurance Policies which is not paid because of the insolvency
of such insurer or the refusal or failure by any insurer to pay such Spinco
Claim; provided, however, that CSC shall assign to Spinco or any member of the
Spinco Group all of its rights under such Insurance Policies with respect to
such Spinco Claim and shall reasonably cooperate with Spinco, at Spinco's option
and expense, in pursuing collection of all or part of such Spinco Claim from
such insurer or such other third parties who may have liability for such Spinco
Claim (including without limitation, governmental authorities, or others holding
insurance reserves available for payment, trustees in bankruptcy or liquidators
of such insurers, etc.).
SECTION 6.8 DIRECT RESPONSIBILITY FOR CLAIMS. CSC agrees to notify
insurers under the Insurance Policies of the Distribution and to seek an
endorsement by such insurers that the coverage provided by such Insurance
Policies will apply to the CSC Group and the Spinco Group with the same force
and effect and subject to the same terms, conditions, and exclusions as if the
separation of CSC and the Distribution had not occurred (it being understood
that CSC shall be under no obligation to pay any amounts or otherwise incur any
liabilities in connection therewith). In the event such endorsement is refused,
CSC agrees to make reasonable efforts to place the Spinco Group in the same
position as it would have been had such endorsement been agreed upon by such
insurers (it being understood that CSC shall be under no obligation to pay any
amounts or otherwise incur
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any liabilities in connection therewith). Spinco shall have the right to make
reasonable efforts to negotiate agreements with any and all insurers or third-
party administrators whereby Spinco shall assume direct responsibility for any
and all Liabilities related to it under any Insurance Policies, and CSC shall
provide reasonable assistance in this effort.
SECTION 6.9 ASSISTANCE, WAIVER OF CONFLICT AND SHARED DEFENSE. Each of
the parties hereto agrees to provide reasonable assistance to the other parties
hereto as regards any dispute with any third party (including insurers, third-
party administrators and state guaranty funds) as to any matter related to the
Insurance Policies. In the event that Insured Claims of more than one Group
exist relating to the same occurrence, the parties hereto agree to defend such
Insured Claims jointly and to waive any conflict of interest necessary to the
conduct of such joint defense. Nothing in this Section 6.9 or elsewhere in this
Article VI shall be construed to limit or otherwise alter in any way the
indemnity obligations of the parties hereto, including those created by this
Agreement, any Ancillary Agreement or by operation of law.
ARTICLE VII
SERVICES AND RELATED MATTERS
SECTION 7.1 PERFORMANCE OF SERVICES. Beginning on the Distribution Date,
CSC will provide, or cause one or more of its Subsidiaries to provide, to Spinco
or another member of the Spinco Group certain services, or the right to use
certain assets, on such terms as may be set forth in the Transition Services
Agreement, including any schedules thereto.
SECTION 7.2 INDEPENDENCE. Unless otherwise agreed in writing, none of the
individuals providing the scheduled services referred to in the Transition
Services Agreement will be deemed to be employees of the party receiving such
services for any purpose.
ARTICLE VIII
CERTAIN OTHER MATTERS
SECTION 8.1 BENEFITS AGREEMENT. All matters relating to or arising out of
any employee benefit, compensation or welfare arrangement in respect of any
present and former employee of the CSC Group or the Spinco Group shall be
governed by the Benefits Agreement. In the event of any inconsistency between
the Benefits Agreement and this Agreement with respect to such matters, the
Benefits Agreement shall govern.
SECTION 8.2 TAX MATTERS. All matters relating to Taxes shall be governed
exclusively by the Tax Agreement. In the event of any inconsistency between the
Tax Agreement and this Agreement with respect to such matters, the Tax Agreement
shall govern.
SECTION 8.3 INTELLECTUAL PROPERTY MATTERS. Certain matters relating to
intellectual property are governed exclusively by the Intellectual Property
Agreements. In the event of any inconsistency between the Intellectual Property
Agreements and this Agreement with respect to the matters covered by the
Intellectual Property Agreements, the Intellectual Property Agreements shall
govern.
SECTION 8.4 TREATMENT OF ASSETS TRANSFERRED AND LIABILITIES ASSUMED. All
transfers of Assets of the CSC Group to the Spinco Group pursuant to this
Agreement shall constitute contributions by CSC to the capital of Spinco, and
all transfers of Assets of the Spinco Group to the
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<PAGE>
CSC Group, and the assumption by the Spinco Group of Liabilities of the CSC
Group, net of Assets received, pursuant to this Agreement shall be treated as a
distribution by Spinco to CSC.
ARTICLE IX
INFORMATION
SECTION 9.1 ACCESS TO INFORMATION. From and after the Distribution Date,
CSC and Spinco shall each afford the other and its accountants, counsel and
other designated representatives reasonable access (including using reasonable
efforts to give access to persons or firms possessing information) and
duplicating rights during normal business hours to all records, books,
contracts, instruments, computer data and other data and information in its
possession relating to the business and affairs of the other (other than data
and information subject to an attorney/client or other privilege), insofar as
such access is reasonably required by the other including, without limitation,
for audit, accounting and litigation purposes; provided, however, that no party
shall be under any obligation by reason of this Section 9.1 to afford such
access to any of the foregoing persons in connection with any Action commenced
or threatened against such party; and provided further, however, that except as
expressly provided otherwise in any Ancillary Agreement, no party shall have any
liability to any other party in the event that any information exchanged or
provided pursuant to this Agreement which is an estimate or forecast, or which
is based on an estimate or forecast, is found to be inaccurate.
SECTION 9.2 LITIGATION COOPERATION. CSC and Spinco shall each use
reasonable efforts to make available to the other, upon written request, its
officers, directors, employees and agents as witnesses to the extent that such
persons may reasonably be required in connection with any legal, administrative
or other proceedings arising out of the business of the other prior to the
Distribution Date in which the requesting party may from time to time be
involved; provided, however, that no party shall be under any obligation by
reason of this Section 9.2 to make available any of the foregoing persons in
connection with any Action commenced or threatened against such party.
SECTION 9.3 PRIVILEGE MATTERS.
(a) Each of the parties hereto shall, and shall cause the members of its
Group over which it has legal or effective direct or indirect control to, use
its reasonable efforts to maintain, preserve, protect and assert all privileges
including, without limitation, all privileges arising under or relating to the
attorney-client relationship (including without limitation the attorney-client
and attorney work product privileges) that relate directly or indirectly to any
member of the other Group for any period prior to the Distribution Date
(PRIVILEGE or PRIVILEGES). Each of the parties hereto shall use its reasonable
efforts not to waive, or permit any member of its Group over which it has legal
or effective direct or indirect control to waive, any such Privilege that could
be asserted under applicable Law without the prior written consent of the other
party. With respect to each party, the rights and obligations created by this
Section 9.3 shall apply to all information as to which a member of any Group did
assert or, but for the Distribution, would have been entitled to assert the
protections of a Privilege (PRIVILEGED INFORMATION) including, but not limited
to, any and all information that either:
(i) was generated or received prior to the Distribution Date but
which, after the Distribution, is in the possession of a member of
another Group; or
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<PAGE>
(ii) is generated or received after the Distribution Date but
refers to or relates to Privileged Information that was generated or
received prior to the Distribution Date.
(b) Upon receipt by a party or any member of its Group of any
subpoena, discovery or other request that arguably calls for the production or
disclosure of Privileged Information, or if a party or any member of its Group
obtains knowledge that any current or former employee of such party or any
member of its Group has received any subpoena, discovery or other request which
arguably calls for the production or disclosure of Privileged Information, such
party shall promptly notify the other parties of the existence of the request
and shall provide the other party a reasonable opportunity to review the
information and to assert any rights it may have under this Section 9.4 or
otherwise to prevent the production or disclosure of Privileged Information. No
party will, or will permit any member of its Group over which it has direct or
indirect legal or effective control to, produce or disclose any information
arguably covered by a Privilege under this Section 9.4 unless:
(i) the other party has provided its express written consent to
such production or disclosure; or
(ii) a court of competent jurisdiction has entered an order which
is not then appealable or a final, nonappealable order finding that
the information is not entitled to protection under any applicable
privilege.
(c) The parties hereto understand and agree that the transfer of any
books and records or other information between any members of the CSC Group or
the Spinco Group shall be made in reliance on the agreements of CSC and Spinco
as set forth in this Article IX, to maintain the confidentiality of Privileged
Information and to assert and maintain all applicable Privileges. The access to
information being granted pursuant to Section 9.1, the agreement to provide
witnesses and individuals pursuant to Section 9.2 and the transfer of Privileged
Information to either party pursuant to this Section 9.3 shall not be deemed a
waiver of any Privilege that has been or may be asserted under this Section 9.3
or otherwise.
SECTION 9.4 REIMBURSEMENT. CSC and Spinco, each providing information or
witnesses under Sections 9.1 or 9.2 to the other, shall be entitled to receive
from the recipient, upon the presentation of invoices therefor, payment for all
out-of-pocket costs and expenses as may be reasonably incurred in providing such
information or witnesses.
SECTION 9.5 RETENTION OF RECORDS. Except as otherwise required by law or
agreed to in writing, each party shall, and shall cause the members of its Group
to, retain all information relating to the other's business in accordance with
the past practice of such party. Notwithstanding the foregoing, except as
otherwise provided in the Tax Agreement, either party may destroy or otherwise
dispose of any information at any time in accordance with the corporate record
retention policy maintained by such party with respect to its own records,
subject to the provisions of applicable law.
SECTION 9.6 CONFIDENTIALITY. Each party shall, and shall cause each
member of its Group to, hold and cause its directors, officers, employees,
agents, consultants and advisors to hold, in strict confidence, unless compelled
to disclose by judicial or administrative process or, in the opinion of its
counsel, by other requirements of law, all information concerning the other
party (except to the extent that such information can be shown to have been (a)
in the public domain through no fault of such party or (b) later lawfully
acquired after the Distribution on a non-confidential basis from
29
<PAGE>
other sources by the party to which it was furnished), and neither party shall
release or disclose such information to any other person, except its auditors,
attorneys, financial advisors, bankers and other consultants and advisors who
shall be advised of and agree in writing to comply with the provisions of this
Section 9.6. Each party shall be deemed to have satisfied its obligation to
hold confidential information concerning or supplied by the other party if it
exercises the same care as it takes to preserve confidentiality for its own
similar information.
ARTICLE X
INTEREST ON PAYMENTS
SECTION 10.1 INTEREST ON PAYMENTS. Except as otherwise expressly
provided in this Agreement, all payments by one party to the other under this
Agreement or any Ancillary Agreement shall be paid, by wire transfer of
immediately available funds to an account in the United States designated by the
recipient, within 30 days after receipt of an invoice or other written request
for payment setting forth the specific amount due and a description of the basis
therefor in reasonable detail. Any amount remaining unpaid beyond its due date,
including disputed amounts that are ultimately determined to be payable, shall
bear interest at a floating rate of interest equal to the prime commercial
lending rate publicly announced by Morgan Guaranty Trust Company of New York or
any successor thereto at its principal office (or any alternative rate
substituted therefor by such bank).
ARTICLE XI
GENERAL
SECTION 11.1 TERMINATION. This Agreement may be terminated at any time
prior to the Distribution by CSC.
SECTION 11.2 EFFECT OF TERMINATION. In the event of any termination of
this Agreement pursuant to Section 11.1, no party to this Agreement (or any of
its directors or officers) shall have any Liability or further obligation to any
other party.
SECTION 11.3 EXPENSES. Except as specifically provided in this Agreement
or any Ancillary Agreement (including Section 3.6), all costs and expenses
incurred in connection with the preparation, execution, delivery and
implementation of this Agreement and the Ancillary Agreements and with the
consummation of the transactions contemplated by this Agreement (including
transfer taxes and the fees and expenses of the Distribution Agent and of all
counsel, accountants and financial and other advisors) shall be paid by CSC.
SECTION 11.4 NOTICES. All notices, requests, claims and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly give or made upon receipt) by delivery by
hand, by reputable overnight courier service, by facsimile transmission, or by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the addresses (or at such other address for a party as
shall be specified in a notice given in accordance with this Section 11.4)
listed below:
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If to CSC, to:
Campbell Soup Company
Campbell Place
Camden, New Jersey 08103-1799
Attention: Linda A. Lipscomb, Esq.
Fax No.: (609) 342-3936
If to Spinco, to:
Vlasic Foods International Inc.
Campbell Place
Camden, New Jersey 08103-1799
Attention: Norma B. Carter, Esq.
Fax No.: (609) 342-3936
or to such other address as any party may, from time to time, designate in a
written notice given in a like manner. Notice given by hand shall be deemed
delivered when received by the recipient. Notice given by mail as set out above
shall be deemed delivered five calendar days after the date the same is mailed.
Notice given by reputable overnight courier shall be deemed delivered on the
next following business day after the same is sent. Notice given by facsimile
transmission shall be deemed delivered on the day of transmission provided
telephone confirmation of receipt is obtained promptly after completion of
transmission.
SECTION 11.5 AMENDMENT AND WAIVER. This Agreement may not be altered or
amended, nor may rights hereunder be waived, except by an instrument in writing
executed by the party or parties to be charged with such amendment or waiver.
No waiver of any term, provision or condition of or failure to exercise or delay
in exercising any rights or remedies under this Agreement, in any one or more
instances, shall be deemed to be, or construed as, a further or continuing
waiver of any such term, provision, condition, right or remedy or as a waiver of
any other term, provision or condition of this Agreement.
SECTION 11.6 ENTIRE AGREEMENT. This Agreement, together with the
Ancillary Agreements, constitutes the entire understanding of the parties hereto
with respect to the subject matter hereof, superseding all negotiations, prior
discussions and prior agreements and understandings relating to such subject
matter. To the extent that the provisions of this Agreement are inconsistent
with the provisions of any Ancillary Agreement, the provisions of this Agreement
shall prevail, except as otherwise provided in Article VIII.
SECTION 11.7 SURVIVAL. All of the representations, warranties, covenants
and agreements contained in this Agreement shall survive (a) the execution and
delivery of this Agreement (b) the transfer and assumption of Spinco Assets and
Spinco Liabilities and (c) the Distribution Date in perpetuity.
SECTION 11.8 PARTIES IN INTEREST. Nothing contained in this Agreement,
express or implied, is intended to confer any benefits, rights or remedies upon
any person or entity other than members of the CSC Group and the Spinco Group,
the Persons released pursuant to Article IV hereof, and the CSC Indemnitees and
Spinco Indemnitees under Article V hereof.
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SECTION 11.9 FURTHER ASSURANCES AND CONSENTS. In addition to the actions
specifically provided for elsewhere in this Agreement, each of the parties
hereto will use its reasonable efforts to (a) execute and deliver such further
instruments and documents and take such other actions as any other party may
reasonably request in order to effectuate the purposes of this Agreement and to
carry out the terms hereof and (b) take, or cause to be taken, all actions, and
to do, or cause to be done, all things reasonably necessary, proper or advisable
under applicable laws, regulations and agreements or otherwise to consummate and
make effective the transactions contemplated by this Agreement, including,
without limitation, using its reasonable efforts to obtain any consents and
approvals and to make any filings and applications necessary or desirable in
order to consummate the transactions contemplated by this Agreement; provided
that no party hereto shall be obligated to pay any consideration therefor
(except for filing fees and other similar charges) to any third party from whom
such consents, approvals and amendments are requested or to take any action or
omit to take any action if the taking of or the omission to take such action
would be unreasonably burdensome to the party or its Group or the business
thereof.
SECTION 11.10 SEVERABILITY. The provisions of this Agreement are
severable and should any provision hereof be void, voidable or unenforceable
under any applicable law, such provision shall not affect or invalidate any
other provision of this Agreement, which shall continue to govern the relative
rights and duties of the parties as though such void, voidable or unenforceable
provision were not a part hereof.
SECTION 11.11 GOVERNING LAW. This Agreement shall be construed in
accordance with, and governed by, the laws of the State of New Jersey, without
regard to the conflicts of law rules of such state.
SECTION 11.12 COUNTERPARTS. This Agreement may be executed in one or more
counterparts each of which shall be deemed an original instrument, but all of
which together shall constitute but one and the same Agreement.
SECTION 11.13 ASSIGNMENT. Neither of the parties may assign or delegate
any of its rights or duties under this Agreement without the prior written
consent of the other party, which consent will not be unreasonably withheld.
This Agreement shall be binding upon, and shall inure to the benefit of, the
parties hereto and their respective successors and permitted assigns.
SECTION 11.14 DISPUTES. (a) Resolution of any and all disputes arising
from or in connection with this Agreement, whether based on contract, tort,
statute or otherwise, including, but not limited to, disputes in connection with
claims by third parties (collectively, DISPUTES), shall be subject to the
provisions of this Section 11.14; provided, however, that nothing contained
herein shall preclude either party from seeking or obtaining (i) injunctive
relief (including where expressly authorized herein pursuant to Sections 3.9) or
(ii) equitable or other judicial relief to enforce the provisions hereof or to
preserve the status quo pending resolution of Disputes hereunder.
(b) Either party may give the other party written notice of any
Dispute not resolved in the normal course of business. The parties shall attempt
in good faith to resolve any Dispute promptly by negotiation between executives
of the parties who have authority to settle the controversy and who are at a
higher level of management than the persons with direct responsibility for
administration of this Agreement. Within 30 days after delivery of the notice,
the foregoing executives of both parties shall meet at a mutually acceptable
time and place, and thereafter as often as they reasonably deem necessary for a
period not to exceed 15 days, to attempt to resolve the Dispute. All reasonable
requests for information made by one party to the other will be honored.
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<PAGE>
If the parties do not resolve the Dispute within such 45 day period (the INITIAL
MEDIATION PERIOD), the parties shall attempt in good faith to resolve the
Dispute by negotiation between (a) in the case of CSC, the Chief Financial
Officer or the Vice President - Treasurer and (b) in the case of Spinco, the
Chief Financial Officer (collectively, the DESIGNATED OFFICERS). Such officers
shall meet at a mutually acceptable time and place (but in any event no later
than 15 days following the expiration of the Initial Mediation Period) and
thereafter as often as they reasonably deem necessary for a period not to exceed
15 days, to attempt to resolve the Dispute.
(c) If the Dispute has not been resolved by negotiation within 75
days of the first party's notice, or if the parties failed to meet within 30
days of the first party's notice, or if the Designated Officers failed to meet
within 60 days of the first party's notice, either party may commence any
litigation or other procedure allowed by law.
33
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the day and year first above written.
CAMPBELL SOUP COMPANY
By _______________________________________
Name:
Title:
VLASIC FOODS INTERNATIONAL INC.
By _______________________________________
Name:
Title:
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<PAGE>
Exhibit 3.1
FORM OF AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
VLASIC FOODS INTERNATIONAL INC.
First. Name. The name of the Corporation is Vlasic Foods International
----
Inc.
Second. Registered Office. The address of the Corporation's initial
-----------------
registered office in the State of New Jersey is Campbell Place, Camden, New
Jersey. The name of the Corporation's registered agent at such address is Norma
B. Carter.
Third. Purpose. The purposes for which the Corporation is organized are
-------
to engage in any lawful business purpose or purposes for which corporations may
be organized under the Business Corporation Act of the State of New Jersey (the
"Business Corporation Act") and to possess and exercise all of the powers and
privileges granted by such law.
Fourth. Authorized Capital. The aggregate number of shares of stock which
------------------
the Corporation shall have authority to issue is 60,000,000 shares, consisting
of 4,000,000 shares of Preferred Stock, without par value ("Preferred Stock"),
and 56,000,000 shares of Common Stock, without par value ("Common Stock").
The designation, relative voting, dividend, liquidation and other
rights, preferences and limitations of the Preferred Stock and the Common Stock
of the Corporation and the authority of the Board of Directors of the
Corporation to divide the shares of Preferred Stock into classes or series and
to determine and change the relative rights, preferences and limitations of any
such class or series are as follows:
A. Preferred Stock.
---------------
1. Terms. The Board of Directors shall have authority to adopt
------
and to cause to be executed and filed, without further approval of the
shareholders, an amendment or amendments to this Amended and Restated
Certificate of Incorporation to divide any unissued shares of
Preferred Stock into one or more classes and into series within any
class or classes of Preferred Stock, to authorize the issuance of such
shares for such consideration as the Board of Directors may determine,
and to determine in any one or more respects from time to time before
issuance of such unissued shares:
a. The distinctive designation of the class or series and
the number of shares which will constitute the class or series;
<PAGE>
b. The dividend rate and the times of payment of dividends
on the shares of the class or series, whether dividends will be
cumulative, and if so, from what date or dates;
c. The price or prices at which, and the terms and
conditions on which, the shares of the class or series may be
redeemed by the Corporation;
d. Whether or not the shares of the class or series will
be entitled to the benefit of a retirement or sinking fund to be
applied to the purchase or redemption of such shares and, if so
entitled, the amount of such fund and the terms and provisions
relative to the operation thereof;
e. Whether or not the shares of the class or series will
be convertible into, or exchangeable for, any other shares of
stock of the Corporation or other securities, and if so
convertible or exchangeable, the conversion price or prices, or
the rates of exchange, and any adjustments thereof, at which such
conversion or exchange may be made, and any other terms and
conditions of such conversion or exchange;
f. The rights of the shares of the class or series in the
event of voluntary or involuntary liquidation, dissolution or
winding up of the Corporation;
g. Whether or not the shares of the class or series will
have priority over or be on a parity with or be junior to the
shares of any other class or series in any respect or will be
entitled to the benefit of limitations restricting the issuance
of shares of any other class or series having priority over or
being on a parity with the shares of such class or series in any
respect, or restricting the payment of dividends on or the making
of other distributions in respect of shares of any other class or
series ranking junior to the shares of the class or series as to
dividends or assets, or restricting the purchase or redemption of
the shares of any such junior class or series, and the terms of
any such restriction;
h. Subject to paragraph 2. below, whether the class or
series will have voting rights, in addition to any voting rights
provided by law, and, if so, the terms of such voting rights; and
i. Any other preferences, qualifications, privileges,
options and other relative or special rights and limitations of
that series as are not inconsistent with this Amended and
Restated Certificate of Incorporation and the Business
Corporation Act.
-2-
<PAGE>
2. Voting Rights. The Board of Directors shall have authority
-------------
to determine voting rights for the holders of the shares of any class
or series of Preferred Stock, provided that the voting rights shall be
limited to any or all of the following:
a. the right to elect, voting as a class, a maximum of two
directors upon default of the equivalent of six quarterly
dividends, whether or not the defaulted dividends occurred in
consecutive periods, and such right will remain in effect until
cumulative dividends have been paid in full or until non-
cumulative dividends have been paid regularly for at least one
year;
b. the right to approve, by at least a majority of the
outstanding shares of the class or classes of Preferred Stock
affected, any increase in the authorized number of shares of such
class or classes or the creation of a class of equal rank;
c. the right to approve, by at least two-thirds of the
outstanding shares of Preferred Stock, the creation of a senior
equity security, provided that the Board of Directors may create
a senior equity security without such shareholder vote if (i)
stockholders authorized such action by the Board of Directors at
the time the existing class of Preferred Stock was created or
(ii) the holders of shares of the existing class of Preferred
Stock previously received adequate notice of the redemption
thereof, which redemption must occur within 90 days, unless all
or part of the existing issue is being retired with proceeds from
the sale of the new senior equity security; and
d. the right to approve, by at least two-thirds of the
outstanding shares of the class of Preferred Stock affected, the
adoption of any amendment to this Amended and Restated
Certificate of Incorporation or the By-Laws that would materially
change existing terms of such class of Preferred Stock, provided
that if all series of a class of Preferred Stock are not equally
affected by such amendment, then such amendment shall receive the
approval of two-thirds of the outstanding shares of the class
and, in addition, two-thirds of the outstanding shares of the
series that will have a diminished status.
3. Changes to Terms. The Board of Directors shall have
----------------
authority to change the designation or the relative rights,
preferences and limitations of any of the shares of any theretofore
established class or series of the Preferred Stock for which no shares
have been issued, and, further, the Board of Directors shall have
authority to increase or decrease the number of shares of any class or
series theretofore established (provided,
-3-
<PAGE>
however, that the number of shares of any class or series shall not be
decreased to a number less than that of the shares of that class or
series then outstanding).
4. Dividends. Holders of Preferred Stock shall be entitled to
---------
receive, when and as declared by the Board of Directors, out of funds
legally available for the payment thereof, dividends at the rates
fixed by the Board of Directors for the respective class or series,
and no more, before any dividends shall be declared and paid, or set
apart for payment, on Common Stock.
5. Preference on Liquidation. In the event of the voluntary or
-------------------------
involuntary liquidation, dissolution or winding up of the Corporation,
holders of each class or series of Preferred Stock will be entitled to
receive the amount fixed for such class or series plus, in the case of
any class or series on which dividends will have been determined by
the Board of Directors to be cumulative, an amount equal to all
dividends accumulated and unpaid thereon to the date of final
distribution whether or not earned or declared before any distribution
shall be paid, or set aside for payment, to holders of Common Stock.
If the assets of the Corporation are not sufficient to pay such
amounts in full, holders of all shares of Preferred Stock will
participate in the distribution of assets ratably in proportion to the
full amounts to which they are entitled or in such order or priority,
if any, as will have been set forth in the amendment to this Amended
and Restated Certificate of Incorporation establishing the class or
series of Preferred Stock. Neither the merger nor consolidation of
the Corporation into or with any other corporation, nor a sale,
transfer or lease of all or part of its assets, will be deemed a
liquidation, dissolution or winding up of the Corporation within the
meaning of this paragraph except to the extent specifically provided
for herein.
6. Redemption. The Corporation, at the option of the Board of
----------
Directors, may redeem all or part of the shares of any class or series
of Preferred Stock on the terms and conditions fixed for such class or
series.
-4-
<PAGE>
B. Common Stock.
------------
1. Dividends. Subject to the express terms of any Preferred
---------
Stock, holders of Common Stock will be entitled to receive such
dividends as may be declared by the Board of Directors.
2. Distribution of Assets. In the event of the voluntary or
----------------------
involuntary liquidation, dissolution or winding up of the Corporation,
holders of Common Stock will be entitled to receive all of the
remaining assets of the Corporation available for distribution to its
shareholders after all amounts to which the holders of Preferred Stock
are entitled have been paid or set aside in cash for payment.
3. Voting Rights. Except as otherwise required by law, and
-------------
subject to the express terms of any amendment to this Amended and
Restated Certificate of Incorporation designating the terms of any
class or series of Preferred Stock, the holders of Common Stock shall
have the general right to vote for all purposes, including the
election of directors, and shall be entitled to one vote for each
share thereof held. The holders of Common Stock shall not be entitled
to cumulative voting in the election of directors of the Corporation.
Fifth. Directors. Upon the effective date of this Amended and Restated
---------
Certificate of Incorporation, the number of directors of the Corporation shall
be [five], and the names and business addresses of such directors shall be as
follows:
Donald J. Keller Vlasic Foods International Inc.
Campbell Place
Camden, New Jersey 08103
Robert F. Bernstock Vlasic Foods International Inc.
Campbell Place
Camden, New Jersey 08103
[Others To Come]
The number of directors of the Corporation may be increased or
decreased from time to time by the Board of Directors. Except as otherwise
provided for or fixed by or pursuant to the provisions of Article Fourth hereof
relating to the rights of the holders of any class or series of Preferred Stock
to elect additional directors under specified circumstances, vacancies in the
Board of Directors resulting from an increase in the number of directors may be
filled by the Board of Directors in accordance with the Business Corporation
Act, and any director so elected shall hold office until the next succeeding
annual meeting of shareholders and until his or her successor shall have been
elected and qualified.
-5-
<PAGE>
The Board of Directors, by the affirmative vote of two-thirds of the
directors in office, may remove a director or directors for cause where, in the
judgment of such two-thirds majority, the continuation of the director or
directors in office would be harmful to the interests of the Corporation and may
suspend the director or directors for a reasonable period pending final
determination of whether cause exists for such removal.
Sixth. Vote Required for Certain Actions. The following action may be
---------------------------------
taken by the affirmative vote of two-thirds of the votes cast by the holders of
all of the Corporation's outstanding shares of stock entitled to vote thereon,
and, in addition, if any class or series is entitled to vote thereon as a class,
the affirmative vote of two-thirds of all of the votes which the holders of each
such class or series are entitled to cast thereon:
(i) the adoption by the shareholders of a proposed amendment
of this Amended and Restated Certificate of Incorporation of the
Corporation;
(ii) the adoption by the shareholders of a proposed plan of
merger or consolidation involving the corporation;
(iii) the approval by the shareholders of a sale, lease,
exchange, or other disposition of all, or substantially all, the
assets of the Corporation otherwise than in the usual and regular
course of business as conducted by the Corporation; and
(iv) dissolution.
Seventh. Except as otherwise provided by statute or by this Amended and
Restated Certificate of Incorporation or the By-Laws of the Corporation, as in
each case the same may be amended from time to time, all corporate powers may be
exercised by the Board of Directors. Without limiting the foregoing, the Board
of Directors shall have the power, without shareholder action except where
required by the Business Corporation Act:
(i) to amend the By-Laws of the Corporation;
(ii) to authorize the Corporation to issue for cash or property
shares of any class or series of its stock, now or hereafter
authorized but unissued or held in the treasury; and
(iii) to authorize the borrowing of money, the issuance of
bonds, debentures, notes and other obligations or evidences of
indebtedness of the Corporation, secured or unsecured, and the
inclusion of provisions as to redeemability and convertibility into
shares of any class or series of stock of the Corporation or
otherwise, and, as security for money borrowed or bonds, debentures,
notes and other obligations or evidences of indebtedness
-6-
<PAGE>
issued by the Corporation, the mortgaging or pledging of any property,
real, personal, or mixed, then owned or thereafter acquired by the
corporation.
Eighth. Limitation on Liability. The directors of the Corporation shall
-----------------------
be entitled to the benefits of all limitations on the liability of directors
generally that are now or hereafter become available under the Business
Corporation Act. Without limiting the generality of the foregoing, no director
of the Corporation shall be personally liable to the Corporation or its
shareholders for monetary damages for breach of any duty owed to the Corporation
or its shareholders, except that this Article Eighth shall not relieve a
director from liability for any breach of duty based upon an act or omission (a)
in breach of such director's duty of loyalty to the Corporation or its
shareholders, (b) not in good faith or involving a knowing violation of law or
(c) resulting in receipt by such director of an improper personal benefit. As
used in this Article Eighth, an act or omission in breach of a director's duty
of loyalty means an act or omission which that director knows or believes to be
contrary to the best interests of the Corporation or its shareholders in
connection with a matter in which he or she has a material conflict of interest.
Any repeal or modification of this Article Eighth shall be prospective only, and
shall not affect, to the detriment of any director, any limitation on the
personal liability of a director of the Corporation existing at the time of such
repeal or modification.
Ninth. Effective Date. The effective date of this Amended and Restated
--------------
Certificate of Incorporation shall be [March 30,] 1998.
Dated: March ___, 1998 VLASIC FOODS INTERNATIONAL INC.
By _____________________________
Name:
Title:
-7-
<PAGE>
Exhibit 3.2
FORM OF AMENDED AND RESTATED
BY-LAWS
OF
VLASIC FOODS INTERNATIONAL INC.
ARTICLE I
SHAREHOLDERS
SECTION 1.1. Annual Meeting. The annual meeting of the shareholders
--------------
of the Company shall be held for the election of directors and for the
transaction of such business as may properly come before the meeting on the
first Tuesday in December of each year (or, if such date is a legal holiday, the
next succeeding business day that is not a legal holiday), at such place and
time, either within or without the State of New Jersey, as may be fixed by
resolution of the Board of Directors.
SECTION 1.2. Call of Special Meeting. Except as otherwise provided
-----------------------
by law, and subject to the rights of the holders of any Preferred Stock of the
Company, special meetings of the shareholders may be called only by (A) the
Secretary of the Company to consider or act upon a specified proposal or
proposals which are a proper matter for shareholder action when requested, in
writing, to do so by the holders of not less than a majority of the capital
stock of the Company issued and outstanding and entitled to vote at such
meeting, (B) the Chairman of the Board, (C) the President or (D) the Board of
Directors pursuant to a resolution adopted by a majority of the directors then
in office. Upon a written request of shareholders of the Company entitled to
call a special meeting of shareholders in accordance with the foregoing
sentence, the Secretary shall, as promptly as practicable, cause notice to be
given to the shareholders entitled to vote that a meeting will be held at a time
and date fixed by the Secretary in accordance with Section 1.4 below.
SECTION 1.3. Place of Special Meeting. The Board of Directors, the
------------------------
Chairman of the Board or the President, as the case may be, may designate the
place of meeting, either within or without the State of New Jersey, for any
special meeting of the shareholders. If no designation is so made, the place of
meeting shall be the principal office of the Company.
SECTION 1.4. Notice of Meeting. Written or printed notice, stating
-----------------
the place, day and hour of the meeting, and, in the case of a special meeting,
the purpose or purposes for which the meeting is called, shall be delivered by
the Company either personally or by mail, to each shareholder of record entitled
to vote at such meeting. Unless otherwise provided by law, the written notice of
any meeting shall be given not less than ten (10) days nor more than sixty (60)
days before the date of the meeting. If mailed, such notice shall be deemed to
be delivered when deposited in the United States mail with postage thereon
prepaid, addressed to the shareholder at his, her or its address as it appears
on the stock transfer books of the Company. Such further notice of any meeting
shall be
<PAGE>
given as may be required by law. Meetings may be held without notice if all
shareholders entitled to vote are present, or if notice is waived by those not
present in accordance with Section 5.4 of Article V of these By-Laws. Subject to
applicable law and any applicable provisions of the Certificate of Incorporation
of the Company, any special meeting of the shareholders called by the Board, the
Chairman of the Board or the President may be cancelled, by resolution adopted
by the Board of Directors, upon public notice given on or prior to the date
previously scheduled for such meeting of shareholders.
SECTION 1.5. Quorum and Adjournment. Except as otherwise provided by
----------------------
law, the presence, in person or by proxy, of shareholders entitled to cast at
least a majority of the votes that all shareholders are entitled to cast on a
particular matter shall constitute a quorum for purposes of consideration and
action on the matter. A majority of the shares so present or represented may
adjourn the meeting from time to time, whether or not a quorum of shareholders
is present. Once a quorum is established, the shareholders present in person or
by proxy may continue to do business until adjournment, notwithstanding the
withdrawal of enough shareholders to leave less than a quorum. No notice of the
time and place of adjourned meetings need be given, except as required by law.
SECTION 1.6. Voting; Proxies. Except as otherwise provided by law or
---------------
in the Certificate of Incorporation, each shareholder entitled to vote at any
meeting shall be entitled to one vote for each share of stock held by such
shareholder which has voting power upon the matter in question. Any shareholder
entitled to vote at any meeting may vote in person or by proxy. Every proxy
shall be in writing, executed by the shareholder or his or her duly authorized
attorney and dated.
SECTION 1.7. Notice of Shareholder Business and Nominations.
----------------------------------------------
(A) Annual Meetings of Shareholders. (I) Nominations of persons for
-------------------------------
election to the Board of Directors of the Company and the proposal of business
to be considered by the shareholders may be made at an annual meeting of
shareholders (a) pursuant to the Company's notice of meeting, (b) by or at the
direction of the Board of Directors or (c) by any shareholder of the Company who
was a shareholder of record at the time of giving of notice provided for in this
Section 1.7, who is entitled to vote at the meeting and who complies with the
notice procedures set forth in this Section 1.7.
(II) For nominations or other business to be properly brought
before an annual meeting by a shareholder pursuant to clause (c) of paragraph
(A)(I) of this Section 1.7, the shareholder must have given timely notice
thereof in writing to the Secretary of the Company, and such other business must
otherwise be a proper matter for shareholder action. To be timely, a
shareholder's notice shall be delivered to the Secretary at the principal
executive offices of the Company, not later than the close of business on the
60th day nor earlier than the close of business on the 90th day prior to the
first anniversary of the preceding year's annual meeting; provided, however,
that with respect to the annual meeting to be held in 1998, the first
anniversary date shall be deemed for all purposes under this Section 1.7 to be
December 2, 1998; and provided, further, that in the event that the date of the
annual meeting is more than 30 days before or more than 60 days after such
anniversary date, notice by the shareholder to be timely must be so delivered
not earlier
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than the close of business on the 90th day prior to such annual meeting and not
later than the close of business on the later of (a) the 60th day prior to such
annual meeting or (b) the 10th day following the day on which public
announcement of the date of such meeting is first made by the Company. In no
event shall the public announcement of an adjournment of an annual meeting
commence a new time period for the giving of a shareholder's notice as described
above. Such shareholder's notice shall set forth (a) as to each person whom the
shareholder proposes to nominate for election or re-election as a director all
information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors in an election contest, or is
otherwise required, in each case pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and Rule 14a-11 thereunder
(including such person's written consent to being named in the proxy statement
as a nominee and to serving as a director if elected); (b) as to any other
business that the shareholder proposes to bring before the meeting, a brief
description of the business desired to be brought before the meeting, the
reasons for conducting such business at the meeting and any material interest in
such business of such shareholder and the beneficial owner, if any, on whose
behalf the proposal is made; and (c) as to the shareholder giving the notice and
the beneficial owner, if any, on whose behalf the nomination or proposal is
made, (i) the name and address of such shareholder, as they appear on the
Company's books, and of such beneficial owner and (ii) the class and number of
shares of the Company which are owned beneficially and of record by each of such
shareholder and such beneficial owner.
(III) Notwithstanding anything in the second sentence of
paragraph (A)(II) of this Section 1.7 to the contrary, and subject to any
applicable provisions of the Certificate of Incorporation dealing with vacancies
on the Board of Directors, in the event that the number of directors to be
elected to the Board of Directors of the Company is increased and there is no
public announcement by the Company naming all of the nominees for director or
specifying the size of the increased Board of Directors at least 70 days prior
to the first anniversary of the preceding year's annual meeting, a shareholder's
notice required by this Section 1.7 shall also be considered timely, but only
with respect to nominees for any new positions created by such increase, if it
shall be delivered to the Secretary at the principal executive offices of the
Company not later than the close of business on the 10th day following the day
on which such public announcement is first made by the Company.
(B) Special Meetings of Shareholders. Only such business shall be
--------------------------------
conducted at a special meeting of shareholders as shall have been brought before
the meeting pursuant to the Company's notice of meeting. Nominations of persons
for election to the Board of Directors may be made at a special meeting of
shareholders at which directors are to be elected pursuant to the Company's
notice of meeting (a) by or at the direction of the Board of Directors or (b) by
any shareholder of the Company who is a shareholder of record at the time of
giving of notice provided for in this Section 1.7, who shall be entitled to vote
at the meeting and who complies with the notice procedures set forth in this
Section 1.7. In the event a special meeting of shareholders is called for the
purpose of electing one or more directors to the Board of Directors, any such
shareholder may nominate a person or persons (as the case may be) for election
to such positions, as specified in the Company's notice of meeting, if a
shareholder's notice complying with the
3
<PAGE>
requirements of paragraph (A)(II) of this Section 1.7 shall be delivered to the
Secretary at the principal executive offices of the Company not earlier than the
close of business on the 90th day prior to such special meeting and not later
than the close of business on the later of (a) the 60th day prior to such
special meeting or (b) the 10th day following the day on which public
announcement is first made of the date of the special meeting and of the
nominees proposed by the Board of Directors to be elected at such meeting. In
no event shall the public announcement of an adjournment of a special meeting
commence a new time period for the giving of a shareholder's notice as described
above.
(C) General. (I) Only such persons who are nominated in accordance
-------
with the procedures set forth in this Section 1.7 shall be eligible to serve as
directors and only such business shall be conducted at a meeting of shareholders
as shall have been brought before the meeting in accordance with the procedures
set forth in this Section 1.7. Except as otherwise provided by law, the
Certificate of Incorporation or these By-Laws, the Chairman of the meeting shall
have the power and duty to determine whether a nomination or any business
proposed to be brought before the meeting was made or proposed, as the case may
be, in accordance with the procedures set forth in this Section 1.7 and, if any
proposed nomination or business is not in compliance with this Section 1.7, to
declare that such defective proposal or nomination shall be disregarded.
(II) For purposes of this Section 1.7, "public announcement"
shall mean disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document publicly
filed by the Company with the Securities and Exchange Commission pursuant to
Section 13, 14 or 15(d) of the Exchange Act.
(III) Notwithstanding the foregoing provisions of this Section
1.7, a shareholder shall also comply with all applicable requirements of the
Exchange Act and the rules and regulations thereunder with respect to the
matters set forth in this Section 1.7. Nothing in this Section 1.7 shall be
deemed to affect any rights (a) of shareholders to request inclusion of
proposals in the Company's proxy statement pursuant to Rule 14a-8 under the
Exchange Act or (b) of the holders of any class or series of Preferred Stock to
elect directors under specified circumstances set forth in the Certificate of
Incorporation.
SECTION 1.8. Chairman of Meetings. All meetings of the shareholders
--------------------
shall be presided over by the Chairman of the Board, or if he or she shall not
be present, by the President. If neither the Chairman of the Board nor the
President shall be present, such meeting shall be presided over by a Vice
President. If none of the Chairman of the Board, the President and a Vice
President shall be present, such meeting shall be presided over by a Chairman to
be elected by the holders of a majority of the shares present or represented at
the meeting.
The Secretary of the Corporation, or if he or she is not present, an
Assistant Secretary of the Corporation, if present, shall act as secretary of
the meeting. If neither the Secretary nor an Assistant Secretary is present,
then the Chairman of the meeting shall appoint a Secretary of the meeting.
4
<PAGE>
SECTION 1.9. Inspectors of Elections. The Board of Directors by
-----------------------
resolution shall appoint one or more inspectors, which inspector or inspectors
may include individuals, other than any director or candidate for the office of
director, who serve the Company in other capacities, including, without
limitation, as officers, employees, agents or representatives, to act at the
meetings of shareholders and make a written report thereof. One or more persons
may be designated as alternate inspectors to replace any inspector who fails to
act. If no inspector or alternate has been appointed to act or is able to act
at a meeting of shareholders, the Chairman of the meeting shall appoint one or
more inspectors to act at the meeting. Each inspector, before discharging his
or her duties, shall take and sign an oath faithfully to execute the duties of
inspector with strict impartiality and according to the best of his or her
ability. The inspectors shall take charge of the polls and shall make a
certificate of the results of the vote taken.
ARTICLE II
BOARD OF DIRECTORS
SECTION 2.1. General Powers. The business and affairs of the Company
--------------
shall be managed under the direction of its Board of Directors. In addition to
the powers and authorities by these By-Laws expressly conferred upon it, the
Board of Directors may exercise all powers of the Company and do all such lawful
acts and things as are not by law or by the Certificate of Incorporation or by
these By-Laws required to be exercised or done by the shareholders.
SECTION 2.2. Number and Tenure. Subject to the rights of the holders
-----------------
of any class or series of Preferred Stock to elect directors under specified
circumstances, the number of directors shall be fixed from time to time pursuant
to a resolution adopted by the Board of Directors, but shall not be less than
three or more than fifteen. Each director shall hold office until the next
annual meeting of shareholders and until his or her successor has been elected
and qualified.
SECTION 2.3. Regular Meetings. Regular meetings of the Board of
----------------
Directors shall be held without other notice than this Section 2.3 (subject to
any applicable provisions of Section 8.1 of Article VIII of these By-Laws) at
such places within or without the State of New Jersey and at such times as the
Board of Directors may determine. The Board of Directors may, by resolution,
provide the time and place for the holding of additional regular meetings
without other notice than such resolution.
SECTION 2.4. Special Meetings. Special meetings of the Board of
----------------
Directors shall be called at the request of the Chairman of the Board, the
President or a number of directors equal to the lesser of (A) a majority of
directors then in office or (B) three. The person or persons authorized to call
special meetings of the Board of Directors may fix the place and time of the
meetings.
SECTION 2.5. Notice. Notice of any special meeting of directors
------
shall be given to each director at his or her business or residence in writing
by hand delivery, first
5
<PAGE>
class or overnight mail or other overnight or express delivery service, telegram
or facsimile transmission, by electronic mail or orally by telephone. Neither
the business to be transacted at, nor the purpose of, any regular or special
meeting of the Board of Directors need be specified in the notice of such
meeting, except for amendments to these By-Laws, as provided under Section 8.1
of Article VIII of these By-Laws, or to the Certificate of Incorporation. A
meeting may be held at any time without notice if all the directors are present
or if those not present waive notice of the meeting in accordance with Section
5.4 of Article V of these By-Laws.
SECTION 2.6. Action by Consent of Board of Directors. Any action
---------------------------------------
required or permitted to be taken at any meeting of the Board of Directors or of
any committee thereof may be taken without a meeting if all members of the Board
or committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board or committee.
SECTION 2.7. Quorum. A majority of the directors then in office
------
shall constitute a quorum for the transaction of business at any meeting of the
Board of Directors. Whether or not a quorum is present, a majority of the
directors present at a meeting of the Board may adjourn the meeting to some
later time without further notice. When a quorum is present, the vote of a
majority of the directors present shall decide any question.
SECTION 2.8. Vacancies. Subject to applicable law and the rights of
---------
the holders of any class or series of Preferred Stock pursuant to the Company's
Certificate of Incorporation, vacancies, including those resulting from death,
resignation, retirement, disqualification, removal from office or other cause,
may be filled by the affirmative vote of a majority of directors then in office,
though less than a quorum of the Board of Directors. Any director so elected
shall hold office until the next annual meeting of shareholders and until such
director's successor shall have been elected and qualified. No decrease in the
number of authorized directors constituting the Board of Directors shall shorten
the term of any incumbent director.
SECTION 2.9. Compensation. In addition to reimbursement of
------------
reasonable expenses incurred in attending meetings or otherwise in connection
with his or her attention to the affairs of the Company, each director as such,
as Chairman of the Board and as a member of any committee of the Board of
Directors, shall be entitled to receive such remuneration as may be fixed from
time to time by the Board of Directors, in the form either of fees for
attendance at meetings of the Board of Directors and committees thereof or
annual retainers, or both; but no director who receives a salary or other
remuneration as an employee of the Company or any subsidiary thereof shall
receive any additional remuneration as a director or member of any committee of
the Board of Directors.
SECTION 2.10. Executive and Other Committees. From time to time, the
------------------------------
Board of Directors may by resolution provide for and appoint the members of an
Executive Committee, or any regular or special committee or committees of
directors, and such committees shall have and may exercise such powers as shall
be conferred or authorized by the resolution of appointment, so long as such
powers are not inconsistent with the Certificate of Incorporation and applicable
law.
6
<PAGE>
ARTICLE III
OFFICERS
SECTION 3.1. Officers. The officers of the Company shall be a
--------
Chairman of the Board of Directors, a President, a Secretary, a Treasurer, one
or more Vice Presidents, and such other officers as the Board of Directors from
time to time may deem proper. The Chairman of the Board shall be chosen from
among the directors. All officers elected by the Board of Directors shall each
have such powers and duties as generally pertain to their respective offices,
subject to the specific provisions of this Article III. Such officers shall also
have such powers and duties as from time to time may be conferred by the Board
of Directors or by any committee thereof. The Board may from time to time elect,
or the President may appoint, such other officers (including one or more
Assistant Vice Presidents, Assistant Secretaries and Assistant Treasurers) and
such agents, as may be necessary or desirable for the conduct of the business of
the Company. Such other officers and agents shall have such duties and shall
hold their offices for such terms as shall be provided in these By-Laws or as
may be prescribed by the Board or such committee or by the President, as the
case may be.
SECTION 3.2. Election and Term of Office. The elected officers of
---------------------------
the Company shall be elected annually by the Board of Directors at the regular
meeting of the Board of Directors held on the date of the annual meeting of the
shareholders. If the election of officers shall not be held at such meeting,
such election shall be held as soon thereafter as convenient. Each such officer
so elected shall hold office until his or her successor has been elected and
qualified or until his or her earlier death, resignation or removal.
SECTION 3.3. Chairman of the Board. The Chairman of the Board shall
---------------------
preside at all meetings of the shareholders and the Board of Directors at which
the Chairman is present. In addition to the foregoing, the Chairman shall have
authority to sign and acknowledge in the name and on behalf of the Company all
stock certificates, contracts or other documents and instruments except when the
signing thereof shall be expressly delegated to an officer or agent by the Board
or required by law to be otherwise signed or executed and, unless otherwise
provided by law or by the Board, authorize any officer, employee or agent of the
Company to sign, execute and acknowledge in his or her place and stead all such
documents and instruments.
SECTION 3.4. President and Chief Executive Officer. The President
-----------------------------------
shall be the Chief Executive Officer of the Company and, in the absence of the
Chairman, shall preside at all meetings of the shareholders and of the Board of
Directors of the Company at which the President is present. The President shall
have general charge and supervision of the business of the Company and, in
general, shall perform all duties incident to the office of chief executive
officer or president of a corporation and such other duties as may, from time to
time, be assigned to him or her by the Board or as may be provided by law. The
President shall have authority to sign and acknowledge in the name and on behalf
of the Company all stock certificates, contracts or other documents and
instruments and, unless otherwise provided by law or by the Board, may authorize
any officer, employee
7
<PAGE>
or agent of the Company to sign, execute and acknowledge in his or her place and
stead all such documents and instruments.
SECTION 3.5. Vice-Presidents. Each Vice President shall have such
---------------
powers and shall perform such duties as may be assigned to him or her by the
Board of Directors or the President.
SECTION 3.6. Treasurer. The Treasurer shall exercise general
---------
supervision over the receipt, custody and disbursement of corporate funds. The
Treasurer shall cause the funds of the Company to be deposited in such banks as
may be authorized by the Board of Directors, or in such banks as may be
designated as depositories in the manner provided by resolution of the Board of
Directors. He or she shall have such further powers and duties and shall be
subject to such directions as may be assigned to him or her from time to time by
the Board of Directors or the President.
SECTION 3.7. Secretary. The Secretary shall attend all meetings of
---------
the Board of Directors and of the shareholders and record all votes and the
minutes of all proceedings in a book to be kept for that purpose. He or she
shall give, or cause to be given, notice of all meetings of the shareholders and
special meetings of the Board of Directors and shareholders in accordance with
these By-Laws and, when appropriate, shall cause the corporate seal to be
affixed to any instruments executed on behalf of the Company. The Secretary
shall also perform all duties incident to the office of Secretary and such other
duties as may be assigned to him or her by the Board of Directors or the
President.
SECTION 3.8. Vacancies. A newly created elected office and a vacancy
---------
in any elected office because of death, resignation, or removal may be filled by
the Board of Directors for the unexpired portion of the term at any meeting of
the Board of Directors. Any vacancy in an office appointed by the President
because of death, resignation, or removal may be filled by the President.
ARTICLE IV
STOCK CERTIFICATES AND RELATED MATTERS
SECTION 4.1. Stock Certificates. The interest of each shareholder of
------------------
the Company shall be evidenced by certificates for shares of stock in such form
as the appropriate officers of the Company may from time to time prescribe, or
by appropriate registration in book-entry accounts without certificates.
Any certificates of stock shall be signed, countersigned and
registered in such manner as the Board of Directors may by resolution prescribe,
which resolution may permit all or any of the signatures on such certificates to
be in facsimile. In case any officer, transfer agent or registrar who has signed
or whose facsimile signature has been placed upon a certificate has ceased to be
such officer, transfer agent or registrar before such certificate
8
<PAGE>
is issued, it may be issued by the Company with the same effect as if he or she
were such officer, transfer agent or registrar at the date of issue.
SECTION 4.2. Lost, Stolen or Destroyed Certificates. No certificate
--------------------------------------
for shares of stock in the Company shall be issued in place of any certificate
alleged to have been lost, destroyed or stolen, except on production of such
evidence of such loss, destruction or theft and on delivery to the Company of a
bond of indemnity in such amount, upon such terms and secured by such surety, as
the Board of Directors or any officer may in its or his or her discretion
require.
ARTICLE V
GENERAL PROVISIONS
SECTION 5.1. Fiscal Year. The fiscal year of the Company shall begin
-----------
on the Monday following the Sunday which is nearest to July 31 of each year and
shall end on the Sunday which is nearest to July 31 of the following year.
SECTION 5.2. Seal. The corporate seal shall be in such form and
----
shall bear such inscription as may be adopted by the Board of Directors.
SECTION 5.3. Waiver of Notice. Whenever any notice is required to be
----------------
given to any shareholder or director of the Company under the provisions of the
Business Corporation Act of the State of New Jersey or these By-Laws, a waiver
thereof in writing, signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice. Neither the business to be transacted at, nor the
purpose of, any annual or special meeting of the shareholders or the Board of
Directors or committee thereof need be specified in any waiver of notice of such
meeting. The presence of any such shareholder or director at such meeting in
person or by proxy without protesting prior to the conclusion of the meeting the
lack of notice of such meeting, shall constitute a waiver of notice by such
shareholder or director.
ARTICLE VI
INDEMNIFICATION; ADVANCE OF EXPENSES
SECTION 6.1. Right to Indemnification. (A) Subject to Section 6.3
------------------------
hereof, the Company shall indemnify to the fullest extent permitted by
applicable law any person who was or is a party or is threatened to be made a
party to or is otherwise involved in any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative,
investigative or of any other kind, or any appeal therefrom (a "Proceeding"), by
reason of the fact that such person is or was a director or officer or employee
of the Company, or is or was serving at the request of the Company as a director
or officer or employee of another corporation or of a partnership, joint
venture, trust or other enterprise or entity, whether or not for profit, whether
domestic or foreign, including service with
9
<PAGE>
respect to an employee benefit plan, its participants or beneficiaries, against
all liability, loss and expense (including judgments, fines, penalties, excise
taxes, attorneys' fees and costs and amounts paid in settlement) actually and
reasonably incurred by such person in connection with such Proceeding, whether
or not the indemnified liability arises or arose from any Proceeding by or in
the right of the Company; provided, however, the Company shall be required to
indemnify any person seeking indemnification in connection with any Proceeding
initiated by such person only if such Proceeding was authorized by the Board of
Directors or is a Proceeding to enforce such person's claim to indemnification
pursuant to the rights granted by applicable law, these By-Laws or otherwise by
the Company. No indemnification pursuant to this Article VI shall be required
with respect to any settlement or other nonadjudicated disposition of any
threatened or pending Proceeding unless the Company has given its prior written
consent to such settlement or other disposition.
(B) Without limiting the generality or the effect of this Section
6.1, the Company may enter into one or more agreements with any person which
provide for indemnification greater than or different from that provided in this
Section 6.1.
SECTION 6.2. Advance of Expenses. Subject to Section 6.3 hereof and
-------------------
the provisions of applicable law, expenses incurred by a director or officer or
employee in defending (or acting as a witness in) a Proceeding shall be paid by
the Company in advance of the final disposition of such Proceeding, provided
that in the event the director, officer or employee is a party to such
Proceeding, such payment shall be made only upon receipt of an undertaking by or
on behalf of the director or officer or employee to repay such amount if it
shall ultimately be determined that such person is not entitled to be
indemnified by the Company under applicable law.
SECTION 6.3. Procedure for Determining Permissibility. To determine
----------------------------------------
whether any indemnification or advance of expenses under this Article VI is
permissible, the Board of Directors by a majority vote of a quorum consisting of
directors who are not parties to or otherwise involved in such Proceeding may,
and on request of any person seeking indemnification or advance of expenses
shall, determine (A) in the case of indemnification, whether the standards under
applicable law have been met, and (B) in the case of advance of expenses,
whether such advance is appropriate under the circumstances, provided that each
such determination shall be made by independent legal counsel if such quorum is
not obtainable, or, even if obtainable, if a majority vote of a quorum of
disinterested directors so directs or, if a resolution of the Board of Directors
so directs, (I) by a committee of the Board of Directors, in the case of a
determination concerning a director or officer of the Company or (II) by one or
more officers of the Company in the case of a determination concerning any
person other than a director or officer of the Company. The reasonable expenses
of any director or officer in prosecuting a successful claim for
indemnification, and the fees and expenses of any independent legal counsel
engaged to determine permissibility of indemnification or advance of expenses,
shall be borne by the Company.
SECTION 6.4. Contractual Obligation. The obligations of the Company
----------------------
to indemnify a director or officer or employee under this Article VI, including
if applicable, the duty to advance expenses, shall be considered a contract
between the Company and such
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director or officer or employee, and no modification or repeal of any provision
of this Article VI shall affect, to the detriment of the director or officer or
employee, such obligations of the Company in connection with a claim based on
any act or failure to act occurring before such modification or repeal.
SECTION 6.5. Indemnification Not Exclusive; Inuring of Benefit. The
-------------------------------------------------
indemnification and advancement of expenses provided by this Article VI shall
not be deemed exclusive of any other right to which one indemnified may be
entitled under any statute, agreement, vote of shareholders or otherwise, both
as to action in such person's official capacity and as to action in another
capacity while holding such office, and shall inure to the benefit of the heirs,
legal representatives and estate of any such person.
SECTION 6.6. Insurance and other Indemnification. The Board of
-----------------------------------
Directors shall have the power to (A) authorize the Company to purchase and
maintain, at the Company's expense, insurance on behalf of the Company and on
behalf of others to the extent that power to do so has not been prohibited by
statute, (B) create any fund of any nature, whether or not under the control of
a trustee, or otherwise secure any of its indemnification obligations, and (C)
give other indemnification to the extent permitted by statute, including to
agents of the Company.
ARTICLE VII
PROXIES
SECTION 7.1. Proxies. Unless otherwise provided by resolution
-------
adopted by the Board of Directors, the President or any Vice President, the
Secretary or any Assistant Secretary, may from time to time appoint an attorney
or attorneys or agent or agents of the Company, in the name and on behalf of the
Company, to cast the votes which the Company may be entitled to cast as the
holder of stock or other securities in any other corporation, any of whose stock
or other securities may be held by the Company, at meetings of the holders of
the stock or other securities of such other corporation, or to consent in
writing, in the name of the Company as such holder, to any action by such other
corporation, and may instruct the person or persons so appointed as to the
manner of casting such votes or giving such consent, and may execute or cause to
be executed in the name and on behalf of the Company and under its corporate
seal or otherwise, all such written proxies or other instruments as he or she
may deem necessary or proper in the premises.
ARTICLE VIII
AMENDMENTS
SECTION 8.1. Amendments. These By-Laws may be amended or repealed,
----------
or new By-Laws may be adopted, at any meeting of the Board of Directors or of
the shareholders, provided notice of the proposed change was given in the notice
of the
11
<PAGE>
meeting and, in the case of a meeting of the Board of Directors, in a notice
given not less than twenty-four hours prior to the meeting.
12
<PAGE>
Exhibit 9.1
MAJOR STOCKHOLDERS' VOTING TRUST AGREEMENT
------------------------------------------
1. Creation of Trust. The stockholders listed on Exhibit A hereto
------------------
(the "Stockholders") of Campbell Soup Company, a New Jersey corporation (the
"Company"), hereby create the Major Stockholders' Voting Trust (the "Trust"),
which shall be governed in accordance with the terms of this trust agreement
(the "Trust Agreement"). The initial Trustees shall be John A. van Beuren and
Charles H. Norris, Jr. who shall be designated as the "Family Trustees". In
addition the Representatives (as hereinafter defined), if they desire, acting
unanimously, shall have the right to appoint another Trustee who shall be
designated the "Non-family Trustee". The term "Trustees" at used herein shall
mean the initial Family Trustees, any Non-Family Trustee and their successors
appointed under the Trust Agreement.
2. Term of Trust. The Trust shall continue for a period of ten
--------------
years, unless it is sooner terminated by the unanimous decision of all Family
Trustees or the withdrawal of all Shares as hereinafter provided.
3. Deposit of Shares. The Stockholders hereby (a) deposit with the
------------------
Trustees 21,369,000 shares of the Company's Capital Stock ($.15 par value) (the
<PAGE>
"Shares"), and (b) deliver to the Trustees one or more certificates evidencing
such Shares. All such certificates delivered to the Trustees as herein provided
shall be registered in the name of the Trustees or shall be endorsed or
accompanied by duly executed stock powers and such other assignments,
certificates of authority and consent to transfer instruments as may be
reasonably requested by counsel to the Trustees in order to transfer record
ownership of the Shares to the Trustees. Such Shares shall be registered in the
name of "Trustees, Major Stockholders' Voting Trust U/A dtd. June 21, 1990," and
all certificates representing the Shares shall contain a legend that such
certificates are held subject to the provisions of the Trust Agreement.
4. Issuance of Trust Certificates. In exchange for the certificates
-------------------------------
evidencing the Shares delivered by each Stockholder hereunder, the Trustees
shall issue and deliver to each Stockholder a Trust certificate (the "Trust
Certificate") or certificates, substantially in the form attached hereto as
Exhibit B, representing, in the aggregate, the number of Shares deposited by
that Stockholder. Trust Certificates shall evidence the Stockholder's
beneficial interest in the Trust and the Shares deposited with the Trustees in
accordance herewith.
2
<PAGE>
The holder of a Trust Certificate shall have all rights of a holder of the
Shares represented by the Trust Certificate except as otherwise provided herein.
5. Powers and Duties of the Trustees.
----------------------------------
(a) While this Trust Agreement is in effect and until the Shares are
withdrawn from the Trust as hereinafter provided, the Trustees, in their
unrestricted discretion, in person, by proxy or by written consent, shall have
the sole and unqualified right and power to vote the Shares for the election of
any person or persons as directors of the Company, and to act in connection with
the voting of the Shares in the same manner and to the same extent as if they
were the absolute owner thereof in their own right. On all other proposals or
matters which are required to be or which shall be submitted for a vote of the
Company's Capital Stock, the Trustees shall be entitled to vote the Shares, for
or against such proposal or matter, or to refrain from voting, as they in their
sole discretion shall determine.
(b) Except as otherwise provided in Section 9 hereof, the decision of
the Trustees as to the voting of the Shares in each case must be determined as
follows: If there are two Trustees acting hereunder, the decision must be
unanimous. If there are three Trustees acting
3
<PAGE>
hereunder, the decision must be approved by at least two out of the three
Trustees. If there are four Trustees acting hereunder, the decision must be
approved by at least three out of the four Trustees. Any two Trustees, after
such decision has been made by the Trustees as above provided, shall be duly
authorized to sign any and all proxies and consents or attend meetings of
stockholders to vote the Shares on behalf of the Trustees. Any proxy, written
consent or other document signed by at least two Trustees shall be conclusive
evidence to the Company and any and all persons not parties to the Trust
Agreement that such action has been duly authorized under the Trust Agreement
and no such person may inquire into the authority of a Trustee or the Trustees
to act hereunder. The decision of a Trustee acting hereunder may be
communicated orally to the other Trustees but shall be confirmed in writing to
the other Trustees. A Trustee, who determines that he or she will be
unavailable to participate in a decision by the Trustees to vote on a particular
matter or attend a particular meeting, may execute a written proxy or power-of-
attorney authorizing another Trustee, a Stockholder or a spouse of a Family
Trustee or Stockholder to act for him or her hereunder with respect to the
particular matter or meeting.
4
<PAGE>
(c) The Trustees shall request the Company to send proxy statements,
quarterly and annual reports and other reports and information directly to the
Stockholders at their addresses as shown by the records of the Trustees who
shall furnish a list of such names and addresses to the Company.
6. Disagreement as to Voting of Shares.
-----------------------------------
(a) If at any time the Family Trustees cannot agree among themselves
as to how the Shares should be voted, for the purposes of this Section those
Family Trustees who represent a majority of the Shares who desire to vote in one
way shall be designated the "Majority Trustee(s)", and the remaining Family
Trustee who represents a minority of the Shares who desire to vote in a contrary
manner or otherwise fail to vote for or support the position of the Majority
Trustee(s) shall be designated the "Minority Trustee". The Minority Trustee
shall have the right to withdraw all Shares represented by him or her from the
Trust and to resign as Trustee upon written notice to the other Trustees. The
Administrative Trustee (as hereinafter defined) shall notify the Stockholders
represented by the Minority Trustee as to the withdrawal of their Shares.
5
<PAGE>
(b) If a Family Trustee who dissents informs the other Trustees that
he or she could resolve a problem among Stockholders of his or her Group (as
hereinafter defined) and thereupon vote with the Majority Trustee(s) if certain
Shares represented by him or her are withdrawn from the Trust, the Family
Trustees shall have authority to cause such Shares to be withdrawn from the
Trust upon written notice to the Stockholders whose Shares are being withdrawn.
(c) Any withdrawal of Shares under this Section shall be effected
pursuant to the provisions of Section 9(d) and (e), end all Trustee resignations
shall be effective immediately.
7. Term of Trustees; Election of Successor Trustees. The
------------------------------------------------
Stockholders shall be divided into groups, one group for Dorrance H. Hamilton
and her descendants (the "Hamilton Group"), another group for Hope H. van Beuren
and her descendants (the "van Beuren Group"), and another group for Diana S.
Norris and her descendants (the "Norris Group"). Each Group shall have a
Representative as follows: Dorrance H. Hamilton will be the Representative of
the Hamilton Group; Hope H. van Beuren will be the Representative of the van
Beuren Group and Diana S. Norris will be the Representative of the Norris
6
<PAGE>
Group. Each Group (acting through its Representative) shall be entitled to
designate one Family Trustee and upon the termination of each trusteeship of
such Family Trustee, a successor Family Trustee representing such Group. One
individual may act as the Family Trustee for one or more Groups. Of the initial
Family Trustees, John A. van Beuren has been designated to represent the
Hamilton and van Beuren Groups, and Charles H. Norris, Jr. has been designated
to represent the Norris Group. The initial term of office of each Trustee shall
continue until June 30, 1991 and for successive one-year terms thereafter. At
the expiration of the term of office, the Representative of each Group shall
appoint an individual to act as Family Trustee for such Group. The
Representatives acting unanimously shall have the right to appoint the initial
and successor Non-family Trustee. The term of each Family Trustee and successor
Family Trustee shall continue until his or her successor is appointed hereunder.
The term of the Non-family Trustee shall not continue beyond the one-year period
unless he is re-appointed by the affirmative action of the Representatives as
above provided. Only descendants of John T. Dorrance, Sr., or the spouses of
such persons, or persons who were spouses of such descendants on the date of
this Trust
7
<PAGE>
Agreement, shall be eligible to serve as a Family Trustee. A Trustee must be 30
years of age or older.
8. Vacancies. Any Trustee may resign by delivering a written
---------
resignation to the remaining Trustees, and thereupon a successor Trustee shall
be designated as set out above. Upon a vacancy created by the death or legal
incompetence of a Trustee, such vacancy shall be filled as set out above. Until
such appointment is made, the Trustees then acting hereunder shall have
authority to vote the Shares and take all other action which may be contemplated
hereunder.
9. Withdrawal.
----------
(a) A Stockholder may withdraw from the Trust some or all of the
Shares transferred to the Trustees hereunder (i) annually during the period from
October I through December 31 of each year, or (ii) at any time during the
period from the date of notice of any annual or special meeting of stockholders
of the Company until five business days prior to the date of the meeting, by
giving prior written notice to the Trustees.
(b) If at any time a Stockholder desires to dispose of some or all of
his or her Shares, such Stockholder may withdraw from the Trust the amount to be
disposed of upon prior written notice to the Trustees.
8
<PAGE>
(c) Other provisions pertaining to withdrawal may be found in Section
6 (Disagreement as to Voting of Shares).
(d) Prior to the delivery or transfer of the withdrawn Shares to the
withdrawing Stockholder, the withdrawing Stockholder shall deliver to the
Trustees the Trust Certificates duly endorsed to the Trustees covering such
Shares and except as provided in Section 9(e) any Shares so withdrawn shall no
longer be subject to the provisions of the Trust Agreement. Thereafter, the
Trustees shall promptly cause such Shares to be re-registered in the name of the
withdrawing Stockholder and delivered to the withdrawing Stockholder in
accordance with his or her instructions. Except as otherwise provided herein, at
such time as Stockholders of a Group have withdrawn all Shares held by them, the
trusteeship of the Family Trustee for such Group shall terminate, and no
successor shall be appointed.
(e) After notice of withdrawal of Shares hereunder is either received
by the Trustees or delivered to Stockholders pursuant to Section 6 hereof, the
Shares covered thereby shall continue to be subject to the Trust Agreement until
the Trustees have received the Trust Certificates representing such Shares as
set out above.
9
<PAGE>
Until the date of such receipt, or thereafter if the Stockholder owning such
withdrawn Shares is unable to vote them because the record date for such vote
has passed, the Trustees will vote such Shares in accordance with the written
instructions of such Stockholder if such instructions are received at lease five
business days prior to the date of any annual or special meeting of stockholders
of the Company. In the absence of such written instructions the Trustees shall
have authority to vote these Shares as they may determine in accordance with the
provisions of the Trust Agreement.
10. Dividends and Distributions.
---------------------------
(a) Cash Dividends. The Trustees shall give the Company or its
--------------
dividend disbursing agent a list of the names and addresses of the then
registered holders of Trust Certificates, which list shall set forth the number
of Shares represented by the Trust Certificates registered in the name of each
holder on the record date for any cash dividends, and the Trustees shall request
the Company to make distribution of cash dividends, on behalf of the Trustees,
directly to each such registered holder of the Trust Certificates or to a bank
designated by the Trustees or by such holder. In the event that any cash
dividends are paid directly to the Trustees, the Trustees shall promptly pay
over such dividends to the then registered holders of Trust Certificates
according to their respective interests at the record date.
(b) Stock Dividends. If any dividend or distribution in respect of
---------------
the Shares held by the Trustees is paid, in whole or in part, in shares of
Capital Stock of the Company or other voting shares of the Company, the Trustees
shall hold the certificates for such shares which are received on account of
such dividend and such shares shall thereafter for all purposes be treated
10
<PAGE>
as part of the Shares. The holder of each Trust Certificate issued under this
Trust Agreement on the date for the determination of those stockholders of the
Company entitled to receive such dividend shall be entitled to receive a Trust
Certificate evidencing such holder's pro rata share of the number of shares
received as such dividend.
(c) Dividends in Other Assets. If any dividend or distribution in
--------------------------
respect of the Shares held by the Trustees is paid, in whole or in part, in
assets of the Company, the Trustees shall give the Company a list of the names
and addresses of the then registered holders of Trust Certificates, which list
shall set forth the number of Shares represented by the Trust Certificates
registered in the name of each holder on the record date, and the Trustees shall
request the Company to make such distribution, on behalf of the Trustees,
directly to each registered holder of the Trust Certificates. In the event the
distributions are paid directly to the Trustees, the Trustees shall promptly pay
over such distributions to the then registered holders of Trust Certificates
according to their respective interests at the record date.
(d) Mergers, etc. If, during the term hereof, the Company shall merge
------------
or consolidate into or with another corporation or corporations or other
business entity, or if there shall be reorganization or recapitalization of the
Company, voting securities representing any such corporation or other business
entity received by the Trustees in exchange for or with respect to the Shares as
a result of such merger, consolidation, recapitalization or reorganization shall
be held by them in accordance with the terms hereof and shall thereafter for all
purposes be treated as part of the Shares. The Trustees shall issue and deliver
Trust Certificates representing such voting securities to the then registered
holders of Trust Certificates as their interests shall appear, against surrender
by such holders of any Trust Certificates registered in their name which
represented Shares which were surrendered by the Trustees pursuant to the terms
of such merger, consolidation, recapitalization or reorganization. Any other
consideration received by the Trustees in such a transaction shall be paid by
the Trustees to the then registered
11
<PAGE>
holders of Trust Certificates in accordance with their respective interests at
the applicable record date.
(e) Dissolution. If, during the term hereof, the Company shall be
-----------
dissolved or liquidated in such a manner as to entitle the holders of Capital
Stock to liquidating dividends, the Trustees shall request all such dividends to
be distributed directly by the Company to the holders of Trust Certificates in
proportion to their respective beneficial ownership in the Shares upon which
dividends are paid. In the event that such dividends are paid directly to the
Trustees, the Trustees shall promptly pay over such dividends to the then
registered holders of Trust Certificates according to their respective interests
at the record date.
(f) Rights Offerings. If any capital stock or other securities of the
----------------
Company are offered for subscription or otherwise to the holders of Capital
Stock of the Company, the Trustees, promptly upon receipt of notice of such
offer, shall mail a copy thereof to each of the holders of the Trust
Certificates. Upon receipt by the Trustees, at least five business days prior to
the last day fixed by the Company for subscription and payment, of a request
from any such registered holder of Trust Certificates to subscribe on behalf of
such holder, accompanied by the sum of money required to pay for such stock or
securities, the Trustees shall make such subscription and payment, and upon
receiving from the Company the certificates for shares or securities so
subscribed for, shall issue to such holder a Trust Certificate in respect
thereof if the same be shares of Capital Stock, but if the same be securities
other than Capital Stock, the Trustees shall mail or deliver such securities to
the holder of the Trust Certificate on whose behalf the subscription was made,
or may request the Company to make delivery directly to the holder of the Trust
Certificate entitled thereto.
11. Administrative Trustee; Formal Meetings. The Trustees shall
---------------------------------------
appoint one of the Trustees as the Administrative Trustee who shall serve at the
pleasure of the Trustees and who shall be responsible for taking care
12
<PAGE>
of the administrative details of the Trust. The Trustees shall notify the
Stockholders of the name of the Administrative Trustee and the address and
telephone number for communications with such Trustee. It is contemplated that
the Trustees will act through informal consultations. The Administrative Trustee
may, however, and shall at the request of any other Trustee, call a meeting of
the Trustees upon 10 days written notice to all Trustees of the time, place and
purposes of the meeting. Notice need not be given to a Trustee who waives notice
in writing or who attends the meeting in person. The meeting may be held by
conference telephone call. Two Trustees shall constitute a quorum. Any action
taken at such meeting shall require only the unanimous consent of the Trustees
present (in person or by telephone) at the meeting, and the consent of any
absent Trustee or Trustees shall not be required for any action so taken.
12. Transfer and Replacement of Voting Trust Certificates.
-----------------------------------------------------
(a) The Administrative Trustee shall keep a record of all Trust
Certificates issued by the Trust upon the original issuance thereof in exchange
for the Shares deposited hereunder, or in exchange for any additional shares of
Capital Stock deposited with the Trustees as
13
<PAGE>
provided herein, or upon the transfer of Trust Certificates, or as a result of
the release of Shares to the Stockholders. The record of Trust Certificates
shall be kept, and Trust Certificates may be transferred, subject to applicable
legal requirements including those under the Securities Act of 1933, at the
office of the Administrative Trustee or counsel for the Trustees. The records so
kept by the Trustees shall conform, as nearly as may be practicable, to the form
of stock ledger or statutory stock books which would be used by a corporation or
a transfer agent under similar circumstances, and shall indicate, among other
things, the names and addresses of all persons who are holders of Trust
Certificates, the number of Shares represented by the Trust Certificates held by
each of them and the dates when each of them became the owners thereof.
(b) Any transfer of Trust Certificates shall be accomplished by
delivery of the Trust Certificates to the Administrative Trustee, duly endorsed
or accompanied by duly executed powers and by such other assignments,
certificates of authority and consent to transfer instruments as may be
reasonably requested by counsel to the Trustees in order to effect a transfer of
the Trust Certificates. Upon effecting any transfer, all Trust
14
<PAGE>
Certificates so surrendered to the Trustees shall be cancelled forthwith. The
Trustees may, in their sole discretion, treat the registered holder of any Trust
Certificates as the owner thereof for all purposes whatsoever, and shall not be
affected by any notice to the contrary. Upon the expiration or termination of
the Trust Agreement, the Shares will not be delivered to the Stockholders
without the surrender of the Trust Certificates representing such Shares,
properly endorsed for surrender. Each transferee of a Trust Certificate issued
hereunder shall, by his acceptance thereof, assent to and become a party to the
Trust Agreement and shall be deemed to be a Stockholder for purposes of the
Trust Agreement, and such acceptance shall have the same force and effect as if
such transferee had in fact executed the Trust Agreement.
(c) If any Trust Certificate shall become mutilated, lost, stolen or
destroyed, the Trustees may provide for the issuance of a new Trust Certificate
in lieu of such lost, stolen or destroyed Trust Certificate or in exchange for
such mutilated Trust Certificate, under such conditions with respect to
indemnity and otherwise as they, in their sole discretion may prescribe.
15
<PAGE>
13. Pledge of Trust Certificates. A Stockholder may assign a security
----------------------------
interest in Shares represented by Trust Certificates to a bank or other lender
(a "lender") and may deliver physical possession of Trust Certificates in pledge
to such lender. A lender that has taken physical possession of a Trust
Certificate in pledge of such Certificate and the Shares represented thereby
shall give written notice to the Trustees of such possession and pledge,
confirmed in writing by the pledgor, and thereafter until otherwise notified in
writing by the lender, the Trustees shall recognize the lender's security
interest in and control of such Certificate and Shares. Unless otherwise
notified in writing by the lender, the Trustees may direct that dividends
relating to pledged Trust Certificates be paid to the pledgor and the Trustees
may follow the instructions of the pledgor as to matters affecting the Trust.
Until the Shares underlying a pledged Trust Certificate are released from the
Trust, the Trustees shall have power to continue to vote such Shares in
accordance with the terms of the Trust Agreement. Upon written notice to the
Trustees from a lender that it desires to obtain possession of the Shares
underlying such Trust Certificates pledged with it in order to protect or
realize upon its security interest
16
<PAGE>
therein, the Trustees shall forthwith cause such Shares to be delivered to the
lender, which shall surrender such Trust Certificates to the Trustees, and such
Shares shall be free from trust and shall no longer be subject to the provisions
of the Trust Agreement. The Trustees shall have authority to enter into written
agreements with a lender confirming such obligation hereunder to the lender.
14. Filings with SEC. The Trustees shall make all required filings
----------------
with the Securities and Exchange Commission, including filings on Schedule 13D
and amendments thereto under the Securities Exchange Act of 1934. Each
Stockholder and Trustee hereby agrees that the Trustees are authorized to make
such filings on his or her behalf, and that any such document (including
Schedule 13D and amendments thereto) may be executed and filed by one Trustee on
behalf of all Trustees and Stockholders. The Administrative Trustee shall have
primary responsibility to see that such filings are made.
15. Expenses. The Family Trustees shall receive no compensation or
--------
commissions for acting as Trustees. The Non-family Trustee shall be entitled to
such compensation as the Family Trustees may unanimously agree to, and the
Family Trustees are authorized to enter into
17
<PAGE>
an employment contract on behalf of the Trust with the Non-family Trustee for
the term of his trusteeship covering such compensation and other terms and
conditions relating to his employment as the Non-family Trustee. The Trustees
shall have authority to pay necessary expenses in connection with the business
of the Trust and the expenses of the termination of the Trust when it
terminates, and may retain counsel and other professionals. Each Trustee shall
be entitled to reimbursement for any reasonable out-of-pocket expenses incurred
by him in connection with the conduct of the business of the Trust, upon
presentation of receipts or other proper documentation to the Administrative
Trustee. The Administrative Trustee shall from time to time assess Stockholders
for funds to pay these expenses, in proportion to the number of shares
contributed by each.
16. Liability.
---------
(a) The Trustees and Representatives shall not be liable for the
consequence of any vote cast or consent given and shall not incur any liability
to any Stockholder, except for willful misconduct evidencing bad faith or gross
negligence. The Stockholders agree to indemnify the Trustees and Representatives
and hold them harmless from any and all liabilities which they may incur as a
18
<PAGE>
result of carrying on the business of the Trust and the termination thereof,
except for willful misconduct evidencing bad faith or gross negligence.
(b) No contract or other transaction between the Company and a
Trustee or a Representative, or any person, firm or corporation in which a
Trustee or a Representative may be interested or with which any of them may be
affiliated or in any way related, shall be rendered invalid by the fact of their
being a party thereto, or being interested in or affiliated with or related to
such person, firm or corporation, and the Trustees, Representatives and any such
person, firm or corporation are hereby relieved from any liability by reason of
the making of any Contract or participating in any transaction wherein the
Trustees, or the Representatives or any of them, or any such person, firm or
corporation, may be interested.
17. Amendments. The Trust Agreement may be amended at any time by the
----------
unanimous written consent of the Representatives of all Groups. The
Administrative Trustee shall notify all Stockholders in writing of any
amendment.
18. Notice to Company. An executed or conformed counterpart of the
-----------------
Trust Agreement, and all amend-
19
<PAGE>
ments thereto if any, shall be filed with the registered office of the Company.
19. Termination. Upon termination of the Trust hereunder, either
-----------
because of the expiration of the trust term or the withdrawal of all Shares by
the Stockholders or the unanimous decision of the Trustees, the Trustees shall
take all such action as may be required to cause such Shares to be re-registered
in the names of the Stockholders who contributed them or transferred in
accordance with their written instructions.
20. Miscellaneous Provisions. Notice hereunder shall be in writing
------------------------
and shall be addressed to any party hereunder at the address listed on the
records of the Administrative Trustee or such other address as a party may have
notified the other parties hereto in writing, or delivered to such person
personally. Notices by the Representatives or Stockholders to the Trustees shall
be sent to them c/o the Administrative Trustee. All notices hereunder shall be
sent by certified or registered mail return receipt requested or delivered by
telex, telecopy, fax, telegram or similar method of communication. Such notice
shall be effective upon receipt. The Trust Agreement may not be terminated or
amended orally but only by an agreement in writing signed
20
<PAGE>
by the parties hereto, except as set out above in Sections 17 and 19. The Trust
Agreement shall be binding upon the successors, assigns, executors and
administrators of the undersigned. It may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute a single instrument. It shall not be effective as to
any party until it has been executed by all parties either individually or
pursuant to a power of attorney.
21. Governing Law. This Trust shall be governed by and construed in
-------------
accordance with the laws of the State of New Jersey.
Dated: As of June 2, 1990
21
<PAGE>
TRUSTEES:
/S/ JOHN A. VAN BUREN
--------------------------
/S/ CHARLES H. NORRIS, JR.
--------------------------
STOCKHOLDERS:
/S/ H.H. VAN BEUREN
--------------------------
/S/ J.A. VAN BEUREN*
--------------------------
/S/ D.S. NORRIS
--------------------------
/S/ CHARLES H. NORRIS, JR.
--------------------------
/S/ D.H. HAMILTON
--------------------------
/S/ S.M.V. HAMILTON
--------------------------
MELLON BANK (EAST)
--------------------------
By: /S/ BARBARA F. BOYLE
----------------------
Authorized Signature
*Also, as attorney-in-fact
22
<PAGE>
EXHIBIT A
---------
page 1
Names of Stockholders
---------------------
Name
- ----
D. H. Hamilton
S. M. V. Hamilton and
M. H. Saunders,
Trustees U/A dtd 1/6/77
S. M. V. Hamilton and
N. P. Hamilton,
Trustees U/A dtd 1/6/77
S. M. V. Hamilton, Trustee U/A dtd 1/6/77
D. H. Hamilton,
Trustee of Charitable Annuity
Trust U/A dtd 12/21/81
D. H. Hamilton and
S. M. V. Hamilton,
Trustees of Charitable
Trust U/A dtd 7/12/83
D. S. Norris,
C. H. Norris, Jr. and
Mellon Bank (East),
Trustees u/d 12/29/75
H. H. van Beuren
J. A. van Beuren,
D. E. P. Lindh,
L. B. Boehner,
Trustees U/A dtd 11/27/75
J. A. van Beuren et al.,
Trustees U/A dtd 01/01/84
van Beuren Charitable
Foundation, Inc.
1615L
23
<PAGE>
EXHIBIT B
---------
___________ __________ Shares
Campbell Soup Company
Voting Trust Certificate
------------------------
This certifies that __________________________________________________
________________________________________________________________________________
is the beneficial owner of ________________ shares of __________________________
Capital Stock ($.15 par value) of Campbell Soup Company, a New Jersey
corporation (the "Company"), which shares have been deposited with the Trustees
of the Major Stockholders' Voting Trust dated , 1990 (the "Voting
Trust"). Upon the surrender of this certificate, when permitted by and in
accordance with the terms of the Voting Trust, the registered holder hereof will
be entitled to receive a certificate representing the same number of shares of
the Company's Capital Stock.
This certificate is issued subject to, and the holder by accepting the
same consents to, all the terms of the Voting Trust Agreement, a copy of which
will be made available to the holder hereof upon application to the Trustees at
the office of the Administrative Trustee,
This certificate is transferable upon the books of the Voting Trust at
the office of the Administrative Trustee (or elsewhere as designated by the
Trustees) by
<PAGE>
the holder of record hereof, either in person or by attorney thereto duly
authorized in accordance with rules established for that purpose by the
Trustees.
Voting Trust interests represented by this certificate have not been
registered under the Securities Act of 1933 (the "Act") or any state securities
law, and may not be assigned, sold or transferred in violation of such Act or
any such law.
Dated: _____________, 1990.
-----------------------------------------
Trustee
-----------------------------------------
Trustee
2
<PAGE>
[Reverse of Certificate]
For value received ___________________________________________________
hereby sell, assign, and transfer unto _________________________________________
________________________________________________________________________________
the within certificate and all rights represented thereby and do hereby
irrevocably constitute and appoint _____________________________________________
as attorney to transfer such certificates on the books of the Trustees mentioned
therein with full power of substitution in the premises.
________________________________(LS)
In presence of
_______________________________________
Notice: The signature to this assignment must correspond with the name as
written upon the face of this certificate in every particular, without
alteration or any change whatever.
3
<PAGE>
MAJOR STOCKHOLDERS' VOTING TRUST
--------------------------------
Amendment to Voting
Trust Agreement
-------------------
Pursuant to Section 17 of the Major Stockholders' Voting Trust Agreement
dated as of June 2, 1990 as amended April 3, 1991 (the "Agreement") among the
undersigned and certain other stockholders of Campbell Soup Company (the
"Company"), the undersigned, as Representatives under the Agreement, hereby
agree that the Agreement shall be amended to provide that Dorrance H. Hamilton
and Hope H. van Beuren shall each have the right to withdraw 400,000 shares of
Capital Stock of the Company from such Voting Trust.
Dated: May 30, 1991
/s/ DORRANCE H. HAMILTON
--------------------------------
Dorrance H. Hamilton
/s/ HOPE H. VAN BEUREN
--------------------------------
Hope H. van Beuren
<PAGE>
EXHIBIT H
MAJOR STOCKHOLDERS' VOTING TRUST
--------------------------------
Amendment to Voting
Trust Agreement
-------------------
Pursuant to Section 17 of the Major Stockholders' Voting Trust Agreement
dated as of June 2, 1990 (the "Agreement") among the undersigned and certain
other stockholders of Campbell Soup Company (the "Company"), the undersigned, as
Representatives under the Agreement, hereby agree that the Agreement shall be
amended to provide that Diana S. Norris ("Mrs. Norris") shall have the right to
withdraw from such Voting Trust shares of the Company in which she has an
interest.
Section 9(d) of the Agreement is amended to provide that upon
withdrawal, the Trustees shall not be obligated to deliver certificates for the
withdrawn Shares until such time as the withdrawing Stockholder has paid to the
Trustees his or her proportionate share of the expenses of the Trust which have
accrued through the date of withdrawal as set out in Section 15 including any
expenses which may have been paid by advances from other Stockholders, and all
expenses relating to such withdrawal, which shall be paid by the withdrawing
Stockholder. Upon such withdrawal and payment of such expenses, the withdrawing
Stockholder shall have no further rights or obligations under the Agreement.
Dated: April 3, 1991
/s/ DORRANCE H. HAMILTON
--------------------------------
Dorrance H. Hamilton
--------------------------------
Hope H. van Beuren
--------------------------------
Diana S. Norris
<PAGE>
EXHIBIT H
MAJOR STOCKHOLDERS' VOTING TRUST
--------------------------------
Amendment to Voting
Trust Agreement
-------------------
Pursuant to Section 17 of the Major Stockholders' Voting Trust Agreement
dated as of June 2, 1990 (the "Agreement") among the undersigned and certain
other stockholders of Campbell Soup Company (the "Company"), the undersigned, as
Representatives under the Agreement, hereby agree that the Agreement shall be
amended to provide that Diana S. Norris ("Mrs. Norris") shall have the right to
withdraw from such Voting Trust shares of the Company in which she has an
interest.
Section 9(d) of the Agreement is amended to provide that upon
withdrawal, the Trustees shall not be obligated to deliver certificates for the
withdrawn Shares until such time as the withdrawing Stockholder has paid to the
Trustees his or her proportionate share of the expenses of the Trust which have
accrued through the date of withdrawal as set out in Section 15 including any
expenses which may have been paid by advances from other Stockholders, and all
expenses relating to such withdrawal, which shall be paid by the withdrawing
Stockholder. Upon such withdrawal and payment of such expenses, the withdrawing
Stockholder shall have no further rights or obligations under the Agreement.
Dated: April 3, 1991
/s/ DORRANCE H. HAMILTON
--------------------------------
Dorrance H. Hamilton
<PAGE>
EXHIBIT 10.1
FORM OF TRANSITION SERVICES AGREEMENT
-------------------------------------
THIS IS A TRANSITION SERVICES AGREEMENT, dated as of March ___, 1998
(the AGREEMENT), between Campbell Soup Company, a New Jersey corporation
(SUPPLIER), and Vlasic Foods International Inc., a New Jersey corporation
(BUYER).
Background
----------
A. Pursuant to a Separation and Distribution Agreement, dated as of
March ___, 1998 (the DISTRIBUTION AGREEMENT), Supplier will distribute the stock
of Buyer to Supplier's shareowners (the DISTRIBUTION), following which
Distribution each of Supplier and Buyer will continue in existence as
independent, publicly-traded companies.
B. This Agreement is entered into pursuant to the Distribution
Agreement. The parties wish to set forth the terms on which Supplier will, for
a limited period, provide certain transition services to, and permit the use of
certain of its assets by, Buyer following the Distribution referred to above.
C. Capitalized terms used herein, unless otherwise defined herein,
shall have the meanings assigned to them in the Distribution Agreement.
Terms
-----
THEREFORE, in consideration of the respective agreements and covenants
contained in this Agreement, and intending to be legally bound hereby, the
parties agree as follows:
SECTION 1. SERVICES. (a) Subject to the terms of this Agreement, Supplier
shall provide, or shall cause another member of the CSC Group to provide, the
services described on Exhibit A to Buyer, or another member of the Spinco Group
designated by Buyer, from and after the Distribution Date and during the time
period set forth in Section 2. Supplier (or such other member of the CSC Group)
shall supply such services substantially in accordance with Supplier's normal
practices in providing such services as of the Distribution Date (except as
otherwise provided in Exhibit A).
(b) In consideration for the Services, Buyer shall pay to Supplier
amounts set forth on Exhibit A. Supplier shall invoice Buyer on a monthly basis
for the Services provided to Buyer. All such invoices shall be due within
thirty days after receipt.
(c) Supplier and Buyer agree to cooperate and to make all reasonable
efforts to work together to take such actions as are reasonably necessary to
eliminate the need for or to otherwise discontinue as expeditiously as
reasonably possible the Services performed under this Agreement.
<PAGE>
(d) Supplier shall be permitted to cause third parties to provide
Services to Buyer hereunder (in lieu of Supplier or a member of the CSC Group)
so long as Supplier remains fully responsible for the performance by such third
party of such Services in compliance with all the terms and provisions of this
Agreement.
(e) To the extent Exhibit A calls for any services to be provided by
Buyer to Supplier, such services shall be supplied in accordance with the terms
and provisions of this Agreement, except that Vlasic Foods International Inc.
shall be deemed to be the "Supplier" and Campbell Soup Company shall be deemed
to be the "Buyer."
SECTION 2. TERM. The term of this Agreement shall be a period of 12 months,
commencing on the Distribution Date and ending on March 29, 1999; provided,
however, that Buyer may terminate any of the Services provided hereunder on not
less than 30 days prior written notice to Supplier, unless otherwise indicated
on Exhibit A. The parties may extend the term of this Agreement by written
agreement signed by both parties. Notwithstanding the foregoing, if (i) either
party fails to perform any material provision of this Agreement and the failure
to perform is not corrected within 15 days after the other party gives written
notice of such default or (ii) Buyer fails to make any payment required under
this Agreement at the time it is due and such failure is not corrected within
five days after written notice of such failure, then the non-defaulting party
may terminate this Agreement.
SECTION 3. STANDARD OF CONDUCT; LIMITATION OF LIABILITY. (a) Supplier shall
have no liability with respect to its furnishing any of the Services hereunder
to Buyer except on account of Supplier's willful misconduct or gross negligence.
In agreeing to provide the Services as an accommodation to Buyer, Supplier is
not making any representation or warranty as to the quality, suitability or
adequacy of the Services for any purpose or use. In providing the Services,
Supplier shall not be obligated to (i) hire any additional employees, (ii)
maintain the employment of any specific employee, or (iii) purchase, lease or
license any additional equipment or software; provided, however, that at the
request of Buyer, Supplier agrees to use reasonable diligence to correct errors
or deficiencies in the Services.
(b) It is understood and agreed that Supplier shall not be obligated
to perform or to cause to be performed any services hereunder in a volume or
quantity which substantially exceeds the historical volumes or quantities of
such services performed for Buyer or other members of the Spinco Group. The
parties further acknowledge that it is Buyer's intention to provide, or procure
the services to be provided by Supplier hereunder from third parties other than
Supplier, as promptly as is reasonably practicable following the Distribution
Date. Supplier will not be required to perform or to cause to be performed any
of the Services for the benefit of any third party or any other entity other
than Buyer or any directly or indirectly wholly owned subsidiary or majority
owned affiliate of Buyer.
(c) Supplier's maximum liability to, and the sole remedy of, Buyer
for breach of this Agreement shall be the greater of (i) Buyer's incremental
out-of-pocket cost of performing such service itself or (ii) Buyer's incremental
out-of-pocket cost of obtaining such service from a third party; provided, that
Buyer shall exercise all reasonable efforts under the circumstances to
-2-
<PAGE>
minimize the cost of any such alternatives to such services by selecting the
most cost-effective alternatives which provide the functional equivalent of the
services replaced. Notwithstanding anything to the contrary herein, (i) in no
event shall Supplier have any liability to Buyer for special or consequential
damages under this Agreement, including as a result of Supplier's breach of this
Agreement or the gross negligence or willful misconduct of Supplier under this
Agreement, and (ii) in no event shall Supplier have any liability of any kind
under this Agreement to any third party.
(d) Except as otherwise provided in the foregoing paragraphs (a)-(c)
of this Section 3, Buyer shall be solely liable and responsible for, and shall
indemnify Supplier and its directors, officers, employees and affiliates from,
any and all claims, liabilities, obligations, losses, costs, expenses,
litigation, proceedings, taxes, assessments, charges, demands, damages or
judgments of any kind or nature whatsoever (LOSSES) for acts or omissions in
furnishing Services to Buyer under this Agreement. Upon termination of this
Agreement or their earlier termination of any Services, Buyer shall be obligated
to return to Supplier, as soon as is reasonably practicable, any equipment or
other property of Supplier relating to the Services which is in Buyer's control
or possession and which is not an asset to be retained by Buyer under the
Distribution Agreement or the Ancillary Agreements.
SECTION 4. FORCE MAJEURE. Neither party shall be responsible for failure or
delay in performance of any services to be performed hereunder, nor shall either
party be responsible for failure or delay in receiving such service, if caused
by an act of God, act of public enemy, war, government acts or regulations,
fire, flood, hurricane, embargo, quarantine, epidemic, labor stoppages beyond
its reasonable control, accident, explosion, unusually severe weather or other
cause similar or dissimilar to the foregoing beyond their control (herein called
FORCE MAJEURE); provided, however, that prior to being relieved of any of its
obligations, the party whose performance has been interrupted by such
circumstances shall use reasonable efforts to remove or otherwise address the
effects of any such event or condition as soon as practicable and shall promptly
give written notice to the other party upon the occurrence of any of such events
or circumstances and shall use reasonable efforts to resume full performance of
this Agreement as soon as is practicable. Notwithstanding the foregoing, to the
extent services are available after the occurrence of a Force Majeure event,
Buyer shall be entitled to, and Supplier shall provide, a level of services
equivalent to the proportionate share of services used by Buyer immediately
prior to the occurrence of any such Force Majeure event.
SECTION 5. CONFIDENTIALITY. Any and all information which is not generally
known to the public which is exchanged by the parties in connection with this
Agreement, whether of a technical or business nature, shall be considered
confidential. The parties agree that such confidential information shall be
treated in accordance with the terms and provisions of the Distribution
Agreement.
SECTION 6. USE OF ASSETS. As set forth in the Distribution Agreement, Buyer
shall have the right to occupy certain facilities and to use certain management
information systems and telecommunications systems, all as more fully set forth
in Exhibit A. In consideration therefor, Buyer shall pay a fee as more
particularly set forth in Exhibit A. Supplier makes no
-3-
<PAGE>
representation or warranty as to the adequacy or condition of the facilities and
the management information and telecommunications systems referred to above or
otherwise, and shall have no liability to Buyer with respect to such facilities
or such other assets, including in respect of the condition, use or adequacy of
such assets.
SECTION 7. AMENDMENT. This Agreement may be amended only by a writing
signed by each of the parties.
SECTION 8. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute a single instrument.
SECTION 9. THIRD PARTIES. Nothing expressed or implied in this Agreement is
intended, or shall be construed, to confer upon or give any person or entity
other than Buyer and Supplier (and its associated indemnified parties under
Section 3(d)) any rights or remedies under, or by reason of, this Agreement.
SECTION 10. WAIVERS. Any waiver by any party of any breach of or failure to
comply with any provision of this Agreement by any other party to this Agreement
shall be in writing and shall not be construed as, or constitute, a continuing
waiver of such provision, or a waiver of any other breach of, or failure to
comply with, any other provision of this Agreement.
SECTION 11. GOVERNING LAW; CONSTRUCTION. This Agreement shall be construed
and enforced in accordance with and governed by the internal substantive laws of
the State of New Jersey. The headings in this Agreement are solely for
convenience of reference and shall not be given any effect in the construction
or interpretation of this Agreement. References to Sections are references to
Sections of this Agreement. The Exhibits of this Agreement are incorporated
herein and are part of this Agreement.
SECTION 12. NOTICES. All notices, requests, claims and other communications
hereunder shall be in writing and shall be given or made (and shall be deemed to
have been duly given or made upon receipt) by delivery by hand, by reputable
overnight courier service, by facsimile transmission, or by registered or
certified mail (postage prepaid, return receipt requested) to the respective
parties at the addresses (or at such other address for a party as shall be
specified in a notice given in accordance with this Section 12) listed below :
if to CSC, to: Campbell Soup Company
Campbell Place
Camden, New Jersey 08101
Attn.: Linda A. Lipscomb, Esq.
Fax No.: (609) 342-3936
-4-
<PAGE>
if to Vlasic, to: Vlasic Foods International Inc.
Campbell Place
Camden, New Jersey 08101
Attn.: Norma B. Carter, Esq.
Fax No.: (609) 342-3936
or to such other address as any party may, from time to time, designate in a
written notice given in a like manner. Notice given by hand shall be deemed
delivered when received by the recipient. Notice given by mail as set out above
shall be deemed delivered five calendar days after the date the same is mailed.
Notice given by reputable overnight courier shall be deemed delivered on the
next following business day after the same is sent. Notice given by facsimile
transmission shall be deemed delivered on the day of transmission provided
telephone confirmation of receipt is obtained promptly after completion of
transmission.
SECTION 13. ASSIGNMENT. Neither of the parties may assign or delegate any
of its rights or duties under this Agreement without the prior written consent
of the other party, which consent will not be unreasonably withheld. This
Agreement shall be binding upon, and shall inure to the benefit of, the parties
hereto and their respective successors and permitted assigns.
SECTION 14. DISPUTES. (a) Resolution of any and all disputes arising from
or in connection with this Agreement, whether based on contract, tort, statute
or otherwise, including, but not limited to, disputes in connection with claims
by third parties (collectively, DISPUTES), shall be subject to the provisions of
this Section 14; provided, however, that nothing contained herein shall preclude
either party from seeking or obtaining (i) injunctive relief or (ii) equitable
or other judicial relief to enforce the provisions hereof or to preserve the
status quo pending resolution of Disputes hereunder.
(b) Either party may give the other party written notice of any
Dispute not resolved in the normal course of business. The parties shall attempt
in good faith to resolve any Dispute promptly by negotiation between executives
of the parties who have authority to settle the controversy and who are at a
higher level of management than the persons with direct responsibility for
administration of this Agreement. Within 30 days after delivery of the notice,
the foregoing executives of both parties shall meet at a mutually acceptable
time and place, and thereafter as often as they reasonably deem necessary for a
period not to exceed 15 days, to attempt to resolve the Dispute. All reasonable
requests for information made by one party to the other will be honored. If the
parties do not resolve the Dispute within such 45 day period (the INITIAL
MEDIATION PERIOD), the parties shall attempt in good faith to resolve the
Dispute by negotiation between (i) in the case of CSC, the Chief Financial
Officer or the Vice President -Treasurer and (ii) in the case of Spinco, the
Chief Financial Officer (collectively, the DESIGNATED OFFICERS). Such officers
shall meet at a mutually acceptable time and place (but in any event no later
than 15 days following the expiration of the Initial Mediation Period) and
thereafter as often as they reasonably deem necessary for a period not to exceed
15 days, to attempt to resolve the Dispute.
-5-
<PAGE>
(c) If the Dispute has not been resolved by negotiation within 75 days
of the first party's notice, or if the parties failed to meet within 30 days of
the first party's notice, or if the Designated Officers failed to meet within 60
days of the first party's notice, either party may commence any litigation or
other procedure allowed by law.
-6-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers as of the day and year first above
written.
CAMPBELL SOUP COMPANY
By:__________________________________
Name:
Title:
VLASIC FOODS INTERNATIONAL INC.
By:__________________________________
Name:
Title:
-7-
<PAGE>
EXHIBIT 10.2
FORM OF BENEFITS SHARING AGREEMENT
dated as of
March 30, 1998
between
CAMPBELL SOUP COMPANY
and
VLASIC FOODS INTERNATIONAL INC.
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<S> <C>
ARTICLE I - DEFINITIONS........................................................................................................ 1
ARTICLE II - EMPLOYEES AND ALLOCATIONS OF LIABILITIES.......................................................................... 6
Section 2.1 Identification and Employment of Active Vlasic Employees..................................................... 6
Section 2.2 Vlasic Assumption of Liabilities............................................................................. 6
ARTICLE III - RETIREMENT PLANS................................................................................................. 6
Section 3.1 General Principles........................................................................................... 6
Section 3.2 Defined Benefit Pension Plans................................................................................ 8
Section 3.3 Defined Contribution Plans................................................................................... 10
ARTICLE IV - WELFARE PLANS..................................................................................................... 11
Section 4.1 General Principles........................................................................................... 11
Section 4.2 Establishment of Mirror Welfare Plans........................................................................ 13
Section 4.3 Vacation and Sick Pay Liabilities............................................................................ 13
Section 4.4 Medical Spending/Dependent Care Accounts..................................................................... 13
Section 4.5 Severance.................................................................................................... 13
Section 4.6 Vendor Contracts............................................................................................. 13
Section 4.7 Coverage of Certain Former Vlasic Employees and Surviving Dependents......................................... 14
Section 4.8 Workers' Compensation and Unemployment Compensation.......................................................... 14
ARTICLE V - EXECUTIVE COMPENSATION AND DIRECTOR OPTION PLANS................................................................... 15
Section 5.1 General Principles........................................................................................... 15
Section 5.2 Bonus and Incentive Plans.................................................................................... 15
Section 5.3 Director Compensation Plan................................................................................... 17
ARTICLE VI - FOREIGN PLANS AND TRANSITION EMPLOYEES............................................................................ 17
Section 6.1 Foreign Plans................................................................................................ 17
Section 6.2 Transition Employees......................................................................................... 17
ARTICLE VII - GENERAL.......................................................................................................... 17
Section 7.1 Payment of and Accounting Treatment for Expenses and Balance Sheet Amounts................................... 17
Section 7.2 Accounting Adjustments....................................................................................... 18
Section 7.3 Notices...................................................................................................... 18
Section 7.4 Amendment and Waiver......................................................................................... 19
Section 7.5 Sharing of Participant Information........................................................................... 19
Section 7.6 Entire Agreement............................................................................................. 19
Section 7.7 Parties in Interest.......................................................................................... 19
Section 7.8 No Third-Party Beneficiaries; No Termination of Employment................................................... 19
Section 7.9 Right to Amend or Terminate Any Plans........................................................................ 20
Section 7.10 Fiduciary and Related Matters............................................................................... 20
Section 7.11 Effect if Distribution Does Not Occur....................................................................... 20
Section 7.12 Relationship of Parties..................................................................................... 20
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Section 7.13 Affiliates.................................................................................................. 20
Section 7.14 Audits...................................................................................................... 20
Section 7.15 Collective Bargaining....................................................................................... 21
Section 7.16 Requests for Internal Revenue Service Rulings and Determinations and United States Department of Labor
Opinions................................................................................................... 22
Section 7.17 Further Assurances and Consents............................................................................. 22
Section 7.18 Severability................................................................................................ 22
Section 7.19 Governing Law............................................................................................... 22
Section 7.20 Counterparts................................................................................................ 22
Section 7.21 Disputes.................................................................................................... 23
Section 7.22 Assignment.................................................................................................. 23
Section 7.23 Interpretation.............................................................................................. 23
Section 7.24 Headings.................................................................................................... 23
</TABLE>
TABLE OF APPENDICES
Appendix A - Executive and Director Compensation Plans
Appendix B - Welfare Plans
Appendix C - Retirement Plans
Appendix D - Conversion Formulas
-ii-
<PAGE>
BENEFITS SHARING AGREEMENT
--------------------------
THIS IS A BENEFITS SHARING AGREEMENT, dated as of March 30, 1998 (the
AGREEMENT), by and between Campbell Soup Company, a New Jersey corporation
(together with its successors and permitted assigns, CSC), and Vlasic Foods
International Inc., a New Jersey corporation (together with its successors and
permitted assigns, VLASIC) (collectively, the PARTIES or individually, a PARTY).
Background
----------
A. The Board of Directors of CSC has determined that it is in the
best interest of CSC and the shareowners of CSC to distribute (the DISTRIBUTION)
to the holders of CSC Common Stock (as defined below) all of the shares of
Vlasic Common Stock (as defined below).
B. CSC and Vlasic have entered into a Separation and Distribution
Agreement, dated as of March 30, 1998 (the DISTRIBUTION AGREEMENT), and certain
other agreements that will govern certain matters relating to the Distribution
and the relationship of CSC and Vlasic and their respective subsidiaries and
affiliates following the Distribution.
C. This Agreement sets forth the arrangements between the Parties
relating to employee benefits and compensation matters.
Terms
-----
THEREFORE, in consideration of the foregoing premises and the mutual
agreements and covenants contained in this Agreement, the Parties hereby agree
as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. The following words and phrases used in
this Agreement shall have the meanings set forth below unless a different
meaning is plainly required by the context.
414(l)(1) AMOUNT means the minimum amount necessary to fund vested
benefits under the CSC Pension Plans and the Vlasic Pension Plans under section
414(l)(1) of the Code in accordance with the actuarial assumptions reasonably
determined by CSC.
ACTION means any claim, demand, suit, countersuit, arbitration,
inquiry, proceeding or investigation by or before any Governmental Authority or
any arbitration or mediation tribunal, pending or threatened, known or unknown.
ACTIVE VLASIC EMPLOYEE means:
(a) Any Employee who is actively performing services for the Vlasic
Business on the Distribution Date, including any such Employee who is not
actively performing
<PAGE>
such service as a result of sick leave, short-term disability, other authorized
leave of absence under the policies of the CSC Group that are in effect on the
Distribution Date or who is not actively performing such service and has
reemployment rights under the policies of the CSC Group that are in effect on
the Distribution Date; and
(b) Any corporate staff Employee of the CSC Group who is designated
by Vlasic and CSC as an Employee to whom Vlasic offers employment beginning on
or before the Distribution Date and who has accepted such offer.
ANNUAL INCENTIVE PLAN, when immediately preceded by "CSC," means the
Campbell Soup Company Management Worldwide Incentive Plan. When immediately
preceded by "Vlasic," ANNUAL INCENTIVE PLAN means the management annual
incentive plan to be established by Vlasic pursuant to Section 5.2(a).
ASSET TRANSFER means the transfer of assets equal to the aggregate
interests of the Vlasic Pension Plans determined under Section 3.2(d)(i),
adjusted by CSC as of the date of the Asset Transfer to the extent necessary or
appropriate to reflect individuals whose employment changes between the CSC
Group and the Vlasic Group following the Distribution Date and prior to the date
of any transfer of assets, additional pension contributions, income, realized
and unrealized investment gains and losses experienced in the CSC Master Pension
Trust, benefit payments, expenses, data corrections, enhancements, and
computational refinements from Immediately after the Distribution Date through
the date of the actual asset transfer of such assets.
ASO CONTRACT means an administrative services only contract, related
prior practice, or related understanding with a third-party administrator that
pertains to any CSC Welfare Plan or Vlasic Welfare Plan.
BENEFITS ADMINISTRATION TRANSITION PERIOD means the period beginning
Immediately after the Distribution Date and ending on March 29, 1999.
CLOSE OF THE DISTRIBUTION DATE means 11:59:59 P.M., Eastern Time, on
the Distribution Date.
CODE means the Internal Revenue Code of 1986, as amended.
CONVERSION FORMULA means the formula used to adjust options and
restricted stock granted to Active Vlasic Employees by CSC prior to the
Distribution Date as outlined in Section 5.2 and set forth in Appendix D.
CSC COMMON STOCK means the shares of capital stock, par value $.0375
per share, of CSC.
CSC GROUP means CSC and its Subsidiaries, excluding any member of the
Vlasic Group.
-2-
<PAGE>
DEFERRED COMPENSATION PROGRAMS means, when preceded by CSC, the
Campbell Soup Company Deferred Compensation Program (including the Salary
Deferral Plan and the Supplemental Saving Plan and amounts deferred under the
CSC Annual Incentive Plan and the CSC LTIP) and the Campbell Soup Company
Supplemental Pension Plan. When immediately preceded by "Vlasic," DEFERRED
COMPENSATION PROGRAMS means the deferred compensation plans, programs and
policies required pursuant to Section 5.2(d) and identified in Part 2 of
Appendix A to this Agreement that are sponsored by a member of the Vlasic Group
for all periods after the Distribution Date.
DISTRIBUTION AGREEMENT is defined in the Background Section to this
Agreement.
DISTRIBUTION DATE means March 30, 1998.
EMPLOYEE means any individual who performs services pursuant to a
common-law employer-employee relationship.
ERISA means the Employee Retirement Income Security Act of 1974, as
amended.
EXECUTIVE COMPENSATION PROGRAM, when immediately preceded by CSC,
means the executive compensation plans, programs and policies listed in Part 1
of Appendix A to this Agreement that are sponsored by CSC. When immediately
preceded by "Vlasic," EXECUTIVE COMPENSATION PROGRAM means the executive
compensation plans, programs and policies listed in Part 2 of Appendix A to this
Agreement that are sponsored by a member of the Vlasic Group for all periods
after the Distribution Date.
FOREIGN PLAN, when immediately preceded by "CSC," means a Plan
maintained by the CSC Group or when immediately preceded by "Vlasic," a Plan
maintained by the Vlasic Group, in either case for the benefit of employees who
perform services and/or are compensated under a payroll that is administered
outside the 50 United States, its territories and possessions, and the District
of Columbia.
FORMER VLASIC EMPLOYEE means an Employee whose employment with the
Vlasic Business terminated for any reason (including retirement) before the
Distribution Date and who, as of the Distribution Date, is not employed by CSC
or a member of the CSC Group.
GOVERNMENTAL AUTHORITY means any federal, state or local court,
government, department, commission, board, bureau, agency, official or other
regulatory, administrative or governmental authority, including, without
limitation, the United States Department of Labor, the Internal Revenue Service,
and the Pension Benefit Guaranty Corporation.
GROUP INSURANCE POLICY means a group insurance policy issued under any
CSC Welfare Plan or any Vlasic Welfare Plan, as applicable.
-3-
<PAGE>
HMO AGREEMENTS means contracts, letter agreements, practices and
understandings with HMOs that provide medical services under the CSC Welfare
Plans and Vlasic Welfare Plans.
HMO means a health maintenance organization that provides benefits
under the CSC Welfare Plans or the Vlasic Welfare Plans.
IMMEDIATELY AFTER THE DISTRIBUTION DATE means 12:00 A.M., Eastern
Time, on the day after the Distribution Date.
LIABILITIES means any and all losses, claims, charges, debts, demands,
actions, costs and expenses (including, without limitation, administrative and
related costs and expenses of any Plan, program or arrangement), of any nature
whatsoever, whether absolute or contingent, matured or unmatured, liquidated or
unliquidated, accrued or unaccrued, known or unknown, whenever arising.
LTIP, when immediately preceded by "CSC," means the Campbell Soup
Company 1994 Long-Term Incentive Plan. When immediately preceded by "Vlasic,"
LTIP means the long-term incentive plan established by Vlasic pursuant to
Section 5.2(b).
MASTER PENSION TRUST, when immediately preceded by "CSC," means the
CSC Pension Plans Master Retirement Trust dated January 25, 1989, as amended,
and currently associated with the CSC Pension Plans. When immediately preceded
by "Vlasic," MASTER PENSION TRUST means the master trust established by Vlasic
pursuant to Section 3.2(b) that corresponds to the CSC Master Pension Trust.
MASTER SAVINGS TRUST, when immediately preceded by "CSC," means the
Trust Agreement dated April 1, 1994 between Campbell Soup Company and Fidelity
Management Trust Company for Master Trust under Campbell Soup Company Savings
and 401(k) Plans, as amended and currently associated with the CSC Savings
Plans. When immediately preceded by "Vlasic," MASTER SAVINGS TRUST means the
master trust to be established by Vlasic pursuant to Section 3.3(b) that
corresponds to the CSC Master Savings Trust.
MATERIAL FEATURE means any feature of a Plan that could reasonably be
expected to be of material importance to the sponsoring employer or the
participants and beneficiaries of the Plan, which could include, without
limitation, depending on the type and purpose of the particular Plan, the class
or classes of employees eligible to participate in such Plan, the nature, type,
form, source, and level of benefits provided by the employer under such Plan and
the amount or level of contributions, if any, required to be made by
participants (or their dependents or beneficiaries) to such Plan or that is a
benefit, right or feature within the meaning of Code section 411(d)(6).
NON-EMPLOYER STOCK FUND is defined in Section 3.3(d)(ii) of this
Agreement.
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PARTICIPATING COMPANY means any Person (other than an individual) that
is participating in a Plan sponsored by a member of the CSC Group or a member of
the Vlasic Group, as the context requires.
PERSON means an individual, a general or limited partnership, a
corporation, a trust, a joint venture, an unincorporated organization, a limited
liability entity, any other entity, and Governmental Authority.
PLAN means any plan, policy, program, payroll practice, on-going
arrangement, contract, trust, insurance policy or other agreement or funding
vehicle, whether written or unwritten, providing benefits to Employees or former
Employees of the CSC Group or the Vlasic Group.
RETIREMENT PLANS, when immediately preceded by "CSC," means the
retirement plans listed and further defined in Part 1 of Appendix C to this
Agreement that are sponsored by a member of the CSC Group. When immediately
preceded by "Vlasic," RETIREMENT PLANS means the retirement plans listed and
further defined in Part 2 of Appendix C to this Agreement that are sponsored by
a member of the Vlasic Group for periods immediately after the Distribution
Date.
SUBSIDIARY means, with respect to any specified Person, any
corporation or other legal entity of which such Person or any of its
Subsidiaries owns or controls, directly or indirectly, more than 50% of the
stock or other equity interest entitled to vote on the election of members to
the board of directors or similar governing body.
VLASIC BUSINESS means the business or businesses that, after giving
effect to the Internal Transfer Transactions (as that term is defined in Section
1.1 of the Distribution Agreement), are conducted by Vlasic or any other member
of the Vlasic Group.
VLASIC COMMON STOCK means the outstanding shares of common stock, no
par value, of Vlasic.
VLASIC DIRECTOR means a person who is a member of the Board of
Directors of Vlasic on or after the Distribution Date.
VLASIC GROUP means Vlasic and its Subsidiaries as of the Distribution
Date and any Subsidiary or division of any member of the CSC Group whose assets
and liabilities are included in the Vlasic Balance Sheet (as that term is
defined in Section 1.1 of the Distribution Agreement).
VLASIC LIABILITIES means (i) Liabilities of or related to Active
Vlasic Employees incurred in connection with the conduct or operation of the
Vlasic Business, whether arising before, on or after the Distribution Date,
except as specifically provided otherwise in this Agreement; (ii) Liabilities
arising on or after the Distribution Date relating to employment with any member
of the Vlasic Group; and (iii) all other Liabilities related to, arising out of,
or resulting from obligations, liabilities, and responsibilities assumed or
retained by Vlasic or
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another member of the Vlasic Group under this Agreement, or a Plan sponsored or
maintained by any member of the Vlasic Group, unless CSC expressly retains any
such Liability in writing or excludes the Liability in writing from those being
assumed by Vlasic.
WELFARE PLANS, when immediately preceded by "CSC," means the welfare
benefit plans, programs, and policies listed in Part 1 of Appendix B to this
Agreement that are sponsored by a member of the CSC Group. When immediately
preceded by "Vlasic," WELFARE PLANS means benefit plans, programs, and policies
listed in Part 2 of Appendix B to this Agreement that are sponsored by a member
of the Vlasic Group for all periods after the Distribution Date.
ARTICLE II
EMPLOYEES AND ALLOCATIONS OF LIABILITIES
SECTION 2.1 IDENTIFICATION AND EMPLOYMENT OF ACTIVE VLASIC
EMPLOYEES. At the Distribution Date, CSC shall provide Vlasic with a list
(which shall be current as of a date no more than 10 days prior to the
Distribution Date) of the name, job title, social security number, employee
identification number and assigned location of each Active Vlasic Employee.
Effective as of the later of the Distribution Date or the date an Active Vlasic
Employee returns from a covered leave, Vlasic shall employ all such identified
Active Vlasic Employees.
SECTION 2.2 VLASIC ASSUMPTION OF LIABILITIES. Vlasic shall, on
behalf of itself and its Subsidiaries, assume, or cause another member of the
Vlasic Group to assume, the Vlasic Liabilities.
ARTICLE III
RETIREMENT PLANS
SECTION 3.1 GENERAL PRINCIPLES.
(a) Assumption of Vlasic Liabilities. Effective as of the
Distribution Date, the Vlasic Group and its applicable Retirement Plans shall
assume all Vlasic Liabilities in connection with the assets to be transferred
with respect to Active Vlasic Employees and their alternate payees and the CSC
Group shall have no further liability with respect to such assets and Vlasic
Liabilities. The CSC Group shall have no liability with respect to the Vlasic
Retirement Plans, except as otherwise provided in Section 3.2(d), and the Vlasic
Group shall have no liability with respect to the CSC Retirement Plans.
(b) Governmental Filings. Vlasic and CSC shall make the filings
required under the Code and ERISA in connection with the transfers described in
this Article III in a timely manner. The Parties agree that the transfers
described in Sections 3.2(d) and 3.3(d) shall be made in accordance with section
414(1) of the Code.
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(c) Determination Letters. Vlasic shall apply to the Internal
Revenue Service for favorable determination letters with respect to the tax-
qualified status of the Vlasic Retirement Plans as soon as practicable after the
Distribution Date, and Vlasic, consistent with the terms of this Agreement,
shall make such amendments to such Plans as may be required by the Internal
Revenue Service in order for Vlasic to receive favorable determination letters
with respect to these Plans.
(d) Terms of Participation - Active Vlasic Employees. With respect
to Active Vlasic Employees, the Vlasic Retirement Plans shall be the successors
in interest to, shall recognize all Material Features as of the Distribution
Date under, and shall not provide benefits that duplicate benefits provided by,
the corresponding CSC Retirement Plans for such Active Vlasic Employees. CSC and
Vlasic shall agree on methods and procedures, including amending the respective
Plan documents, to prevent Active Vlasic Employees from receiving duplicative
benefits from the CSC Retirement Plans and the Vlasic Retirement Plans. Each
Vlasic Retirement Plan shall provide that all service, all compensation, and all
other benefit-affecting determinations that, as of the Distribution Date, were
recognized under the corresponding CSC Retirement Plan (for periods immediately
before the Distribution Date) shall, as of Immediately after the Distribution
Date, receive full recognition, credit and validity and be taken into account
under such Vlasic Retirement Plan to the same extent as if such items occurred
under such Vlasic Retirement Plan, except to the extent that duplication of
benefits would result. The provisions of this Agreement for the transfer of
assets from certain trusts relating to CSC Retirement Plans to the corresponding
trusts relating to Vlasic Retirement Plans are based upon the understanding of
the Parties that, subject to Section 3.2(e), each such Vlasic Retirement Plan
will assume all Vlasic Liabilities of the corresponding CSC Retirement Plan to
or relating to Active Vlasic Employees, as provided for in this Agreement. If
there are any legal or other authoritative reasons that any of such Vlasic
Liabilities are not effectively assumed by the appropriate Vlasic Retirement
Plan, then the amount of assets transferred to the trust relating to such Vlasic
Retirement Plan from the trust relating to the corresponding CSC Retirement Plan
shall be recomputed, ab initio, as set forth in Section 3.2(d)(i) but taking
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into account the retention of such Vlasic Liabilities by such CSC Retirement
Plan, and assets shall be transferred by the trust relating to such Vlasic Plan
to the trust relating to such CSC Retirement Plan so as to place each such trust
in the position it would have been in, had the initial asset transfer been made
in accordance with such recomputed amount of assets.
(e) Limitation on Certain Plan Amendments. During the Benefits
Administration Transition Period and subject to the general limitation of
Section 7.9, Vlasic shall not adopt any amendment, or allow any amendment to be
adopted, to any Vlasic Retirement Plan that, in the opinion of counsel
acceptable to both CSC and Vlasic, would violate, or create an optional form of
benefit subject to, Code section 411(d)(6).
(f) Beneficiary Designations. All beneficiary designations made by
Active Vlasic Employees or their respective alternate payees for CSC Retirement
Plans shall be transferred to and be in full force and effect under the
corresponding Vlasic Retirement Plans until such beneficiary designations are
replaced or revoked by the individual who made such beneficiary designation.
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SECTION 3.2 DEFINED BENEFIT PENSION PLANS.
(a) Establishment of Mirror Pension Plans. Effective as of the
Distribution Date, Vlasic shall adopt the Vlasic Pension Plans, which shall
provide benefits with respect to Active Vlasic Employees and their respective
alternate payees that are substantially similar in all Material Features to
those provided under the CSC Pension Plans immediately before the Distribution
Date.
(b) Establishment of Mirror Pension Trust. Effective as of the
Distribution Date, Vlasic shall establish or cause to have established the
Vlasic Master Pension Trust, which shall be exempt from taxation under Code
section 501(a)(1).
(c) Appointment of Trustee. Effective as of the Distribution Date,
Vlasic shall use its reasonable best efforts to enter into such agreements to
accomplish the assumption of Vlasic Liabilities and transfer of assets outlined
in this Section 3.2, the maintenance of the necessary participant records and
the appointment of an initial trustee under the Vlasic Pension Plans.
(d) Transfer of Pension Plan Assets.
(i) Calculation of Pension Plan Asset Allocation. As soon as
practicable after the Distribution Date, CSC shall cause the enrolled actuary
for the Pension Plans to calculate the 414(l)(1) Amount with respect to Active
Vlasic Employees under each CSC Pension Plan as of the Close of the Distribution
Date.
(ii) Transfer of Assets to the Vlasic Master Pension Trust. As
soon as practicable after the completion of the calculation required by Section
3.2(d)(i), but in no event before CSC, or its authorized representative,
determines that the calculation and the data on which it is based are acceptably
complete and accurate, CSC shall cause the Asset Transfer from the CSC Master
Pension Trust to the Vlasic Master Pension Trust of not less than the 414(l)(1)
Amount calculated under Section 3.2(d)(i). Notwithstanding the preceding
sentence, the Asset Transfer from the CSC Master Pension Trust to the Vlasic
Master Pension Trust shall not occur until the Internal Revenue Service has
issued favorable letters of determination finding that the Vlasic Pension Plans
are tax-qualified within the meaning of section 401(a) of the Code.
Specifically, with respect to the CSC Salaried Pension Plan, at CSC's sole
discretion, the Asset Transfer from the CSC Master Pension Trust to the Vlasic
Master Pension Trust also shall not occur until the Internal Revenue Service has
issued a favorable letter of determination finding that the CSC Salaried Pension
Plan is tax-qualified within the meaning of section 401(a) of the Code.
(iii) Identification of Assets Transferred. The specific assets
to be transferred from the CSC Master Pension Trust to the Vlasic Master Pension
Trust in the Asset Transfer shall represent a reasonable cross-section of the
asset classes in the CSC Master Pension Trust consistent with the objective of
enabling Vlasic to implement an investment program for the Vlasic Master Pension
Trust, but in no event shall CSC or the CSC Master Pension Trust be required to
incur unreasonable transaction costs in the process of transferring assets and
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subsequently re-balancing the investment portfolio held by the CSC Master
Pension Trust. CSC shall not be required to transfer any shares of CSC or Vlasic
stock or any interests in group annuity contracts held by the CSC Master Pension
Trust. CSC shall not be required to transfer any specific asset, any portion of
any specific fund or investment manager account, or any specific portion of any
specific asset, fund or investment manager account. By accepting the assets
transferred, Vlasic acknowledges that it and not CSC is serving as the fiduciary
for the Vlasic Master Pension Trust with respect to the determination and actual
transfer of assets from the CSC Master Pension Trust and that, acting as
fiduciary for the Vlasic Pension Plans, Vlasic further acknowledges that it is
able to change the asset allocation as it deems appropriate at any time after
the Asset Transfer. Once the assets have been transferred to and received by the
Vlasic Master Pension Trust, such event shall fully and finally foreclose any
issue or matter of any nature whatsoever by Vlasic, the Vlasic Master Pension
Trust, the Vlasic Pension Plans or any other trust related to such Plans against
CSC, the CSC Master Pension Trust, the CSC Pension Plans, or any other trust
related to such Plans relating to the condition, identity, or value of such
assets and Vlasic shall fully indemnify CSC, its employees, officers, directors,
and the CSC Pension Plans and the CSC Master Pension Trust regarding any Vlasic
Liabilities or regulatory issue of any nature with respect to the CSC Pension
Plans and the CSC Master Pension Trust.
(e) PBGC Intervention. Notwithstanding any provision of this
Agreement to the contrary, in the event that at any time the Pension Benefit
Guaranty Corporation (PBGC) or any other Governmental Authority asserts that the
Distribution may provide justification for the PBGC to seek termination of any
CSC Pension Plan or Vlasic Pension Plan pursuant to ERISA section 4042 or
otherwise asserts that the Distribution may increase unreasonably the long-run
loss to the PBGC (within the meaning of ERISA section 4042(a)(4)) with respect
to any CSC Pension Plan or Vlasic Pension Plan, CSC may, in its sole discretion:
(i) Retain all assets and Vlasic Liabilities with respect to
Active Vlasic Employees and their respective alternate payees arising prior to
the Distribution Date under the applicable CSC Pension Plan and require Vlasic
to provide equivalent benefits under plans maintained by it with an offset for
any benefits continued to be provided under the applicable CSC Pension Plan;
(ii) Enter into negotiations with the PBGC to resolve these
issues and, upon satisfactorily resolving such issues, Vlasic shall fully comply
with the terms of this Section 3.2(e); or
(iii) Reach such other agreement as may be satisfactory to CSC
and Vlasic.
In any case and notwithstanding any other provision of this Agreement, Vlasic
shall be fully responsible and liable for any obligation to, agreement with, or
undertaking (on behalf of or relating to any Vlasic Pension Plan) to the PBGC
and shall hold CSC free from and fully indemnify it against any such obligation,
agreement, or undertaking. If CSC retains any Vlasic Liabilities with respect
to any Active Vlasic Employee and their respective alternate payees
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under any CSC Pension Plan, Vlasic shall fully reimburse CSC for the reasonable
administrative expenses relating to any such liabilities.
SECTION 3.3 DEFINED CONTRIBUTION PLANS.
(a) Establishment of Mirror Savings Plans. Prior to and effective on
the Distribution Date, Vlasic shall adopt the Vlasic Savings Plans, which shall
provide benefits to Active Vlasic Employees and their respective alternate
payees that are substantially similar in all Material Features to those provided
under the CSC Savings Plans immediately before the Distribution Date.
(b) Establishment of Mirror Savings Trust. Effective on the
Distribution Date, Vlasic shall establish or cause to be established the Vlasic
Master Savings Trust, which shall be exempt from taxation under Code section
501(a)(1).
(c) Appointment of Trustee/Recordkeeper. Effective no later than the
Distribution Date, Vlasic shall use its reasonable best efforts to enter into
such agreements to accomplish the assumption of Vlasic Liabilities and transfer
of assets outlined in this Section 3.3, the maintenance of the necessary
participant records, the appointment of Fidelity Management Trust Company as
initial trustee under the Vlasic Savings Plans, and the engagement of Fidelity
Management Trust Company as initial recordkeeper under such plans.
(d) Transfer of Savings Plan Assets.
(i) Transfer of Assets to the Vlasic Master Savings Trust. CSC
shall cause the accounts of the Active Vlasic Employees and their respective
alternate payees, if any, under the applicable CSC Savings Plan that are held by
its related trust as of the Distribution Date to be transferred to the
applicable Vlasic Savings Plan and its related trust, and Vlasic shall cause
such transferred accounts to be accepted by such plan and trust. As soon as
practicable after the Distribution Date, assets related to the accounts of all
Active Vlasic Employees and their alternate payees shall be transferred from the
CSC Master Savings Plan Trust to the Vlasic Master Savings Plan Trust. The
transfer of such accounts shall be made: (A) in kind, to the extent the assets
consist of investments in a CSC Common Stock fund or a Vlasic Common Stock fund
and (B) otherwise in cash, interests in mutual funds, securities, or other
property or in a combination thereof, at CSC's sole discretion, but, to the
extent practicable, shall be invested initially in comparable investment options
in the Vlasic Savings Plans as such accounts were invested immediately before
the date of transfer. Any outstanding balances of loans under any CSC Savings
Plans to Active Vlasic Employees shall be transferred with the underlying
accounts.
(ii) Non-Employer Stock Funds. Effective Immediately after the
Distribution Date, a Vlasic Common Stock fund shall be added as an investment
option to the CSC Savings Plans and the Vlasic Savings Plans shall provide for
both a CSC Common Stock fund and a Vlasic Common Stock fund as investment
options. The Vlasic Common Stock fund in the CSC Savings Plan and the CSC Common
Stock fund in the Vlasic Savings Plan are each referred to as a NON-EMPLOYER
STOCK FUND with respect to the applicable plan. The
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Parties intend that each Non-Employer Stock Fund will be maintained under the
respective Savings Plan through December 31, 1999; provided, however that the
respective Plan fiduciaries have the ultimate and sole responsibility for
determining the investment options available under the Plans. On December 31,
1999 or earlier as directed by the relevant Plan fiduciaries, all Non-Employer
Stock shall be liquidated and the proceeds of such liquidation shall be invested
as directed by the relevant Plan fiduciaries. The CSC Savings Plans and the
Vlasic Savings Plans shall each provide that, after the Distribution Date, no
new contributions may be invested in, and no amounts may be transferred from
other investment options to, the Non-Employer Stock Fund under the respective
Plans. The CSC Savings Plans shall provide that no earnings or dividends under
its Non-Employer Stock Fund may be reinvested in Vlasic Common Stock fund and
the Vlasic Savings Plan shall provide that no earnings or dividends under its
Non-Employer Stock Fund may be reinvested in its CSC Common Stock fund.
(iii) Provision of Disclosure Materials Relating to Non-Employer
Stock Funds. Each Party shall provide to the other Party in a timely manner
such proxy statements, annual reports, and other materials with respect to the
Party's stock held in the Non-Employer Stock Fund under the Savings Plan of the
other Party as may be reasonably requested by the other Party.
(iv) Miscellaneous Funds. In the event that CSC determines that
it is not feasible or appropriate to transfer in-kind the assets of a particular
investment fund from one or more CSC Savings Plans to the applicable Vlasic
Savings Plan, then the fair market value of the assets, as of the close of
business on the Distribution Date (and earnings, gains and losses attributable
to such amount from the Distribution Date to the date the assets are actually
transferred) shall be transferred in cash to the Vlasic Savings Plan and Vlasic
shall invest such cash in its Plan and trust in the same manner and proportion
as it was invested in the CSC Savings Plan or otherwise at the direction of each
individual entitled to direct investments.
ARTICLE IV
WELFARE PLANS
SECTION 4.1 GENERAL PRINCIPLES.
(a) Assumption of Welfare Plan Liabilities. Immediately after the
Distribution Date, all Vlasic Liabilities for or relating to Active Vlasic
Employees and certain Former Vlasic Employees and surviving dependents as set
forth in Section 4.7 under the CSC Welfare Plans or Vlasic Welfare Plans shall
cease to be Liabilities of CSC or the CSC Welfare Plans and shall be assumed by
the Vlasic Group and the Vlasic Welfare Plans (on a claims-made basis)
including, without limitation, retiree medical benefits. Unless otherwise
specifically set forth in writing, Vlasic shall not be entitled to assets
associated with any CSC Welfare Plan or Vlasic Welfare Plan.
(b) Continuation of Elections. Vlasic shall cause the Vlasic Welfare
Plans to recognize and maintain all coverage and contribution elections made by
Active Vlasic Employees under the CSC Welfare Plans in effect for the period
immediately before the
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Distribution Date and shall apply such elections under the Vlasic Welfare Plans
for the remainder of the period or periods for which such elections are by their
terms applicable. Vlasic shall provide coverage to Active Vlasic Employees under
the Vlasic Welfare Plans without the need to undergo a physical examination or
otherwise provide evidence of insurability, will not impose pre-existing
condition exclusions and will recognize and maintain all irrevocable assignments
and elections made by Active Vlasic Employees in connection with any life
insurance coverage under the CSC Welfare Plans and any predecessor plans.
(c) Continuation of Co-Payments. Vlasic shall cause the Vlasic
Welfare Plans to recognize and give credit for all amounts applied to
deductibles, out-of-pocket maximums, and other applicable benefit coverage
limits for expenses that have been incurred by Active Vlasic Employees under the
CSC Welfare Plans for the remainder of the benefit limit year in which the
Distribution Date occurs.
(d) Continuation of Maximum Benefits. Vlasic shall cause the Vlasic
Welfare Plans to recognize and give credit for all benefits paid to Active
Vlasic Employees under the CSC Welfare Plans, before and during the benefit
limit year in which the Distribution occurs, for purposes of determining when
such persons have reached their lifetime maximum benefits under the Vlasic
Welfare Plans.
(e) Campbell Couples - Coordination of Benefits. To the extent
required by law, effective as of the first January 1 or CHANGE IN FAMILY STATUS
(within the meaning of the Code and applicable regulations) that occurs
Immediately after the Distribution Date, Vlasic shall cause the Vlasic Welfare
Plans to permit eligible Active Vlasic Employees to cover their lawful spouses
as dependents if such lawful spouses are active or retired CSC employees (but
were not otherwise covered as a dependent under the CSC Welfare Plans or other
CSC Plans due to their previous status as both employee and dependent of a CSC
employee). To the extent required by law, effective as of the first January 1 or
CHANGE IN FAMILY STATUS (within the meaning of the Code and applicable
regulations) that occurs Immediately after the Distribution Date, CSC shall
cause the CSC Welfare Plans to permit eligible CSC Group employees to cover
their spouses as dependents if such spouses are active or retired Vlasic
employees. All benefits provided under any such plans to a lawful spouse
dependent of the other Party's employee shall be coordinated pursuant to the
applicable CSC and Vlasic Plans.
(f) COBRA and HIPAA Obligations. For periods before the Distribution
Date, CSC shall be responsible for administering compliance with the
continuation coverage requirements for "group health plans" under Title X of the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (COBRA), and
the portability requirements under the Health Insurance Portability and
Accountability Act of 1996, as amended (HIPAA), with respect to Active Vlasic
Employees, Former Vlasic Employees and any beneficiaries and dependents thereof,
and shall be responsible for furnishing all necessary employee change notices
with respect to these persons in accordance with applicable CSC policies and
procedures. Effective on the Distribution Date and thereafter, Vlasic shall be
solely responsible for administering compliance with and satisfying any
outstanding COBRA or HIPAA obligation with respect to Active Vlasic Employees,
Former Vlasic Employees and their beneficiaries and dependents.
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(g) Subrogation. If Vlasic recovers any amounts through subrogation
or otherwise for claims paid by CSC reimbursed to Active Vlasic Employees and
certain Former Vlasic Employees and surviving dependents as set forth in Section
4.8 and their beneficiaries and dependents, Vlasic shall pay such amounts to
CSC.
SECTION 4.2 ESTABLISHMENT OF MIRROR WELFARE PLANS. Except as
otherwise set forth in this Article IV, Vlasic shall take all actions necessary
or appropriate to establish, on or before the Distribution Date, Vlasic Welfare
Plans to provide each Active Vlasic Employee with benefits substantially similar
to the benefits provided to him or her under the CSC Welfare Plans immediately
before the Distribution Date.
SECTION 4.3 VACATION AND SICK PAY LIABILITIES. Effective on the
Distribution Date, Vlasic shall assume all accrued Liabilities (whether vested
or unvested, and whether funded or unfunded) for vacation and sick leave in
respect of all Active Vlasic Employees as of the Distribution Date.
SECTION 4.4 MEDICAL SPENDING/DEPENDENT CARE ACCOUNTS. For the
calendar year that includes the Distribution Date, the Vlasic Flex Plan shall
recognize all elections, contributions and related claims by Active Vlasic
Employees to flexible spending or dependent care assistance accounts under the
CSC Flex Plan. As soon as practicable after the close of such calendar year and
in conjunction with any other appropriate accounting adjustments to be made
between the Parties, CSC shall reimburse Vlasic for the aggregate contributions
to such accounts withheld by CSC from Active Vlasic Employees prior to the
Distribution Date to the extent that CSC did not exhaust such contributions by
providing benefits to Active Vlasic Employees prior to the Distribution Date, or
if benefits paid by CSC to Active Vlasic Employees prior other Distribution Date
exceeds the contributions withheld by CSC from Active Vlasic Employees, Vlasic
shall reimburse CSC for such difference.
SECTION 4.5 SEVERANCE. The Parties agree that, with respect to
Active Vlasic Employees who, in connection with the Distribution, cease to be
employees of the CSC Group or Vlasic Group and become Employees of the Vlasic
Group or CSC Group, respectively, such cessation shall not be deemed a severance
of employment from either Group for purposes of any Plan that provides for the
payment of severance, salary continuation or similar benefits and shall, in
connection with the Distribution, if and to the extent appropriate, obtain
waivers from Active Vlasic Employees against any such assertion. The Parties
shall take all such action, including, but not limited to amending any Plan to
give effect to the provisions of this Section 4.5.
SECTION 4.6 VENDOR CONTRACTS.
(a) Pre-Distribution Date Negotiation. Before the Distribution Date,
CSC shall take such steps as are necessary under each ASO Contract, Group
Insurance Policy, HMO Agreement and letters of understanding and arrangements in
existence as of the date of this Agreement to permit Vlasic to participate in
the terms and conditions of such ASO Contract, Group Insurance Policy, HMO
Agreement or letters of understanding and arrangements beginning Immediately
after the Distribution Date.
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(b) Terms of Vlasic Participation. CSC shall determine, and shall
promptly notify Vlasic of, the manner in which Vlasic's participation in the
terms and conditions of ASO Contracts, Group Insurance Policies, HMO Agreements,
letters of understanding and arrangements as set forth above is to be
effectuated. Vlasic hereby authorizes CSC to act on its behalf to extend to
Vlasic the terms and conditions of the ASO Contracts, Group Insurance Policies,
HMO Agreements and letters of understanding and arrangements. Vlasic shall
fully cooperate with CSC in such efforts.
(c) Premium/Administration Rates. CSC and Vlasic shall use their
reasonable best efforts to cause each of the insurance companies, HMOs, paid
provider organizations and third-party administrators providing services and
benefits under the CSC Welfare Plans and the Vlasic Welfare Plans to maintain
the premium and/or administrative rates, based on the aggregate number of
participants in both the CSC Welfare Plans, after the Distribution Date, and the
Vlasic Welfare Plans.
(d) Management of the ASO Contracts, Group Insurance Policies, HMO
Agreements, Letters of Understanding and other Vendor Contracts. Vlasic shall
be responsible, subject to the direction and control of CSC, for the management
of the existing contractual and other arrangements pertaining to the
administration of the Vlasic Welfare Plans. Immediately after the Distribution
Date, Vlasic shall be responsible for the management and control of the ASO
contracts, Group Insurance Policies, HMO Agreements, letters of understanding,
arrangements and other vendor contracts and relationships to the extent such
contracts, policies and agreements apply to the Vlasic Welfare Plans.
Notwithstanding the foregoing, nothing contained in this Section 4.6(d) shall
permit Vlasic to direct any insurance carrier, third-party vendor or claims
administrator with respect to any contractual arrangement, policy or agreement
under any CSC Welfare Plan.
SECTION 4.7 COVERAGE OF CERTAIN FORMER VLASIC EMPLOYEES AND
SURVIVING DEPENDENTS. In addition to Active Vlasic Employees, Vlasic shall
cause the Vlasic Welfare Plans to cover: (a) each Former Vlasic Employee who is
totally disabled with at least ten (10) years of service with the CSC Group
prior to the Distribution Date, (b) eligible surviving spouses and dependents of
each Former Vlasic Employee and (c) each Former Vlasic Employee who is receiving
severance benefits from CSC prior to the Distribution Date.
SECTION 4.8 WORKERS' COMPENSATION AND UNEMPLOYMENT COMPENSATION.
Effective on the Distribution Date, Vlasic shall assume all Vlasic Liabilities
for Active Vlasic Employees related to any and all workers' compensation and
unemployment compensation matters under any law of any state, territory, or
possession of the United States or the District of Columbia and Vlasic shall be
fully responsible for the administration of all such claims. If Vlasic is
unable to assume any of such Vlasic Liabilities or the administration of any
such claim because of the operation of applicable state law or for any other
reason, Vlasic shall reimburse CSC for all such Vlasic Liabilities.
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ARTICLE V
EXECUTIVE AND DIRECTOR COMPENSATION PROGRAMS
SECTION 5.1 GENERAL PRINCIPLES.
(a) Assumption of Vlasic Liabilities. Except as otherwise provided
in this Agreement, effective as of the Distribution Date, the Vlasic Group and
its applicable Plan shall assume all Vlasic Liabilities in connection with
Vlasic Executive Compensation Programs for Active Vlasic Employees and the CSC
Group shall have no further liability with respect to such Vlasic Liabilities.
The CSC Group shall have no liability with respect to the Vlasic Executive
Compensation Programs, and the Vlasic Group shall have no liability with respect
to the CSC Executive Compensation Programs.
(b) Establishment of Mirror Plans. Unless specifically provided for
otherwise in this Article V, effective on the Distribution Date, Vlasic shall
establish the Vlasic Executive Compensation Programs, which shall provide
benefits to eligible Active Vlasic Employees that are comparable to the
corresponding CSC Executive Compensation Programs. Notwithstanding the
foregoing, Vlasic has sole authority to determine which Active Vlasic Employees
shall be eligible to participate in one or more of the Vlasic Executive
Compensation Programs.
(c) Cessation of Participation. All Active Vlasic Employees, whether
or not eligible to participate in one or more of the Vlasic Executive
Compensation Programs, shall cease to be eligible to participate in the CSC
Executive Compensation Programs as of the Distribution Date, except as otherwise
provided pursuant to the CSC Executive Compensation Programs.
SECTION 5.2 BONUS AND INCENTIVE PLANS.
(a) Annual Incentive Plan. CSC shall retain all Liabilities for or
related to Active Vlasic Employees payable under the CSC Annual Incentive Plan
to Active Vlasic Employees with respect to the one year performance period
ending on August 2, 1998; provided, however, that CSC shall make such
adjustments to the financial goals, targets, payments and forms of payment as
CSC in its sole discretion deems appropriate to reflect the Distribution. For
periods beginning on or after August 3, 1998, Vlasic shall establish the Vlasic
Annual Incentive Plan covering such of its Active Vlasic Employees as it in its
sole discretion deems appropriate.
(b) LTIP - Restricted Stock Awards for Active Vlasic Employees.
Except as otherwise provided pursuant to the CSC LTIP, CSC shall retain all
Liabilities for Active Vlasic Employees payable under the CSC LTIP with respect
to (i) performance-based restricted shares (the PERFORMANCE AWARDS) for the
performance period ending August 2, 1998 and (ii) time-lapse restricted shares.
With respect to all such awards held by Active Vlasic Employees and awards of
restricted shares of CSC Stock held by CSC Group employees after the
Distribution, the number of such shares shall be adjusted by the Campbell
Conversation Ratio, as set forth in Appendix D, in lieu of receiving shares of
Vlasic Stock pursuant to the Distribution. With respect to Performance Awards
for the performance period ending on August 2, 1998, CSC will adjust the
performance goals for the period beginning Immediately After the Distribution
Date to reflect the Distribution. Active
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Vlasic Employees will receive (i) a full payout of their Performance Awards for
the performance period ending August 2, 1998 if the adjusted performance goals
are met or (ii) a pro-rated payout of their Performance Awards for the
performance period ending August 2, 1998 if the adjusted performance goals are
not met. Performance Awards under the CSC LTIP for Active Vlasic Employees for
performance periods ending after August 3, 1998 will be cancelled.
(c) LTIP - Stock Option Awards for Active Vlasic Employees.
(i) Vested Options. Effective Immediately after the
Distribution Date, each unexercised stock option for CSC Stock held by an Active
Vlasic Employee that was vested as of the Distribution Date shall continue to be
held as a vested option for CSC Stock and issuable under the CSC LTIP; provided,
however, that as soon as practicable after the Distribution Date, the number of
options and the exercise price for such options shall be adjusted, as of
Immediately after the Distribution Date, by the applicable Conversion Formula.
Employment by the Vlasic Group of Active Vlasic Employees holding options for
CSC Stock shall be treated as employment by the CSC Group for purposes of the
CSC LTIP. With respect to the adjusted stock options for CSC Stock exercised by
Active Vlasic Employees, CSC shall be entitled to any tax deduction and any
other treatment related to any such tax deduction with respect to the exercise
of such stock options.
(ii) Unvested Options. Effective Immediately after the
Distribution Date, each stock option for CSC Stock held by an Active Vlasic
Employee that are not vested as of the Distribution Date shall be converted into
unvested options for Vlasic Stock and issuable under the Vlasic LTIP; provided,
however, that as soon as practicable after the Distribution Date, the number of
options and the exercise price for such options shall be adjusted, as of
Immediately after the Distribution Date, by the applicable Conversion Formula.
With respect to the adjusted stock options for Vlasic Stock exercised by Active
Vlasic Employees, Vlasic shall be entitled to any tax deduction and any other
treatment related to any such tax deduction with respect to the exercise of such
stock options.
(d) Deferred Compensation Program. Except as otherwise set forth in
this Section 5.2 or as otherwise specifically provided in one or more CSC
Executive Compensation Programs, effective Immediately after the Distribution
Date, Vlasic shall assume all Vlasic Liabilities for Active Vlasic Employees
under all CSC Deferred Compensation Programs. Vlasic shall administer the
Vlasic Deferred Compensation Program so as to continue all elections by Active
Vlasic Employees under the CSC Deferred Compensation Program assumed under the
Vlasic Deferred Compensation Programs. Vlasic shall administer the Vlasic
Deferred Compensation Program in a manner that will ensure that, as of the
Distribution Date, the investment choices will be substantially similar to the
hypothetical investment choices available under the CSC Deferred Compensation
Programs on the Distribution Date; provided, however, that Vlasic, may in its
sole discretion amend, modify or terminate investment choices after the
Distribution Date. Account amounts stated in whole or in part in CSC phantom
shares as of the Distribution Date, shall be converted into amounts stated in
phantom shares of CSC and Vlasic in a manner consistent with the treatment of
employer securities in the CSC Savings Plans and
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the Vlasic Savings Plans, as determined by CSC. Immediately after the
Distribution Date, Vlasic shall have the right to amend or modify such
hypothetical investment choices.
(e) Mid-Career Hire Pension Plan. Vlasic shall assume, discharge and
hold CSC harmless from all Vlasic Liabilities to or relating to Active Vlasic
Employees under the CSC Mid-Career Hire Pension Plan. Vlasic may, at its sole
discretion, establish a comparable Mid-Career Hire Pension Plan for any or all
of its employees, including any Active Vlasic Employee.
SECTION 5.3 DIRECTOR COMPENSATION PLAN. Prior to and effective on
the Distribution Date, Vlasic shall establish a director compensation plan for
eligible Vlasic Directors.
ARTICLE VI
FOREIGN PLANS AND TRANSITION EMPLOYEES
SECTION 6.1 FOREIGN PLANS. CSC and Vlasic shall use their
reasonable best efforts so that, as soon as practicable after the Distribution
Date, CSC and Vlasic shall agree regarding the treatment of Foreign Plans,
which, to the extent allowed under foreign laws, mirrors the approach outlined
in this Agreement for the various employee benefit plans.
SECTION 6.2 TRANSITION EMPLOYEES. CSC and Vlasic shall use their
reasonable best efforts so that as soon as practicable after the Distribution
Date, CSC and Vlasic shall agree, on a case-by-case basis, regarding the
treatment, for purposes of their respective employee benefit plans, of
individuals whose employment changes between the CSC Group and the Vlasic Group
during an agreed upon period following the Distribution Date.
ARTICLE VII
GENERAL
SECTION 7.1 PAYMENT OF AND ACCOUNTING TREATMENT FOR EXPENSES AND
BALANCE SHEET AMOUNTS.
(a) Expenses. All expenses (and the accounting treatment related to
such expenses) through the Close of the Distribution Date regarding matters
addressed in this Agreement shall be handled and administered in the ordinary
course by CSC and Vlasic in accordance with past CSC accounting and financial
practices and procedures pertaining to such matters. To the extent expenses are
unpaid as of the Close of the Distribution Date that pertain to Active Vlasic
Employees, Vlasic shall be solely responsible for such payment, without regard
to any accounting treatment to be accorded such expense by CSC or Vlasic on
their respective books and records. The accounting treatment to be accorded all
such expenses, whether such expenses are paid by CSC or Vlasic, shall be
determined by CSC.
(b) Balance Sheet Amounts. Vlasic shall assume any balance sheet
liability for any Liabilities assumed by it under this Agreement as of the Close
of the Distribution Date or
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thereafter, with respect to any Active Vlasic Employee. The determination of any
balance sheet liability as of the Close of the Distribution Date shall be
determined by CSC consistent with past accounting practices, consistently
applied.
SECTION 7.2 ACCOUNTING ADJUSTMENTS. Before the Distribution Date,
Vlasic will have established on its books for financial accounting purposes
liabilities and reserves for pension, deferred compensation, welfare and other
employee benefit plan obligations that will be retained or assumed by Vlasic
under this Agreement, and CSC will have adjusted the liabilities and reserves on
its books for financial accounting purposes to take into account Vlasic'
assumption or retention of Liabilities under this Agreement. The initial
adjustments as of the Distribution Date, will be made on an estimated basis.
After the Parties have finally calculated the actual liabilities under this
Agreement, each Party shall appropriately adjust its liabilities and reserves to
reflect the amount of the liabilities and reserves that are properly allocable
to that Party. Except as otherwise provided in Article III and Article VI,
neither Party shall have any obligation to make payments or transfer assets to
the other Party with respect to such adjustments.
SECTION 7.3 NOTICES. All notices, requests, claims and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery by
hand, by reputable overnight courier service, by facsimile transmission, or by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the addresses (or at such other address for a Party as
shall be specified in a notice given in accordance with this Section 7.3) listed
below:
if to CSC, to: Campbell Soup Company
Campbell Place
Camden, New Jersey 08101
Attn.: Linda A. Lipscomb, Esq.
Fax No.
if to Vlasic, to: Vlasic Foods International Inc.
Campbell Place
Camden, New Jersey 08101
Attn.: Norma B. Carter, Esq.
Fax No.
or to such other address as any Party may, from time to time, designate in a
written notice given in a like manner. Notice given by hand shall be deemed
delivered when received by the recipient. Notice given by mail as set out above
shall be deemed delivered five calendar days after the date the same is mailed.
Notice given by reputable overnight courier shall be deemed delivered on the
next following business day after the same is sent. Notice given by facsimile
transmission shall be deemed delivered on the day of transmission provided
telephone confirmation of receipt is obtained promptly after completion of
transmission.
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SECTION 7.4 AMENDMENT AND WAIVER. This Agreement may not be
altered or amended, nor may rights hereunder be waived, except by an instrument
in writing executed by the Party or Parties to be charged with such amendment or
waiver. No waiver of any term, provision or condition of or failure to exercise
or delay in exercising any rights or remedies under this Agreement, in any one
or more instances, shall be deemed to be, or construed as, a further or
continuing waiver of any such term, provision, condition, right or remedy or as
a waiver of any other term, provision or condition of this Agreement.
SECTION 7.5 SHARING OF PARTICIPANT INFORMATION. CSC and Vlasic
shall share, CSC shall cause each applicable member of the CSC Group to share,
and Vlasic shall cause each applicable member of the Vlasic Group to share,
with each other and their respective agents and vendors (without obtaining
releases) all participant information necessary for the efficient and accurate
administration of each of the CSC Benefit Plans and the Vlasic Benefit Plans
during the Benefits Administration Transition Period. CSC and Vlasic and their
respective authorized agents shall, subject to applicable laws on
confidentiality, be given reasonable and timely access to, and may make copies
of, all information relating to the subjects of this Agreement in the custody of
the other Party, to the extent necessary for such administration. Until the
Close of the Distribution Date, all participant information shall be provided in
the manner and medium applicable to Participating Companies in the CSC Plans
generally, and thereafter until December 31, 1998, all participant information
shall be provided in a manner and medium that is compatible with the data
processing systems of CSC as in effect as of the Close of the Distribution Date,
unless otherwise agreed to by CSC and Vlasic.
SECTION 7.6 ENTIRE AGREEMENT. This Agreement, together with the
Distribution Agreement and all other agreements between the Parties referred to
in the Distribution Agreement (the ANCILLARY AGREEMENTS), constitute the entire
understanding of the Parties with respect to the Distribution, superseding all
negotiations, prior discussions and prior agreements and understandings relating
to such subject matter. To the extent that the provisions of this Agreement are
inconsistent with the provisions of the Distribution Agreement or any other
ancillary agreement, the provisions of this Agreement shall prevail.
SECTION 7.7 PARTIES IN INTEREST. Neither of the Parties may assign
its rights or delegate any of its duties under this Agreement without the prior
written consent of the other Party (which consent shall not be unreasonably
withheld or delayed). This Agreement shall be binding upon, and shall inure to
the benefit of, the Parties and their respective successors and permitted
assigns.
SECTION 7.8 NO THIRD-PARTY BENEFICIARIES; NO TERMINATION OF
EMPLOYMENT. No provision of this Agreement or the Distribution Agreement shall
be construed to create any right, or accelerate entitlement, to any compensation
or benefit whatsoever on the part of any Active Vlasic Employee or other future,
present, or former employee of the CSC Group or the Vlasic Group under any CSC
Plan or Vlasic Plan or otherwise. Without limiting the generality of the
foregoing, except as expressly provided in this Agreement, neither the
Distribution nor the termination of the controlled group status of a member of
the Vlasic Group shall cause any employee to be deemed to have incurred a
termination of employment that by
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itself entitles such individual to the commencement of benefits under any of the
CSC Plans, any of the Vlasic Plans, or any individual agreements.
SECTION 7.9 RIGHT TO AMEND OR TERMINATE ANY PLANS. Nothing in this
Agreement other than those provisions specifically set forth in this Agreement
to the contrary shall preclude Vlasic or CSC, at any time after the Close of the
Distribution Date, from amending, merging, modifying, terminating, eliminating,
reducing, or otherwise altering in any respect any Vlasic Plan or CSC Plan,
respectively, any benefit under any Plan or any trust, insurance policy or
funding vehicle related to any Vlasic Plan or CSC Plan, respectively (the
BENEFIT ACTIONS). Notwithstanding the preceding sentence, however, the Vlasic
Group shall not take any Benefit Action that increases the administrative cost
or burden associated with the affected benefit during the Benefits
Administration Transition Period without obtaining CSC's prior written approval
of such Benefit Action unless the Vlasic Group undertakes to administer or cause
to be administered such affected benefit.
SECTION 7.10 FIDUCIARY AND RELATED MATTERS. Vlasic acknowledges
that CSC will not be a fiduciary with respect to any Vlasic Plans. Vlasic also
acknowledges that CSC shall not be deemed to be in violation of this Agreement
if it fails to comply with any provision of this Agreement based upon its good
faith determination that to do so would violate any applicable fiduciary duties
or standards of conduct under ERISA or other applicable law. Notwithstanding
any other provision in this Agreement, the Parties may take such actions as
necessary or appropriate to effectuate the terms and provisions of this
Agreement.
SECTION 7.11 EFFECT IF DISTRIBUTION DOES NOT OCCUR. If the
Distribution does not occur, then all actions and events that are, under this
Agreement, to be taken or occur effective as of the Close of the Distribution
Date, Immediately after the Distribution Date, or otherwise in connection with
the Distribution, shall not be taken or occur except to the extent specifically
agreed to in writing by Vlasic and CSC.
SECTION 7.12 RELATIONSHIP OF PARTIES. Nothing in this Agreement
shall be deemed or construed by the Parties or any third party as creating the
relationship of principal and agent, or a partnership or joint venture between
the Parties, it being understood and agreed that no provision contained in this
Agreement, and no act of the Parties, shall be deemed to create any relationship
between the Parties other than the relationship set forth in this Agreement.
SECTION 7.13 AFFILIATES. Each of CSC and Vlasic shall cause to be
performed, and hereby guarantees the performance of, all actions, agreements and
obligations set forth in this Agreement to be performed by members of the CSC
Group or members of the Vlasic Group, respectively, where relevant.
SECTION 7.14 AUDITS.
(a) Audit Rights With Respect to Information Provided.
(i) Each of CSC and Vlasic, and their duly authorized
representatives, shall have the right to conduct audits at any time upon
reasonable prior notice, at their own
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expense, with respect to all information provided to it or to any Plan trustee,
recordkeeper or third-party administrator by the other Party. The Party
conducting the audit shall have the sole discretion to determine the procedures
and guidelines for conducting audits and the selection of audit representatives
under this Section. The auditing Party shall have the right to make copies of
any records at its expense, subject to the confidentiality provisions set forth
in the Distribution Agreement, which are incorporated by reference in this
Agreement. The Party being audited shall provide the auditing Party's
representatives with reasonable access during normal business hours to its
operations, computer systems and paper and electronic files, and provide
workspace to its representatives. After any audit is completed, the Party being
audited shall have the right to review a draft of the audit findings and to
comment on those findings in writing within five business days after receiving
such draft.
(ii) The auditing Party's audit rights under this Section shall
include the right to audit, or participate in an audit facilitated by the Party
being audited, of any Subsidiaries and affiliates of the Party being audited and
of any benefit providers and third Parties with whom the Party being audited has
a relationship, or agents of such Party, to the extent any such persons are
affected by or addressed in this Agreement (collectively, the NON-PARTIES). The
Party being audited shall, upon written request from the auditing Party, provide
an individual (at the auditing Party's expense) to supervise any audit of any
such benefit provider or third-Party. The auditing Party shall be responsible
for supplying, at its expense, additional personnel sufficient to complete the
audit in a reasonably timely manner.
(b) Audits Regarding Vendor Contracts. From Immediately after the
Distribution Date through December 31, 1999, CSC and Vlasic and their duly
authorized representatives shall have the right to conduct joint audits with
respect to any vendor contracts that relate to both the CSC Welfare Plans and
the Vlasic Welfare Plans. The scope of such audits shall encompass the review
of all correspondence, account records, claim forms, canceled drafts (unless
retained by the bank), provider bills, medical records submitted with claims,
billing corrections, vendor's internal corrections of previous errors and any
other documents or instruments relating to the services performed by the vendor
under the applicable vendor contracts. CSC and Vlasic shall agree on the
performance standards, audit methodology, auditing policy and quality measures
and reporting requirements relating to the audits described in this Section, and
the manner in which costs incurred in connection with such audits will be
shared.
SECTION 7.15 COLLECTIVE BARGAINING. To the extent any provision of
this Agreement is contrary to the provisions of any applicable collective
bargaining agreement to which CSC or any affiliate of CSC is a party, the terms
of such collective bargaining agreement shall prevail. Should any provisions of
this Agreement be deemed to relate to a topic determined by an appropriate
authority to be a mandatory subject of collective bargaining, CSC or Vlasic may
be obligated to bargain with the union representing affected employees
concerning those subjects. Neither Party will agree to a modification of any
applicable collective bargaining agreement without the consent of the other.
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SECTION 7.16 REQUESTS FOR INTERNAL REVENUE SERVICE RULINGS AND
DETERMINATIONS AND UNITED STATES DEPARTMENT OF LABOR OPINIONS. Vlasic shall
cooperate fully with CSC on any issue relating to the transactions contemplated
by this Agreement for which CSC elects to seek a determination letter or private
letter ruling from the Internal Revenue Service or an advisory opinion from the
United States Department of Labor. CSC shall cooperate fully with Vlasic with
respect to any request for a determination letter or private letter ruling
from the Internal Revenue Service or an advisory opinion from the United States
Department of Labor with respect to any of the Vlasic Plans relating to the
transactions contemplated by this Agreement.
SECTION 7.17 FURTHER ASSURANCES AND CONSENTS. In addition to the
actions specifically provided for elsewhere in this Agreement, each of the
Parties will use its reasonable best efforts to (a) execute and deliver such
further instruments and documents and take such other actions as any other Party
may reasonably request in order to effectuate the purposes of this Agreement and
to carry out the terms of this Agreement and (b) take, or cause to be taken, all
actions, and to do, or cause to be done, all things, reasonably necessary,
proper or advisable under applicable laws, regulations and agreements or
otherwise to consummate and make effective the transactions contemplated by this
Agreement, including, without limitation, using its reasonable best efforts to
obtain any consents and approvals and to make any filings and applications
necessary or desirable in order to consummate the transactions contemplated by
this Agreement; provided that no Party shall be obligated to pay any
consideration therefor (except for filing fees and other similar charges) to any
third-party from whom such consents, approvals and amendments are requested or
to take any action or omit to take any action if the taking of or the omission
to take such action would be unreasonably burdensome to the Party or its Group
or the business thereof. To the extent that either Party is obligated to
deliver shares of the other Party in satisfaction of obligations under employee
or director benefit plans or other arrangements, including, without limitation,
savings plans, stock option plans, stock purchase plans and bonus and incentive
plans, the Party whose shares are required for such purpose shall make such
shares available, consistent with the terms of the relevant Plans, or treasury
shares on such terms as may be appropriate to the transaction.
SECTION 7.18 SEVERABILITY. The provisions of this Agreement are
severable and should any provision of this Agreement be void, voidable or
unenforceable under any applicable law, such provision shall not affect or
invalidate any other provision of this Agreement, which shall continue to govern
the relative rights and duties of the Parties as though such void, voidable or
unenforceable provision were not part of this Agreement.
SECTION 7.19 GOVERNING LAW. Subject to federal law, this Agreement
shall be construed in accordance with, and governed by, the laws of the State of
New Jersey, without regard to the conflicts of law rules of such state.
SECTION 7.20 COUNTERPARTS. This Agreement may be executed in one or
more counterparts each of which shall be deemed an original instrument, but all
of which together shall constitute but one and the same Agreement.
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SECTION 7.21 DISPUTES.
(a) Resolution of any and all disputes arising from or in connection
with this Agreement, whether based on contract, tort, statute or otherwise,
including, but not limited to, disputes in connection with claims by third
parties (collectively, DISPUTES), shall be subject to the provisions of this
Section 7.21; provided, however, that nothing contained in this Agreement shall
preclude either Party from seeking or obtaining (i) injunctive relief or (ii)
equitable or other judicial relief to enforce the provisions of this Agreement
or to preserve the status quo pending resolution of Disputes hereunder.
(b) Either Party may give the other Party written notice of any
Dispute not resolved in the normal course of business. The parties shall attempt
in good faith to resolve any Dispute promptly by negotiation between executives
of the parties who have authority to settle the controversy and who are at a
higher level of management than the persons with direct responsibility for
administration of this Agreement. Within 30 days after delivery of the notice,
the foregoing executives of both parties shall meet at a mutually acceptable
time and place, and thereafter as often as they reasonably deem necessary for a
period not to exceed 15 days, to attempt to resolve the Dispute. All reasonable
requests for information made by one Party to the other will be honored. If the
parties do not resolve the Dispute within such 45 day period (the INITIAL
MEDIATION PERIOD), the parties shall attempt in good faith to resolve the
Dispute by negotiation between (a) in the case of CSC, the Chief Financial
Officer or the Vice President - Treasurer and (b) in the case of Vlasic, the
Chief Financial Officer (collectively, DESIGNATED OFFICERS). Such officers
shall meet at a mutually acceptable time and place (but in any event no later
than 15 days following the expiration of the Initial Mediation Period) and
thereafter as often as they reasonably deem necessary for a period not to exceed
15 days, to attempt to resolve the Dispute.
(c) If the Dispute has not been resolved by negotiation within 75
days of the first Party's notice, or if the Parties failed to meet within 30
days of the first Party's notice, or if the Designated Officers failed to meet
within 60 days of the first Party's notice, either Party may commence any
litigation or other procedure allowed by law.
SECTION 7.22 ASSIGNMENT. Neither of the parties may assign or
delegate any of its rights or duties under this Agreement without the prior
written consent of the other party, which consent will not be unreasonably
withheld. This Agreement shall be binding upon, and shall inure to the benefit
of, the Parties and their respective successors and permitted assigns.
SECTION 7.23 INTERPRETATION. Words in the singular shall be held to
include the plural and vice versa and words of one gender shall be held to
include the other genders as the context requires. The word "including" and
words of similar import when used in this Agreement means "including, without
limitation," unless the context otherwise requires or unless otherwise
specified. The word "or" shall not be exclusive.
SECTION 7.24 HEADINGS. The Article and Section headings contained
in this Agreement are solely for the purpose of reference, are not part of the
agreement of the Parties and shall not in any way affect the meaning or
interpretation of this Agreement.
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* * * * *
IN WITNESS WHEREOF, the Parties have executed and delivered this
Agreement as of the day and year first above written.
CAMPBELL SOUP COMPANY
By: _____________________________
Name:
Title:
VLASIC FOODS INTERNATIONAL INC.
By: _____________________________
Name:
Title:
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EXHIBIT 10.3
FORM OF SWANSON TRADEMARK LICENSE AGREEMENT (U.S.)
--------------------------------------------------
THIS IS A TRADEMARK LICENSE AGREEMENT, dated as of ________, 1998 (this
AGREEMENT), by and between CSC Brands, Inc., Campbell Place, Camden, NJ 08103
(LICENSOR) and Vlasic International Brands Inc. (LICENSEE).
Background
----------
A. LICENSOR owns and has the right to license the Licensed Marks set
forth in Section 1(d) below.
B. LICENSOR has licensed the Licensed Marks to Campbell Soup Company,
which has manufactured, distributed, marketed, advertised, promoted and sold a
wide variety of food products, including frozen foods such as dinners,
breakfasts, pot pies, sandwiches and the like using the Licensed Marks for many
years.
C. LICENSOR has formed LICENSEE and wishes to grant the perpetual license
created hereby to LICENSEE in exchange for the issuance by LICENSEE to LICENSOR
of [_____] shares of LICENSEE's capital stock, in a transaction governed by
Section 351 of the Code.
D. LICENSEE desires to utilize the Licensed Marks in connection with the
manufacture, distribution, marketing, advertisement, promotion and sale of the
products described in Section 1(e) below.
Terms
-----
THEREFORE, in consideration of the premises and the mutual promises and
covenants herein contained and with the intent to be legally bound, the parties
agree as follows:
SECTION 1. DEFINITIONS. For the purpose of this Agreement:
(a) AFFILIATE means any corporation, partnership or other entity which is
owned by or controlled by or is under common ownership or control with a party
to this Agreement. Ownership or control for the purpose of this section shall
mean ownership of at least fifty percent (50%) of the voting stock or general
partnership interest of such corporation, partnership or other entity.
(b) CODE means the Internal Revenue Code of 1986, as amended.
(c) LICENSE means the license granted hereunder.
(d) LICENSED MARKS means the names, logos, symbols, designs and/or
identifications, which are used in the United States, as set forth on Exhibit
"A" attached to this Agreement.
<PAGE>
(e) LICENSED PRODUCTS means frozen foods and beverages of any type except
for frozen soup or broth, defined to include European-style soups and broth
concentrates or stocks.
(f) TERRITORY means the United States of America.
SECTION 2. LICENSING RIGHTS.
(a) Grant of License: In exchange for [_____] shares of LICENSEE's capital
stock, LICENSOR hereby grants to LICENSEE the royalty-free, sole and exclusive
license to use the Licensed Marks in connection with the manufacture,
distribution, marketing, advertising, promotion and sale of Licensed Products in
the Territory in jurisdictions where LICENSOR has acquired rights in the
Licensed Marks and only to the extent LICENSOR has obtained the rights in the
Licensed Marks and only to the extent LICENSOR has obtained the rights to use
the Licensed Marks in such product categories. No license is granted hereunder
for the use of the Licensed Marks for any purposes other than upon the Licensed
Products and in the promotion and advertisement thereof, except that LICENSEE
may make reference to the Licensed Marks and/or the "Swanson" name in relation
to the identification of business units or manufacturing and sales facilities,
provided that such use is always in conjunction with the phrase "frozen foods."
Use of the Licensed Marks or the "Swanson" name in this regard shall not include
use as a trade name on product labels or in billing, invoicing or other
correspondence with customers or vendors and shall also not include use in a way
that may cause confusion for customers or vendors.
(b) LICENSEE shall have the right to sublicense to sublicensees, approved
in writing in advance by LICENSOR, such approval not to be unreasonably
withheld. Such sublicenses shall be in a commercially reasonable form which is
acceptable to LICENSOR, such acceptance not to be unreasonably withheld. A
fully executed copy of any sublicense granted by LICENSEE hereunder shall be
delivered promptly to the party identified in Section 16 below upon execution.
The grant of any such sublicense by LICENSEE shall not relieve LICENSEE of its
obligations to LICENSOR under this Agreement.
(c) From time to time, LICENSOR and LICENSEE may add new trademarks and
new trademark registrations to this Agreement. The new trademarks may be either
new renderings of existing trademarks or trademarks created by combining some
element of a Licensed Mark with new material. The new trademark registrations
may cover new trademarks and/or new countries in which the trademarks would be
registered. To the extent the description of goods in any application for
registration of a new trademark or rendering of existing trademarks is limited
to Licensed Products, LICENSEE shall bear the costs of searching for, obtaining
and/or renewing any such trademarks.
(d) To add a new trademark to this Agreement, LICENSEE may at any time
submit to LICENSOR a notice requesting an amendment of Exhibit "A" to add (i) a
new rendering of a Licensed Mark or (ii) a new Licensed Mark combining some
element of an existing Licensed Mark with new material such that the new
Licensed Mark is properly a trademark associated with an existing Licensed Mark
(hereinafter "2(d) Notice"). Upon receipt of a 2(d) Notice, Exhibit "A" shall
be amended in accordance with the terms of the 2(d) Notice unless LICENSOR
delivers to LICENSEE, within 30 days of receipt of the 2(d) Notice, written
notice of its determination that the requested addition to Exhibit "A" would
create a substantial risk that the Licensed Marks would be
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unenforceable as against third parties, would disparage or would bring the
Licensed Marks into disrepute, or would harm the goodwill of the Licensed Marks,
and the basis for such determination. The basis for such a determination must be
reasonable.
(e) LICENSOR shall, at LICENSEE's expense, use its best reasonable efforts
to file new trademark applications as requested by LICENSEE in respect of any
new trademarks as referred to in section 2(d) and any new countries as referred
to in section 5 of this Agreement and prosecute all such applications and
maintain all resulting registrations for the duration of this Agreement unless
LICENSEE agrees in writing that they may lapse.
SECTION 3. TERM OF LICENSE.
The License shall be perpetual unless it is sooner terminated in accordance
with any other provision hereof.
SECTION 4. APPROVAL.
(a) LICENSEE shall use the Licensed Marks in the same manner as they were
used by LICENSOR immediately before the date of this License and shall obtain
the prior written approval of LICENSOR (such approval not to be unreasonably
withheld or delayed by more than five (5) working days from receipt of a notice
requesting approval) to the visual appearance and labeling of all packaging,
advertising materials and promotions bearing the Licensed Marks which it intends
to use. The notice which is sent to LICENSOR must specify that LICENSOR must
respond within five (5) days or such use is deemed to be approved. If LICENSEE
fails to comply with such notice requirement then there shall be no such deemed
approval. LICENSOR may withhold its approval only by means of a written
description of the reason or reasons why approval has been withheld.
Notwithstanding the foregoing, LICENSEE shall not be required to obtain the
approval of LICENSOR of non-material changes to labeling, advertising or
promotional materials, including but not limited to minor changes in product
ingredients, product description or nutrition information. All submissions for
approval shall be made to the Trademark Counsel of LICENSOR at the address set
forth in Section 16.
(b) On reasonable request by LICENSOR, LICENSEE agrees to supply LICENSOR,
at LICENSOR's expense, samples of Licensed Products offered for sale or
otherwise provided to third parties under the Licensed Marks, and samples of the
advertising and promotional materials in or on which the Licensed Marks appear.
Such requests shall occur no more than once per contract year.
(c) If LICENSOR finds that any of the Licensed Products bearing or
intended to bear the Licensed Marks are not in conformity with any of LICENSEE's
obligations under this Section, LICENSOR shall give LICENSEE written notice of
such fact setting forth evidence of such lack of conformity. LICENSEE shall have
sixty (60) days to cure such lack of conformity. If LICENSEE cannot cure such
lack of conformity, LICENSEE undertakes that it will not sell any such
nonconforming products under the Licensed Marks without first conforming them to
such obligation, or without the prior written consent of LICENSOR; subject to
LICENSEE's right to dispute such alleged nonconformity in accordance with
Section 23 hereof.
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(d) The parties hereby undertake that:
(i) Neither party will use the Licensed Marks, or in the case of
LICENSOR, related marks, in a manner which causes or is likely to cause harm to
the goodwill attached to the Licensed Marks; and
(ii) Each party will maintain all necessary approvals and licenses
in relation to the products on which the Licensed Marks are used as may be
required in any jurisdiction.
SECTION 5. [INTENTIONALLY OMITTED]
SECTION 6. QUALITY CONTROL; RIGHT TO INSPECT.
(a) LICENSEE shall comply in all material respects with established
industry standards, good manufacturing and storage practices, and laws and
regulations having application to the production, manufacture, advertisement or
sale of Licensed Products, and shall maintain a vigorous quality control and
safety assurance program with respect to the Licensed Products (hereinafter
LICENSOR'S QUALITY CONTROL STANDARDS). LICENSEE further agrees that the
Licensed Products and labeling used in conjunction with such Licensed Products
will not at any time be misbranded, adulterated or otherwise unlawful. All
Licensed Products manufactured and distributed prior to the date of this
Agreement by LICENSOR shall be deemed to conform to the standards set forth in
this Section 6 and LICENSEE agrees to continue manufacturing these product lines
at comparable or better quality.
(b) LICENSEE agrees to manufacture any newly developed or newly formulated
products bearing the Licensed Marks in accordance with LICENSOR's Quality
Control Standards. During the development of such newly developed or newly
formulated products, LICENSEE shall submit laboratory samples of such products
to LICENSOR from time to time for approval not to be unreasonably withheld in
respect of the taste and other physical characteristics (e.g., viscosity,
texture, color) of the products as well as their overall character. Such
approval shall be in writing and shall be delivered within twenty-one (21) days
following receipt.
(c) LICENSOR shall have the right to conduct, during regular business
hours, on three (3) business days notice, an examination of Licensed Products
manufactured by LICENSEE at LICENSEE's facilities, or at a third party
manufacturer's facilities, to ensure compliance with LICENSOR's Quality Control
Standards established in accordance with this Agreement.
SECTION 7. PROTECTION OF RIGHTS.
(a) Goodwill: The parties hereto recognize the great value of the goodwill
associated with the Licensed Marks and acknowledge that, subject to the License
granted hereunder, all rights therein and goodwill attached thereto belong
exclusively to LICENSOR, and that the Licensed Marks have secondary meaning in
the minds of the public. The parties agree that they will not, during the term
of this Agreement or thereafter, attack each other's respective property rights
in and to the Licensed Marks, or attack the validity, legality or enforceability
of this Agreement.
(b) Assistance in Protecting Marks: The parties shall cooperate to the
fullest extent
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necessary to assist each other in the protection of their respective property
rights with respect to the Licensed Marks against third parties, including,
without limitation, executing and delivering any and all documents necessary or
desirable in connection with obtaining, defending or maintaining rights in and
to the Licensed Marks. The party whose rights are being challenged shall
reimburse the other party for any reasonable out-of-pocket costs actually
incurred by such other party in providing such cooperation and assistance.
LICENSOR shall take all actions reasonably necessary to maintain registrations
of the Licensed Marks in full force and effect.
(c) Ownership of Marks: LICENSEE acknowledges that LICENSOR is the owner
of the Licensed Marks, subject to the License granted hereunder. Any
intellectual property rights in the Licensed Marks that may accrue to LICENSEE,
including those rights in countries not identified in Exhibit A, shall, except
as provided in this License, inure to the benefit of LICENSOR and shall be
assigned to LICENSOR upon its request. LICENSEE acknowledges that it has
received a perpetual license to use the Licensed Marks and that this Agreement
does not constitute any form of assignment or transfer of ownership in the
Licensed Marks except as provided in this License, or the right to register any
trademark(s) similar to the Licensed Marks so as to suggest association with or
sponsorship by LICENSOR in the United States or in any other country in the
world, or the right to use any trademark or trademarks similar to the Licensed
Marks, except as provided in this License. LICENSEE shall take all necessary
steps to secure an assignment to LICENSOR of the copyright from a creator of
work incorporating the Licensed Marks that is not a work-for-hire.
(d) Notices, Labeling and Records: In every instance in which any Licensed
Mark is used, LICENSEE shall cause to appear on the packaging of each Licensed
Product sold, the notice "" "(R)" "(C)" or such other copyright, trademark or
service mark notices (including the form, location and content of such notices)
as LICENSOR reasonably designates together with the statement "used under
license." LICENSEE shall keep appropriate records, and advise LICENSOR, of the
date when products approved under the terms of Section 4(a)have been first
placed on sale or sold (along with a copy of the invoice) and when promotional
or packaging materials have first been used (i) in the case of additions to
Exhibit "A" pursuant to Section 2(c) and (ii) in additional countries pursuant
to Section 5, all in order to support the efforts of LICENSOR to secure and
maintain valid registrations of the Licensed Marks.
(e) LICENSEE Trade Names and Trademarks: LICENSEE shall not incorporate
the Licensed Marks into LICENSEE's corporate or business name or trademark in
any manner whatsoever and shall place its trade names and trademarks on Licensed
Products only as approved by LICENSOR.
SECTION 8. INFRINGEMENTS.
(a) LICENSOR and LICENSEE shall promptly notify each other of any actual
or threatened infringement or dilution of or act of unfair competition with
respect to the Licensed Marks in the Territory and shall consult with each other
about any material action to be taken. LICENSOR shall use its best reasonable
efforts and exercise diligence to successfully prosecute such infringements or
acts of unfair competition or dilution. All costs, disbursements and expenses of
any actions which LICENSOR prosecutes for the benefit of LICENSEE shall be borne
by
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LICENSEE, and all other costs, disbursements and expenses shall be borne by
LICENSOR.
(b) If LICENSOR elects not to initiate legal action against infringement
relating to the Licensed Products, LICENSEE shall have the right at its own
expense to take legal action to obtain appropriate relief, and LICENSOR shall be
joined as a party in any such action and shall reasonably cooperate with and
assist LICENSEE in its prosecution of such action. The costs of such joinder
and any assistance by LICENSOR shall be reimbursed by LICENSEE.
(c) If the parties agree to jointly take action against an infringement,
or act of unfair competition or dilution, with respect to the Licensed Marks,
the cost of the action and any damages accruing shall be shared equally. If one
party takes action against an infringer, it shall be entitled to retain all
damages, costs or other compensation it may recover.
(d) The parties agree to fully cooperate with each other in relation to
any legal, administrative or other proceedings relating to the Licensed Marks or
Licensed Products and to sign any and all necessary documents as may be
necessary to effectuate the purpose of this Agreement.
SECTION 9. REPRESENTATIONS AND WARRANTIES.
(a) Each party represents and warrants that it has the right and authority
to enter into and perform this Agreement and to grant the rights and render the
performances required under this Agreement. LICENSEE represents and warrants
that the shares of its capital stock issued to LICENSOR hereunder are duly
authorized and issued, fully paid and non-assessable shares. LICENSEE
represents and warrants that all advertising and promotional materials shall
comply with all applicable laws, regulations and standards. LICENSOR's approval
of such materials is not a representation that LICENSOR believes such materials
are sufficient to meet applicable laws, regulations and standards, nor is it a
representation that LICENSOR agrees with or supports any claims made by LICENSEE
in any advertising materials relating to the Licensed Products. LICENSEE
further represents and warrants that all advertising and promotional materials
and all graphics used on Licensed Products will not violate the intellectual
property rights of any third party.
(b) Breaches of warranties under this Section 9 trigger the right to
indemnification in accordance with Section 10 below. Such breaches shall not
form the basis for termination in accordance with Section 13 below.
SECTION 10. INDEMNIFICATIONS.
(a) LICENSOR shall be solely responsible for, and shall defend, hold
harmless and indemnify LICENSEE, its subsidiaries and each of their respective
Affiliates, directors, officers, employees and agents against any claims,
demands, causes of action or damages, including reasonable attorneys' fees and
expenses (collectively CLAIMS) arising out of: (i) a claim that the use of the
Licensed Marks as authorized by this Agreement violates or infringes upon the
trademark, copyright or other intellectual property rights of a third party in
or to the Licensed Marks, (ii) any defect in a product produced by or under the
authority of LICENSOR other than under this Agreement or any packaging or other
materials (including advertising materials), or arising from personal injury or
damages or loss to property or any infringement of any rights of any
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other person or entity by the manufacture, sale, possession or use of such
products or their failure to comply with applicable laws, regulations and
standards, or (iii) any breach of any representation, warranty, covenant or
agreement made by LICENSOR herein, provided LICENSOR is given prompt written
notice of and shall have the option to undertake and conduct the defense of any
such Claim. In any instance to which the foregoing indemnities pertain, LICENSEE
shall cooperate fully with and assist LICENSOR in all respects in connection
with any such defense. LICENSOR shall reimburse LICENSEE for all reasonable out-
of-pocket costs actually incurred by LICENSEE in connection with such
cooperation and assistance. In any instance to which such indemnities pertain,
LICENSOR shall not enter into a settlement of such Claim or admit liability or
fault without LICENSEE's prior written approval.
(b) LICENSEE shall be solely responsible for, and shall defend, hold
harmless and indemnify LICENSOR, its subsidiaries and each of their respective
Affiliates, directors, officers, employees and agents against Claims arising out
of or in connection with: (i) any act or omission of LICENSEE in relation to
this License; (ii) any unauthorized use by LICENSEE of the Licensed Marks; (iii)
any breach of any representation, warranty, covenant or agreement made by
LICENSEE herein; (iv) any defect (whether obvious or hidden and whether or not
present in any sample approved by LICENSOR) in the Licensed Products or any
packaging or other materials (including advertising materials), or arising from
personal injury or damages or loss to property or any infringement of any rights
of any other person or entity by the manufacture, sale, possession or use of
Licensed Products or their failure to comply with applicable laws, regulations
and standards or (v) any Claim that the use of any design or other graphic
component of any Licensed Product (other than the Licensed Marks) violates or
infringes upon the trademark, copyright or other intellectual property rights
(including trade dress) of a third party, provided LICENSEE is given prompt
written notice of and shall have the option to undertake and conduct the defense
of any such Claim. In any instance to which the foregoing indemnities pertain,
LICENSOR shall cooperate fully with and assist LICENSEE in all respects in
connection with any such defense. LICENSEE shall reimburse LICENSOR for all
reasonable out-of-pocket costs actually incurred by LICENSOR in connection with
such cooperation and assistance. In any instance to which such indemnities
pertain, LICENSEE shall not enter into a settlement of such Claim or admit
liability or fault without LICENSOR's prior written approval.
(c) Each party hereto shall obtain and maintain, at its sole cost,
comprehensive general liability insurance coverage, including, but not limited
to, Products Liability, Contractual Liability and Advertising Liability, which
policy shall be written for the benefit of such party and which shall name the
other party and/or its Affiliates as an additional insured with respect to third
party liability. The amount of coverage (which may be comprised of a primary
general liability policy and an excess liability policy) shall be a minimum of
Two Million U.S. dollars (USD 2,000,000) per occurrence combined single limit
and Three Million U.S. dollars (USD 3,000,000) annual general aggregate. The
policy and certificate of insurance shall be endorsed to indicate that the
acquiring party's insurance is primary and not in excess of or contributory to
any other insurance in effect for the other party and all related entities.
Such insurance shall be carried by an insurer authorized to conduct business in
the State of New Jersey with a rating by A.M. Best & Co. of at least A- or other
rating satisfactory to the party being named as the additional insured. Such
insurance policy shall also provide that the party being named as the additional
insured receive written notice within thirty (30) days prior to the effective
date of the cancellation, non renewal or
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any material change in coverage. Each party (i) shall deliver to the other party
a certificate of such insurance evidencing satisfactory coverage prior to or
simultaneously with the execution of this Agreement, and (ii) shall not modify
such policy so as not to comply with the terms of this section. Such insurance
obligations shall not limit either party's indemnity obligations, except to the
extent that one party's insurance company actually pays the other party amounts
which the insured party would otherwise be obligated to pay the other party.
SECTION 11. CONFIDENTIALITY.
The parties expressly acknowledge and agree that all technical and/or
commercial information, whether written or oral, furnished by either party
(DISCLOSING PARTY) to the other (RECEIVING PARTY) or an officer, director,
employee, agent or representative thereof (REPRESENTATIVE) and relating to the
formulation, production, marketing, advertising, promotion, distribution or sale
of the Licensed Products shall be deemed to be confidential information and
shall not be used for its own commercial purposes or disclosed to any third
party, but shall be safeguarded and maintained by each Receiving Party and
Representative in confidence, provided, however, that this obligation of
confidentiality with respect to the confidential information of a Disclosing
Party shall not apply to information which (a) is or becomes generally available
to the public other than as a result of a disclosure by a Receiving Party or its
Representatives; (b) was available to Receiving Party on a non confidential
basis prior to its disclosure by Disclosing Party; or (c) becomes available to
Receiving Party on a non confidential basis from a person other than Disclosing
Party who is not otherwise bound by a confidentiality agreement with Disclosing
Party or its Representatives, or is not otherwise prohibited from transmitting
the information to Receiving Party.
SECTION 12. THIRD PARTY MANUFACTURE; COMPLIANCE.
If LICENSEE desires to have a third party manufacture the Licensed
Products, LICENSEE must first notify LICENSOR of the name and address of such
third party. LICENSOR shall have the right to withhold approval for such third
party manufacturer, such approval not to be unreasonably withheld. If any of
LICENSEE's authorized manufacturers use the Licensed Marks for any unauthorized
purpose, LICENSEE shall be responsible for, and shall cooperate fully and use
its best efforts in stopping such unauthorized use.
SECTION 13. TERMINATION.
(a) Without prejudice to any other rights LICENSOR may have pursuant to
this Agreement or otherwise, LICENSOR shall have the right to terminate this
Agreement at any time if:
(i) LICENSEE or any guarantor under this Agreement shall be unable
to pay its liabilities when due, or shall make any assignment for the benefit of
creditors, or under any applicable law admits in writing its inability to meet
its obligations when due or commit any other act of bankruptcy, institute
voluntary proceedings in bankruptcy or insolvency or permit institution of such
proceedings against it.
(ii) LICENSEE shall fail to perform or shall be in breach of any
other material
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term or condition of this Agreement; provided, however, that if such breach can
be cured, termination shall take effect sixty (60) days after written notice of
such breach is sent by LICENSOR if such breach has not been cured during such
sixty (60) day period.
(iii) LICENSEE shall fail to sell Licensed Products in the
Territory for a continuous period of three (3) years.
(b) LICENSEE shall have the right to terminate this Agreement at any time
if:
(i) LICENSOR or any guarantor under this Agreement shall be unable
to pay its liabilities when due, or shall make any assignment for the benefit of
creditors, or under any applicable law admits in writing its inability to meet
its obligations when due or commit any other act of bankruptcy, institute
voluntary proceedings in bankruptcy or insolvency or permit institution of such
proceedings against it.
(ii) LICENSOR shall fail to perform or shall be in breach of any
other material term or condition of this Agreement; provided, however, that if
such breach can be cured, termination shall take effect sixty (60) days after
written notice of such breach is sent by LICENSEE if such breach has not been
cured during such sixty (60) day period.
(iii) In the event the events set out in Section 13(b)(i) or
13(b)(ii) occur, LICENSEE shall have the continued rights as LICENSEE to use the
Licensed Marks in connection with Licensed Products in accordance with the terms
and conditions set forth hereunder.
SECTION 14. DISPOSAL OF STOCK.
After termination of this Agreement, LICENSEE shall have no further right
to manufacture, authorize any third party to manufacture, advertise, distribute,
sell, promote or otherwise deal in any Licensed Products or use the Licensed
Marks except as provided below. For a period of one hundred and eighty (180)
days following the effective date of termination of this Agreement, LICENSEE may
sell-off and deliver completed Licensed Products which are on hand at the
effective date of termination (the SELL-OFF PERIOD); LICENSOR shall have the
option to conduct physical inventories before the termination of this Agreement
until the end of the Sell-Off Period in order to verify disposal of stock. If
LICENSEE refuses to permit such physical inventory, LICENSEE shall forfeit its
right to dispose of its inventory. Upon termination of the Agreement or after
the Sell-Off Period, as the case may be, all inventory on hand or in process
(including all promotional and packaging materials) will either be returned to
LICENSOR or destroyed and LICENSEE shall deliver to LICENSOR a certified
statement signed by LICENSEE's President or Chief Financial Officer that such
materials have been returned to LICENSOR or destroyed.
SECTION 15. EQUITABLE RELIEF.
The parties acknowledge that the Licensed Marks possess a special, unique
and extraordinary character which makes difficult the assessment of the monetary
damage which a party would sustain as a result of the unauthorized use of the
Licensed Marks or any challenge to the validity of the Licensed Marks. The
parties further acknowledge that: (i) a failure to manufacture, advertise,
distribute, sell and promote the Licensed Products in accordance with this
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Agreement, including a failure to satisfy an obligation to maintain and not to
detract from the value of the Licensed Marks, (ii) the unauthorized use of the
Licensed Marks, (iii) a failure to protect the Licensed Marks and prosecute any
action against infringement (or to cooperate in such prosecution), or (iv)
failure to reach agreement as to the reasonableness of the consent to assign in
accordance with Section 21 below, will cause immediate and irreparable damage to
the injured party for which such party would not have an adequate remedy at law.
Therefore, the parties agree that, in the event of a breach of this Agreement by
a party, in addition to such other legal and equitable rights and remedies as
shall be available to the other party, such other party shall be entitled to
injunctive and other equitable relief, without the necessity of proving damages
or furnishing a bond or other security.
SECTION 16. NOTICES.
All notices, requests, claims and other communications hereunder shall be
in writing and shall be given or made (and shall be deemed to have been duly
given or made upon receipt) by delivery by hand, by reputable overnight courier
service, by facsimile transmission, or by registered or certified mail (postage
prepaid, return receipt requested) to the respective parties at the addresses
(or at such other address for a party as shall be specified in a notice given in
accordance with this Section 16) listed below:
If to LICENSOR: CSC BRANDS, INC.
Campbell Place
Camden, New Jersey 08101
Attn.: Trademark Counsel
Fax No. (609) 342-3936
If to LICENSEE: VLASIC INTERNATIONAL BRANDS, INC.
Campbell Place
Camden, New Jersey 08101
Attn.: Trademark Counsel
Fax No. (609) 342-3936
or to such other address as any party may, from time to time, designate in a
written notice given in a like manner. Notice given by hand shall be deemed
delivered when received by the recipient. Notice given by mail as set out above
shall be deemed delivered five calendar days after the date the same is mailed.
Notice given by reputable overnight courier shall be deemed delivered on the
next following business day after the same is sent. Notice given by facsimile
transmission shall be deemed delivered on the day of transmission provided
telephone confirmation of receipt is obtained promptly after completion of
transmission
SECTION 17. NO JOINT VENTURE.
Nothing herein contained shall be construed to place the parties in the
relationship of partners or joint venturers or principal and agent or employer
and employee and no party shall have the power to obligate or bind the other
party in any manner whatsoever.
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SECTION 18. ENTIRE AGREEMENT.
This Agreement constitutes the entire Agreement and understanding between
the parties with respect to the subject matter and terminates and supersedes any
such prior agreement or understanding, oral or written, between LICENSOR and
LICENSEE with respect to the Licensed Marks and/or the Licensed Products. None
of the provisions of this Agreement can be waived or modified except in writing
signed by both parties. THERE ARE NO REPRESENTATIONS, PROMISES, AGREEMENTS,
WARRANTIES, COVENANTS OR UNDERTAKINGS MADE BY LICENSOR OR BY LICENSEE OTHER THAN
THOSE EXPRESSLY CONTAINED HEREIN.
SECTION 19. SEVERABILITY.
In the event any provision of this Agreement shall for any reason be void
or unenforceable by reason of any provision of applicable law, it shall be
deleted and the remaining provisions shall continue in full force and effect and
be amended to the extent, if at all, necessary to give effect to the intentions
of the parties as of the date of this Agreement.
SECTION 20. TAX CONSISTENCY.
The parties shall treat the grant of the License in exchange for LICENSEE's
capital stock as an exchange of property governed by Section 351 of the Code
(and related provisions). No party shall take a position inconsistent with the
foregoing on any tax return or in any tax examination, tax administrative
proceeding or tax litigation.
SECTION 21. ASSIGNMENT; CHANGE IN CONTROL.
This Agreement and any rights granted under this Agreement are personal to
LICENSEE and shall not be assigned or encumbered, directly or indirectly, by law
or by contract, except to an Affiliate, without LICENSOR's prior written
consent, such consent not to be unreasonably withheld. The notice which is sent
to LICENSOR must specify that LICENSOR must respond within twenty (20) days or
such assignment or encumbrance is deemed to be approved. If LICENSEE fails to
comply with such notice requirement then there shall be no such deemed approval.
LICENSOR may withhold its approval only by means of a written description of the
reason or reasons why approval has been withheld. Any transfer of a controlling
interest in LICENSEE or in any party which controls LICENSEE as of the effective
date of this Agreement, directly or indirectly, shall be deemed an assignment
governed by the preceding sentences. Any nonconsensual assignment or
encumbrance of this Agreement by LICENSEE shall be invalid and of no force or
effect. Upon any such nonconsensual assignment or encumbrance, this Agreement
shall terminate and all rights granted under this Agreement shall immediately
revert to LICENSOR.
SECTION 22. COOPERATION.
(a) The parties agree to consult with one another in good faith in an
effort to resolve any situation arising out of their respective uses of the
Licensed Marks where customers or consumers may misdirect communications.
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(b) The parties shall sign all documents and do all things reasonably
necessary to effectuate the terms and intent of this Agreement including, but
not limited to, cooperating with efforts to register the Licensed Marks anywhere
in the world.
SECTION 23. ARBITRATION OF CERTAIN MATTERS.
Except as set forth in Section 15 above, any dispute or claim arising out
of or related to this Agreement, or the breach, termination or validity thereof,
shall be settled by arbitration in accordance with the then current Center for
Public Resources/International Trademark Association Rules for Non-Administered
Arbitration of Trademark Disputes, by three arbitrators, of whom each party
shall appoint one selected from the CPR/INTA Panel of Neutrals in accordance
with its process as the first resource for possible arbitrators. If a good
faith attempt by the parties to select from this Panel does not result in the
selection of an available suitable neutral, the parties will request CPR to
further assist in the selection in accordance with its standard selection
process using other panels. The arbitration shall be governed by the United
States Arbitration Act, 9 U.S.C. (S)(S) 1 - 16, and judgment upon the award
rendered by the Arbitrator(s) may be entered by any court having jurisdiction
thereof. The place of arbitration shall be New Jersey.
SECTION 24. SURVIVAL.
The provisions of Sections 10, 11 and 14 shall survive the termination of
this Agreement.
SECTION 25. NO WAIVER.
No waiver by either party of a breach or a default hereunder shall be
deemed a waiver by such party of a subsequent breach or default of like or
similar nature.
SECTION 26. CAPTIONS.
The captions used in connection with the sections of this Agreement are
inserted only for the purpose of reference and shall not affect the
interpretation of this Agreement.
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IN WITNESS WHEREOF, the parties have respectively caused two copies of this
Agreement to be executed by a fully authorized officer as of the day and year
first above written.
CSC BRANDS, INC. VLASIC INTERNATIONAL BRANDS INC.
By:___________________________ By:___________________________
Title:________________________ Title:________________________
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SWANSON TRADEMARK LICENSE AGREEMENT (NON-U.S.)
----------------------------------------------
THIS IS A TRADEMARK LICENSE AGREEMENT, dated as of ________, 1998
(this AGREEMENT), by and between Campbell Soup Company, Campbell Place, Camden,
NJ 08103 (LICENSOR) and Vlasic International Brands Inc. (LICENSEE).
Background
----------
A. LICENSOR owns and has the right to license the Licensed Marks set
forth in Section 1(d) below.
B. LICENSOR has manufactured, distributed, marketed, advertised, promoted
and sold a wide variety of food products, including frozen foods such as
dinners, breakfasts, pot pies, sandwiches and the like using the Licensed Marks
for many years.
C. LICENSOR owns all of the outstanding stock of LICENSEE and wishes to
grant the perpetual license created hereby to LICENSEE in exchange for the
issuance by LICENSEE to LICENSOR of [_____] shares of LICENSEE's capital stock,
in a transaction governed by Section 351 of the Code.
D. LICENSEE desires to utilize the Licensed Marks in connection with the
manufacture, distribution, marketing, advertisement, promotion and sale of the
products described in Section 1(e) below.
Terms
-----
THEREFORE, in consideration of the premises and the mutual promises and
covenants herein contained and with the intent to be legally bound, the parties
agree as follows:
SECTION 1. DEFINITIONS. For the purpose of this Agreement:
(a) AFFILIATE means any corporation, partnership or other entity which is
owned by or controlled by or is under common ownership or control with a party
to this Agreement. Ownership or control for the purpose of this section shall
mean ownership of at least fifty percent (50%) of the voting stock or general
partnership interest of such corporation, partnership or other entity.
(b) CODE means the Internal Revenue Code of 1986, as amended.
(c) LICENSE means the license granted hereunder.
(d) LICENSED MARKS means the names, logos, symbols, designs and/or
identifications, which are used in the Territory, excluding the United States,
as set forth on Exhibit "A" attached to this Agreement.
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(e) LICENSED PRODUCTS means frozen foods and beverages of any type except
for frozen soup or broth, defined to include European-style soups and broth
concentrates or stocks.
(f) TERRITORY means the world, excluding the United States of America.
SECTION 2. LICENSING RIGHTS.
(a) Grant of License: In exchange for [_____] shares of LICENSEE's capital
stock, LICENSOR hereby grants to LICENSEE the royalty-free, sole and exclusive
license to use the Licensed Marks in connection with the manufacture,
distribution, marketing, advertising, promotion and sale of Licensed Products in
the Territory in jurisdictions where LICENSOR has acquired rights in the
Licensed Marks and only to the extent LICENSOR has obtained the rights in the
Licensed Marks and only to the extent LICENSOR has obtained the rights to use
the Licensed Marks in such product categories. No license is granted hereunder
for the use of the Licensed Marks for any purposes other than upon the Licensed
Products and in the promotion and advertisement thereof, except that LICENSEE
may make reference to the Licensed Marks and/or the "Swanson" name in relation
to the identification of business units or manufacturing and sales facilities,
provided that such use is always in conjunction with the phrase "frozen foods."
Use of the Licensed Marks or the "Swanson" name in this regard shall not include
use as a trade name on product labels or in billing, invoicing or other
correspondence with customers or vendors and shall also not include use in a way
that may cause confusion for customers or vendors.
(b) LICENSEE shall have the right to sublicense to sublicensees, approved
in writing in advance by LICENSOR, such approval not to be unreasonably
withheld. Such sublicenses shall be in a commercially reasonable form which is
acceptable to LICENSOR, such acceptance not to be unreasonably withheld. A
fully executed copy of any sublicense granted by LICENSEE hereunder shall be
delivered promptly to the party identified in Section 16 below upon execution.
The grant of any such sublicense by LICENSEE shall not relieve LICENSEE of its
obligations to LICENSOR under this Agreement.
(c) From time to time, LICENSOR and LICENSEE may add new trademarks and
new trademark registrations to this Agreement. The new trademarks may be either
new renderings of existing trademarks or trademarks created by combining some
element of a Licensed Mark with new material. The new trademark registrations
may cover new trademarks and/or new countries in which the trademarks would be
registered. To the extent the description of goods in any application for
registration of a new trademark or rendering of existing trademarks is limited
to Licensed Products, LICENSEE shall bear the costs of searching for, obtaining
and/or renewing any such trademarks.
(d) To add a new trademark to this Agreement, LICENSEE may at any time
submit to LICENSOR a notice requesting an amendment of Exhibit "A" to add (i) a
new rendering of a Licensed Mark or (ii) a new Licensed Mark combining some
element of an existing Licensed Mark with new material such that the new
Licensed Mark is properly a trademark associated with an existing Licensed Mark
(hereinafter "2(d) Notice"). Upon receipt of a 2(d) Notice, Exhibit "A" shall
be amended in accordance with the terms of the 2(d) Notice unless LICENSOR
delivers to LICENSEE, within 30 days of receipt of the 2(d) Notice, written
notice of its determination that the requested addition to Exhibit "A" would
create a substantial risk that the Licensed Marks would be
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unenforceable as against third parties, would disparage or would bring the
Licensed Marks into disrepute, or would harm the goodwill of the Licensed Marks,
and the basis for such determination. The basis for such a determination must be
reasonable.
(e) LICENSOR shall, at LICENSEE's expense, use its best reasonable efforts
to file new trademark applications as requested by LICENSEE in respect of any
new trademarks as referred to in section 2(d) and any new countries as referred
to in section 5 of this Agreement and prosecute all such applications and
maintain all resulting registrations for the duration of this Agreement unless
LICENSEE agrees in writing that they may lapse.
SECTION 3. TERM OF LICENSE.
The License shall be perpetual unless it is sooner terminated in accordance
with any other provision hereof.
SECTION 4. APPROVAL.
(a) LICENSEE shall use the Licensed Marks in the same manner as they were
used by LICENSOR immediately before the date of this License and shall obtain
the prior written approval of LICENSOR (such approval not to be unreasonably
withheld or delayed by more than five (5) working days from receipt of a notice
requesting approval) to the visual appearance and labeling of all packaging,
advertising materials and promotions bearing the Licensed Marks which it intends
to use. The notice which is sent to LICENSOR must specify that LICENSOR must
respond within five (5) days or such use is deemed to be approved. If LICENSEE
fails to comply with such notice requirement then there shall be no such deemed
approval. LICENSOR may withhold its approval only by means of a written
description of the reason or reasons why approval has been withheld.
Notwithstanding the foregoing, LICENSEE shall not be required to obtain the
approval of LICENSOR of non-material changes to labeling, advertising or
promotional materials, including but not limited to minor changes in product
ingredients, product description or nutrition information. All submissions for
approval shall be made to the Trademark Counsel of LICENSOR at the address set
forth in Section 16.
(b) On reasonable request by LICENSOR, LICENSEE agrees to supply LICENSOR,
at LICENSOR's expense, samples of Licensed Products offered for sale or
otherwise provided to third parties under the Licensed Marks, and samples of the
advertising and promotional materials in or on which the Licensed Marks appear.
Such requests shall occur no more than once per contract year.
(c) If LICENSOR finds that any of the Licensed Products bearing or
intended to bear the Licensed Marks are not in conformity with any of LICENSEE's
obligations under this Section, LICENSOR shall give LICENSEE written notice of
such fact setting forth evidence of such lack of conformity. LICENSEE shall have
sixty (60) days to cure such lack of conformity. If LICENSEE cannot cure such
lack of conformity, LICENSEE undertakes that it will not sell any such
nonconforming products under the Licensed Marks without first conforming them to
such obligation, or without the prior written consent of LICENSOR; subject to
LICENSEE's right to dispute such alleged nonconformity in accordance with
Section 23 hereof.
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(d) The parties hereby undertake that:
(i) Neither party will use the Licensed Marks, or in the case of
LICENSOR, related marks, in a manner which causes or is likely to cause harm to
the goodwill attached to the Licensed Marks; and
(ii) Each party will maintain all necessary approvals and licenses
in relation to the products on which the Licensed Marks are used as may be
required in any jurisdiction.
SECTION 5. MARKET EXPANSION.
The Licensed Marks are not registered in all jurisdictions throughout the
world and may not be available for use, and/or registration, in specific
jurisdictions. LICENSEE shall notify LICENSOR in the event LICENSEE desires to
expand the sale of products bearing the Licensed Marks in countries outside of
those identified in Exhibit A. Upon such notice, LICENSOR shall, at LICENSEE's
expense, undertake to register some or all of the Licensed Marks in that country
or countries.
SECTION 6. QUALITY CONTROL; RIGHT TO INSPECT.
(a) LICENSEE shall comply in all material respects with established
industry standards, good manufacturing and storage practices, and laws and
regulations having application to the production, manufacture, advertisement or
sale of Licensed Products, and shall maintain a vigorous quality control and
safety assurance program with respect to the Licensed Products (hereinafter
LICENSOR'S QUALITY CONTROL STANDARDS). LICENSEE further agrees that the
Licensed Products and labeling used in conjunction with such Licensed Products
will not at any time be misbranded, adulterated or otherwise unlawful. All
Licensed Products manufactured and distributed prior to the date of this
Agreement by LICENSOR shall be deemed to conform to the standards set forth in
this Section 6 and LICENSEE agrees to continue manufacturing these product lines
at comparable or better quality.
(b) LICENSEE agrees to manufacture any newly developed or newly formulated
products bearing the Licensed Marks in accordance with LICENSOR's Quality
Control Standards. During the development of such newly developed or newly
formulated products, LICENSEE shall submit laboratory samples of such products
to LICENSOR from time to time for approval not to be unreasonably withheld in
respect of the taste and other physical characteristics (e.g., viscosity,
texture, color) of the products as well as their overall character. Such
approval shall be in writing and shall be delivered within twenty-one (21) days
following receipt.
(c) LICENSOR shall have the right to conduct, during regular business
hours, on three (3) business days notice, an examination of Licensed Products
manufactured by LICENSEE at LICENSEE's facilities, or at a third party
manufacturer's facilities, to ensure compliance with LICENSOR's Quality Control
Standards established in accordance with this Agreement.
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SECTION 7. PROTECTION OF RIGHTS.
(a) Goodwill: The parties hereto recognize the great value of the goodwill
associated with the Licensed Marks and acknowledge that, subject to the License
granted hereunder, all rights therein and goodwill attached thereto belong
exclusively to LICENSOR, and that the Licensed Marks have secondary meaning in
the minds of the public. The parties agree that they will not, during the term
of this Agreement or thereafter, attack each other's respective property rights
in and to the Licensed Marks, or attack the validity, legality or enforceability
of this Agreement.
(b) Assistance in Protecting Marks: The parties shall cooperate to the
fullest extent necessary to assist each other in the protection of their
respective property rights with respect to the Licensed Marks against third
parties, including, without limitation, executing and delivering any and all
documents necessary or desirable in connection with obtaining, defending or
maintaining rights in and to the Licensed Marks. The party whose rights are
being challenged shall reimburse the other party for any reasonable out-of-
pocket costs actually incurred by such other party in providing such cooperation
and assistance. LICENSOR shall take all actions reasonably necessary to
maintain registrations of the Licensed Marks in full force and effect.
(c) Ownership of Marks: LICENSEE acknowledges that LICENSOR is the owner
of the Licensed Marks, subject to the License granted hereunder. Any
intellectual property rights in the Licensed Marks that may accrue to LICENSEE,
including those rights in countries not identified in Exhibit A, shall, except
as provided in this License, inure to the benefit of LICENSOR and shall be
assigned to LICENSOR upon its request. LICENSEE acknowledges that it has
received a perpetual license to use the Licensed Marks and that this Agreement
does not constitute any form of assignment or transfer of ownership in the
Licensed Marks except as provided in this License, or the right to register any
trademark(s) similar to the Licensed Marks so as to suggest association with or
sponsorship by LICENSOR in the United States or in any other country in the
world, or the right to use any trademark or trademarks similar to the Licensed
Marks, except as provided in this License. LICENSEE shall take all necessary
steps to secure an assignment to LICENSOR of the copyright from a creator of
work incorporating the Licensed Marks that is not a work-for-hire.
(d) Notices, Labeling and Records: In every instance in which any Licensed
Mark is used, LICENSEE shall cause to appear on the packaging of each Licensed
Product sold, the notice "(TM)" "(R)" "(C)" or such other copyright, trademark
or service mark notices (including the form, location and content of such
notices) as LICENSOR reasonably designates together with the statement "used
under license." LICENSEE shall keep appropriate records, and advise LICENSOR, of
the date when products approved under the terms of Section 4(a)have been first
placed on sale or sold (along with a copy of the invoice) and when promotional
or packaging materials have first been used (i) in the case of additions to
Exhibit "A" pursuant to Section 2(c) and (ii) in additional countries pursuant
to Section 5, all in order to support the efforts of LICENSOR to secure and
maintain valid registrations of the Licensed Marks.
(e) LICENSEE Trade Names and Trademarks: LICENSEE shall not incorporate
the Licensed Marks into LICENSEE's corporate or business name or trademark in
any manner whatsoever and shall place its trade names and trademarks on Licensed
Products only as approved
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by LICENSOR.
SECTION 8. INFRINGEMENTS.
(a) LICENSOR and LICENSEE shall promptly notify each other of any actual
or threatened infringement or dilution of or act of unfair competition with
respect to the Licensed Marks in the Territory and shall consult with each other
about any material action to be taken. LICENSOR shall use its best reasonable
efforts and exercise diligence to successfully prosecute such infringements or
acts of unfair competition or dilution. All costs, disbursements and expenses of
any actions which LICENSOR prosecutes for the benefit of LICENSEE shall be borne
by LICENSEE, and all other costs, disbursements and expenses shall be borne by
LICENSOR.
(b) If LICENSOR elects not to initiate legal action against infringement
relating to the Licensed Products, LICENSEE shall have the right at its own
expense to take legal action to obtain appropriate relief, and LICENSOR shall be
joined as a party in any such action and shall reasonably cooperate with and
assist LICENSEE in its prosecution of such action. The costs of such joinder and
any assistance by LICENSOR shall be reimbursed by LICENSEE.
(c) If the parties agree to jointly take action against an infringement,
or act of unfair competition or dilution, with respect to the Licensed Marks,
the cost of the action and any damages accruing shall be shared equally. If one
party takes action against an infringer, it shall be entitled to retain all
damages, costs or other compensation it may recover.
(d) The parties agree to fully cooperate with each other in relation to
any legal, administrative or other proceedings relating to the Licensed Marks or
Licensed Products and to sign any and all necessary documents as may be
necessary to effectuate the purpose of this Agreement.
SECTION 9. REPRESENTATIONS AND WARRANTIES.
(a) Each party represents and warrants that it has the right and authority
to enter into and perform this Agreement and to grant the rights and render the
performances required under this Agreement. LICENSEE represents and warrants
that the shares of its capital stock issued to LICENSOR hereunder are duly
authorized and issued, fully paid and non-assessable shares. LICENSEE
represents and warrants that all advertising and promotional materials shall
comply with all applicable laws, regulations and standards. LICENSOR's approval
of such materials is not a representation that LICENSOR believes such materials
are sufficient to meet applicable laws, regulations and standards, nor is it a
representation that LICENSOR agrees with or supports any claims made by LICENSEE
in any advertising materials relating to the Licensed Products. LICENSEE
further represents and warrants that all advertising and promotional materials
and all graphics used on Licensed Products will not violate the intellectual
property rights of any third party.
(b) Breaches of warranties under this Section 9 trigger the right to
indemnification in accordance with Section 10 below. Such breaches shall not
form the basis for termination in accordance with Section 13 below.
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SECTION 10. INDEMNIFICATIONS.
(a) LICENSOR shall be solely responsible for, and shall defend, hold
harmless and indemnify LICENSEE, its subsidiaries and each of their respective
Affiliates, directors, officers, employees and agents against any claims,
demands, causes of action or damages, including reasonable attorneys' fees and
expenses (collectively CLAIMS) arising out of: (i) a claim that the use of the
Licensed Marks as authorized by this Agreement violates or infringes upon the
trademark, copyright or other intellectual property rights of a third party in
or to the Licensed Marks, (ii) any defect in a product produced by or under the
authority of LICENSOR other than under this Agreement or any packaging or other
materials (including advertising materials), or arising from personal injury or
damages or loss to property or any infringement of any rights of any other
person or entity by the manufacture, sale, possession or use of such products or
their failure to comply with applicable laws, regulations and standards, or
(iii) any breach of any representation, warranty, covenant or agreement made by
LICENSOR herein, provided LICENSOR is given prompt written notice of and shall
have the option to undertake and conduct the defense of any such Claim. In any
instance to which the foregoing indemnities pertain, LICENSEE shall cooperate
fully with and assist LICENSOR in all respects in connection with any such
defense. LICENSOR shall reimburse LICENSEE for all reasonable out-of-pocket
costs actually incurred by LICENSEE in connection with such cooperation and
assistance. In any instance to which such indemnities pertain, LICENSOR shall
not enter into a settlement of such Claim or admit liability or fault without
LICENSEE's prior written approval.
(b) LICENSEE shall be solely responsible for, and shall defend, hold
harmless and indemnify LICENSOR, its subsidiaries and each of their respective
Affiliates, directors, officers, employees and agents against Claims arising out
of or in connection with: (i) any act or omission of LICENSEE in relation to
this License; (ii) any unauthorized use by LICENSEE of the Licensed Marks; (iii)
any breach of any representation, warranty, covenant or agreement made by
LICENSEE herein; (iv) any defect (whether obvious or hidden and whether or not
present in any sample approved by LICENSOR) in the Licensed Products or any
packaging or other materials (including advertising materials), or arising from
personal injury or damages or loss to property or any infringement of any rights
of any other person or entity by the manufacture, sale, possession or use of
Licensed Products or their failure to comply with applicable laws, regulations
and standards or (v) any Claim that the use of any design or other graphic
component of any Licensed Product (other than the Licensed Marks) violates or
infringes upon the trademark, copyright or other intellectual property rights
(including trade dress) of a third party, provided LICENSEE is given prompt
written notice of and shall have the option to undertake and conduct the defense
of any such Claim. In any instance to which the foregoing indemnities pertain,
LICENSOR shall cooperate fully with and assist LICENSEE in all respects in
connection with any such defense. LICENSEE shall reimburse LICENSOR for all
reasonable out-of-pocket costs actually incurred by LICENSOR in connection with
such cooperation and assistance. In any instance to which such indemnities
pertain, LICENSEE shall not enter into a settlement of such Claim or admit
liability or fault without LICENSOR's prior written approval.
(c) Each party hereto shall obtain and maintain, at its sole cost,
comprehensive general liability insurance coverage, including, but not limited
to, Products Liability, Contractual Liability and Advertising Liability, which
policy shall be written for the benefit of such party and which
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shall name the other party and/or its Affiliates as an additional insured with
respect to third party liability. The amount of coverage (which may be comprised
of a primary general liability policy and an excess liability policy) shall be a
minimum of Two Million U.S. dollars (USD 2,000,000) per occurrence combined
single limit and Three Million U.S. dollars (USD 3,000,000) annual general
aggregate. The policy and certificate of insurance shall be endorsed to indicate
that the acquiring party's insurance is primary and not in excess of or
contributory to any other insurance in effect for the other party and all
related entities. Such insurance shall be carried by an insurer authorized to
conduct business in the State of New Jersey with a rating by A.M. Best & Co. of
at least A- or other rating satisfactory to the party being named as the
additional insured. Such insurance policy shall also provide that the party
being named as the additional insured receive written notice within thirty (30)
days prior to the effective date of the cancellation, non renewal or any
material change in coverage. Each party (i) shall deliver to the other party a
certificate of such insurance evidencing satisfactory coverage prior to or
simultaneously with the execution of this Agreement, and (ii) shall not modify
such policy so as not to comply with the terms of this section. Such insurance
obligations shall not limit either party's indemnity obligations, except to the
extent that one party's insurance company actually pays the other party amounts
which the insured party would otherwise be obligated to pay the other party.
SECTION 11. CONFIDENTIALITY.
The parties expressly acknowledge and agree that all technical and/or
commercial information, whether written or oral, furnished by either party
(DISCLOSING PARTY) to the other (RECEIVING PARTY) or an officer, director,
employee, agent or representative thereof (REPRESENTATIVE) and relating to the
formulation, production, marketing, advertising, promotion, distribution or sale
of the Licensed Products shall be deemed to be confidential information and
shall not be used for its own commercial purposes or disclosed to any third
party, but shall be safeguarded and maintained by each Receiving Party and
Representative in confidence, provided, however, that this obligation of
confidentiality with respect to the confidential information of a Disclosing
Party shall not apply to information which (a) is or becomes generally available
to the public other than as a result of a disclosure by a Receiving Party or its
Representatives; (b) was available to Receiving Party on a non confidential
basis prior to its disclosure by Disclosing Party; or (c) becomes available to
Receiving Party on a non confidential basis from a person other than Disclosing
Party who is not otherwise bound by a confidentiality agreement with Disclosing
Party or its Representatives, or is not otherwise prohibited from transmitting
the information to Receiving Party.
SECTION 12. THIRD PARTY MANUFACTURE; COMPLIANCE.
If LICENSEE desires to have a third party manufacture the Licensed
Products, LICENSEE must first notify LICENSOR of the name and address of such
third party. LICENSOR shall have the right to withhold approval for such third
party manufacturer, such approval not to be unreasonably withheld. If any of
LICENSEE's authorized manufacturers use the Licensed Marks for any unauthorized
purpose, LICENSEE shall be responsible for, and shall cooperate fully and use
its best efforts in stopping such unauthorized use.
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SECTION 13. TERMINATION.
(a) Without prejudice to any other rights LICENSOR may have pursuant to
this Agreement or otherwise, LICENSOR shall have the right to terminate this
Agreement at any time if:
(i) LICENSEE or any guarantor under this Agreement shall be unable
to pay its liabilities when due, or shall make any assignment for the benefit of
creditors, or under any applicable law admits in writing its inability to meet
its obligations when due or commit any other act of bankruptcy, institute
voluntary proceedings in bankruptcy or insolvency or permit institution of such
proceedings against it.
(ii) LICENSEE shall fail to perform or shall be in breach of any
other material term or condition of this Agreement; provided, however, that if
such breach can be cured, termination shall take effect sixty (60) days after
written notice of such breach is sent by LICENSOR if such breach has not been
cured during such sixty (60) day period.
(iii) LICENSEE shall fail to sell Licensed Products in the Territory
for a continuous period of three (3) years.
(b) LICENSEE shall have the right to terminate this Agreement at any time
if:
(i) LICENSOR or any guarantor under this Agreement shall be unable
to pay its liabilities when due, or shall make any assignment for the benefit of
creditors, or under any applicable law admits in writing its inability to meet
its obligations when due or commit any other act of bankruptcy, institute
voluntary proceedings in bankruptcy or insolvency or permit institution of such
proceedings against it.
(ii) LICENSOR shall fail to perform or shall be in breach of any
other material term or condition of this Agreement; provided, however, that if
such breach can be cured, termination shall take effect sixty (60) days after
written notice of such breach is sent by LICENSEE if such breach has not been
cured during such sixty (60) day period.
(iii) In the event the events set out in Section 13(b)(i) or
13(b)(ii) occur, LICENSEE shall have the continued rights as LICENSEE to use the
Licensed Marks in connection with Licensed Products in accordance with the terms
and conditions set forth hereunder.
SECTION 14. DISPOSAL OF STOCK.
After termination of this Agreement, LICENSEE shall have no further right
to manufacture, authorize any third party to manufacture, advertise, distribute,
sell, promote or otherwise deal in any Licensed Products or use the Licensed
Marks except as provided below. For a period of one hundred and eighty (180)
days following the effective date of termination of this Agreement, LICENSEE may
sell-off and deliver completed Licensed Products which are on hand at the
effective date of termination (the SELL-OFF PERIOD); LICENSOR shall have the
option to conduct physical inventories before the termination of this Agreement
until the end of the Sell-Off Period in order to verify disposal of stock. If
LICENSEE refuses to permit such physical inventory,
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LICENSEE shall forfeit its right to dispose of its inventory. Upon termination
of the Agreement or after the Sell-Off Period, as the case may be, all inventory
on hand or in process (including all promotional and packaging materials) will
either be returned to LICENSOR or destroyed and LICENSEE shall deliver to
LICENSOR a certified statement signed by LICENSEE's President or Chief Financial
Officer that such materials have been returned to LICENSOR or destroyed.
SECTION 15. EQUITABLE RELIEF.
The parties acknowledge that the Licensed Marks possess a special, unique
and extraordinary character which makes difficult the assessment of the monetary
damage which a party would sustain as a result of the unauthorized use of the
Licensed Marks or any challenge to the validity of the Licensed Marks. The
parties further acknowledge that: (i) a failure to manufacture, advertise,
distribute, sell and promote the Licensed Products in accordance with this
Agreement, including a failure to satisfy an obligation to maintain and not to
detract from the value of the Licensed Marks, (ii) the unauthorized use of the
Licensed Marks, (iii) a failure to protect the Licensed Marks and prosecute any
action against infringement (or to cooperate in such prosecution), or (iv)
failure to reach agreement as to the reasonableness of the consent to assign in
accordance with Section 21 below, will cause immediate and irreparable damage to
the injured party for which such party would not have an adequate remedy at law.
Therefore, the parties agree that, in the event of a breach of this Agreement by
a party, in addition to such other legal and equitable rights and remedies as
shall be available to the other party, such other party shall be entitled to
injunctive and other equitable relief, without the necessity of proving damages
or furnishing a bond or other security.
SECTION 16. NOTICES.
All notices, requests, claims and other communications hereunder shall be
in writing and shall be given or made (and shall be deemed to have been duly
given or made upon receipt) by delivery by hand, by reputable overnight courier
service, by facsimile transmission, or by registered or certified mail (postage
prepaid, return receipt requested) to the respective parties at the addresses
(or at such other address for a party as shall be specified in a notice given in
accordance with this Section 16) listed below:
If to LICENSOR: CAMPBELL SOUP COMPANY
Campbell Place
Camden, New Jersey 08101
Attn.: Trademark Counsel
Fax No. (609) 342-3936
If to LICENSEE: VLASIC INTERNATIONAL BRANDS, INC.
Campbell Place
Camden, New Jersey 08101
Attn.: Trademark Counsel
Fax No. (609) 342-3936
or to such other address as any party may, from time to time, designate in a
written notice given
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in a like manner. Notice given by hand shall be deemed delivered when received
by the recipient. Notice given by mail as set out above shall be deemed
delivered five calendar days after the date the same is mailed. Notice given by
reputable overnight courier shall be deemed delivered on the next following
business day after the same is sent. Notice given by facsimile transmission
shall be deemed delivered on the day of transmission provided telephone
confirmation of receipt is obtained promptly after completion of transmission
SECTION 17. NO JOINT VENTURE.
Nothing herein contained shall be construed to place the parties in the
relationship of partners or joint venturers or principal and agent or employer
and employee and no party shall have the power to obligate or bind the other
party in any manner whatsoever.
SECTION 18. ENTIRE AGREEMENT.
This Agreement constitutes the entire Agreement and understanding between
the parties with respect to the subject matter and terminates and supersedes any
such prior agreement or understanding, oral or written, between LICENSOR and
LICENSEE with respect to the Licensed Marks and/or the Licensed Products. None
of the provisions of this Agreement can be waived or modified except in writing
signed by both parties. THERE ARE NO REPRESENTATIONS, PROMISES, AGREEMENTS,
WARRANTIES, COVENANTS OR UNDERTAKINGS MADE BY LICENSOR OR BY LICENSEE OTHER THAN
THOSE EXPRESSLY CONTAINED HEREIN.
SECTION 19. SEVERABILITY.
In the event any provision of this Agreement shall for any reason be void
or unenforceable by reason of any provision of applicable law, it shall be
deleted and the remaining provisions shall continue in full force and effect and
be amended to the extent, if at all, necessary to give effect to the intentions
of the parties as of the date of this Agreement.
SECTION 20. TAX CONSISTENCY.
The parties shall treat the grant of the License in exchange for LICENSEE's
capital stock as an exchange of property governed by Section 351 of the Code
(and related provisions). No party shall take a position inconsistent with the
foregoing on any tax return or in any tax examination, tax administrative
proceeding or tax litigation.
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SECTION 21. ASSIGNMENT; CHANGE IN CONTROL.
This Agreement and any rights granted under this Agreement are personal to
LICENSEE and shall not be assigned or encumbered, directly or indirectly, by law
or by contract, except to an Affiliate, without LICENSOR's prior written
consent, such consent not to be unreasonably withheld. The notice which is sent
to LICENSOR must specify that LICENSOR must respond within twenty (20) days or
such assignment or encumbrance is deemed to be approved. If LICENSEE fails to
comply with such notice requirement then there shall be no such deemed approval.
LICENSOR may withhold its approval only by means of a written description of the
reason or reasons why approval has been withheld. Any transfer of a controlling
interest in LICENSEE or in any party which controls LICENSEE as of the effective
date of this Agreement, directly or indirectly, shall be deemed an assignment
governed by the preceding sentences. Any nonconsensual assignment or
encumbrance of this Agreement by LICENSEE shall be invalid and of no force or
effect. Upon any such nonconsensual assignment or encumbrance, this Agreement
shall terminate and all rights granted under this Agreement shall immediately
revert to LICENSOR.
SECTION 22. COOPERATION.
(a) The parties agree to consult with one another in good faith in an
effort to resolve any situation arising out of their respective uses of the
Licensed Marks where customers or consumers may misdirect communications.
(b) The parties shall sign all documents and do all things reasonably
necessary to effectuate the terms and intent of this Agreement including, but
not limited to, cooperating with efforts to register the Licensed Marks anywhere
in the world.
SECTION 23. ARBITRATION OF CERTAIN MATTERS.
Except as set forth in Section 15 above, any dispute or claim arising out
of or related to this Agreement, or the breach, termination or validity thereof,
shall be settled by arbitration in accordance with the then current Center for
Public Resources/International Trademark Association Rules for Non-Administered
Arbitration of Trademark Disputes, by three arbitrators, of whom each party
shall appoint one selected from the CPR/INTA Panel of Neutrals in accordance
with its process as the first resource for possible arbitrators. If a good
faith attempt by the parties to select from this Panel does not result in the
selection of an available suitable neutral, the parties will request CPR to
further assist in the selection in accordance with its standard selection
process using other panels. The arbitration shall be governed by the United
States Arbitration Act, 9 U.S.C. (S)(S) 1 - 16, and judgment upon the award
rendered by the Arbitrator(s) may be entered by any court having jurisdiction
thereof. The place of arbitration shall be New Jersey.
SECTION 24. SURVIVAL.
The provisions of Sections 10, 11 and 14 shall survive the termination of
this Agreement.
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SECTION 25. NO WAIVER.
No waiver by either party of a breach or a default hereunder shall be
deemed a waiver by such party of a subsequent breach or default of like or
similar nature.
SECTION 26. CAPTIONS.
The captions used in connection with the sections of this Agreement are
inserted only for the purpose of reference and shall not affect the
interpretation of this Agreement.
IN WITNESS WHEREOF, the parties have respectively caused two copies of this
Agreement to be executed by a fully authorized officer as of the day and year
first above written.
CAMPBELL SOUP COMPANY VLASIC INTERNATIONAL BRANDS INC.
By:___________________________ By:___________________________
Title:________________________ Title:________________________
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EXHIBIT 10.4
FORM OF TECHNOLOGY SHARING AGREEMENT
This is a Technology Sharing Agreement (hereinafter, the AGREEMENT)
dated as of _____________, 1998 by and among Campbell Soup Company, a New Jersey
corporation (CSC) and Vlasic Foods International Inc., a New Jersey corporation
(together with its successors and permitted assigns, SPINCO).
Background
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A. Spinco is currently a wholly owned subsidiary of CSC. Pursuant to
a Separation and Distribution Agreement, dated as of _______, 1998, (the
DISTRIBUTION AGREEMENT), CSC shall distribute the stock of Spinco to CSC's
shareowners (the DISTRIBUTION), following which Distribution each of CSC and
Spinco shall continue in existence as independent, publicly-traded companies.
B. This Agreement is entered into in conjunction with the
Distribution Agreement in order to facilitate (i) the transfer to Spinco of
certain patent rights and technical information currently owned by CSC, (ii) the
license to Spinco of certain patent rights and technical information currently
owned by CSC, (iii) the license to CSC of certain patent rights currently owned
by Spinco, and (iv) the license back to CSC of certain patents currently owned
by CSC but which will be transferred to Spinco under this Agreement.
C. CSC wishes to grant the assignments and licenses to Spinco set
forth in this Agreement and Spinco wishes to accept such assignments and
licenses on the terms and conditions set forth herein. Spinco wishes to grant
the licenses to CSC set forth in this Agreement and CSC wishes to accept such
licenses on the terms and conditions set forth herein.
Terms
-----
NOW, THEREFORE, in consideration of the respective agreements and
covenants contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, and intending to be
legally bound hereby, the parties agree as follows:
SECTION 1. DEFINITIONS.
(a) As used herein, the following terms have the following meanings:
ACTION means any claim, suit, arbitration, inquiry, proceeding or
investigation by or before any court, governmental or other regulatory or
administrative agency or commission or any other tribunal.
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ASSIGNED CSC INTELLECTUAL PROPERTY RIGHTS means collectively the
ASSIGNED CSC PATENTS and the ASSIGNED CSC TECHNICAL INFORMATION.
ASSIGNED CSC PATENTS means any and all Patents currently owned by the
CSC which, as of the date of this Agreement, are or have in the past been used
exclusively or primarily in the Spinco Business, including, without limitation,
the Patents listed on Schedule A.
ASSIGNED CSC TECHNICAL INFORMATION means any and all Technical
Information currently owned by the CSC which, as of the date of this Agreement,
is or has in the past been used exclusively or primarily in the Spinco Business,
including, without limitation, the Technical Information specified on Schedule
B.
CSC INTELLECTUAL PROPERTY RIGHTS means collectively the ASSIGNED CSC
INTELLECTUAL PROPERTY RIGHTS and the SHARED CSC INTELLECTUAL PROPERTY RIGHTS.
PATENTS means any and all issued patents, patent applications,
industrial design rights and the inventions covered by such patents, patent
applications and industrial design rights (including all corresponding patents,
patent application and industrial design rights throughout the world, and all
continuations, continuations-in-part, divisionals, extensions, reissues,
reexaminations and renewals thereof) that are (i) owned by CSC, or (ii) owned by
Spinco, and which, as of the date of this Agreement, are or have in the past
been used in the Spinco Business as such business or businesses are or were
previously conducted by CSC and its Subsidiaries.
SHARED CSC INTELLECTUAL PROPERTY RIGHTS means collectively the SHARED
CSC PATENTS and the SHARED CSC TECHNICAL INFORMATION.
SHARED CSC PATENTS means any and all Patents currently owned by CSC
(other than the Assigned CSC Patents) which, as of the date of this Agreement,
are used in both the Spinco Business and the CSC Business, including, without
limitation, the Patents listed on Schedule C.
SHARED CSC TECHNICAL INFORMATION means any and all Technical
Information owned by CSC (other than the Assigned CSC Technical Information)
which, as of the date of this Agreement, is used in both the Spinco Business and
the CSC Business, including, without limitation, the Technical Information
listed on Schedule D.
SHARED SPINCO PATENTS means any and all Patents currently owned by
Spinco and the Assigned CSC Patents, which, as of the date of this Agreement,
are used in both the Spinco Business and the CSC Business, including, without
limitation, the Patents listed on Schedule E.
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TECHNICAL INFORMATION means any and all information and data
(including, without limitation, any trade secrets, product formulas, processing
and equipment design and information, specifications, know how, show how,
manufacturing, research, software, unpatented inventions, industrial property
rights, and other technical information and data) that is (i) owned by CSC, or
(ii) owned by Spinco, and which, as of the date of this Agreement, is or has in
the past been used or reduced to practice for use in the Spinco Business as such
business or businesses are or were previously conducted by CSC and its
Subsidiaries.
(b) All other capitalized terms used but not otherwise defined herein
shall have the meanings ascribed thereto in the Distribution Agreement.
SECTION 2. ASSIGNMENTS FROM CSC TO SPINCO.
(a) Effective as of the Distribution Date, CSC hereby assigns and
transfers to Spinco, its successors and assigns, all of CSC's right, title, and
interest, in the United States of America and all foreign countries, in and to
(i) the Assigned CSC Intellectual Property, (ii) all income, royalties, fees,
damages, and payments now or hereafter due or payable by third parties in
respect thereto, and (iii) any and all causes of action (either in law or in
equity), and the right to enforce any rights and file any causes of action,
including the right to recover damages, for any past, present, or future
infringement or misappropriation thereof.
(b) Spinco shall be responsible, at its sole cost and expense, for
filing any documents, paying any fees or other payments, or taking any other
action necessary or advisable to record, evidence, perfect, maintain and
effectuate the rights assigned to Spinco hereunder, including, without
limitation, filing a recordation of the assignments of the Assigned CSC Patents
with the U.S. Patent and Trademark Office and applicable foreign governmental
offices. At Spinco's reasonable request and Spinco's expense, CSC shall from
time to time after the date hereof, execute and deliver such other instruments
and documents, in form or substance reasonably satisfactory to Spinco and
otherwise take reasonable steps to cooperate with Spinco, to record, evidence,
perfect, maintain and effectuate the rights assigned to Spinco hereunder,
including, without limitation, executing and delivering to Spinco an Assignment
of Patents, substantially in the form of Exhibit 1.
(c) The assignments under this Section 2 are contributions to the
capital of Spinco.
SECTION 3. LICENSE TO SPINCO. CSC hereby grants to Spinco, effective as of the
Distribution Date and subject to the terms, covenants, conditions, and
limitations set forth in this Agreement, the Distribution Agreement, and any
other Ancillary Agreements, an exclusive (except as to CSC and its Affiliates)
license throughout the world to use in the Spinco Business (a) the Shared CSC
Patents for the remainder of the terms of such Patents (including any extensions
and renewals thereof), and (b) the Shared CSC Technical Information in
perpetuity, for a combined single royalty payment of _________, receipt of which
is hereby acknowledged. The parties acknowledge and agree that use of the Shared
CSC Intellectual Property by either party or its
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Affiliates shall be deemed to include any direct or indirect use in the
furtherance of the business of such party and its Affiliates.
SECTION 4. LICENSES TO CSC. Spinco hereby grants to CSC, effective as of the
Distribution Date and subject to the terms, covenants, conditions, and
limitations set forth in this Agreement, the Distribution Agreement, and any
other Ancillary Agreements, an exclusive (except as to Spinco and its
Affiliates) license to use the Shared Spinco Patents for the remainder of the
terms of such Patents (including any extensions and renewals thereof) throughout
the world in the CSC Business for a combined single royalty payment of
_________, receipt of which is hereby acknowledged. The parties acknowledge and
agree that use of the Shared Spinco Patents by either party or its Affiliates
shall be deemed to include any direct or indirect use in the furtherance of the
business of such party and its Affiliates.
SECTION 5. INTELLECTUAL PROPERTY RIGHTS.
(a) Spinco acknowledges that, as between CSC and Spinco, CSC owns all
title to the Shared CSC Intellectual Property Rights, in each case subject to
the license granted to Spinco hereunder. Spinco acknowledges that it has
received a license to use the Shared CSC Intellectual Property Rights and that
this Agreement does not constitute any form of assignment or transfer of
ownership therein to Spinco.
(b) CSC acknowledges that, as between Spinco and CSC, Spinco owns all
title to the Shared Spinco Patents, in each case subject to the license granted
to CSC hereunder. CSC acknowledges that it has received a license to use the
Shared Spinco Patents and that this Agreement does not constitute any form of
assignment or transfer of ownership therein to CSC.
(c) CSC shall be responsible in the first instance, at its sole cost and
expense, for filing any documents, paying any fees or other payments, or taking
any other action which it deems necessary or advisable, in its reasonable
business judgment, to protect, maintain and enforce the parties' rights in and
to the Shared CSC Intellectual Property Rights, including, without limitation,
filing and prosecuting such patent and copyright applications as it deems
advisable and Spinco agrees to provide CSC, at CSC's expense, with such
assistance and cooperation in connection therewith as CSC may reasonably
request. In the event that CSC chooses to file and prosecute any patent and
copyright applications in connection with the Shared CSC Intellectual Property
Rights, it shall do so in its own name. In the event that CSC chooses not to or
fails to take such action as Spinco deems necessary or prudent to protect,
maintain and enforce the parties' rights in and to the Shared CSC Intellectual
Property Rights, Spinco shall have the right, at its sole cost and expense, to
file any documents, pay any fees or other payments, or take any other action
which it deems necessary or advisable, in its reasonable business judgment, to
protect, maintain and enforce the parties' rights therein and thereto,
including, without limitation, filing and prosecuting such patent and copyright
applications as it deems advisable and CSC agrees to provide Spinco, at Spinco's
expense, with such assistance and cooperation in connection therewith as Spinco
may reasonably request. In the event that Spinco chooses to file
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<PAGE>
and prosecute any patent and copyright applications in connection with the
Shared CSC Intellectual Property Rights, it shall do so in CSC's name.
(d) Spinco shall be responsible in the first instance, at its sole cost
and expense, for filing any documents, paying any fees or other payments, or
taking any other action which it deems necessary or advisable, in its reasonable
business judgment, to protect, maintain and enforce the parties' rights in and
to the Shared Spinco Patents, including, without limitation, filing and
prosecuting such patent applications as it deems advisable and CSC agrees to
provide Spinco, at Spinco's expense, with such assistance and cooperation in
connection therewith as Spinco may reasonably request. In the event that Spinco
chooses to file and prosecute any patent applications in connection with the
Shared Spinco Patents, it shall do so in its own name. In the event that Spinco
chooses not to or fails to take such action as CSC deems necessary or prudent to
protect, maintain and enforce the parties' rights in and to the Shared Spinco
Patents, CSC shall have the right, at its sole cost and expense, to file any
documents, pay any fees or other payments, or take any other action which it
deems necessary or advisable, in its reasonable business judgment, to protect,
maintain and enforce the parties' rights therein and thereto, including, without
limitation, filing and prosecuting such patent and copyright applications as it
deems advisable and Spinco agrees to provide CSC, at CSC's expense, with such
assistance and cooperation in connection therewith as CSC may reasonably
request. In the event that CSC chooses to file and prosecute any patent and
copyright applications in connection with the Shared Spinco Patents, it shall do
so in Spinco's name.
(e) Spinco shall comply with the laws and regulations of all relevant
countries with respect to Shared CSC Intellectual Property Rights, including,
without limitation, all laws and regulations with regard to the import/export of
such technology and the marking of goods or other materials that incorporate or
utilize any of the Shared CSC Patents. CSC shall comply with the laws and
regulations of all relevant countries with respect to Shared Spinco Patents,
including, without limitation, all laws and regulations with regard to the
import/export of such technology and the marking of goods or other materials
that incorporate or utilize any of the Shared Spinco Patents.
(f) No party shall have any obligation to assign, license, share or
provide to the other party with any patents, patent applications, industrial
design right, inventions, trade secrets, or any other proprietary information or
know how created, developed or acquired by such party after the Distribution
Date except to the extent contemplated by the Distribution Agreement and the
other Ancillary Agreements.
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SECTION 6. INFRINGEMENT.
(a) CSC and Spinco shall promptly notify each other of any actual or
threatened infringement with respect to the Shared CSC Intellectual Property
Rights and shall consult with each other about any material action to be taken.
CSC shall use its best reasonable efforts and exercise diligence to successfully
prosecute such infringements. All costs, disbursements and expenses of any
actions which CSC prosecutes for the benefit of Spinco shall be borne by Spinco,
and all other costs, disbursements and expenses shall be borne by CSC. If CSC
elects not to initiate legal action against infringement relating to the Shared
CSC Intellectual Property Rights, Spinco shall have the right at its own expense
to take legal action to obtain appropriate relief, and CSC shall be joined as a
party in any such action and shall reasonably cooperate with and assist Spinco
in its prosecution of such action. The costs of such joinder and any assistance
by CSC shall be reimbursed by Spinco.
(b) CSC and Spinco shall promptly notify each other of any actual or
threatened infringement with respect to the Shared Spinco Patents and shall
consult with each other about any material action to be taken. Spinco shall use
its best reasonable efforts and exercise diligence to successfully prosecute
such infringements. All costs, disbursements and expenses of any actions which
Spinco prosecutes for the benefit of CSC shall be borne by CSC, and all other
costs, disbursements and expenses shall be borne by Spinco. If Spinco elects not
to initiate legal action against infringement relating to the Shared Spinco
Patents, CSC shall have the right at its own expense to take legal action to
obtain appropriate relief, and Spinco shall be joined as a party in any such
action and shall reasonably cooperate with and assist CSC in its prosecution of
such action. The costs of such joinder and any assistance by Spinco shall be
reimbursed by CSC.
(c) If CSC and Spinco agree to jointly take action against an
infringement relating to the Shared CSC Intellectual Property Rights or the
Shared Spinco Patents, the cost of the action and any damages accruing shall be
shared equally. If one party takes action against an infringer, it shall be
entitled to retain all damages, costs or other compensation it may recover.
(d) The parties agree to fully cooperate with each other in relation to
any legal, administrative or other proceedings relating to the Shared CSC
Intellectual Property Rights or the Shared Spinco Patents.
SECTION 7. INDEMNIFICATION.
(a ) Spinco shall indemnify, defend and hold harmless each member of the
CSC Group, and each of their respective directors, officers, employees and
agents (the CSC INDEMNITEES) from and against any and all damage, loss,
liability and expense (including, without limitation, reasonable expenses of
investigation and reasonable attorneys' fees and expenses in connection with any
and all Actions or threatened Actions, but expressly excluding any special or
consequential damages) (collectively, INDEMNIFIABLE LOSSES) incurred or suffered
by any
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the CSC Indemnitees as a result of or arising out of use by Spinco and its
Affiliates of the Assigned CSC Intellectual Property Rights and the Shared CSC
Intellectual Property Rights.
(b) CSC shall indemnify, defend and hold harmless each member of the
Spinco Group, and each of their respective directors, officers, employees and
agents (the SPINCO INDEMNITEES) from and against any and all Indemnifiable
Losses incurred or suffered by any of the Spinco Indemnitees as a result of or
arising out of use by CSC and its Affiliates of the Shared Spinco Patents.
SECTION 8. CONFIDENTIALITY.
(a) CSC agrees during the term of this Agreement and thereafter (i) to
treat as confidential all Assigned CSC Technical Information and all non-public
patent applications within the Assigned CSC Patents and the Shared Spinco
Patents, (ii) to use the same level of care to prevent the disclosure thereof as
it uses to protect their own similar confidential or proprietary information but
in no event, less than a reasonable degree of care, and (iii) not to disclose or
to permit to be disclosed any portion thereof to any third party other than an
Affiliate, without the consent of Spinco.
(b) The Spinco Group agrees during the term of this Agreement and
thereafter (i) to treat as confidential all Shared CSC Technical Information and
all non-public patent applications within the Shared CSC Patents, (ii) to use
the same level of care to prevent the disclosure thereof as it uses to protect
their own similar confidential or proprietary information but in no event, less
than a reasonable degree of care, and (iii) not to disclose or to permit to be
disclosed any portion thereof to any third party other than an Affiliate,
without the consent of CSC.
(c) The obligations of confidentiality and nondisclosure specified in
subsections (a) and (b) above, shall not apply to any information or data that :
(i) was known to the public or generally available to the public
prior to the date it was received from the disclosing party;
(ii) became known to the public or generally available to the
public subsequent to the date it was received from the
disclosing party without any fault of the receiving party;
(iii) is, subsequent to the date of this Agreement, disclosed to the
receiving party by a third party who is under no obligation of
confidentiality regarding the same; or
(iv) is, subsequent to the date of this Agreement, independently
discovered or developed by the receiving party without
reference to or use of any of the disclosed information or
data.
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(d) Each party acknowledges and agrees that the confidential information
referred to in this Section 8 is valuable and that breach of this Section 8 may
result in immediate irreparable injury to the other party. Each party agrees
that in the event of a breach or threatened breach by it or its Affiliates of
the terms of this Section 8, the other party shall be entitled to seek from any
court of competent jurisdiction, preliminary and permanent injunctive relief
which remedy shall be cumulative and in addition to any other rights and
remedies to which the other party may be entitled.
SECTION 9. DISCLAIMER OF WARRANTIES; NO INDEMNIFICATION; LIMITATION OF
LIABILITY
(a) ALL ASSIGNMENTS FROM CSC TO SPINCO HEREUNDER ARE ON A QUITCLAIM
BASIS AND ALL LICENSES FROM CSC TO SPINCO ARE ON AN "AS IS" BASIS. ALL
WARRANTIES, EXPRESS OR IMPLIED, ARE HEREBY DISCLAIMED BY CSC. WITHOUT LIMITING
THE GENERALITY OF THE FOREGOING, CSC MAKES NO REPRESENTATION OR WARRANTY,
WHETHER EXPRESS OR IMPLIED, TO SPINCO, ITS AFFILIATES OR ANY THIRD PARTY WITH
RESPECT TO THE CSC INTELLECTUAL PROPERTY RIGHTS, INCLUDING WITHOUT LIMITATION,
THE VALIDITY, ENFORCEABILITY OR OWNERSHIP OF ANY RIGHTS THEREIN, THE RESULTS TO
BE EXPECTED FROM THE USE OF SUCH CSC INTELLECTUAL PROPERTY RIGHTS, OR THAT THE
USE OF SUCH CSC INTELLECTUAL PROPERTY RIGHTS WILL NOT INFRINGE OR OTHERWISE
VIOLATE THE RIGHTS OF ANY THIRD PARTY UNDER THE LAWS OF ANY COUNTRY. CSC SHALL
HAVE NO OBLIGATION TO INDEMNIFY SPINCO OR ITS AFFILIATES IN THE EVENT THAT THE
USE OF SUCH CSC INTELLECTUAL PROPERTY INFRINGES OR OTHERWISE VIOLATES OR ITS
CLAIMED TO INFRINGE OR OTHERWISE VIOLATE THE RIGHTS OF ANY THIRD PARTY UNDER THE
LAWS OF ANY COUNTRY.
(b) ALL LICENSES FROM SPINCO TO CSC ARE ON AN "AS IS" BASIS. ALL
WARRANTIES, EXPRESS OR IMPLIED, ARE HEREBY DISCLAIMED BY SPINCO. WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, SPINCO MAKES NO REPRESENTATION OR
WARRANTY, WHETHER EXPRESS OR IMPLIED, TO CSC, ITS AFFILIATES OR ANY THIRD PARTY
WITH RESPECT TO THE SPINCO SHARED PATENTS, INCLUDING WITHOUT LIMITATION, THE
VALIDITY, ENFORCEABILITY OR OWNERSHIP OF ANY RIGHTS THEREIN, THE RESULTS TO BE
EXPECTED FROM THE USE OF SUCH SPINCO SHARED PATENTS, OR THAT THE USE OF SUCH
SPINCO SHARED PATENTS WILL NOT INFRINGE OR OTHERWISE VIOLATE THE RIGHTS OF ANY
THIRD PARTY UNDER THE LAWS OF ANY COUNTRY. SPINCO SHALL HAVE NO OBLIGATION TO
INDEMNIFY CSC OR ITS AFFILIATES IN THE EVENT THAT THE USE OF SUCH SPINCO SHARED
PATENTS INFRINGES OR OTHERWISE VIOLATES OR ITS CLAIMED TO INFRINGE OR OTHERWISE
VIOLATE THE RIGHTS OF ANY THIRD PARTY UNDER THE LAWS OF ANY COUNTRY.
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(c) IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR INCIDENTAL, SPECIAL OR
CONSEQUENTIAL DAMAGES OF ANY KIND, EVEN IF SUCH PARTY WAS ADVISED OR AWARE OF
THE POSSIBILITY OF SUCH DAMAGES, EXCEPT TO THE EXTENT MANDATED BY APPLICABLE
LAW.
SECTION 10. TERMINATION.
(a) Notwithstanding anything herein to the contrary, this Agreement may be
terminated by either CSC or Spinco on written notice at any time prior to the
Distribution Date.
(b) CSC shall have the right to terminate this Agreement at any time if:
(i) Spinco shall be unable to pay its liabilities when due, or shall
make any assignment for the benefit of creditors, or under any
applicable law admits in writing its inability to meet its
obligations when due or commit any other act of bankruptcy,
institute voluntary proceedings in bankruptcy or insolvency or
permit institution of such proceedings against it; or
(ii) Spinco shall fail to perform or shall be in breach of any other
material term or condition of this Agreement; provided, however,
that if such breach can be cured, termination shall take effect
sixty (60) days after written notice of such breach is sent by
CSC if such breach has not been cured during such sixty (60) day
period.
(c) Spinco shall have the right to terminate this Agreement at any time
if:
(i) CSC shall be unable to pay its liabilities when due, or shall
make any assignment for the benefit of creditors, or under any
applicable law admits in writing its inability to meet its
obligations when due or commit any other act of bankruptcy,
institute voluntary proceedings in bankruptcy or insolvency or
permit institution of such proceedings against it.
(ii) CSC shall fail to perform or shall be in breach of any other
material term or condition of this Agreement; provided, however,
that if such breach can be cured, termination shall take effect
sixty (60) days after written notice of such breach is sent by
Spinco if such breach has not been cured during such sixty (60)
day period.
(d) In the event the events set out in Section 10(b)(i) or 10(b)(ii)
occur, CSC shall have the continued rights to use the Shared Spinco Patents in
accordance with the terms and conditions set forth herein. In the event the
events set out in Section 10(c)(i) or 10(c)(ii) occur, Spinco shall have the
continued rights to use the Shared CSC Intellectual Property Rights in
accordance with the terms and conditions set forth herein.
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SECTION 11. DISPUTES.
(a) Resolution of any and all disputes arising from or in connection with
this Agreement, whether based on contract, tort, statute or otherwise,
including, but not limited to, disputes in connection with claims by third
parties (collectively, DISPUTES), shall be subject to the provisions of this
Section 11; provided, however, that nothing contained herein shall preclude
either party from seeking or obtaining (i) injunctive relief or (ii) equitable
or other judicial relief to enforce the provisions hereof or to preserve the
status quo pending resolution of Disputes hereunder.
(b) Either party may give the other party written notice of any Dispute not
resolved in the normal course of business. The parties shall attempt in good
faith to resolve any Dispute promptly by negotiation between executives of the
parties who have authority to settle the controversy and who are at a higher
level of management than the persons with direct responsibility for
administration of this Agreement. Within 30 days after delivery of the notice,
the foregoing executives of both parties shall meet at a mutually acceptable
time and place, and thereafter as often as they reasonably deem necessary for a
period not to exceed 15 days, to attempt to resolve the Dispute. All reasonable
requests for information made by one party to the other will be honored. If the
parties do not resolve the Dispute within such 45 day period (the INITIAL
MEDIATION PERIOD), the parties shall attempt in good faith to resolve the
Dispute by negotiation between (a) in the case of CSC, the Chief Financial
Officer or the Vice President - Treasurer and (b) in the case of Spinco, the
Chief Financial Officer (collectively, the DESIGNATED OFFICERS). Such officers
shall meet at a mutually acceptable time and place (but in any event no later
than 15 days following the expiration of the Initial Mediation Period) and
thereafter as often as they reasonably deem necessary for a period not to exceed
15 days, to attempt to resolve the Dispute.
(c) If the Dispute has not been resolved by negotiation within 75 days of
the first party's notice, or if the parties failed to meet within 30 days of the
first party's notice, or if the Designated Officers failed to meet within 60
days of the first party's notice, either party may commence any litigation or
other procedure allowed by law.
SECTION 12. ASSIGNMENT/SUBLICENSES.
(a) Neither of the parties may assign or delegate any of its rights or
duties under this Agreement without the prior written consent of the other
party, which consent will not be unreasonably withheld. This Agreement shall be
binding upon, and shall inure to the benefit of, the parties and their
respective successors and permitted assigns.
(b) Notwithstanding anything herein to the contrary, Spinco shall have the
right to sublicense the Shared CSC Intellectual Property Rights to its
Affiliates subject to the terms and
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conditions set forth herein, provided that such Affiliates shall have no right
to further sublicense such Shared CSC Intellectual Property Rights without the
express written permission of CSC.
(c) Notwithstanding anything herein to the contrary, CSC shall have the
right to sublicense the Shared Spinco Patents to its Affiliates subject to the
terms and conditions set forth herein, provided that such Affiliates shall have
no right to further sublicense such Shared Spinco Patents without the express
written permission of Spinco.
SECTION 13. GENERAL.
(a) Notices. All notices, requests, claims and other communications
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hereunder shall be in writing and shall be given or made (and shall be deemed to
have been duly given or made upon receipt) by delivery by hand, by reputable
overnight courier service, by facsimile transmission, or by registered or
certified mail (postage prepaid, return receipt requested) to the respective
parties at the addresses (or at such other address for a party as shall be
specified in a notice given in accordance with this Section 13(a)) listed below:
if to CSC, to: Campbell Soup Company
Campbell Place
Camden, New Jersey 08101
Attn.: Trademark Counsel
Fax No. (609) 342-3936
if to Spinco, to: Vlasic Foods International Inc.
Campbell Place
Camden, New Jersey 08101
Attn.: General Counsel
Fax No. (609) 342-3936
or to such other address as any party may, from time to time, designate in a
written notice given in a like manner. Notice given by hand shall be deemed
delivered when received by the recipient. Notice given by mail as set out above
shall be deemed delivered five calendar days after the date the same is mailed.
Notice given by reputable overnight courier shall be deemed delivered on the
next following business day after the same is sent. Notice given by facsimile
transmission shall be deemed delivered on the day of transmission provided
telephone confirmation of receipt is obtained promptly after completion of
transmission.
(b) No Joint Venture. Nothing herein contained shall be construed to place
----------------
the parties in the relationship of partners or joint venturers or principal and
agent or employer and employee and no party shall have the power to obligate or
bind any other party in any manner whatsoever.
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(c) Entire Agreement. This Agreement constitutes the entire agreement and
----------------
understanding between the parties with respect to the subject matter and
terminates and supersedes any such prior agreement or understanding, oral or
written, between the parties with respect thereto. None of the provisions of
this Agreement can be waived or modified except in writing signed by all the
parties.
(d) Severability. In the event any provision of this Agreement shall for
------------
any reason be void or unenforceable by reason of any provision of applicable
law, it shall be deleted and the remaining provisions shall continue in full
force and effect and be amended to the extent, if at all, necessary to give
effect to the intentions of the parties as of the date of this Agreement.
(e) Survival. The provisions of Sections 5, 6, 7, 8, 9, 10(d), and 11
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shall survive the termination of this Agreement.
(f) No Waiver. No waiver by any party of a breach or a default hereunder
---------
shall be deemed a waiver by such party of a subsequent breach of default of a
similar nature.
(g) Captions. The captions used in connection with the sections of this
---------
Agreement are inserted only for the purpose of reference and shall not affect
the interpretation of this Agreement.
(h) Other Actions. The parties agree to cooperate and to take any
-------------
additional action or sign any documents as may be necessary to effectuate the
purposes of this Agreement, including, without limitation, CSC executing and
delivering to Spinco assignments of any Assigned CSC Patents which may be
inadvertently omitted from the Assignment of Patents in Exhibit 1.
12
<PAGE>
IN WITNESS WHEREOF, the parties have respectively caused this Agreement to
be executed by a fully authorized officer as of the day and year first above
written.
CAMPBELL SOUP COMPANY VLASIC FOODS INTERNATIONAL INC.
By: __________________________ By: __________________________
Name: Name:
Title: Title:
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EXHIBIT 10.5
FORM OF TAX SHARING AND INDEMNIFICATION AGREEMENT
-------------------------------------------------
THIS IS A TAX SHARING AND INDEMNIFICATION AGREEMENT (the "Agreement"),
dated as of the Effective Date, made by and among Campbell Soup Company, a New
Jersey corporation ("CSC") on behalf of itself and each member of the CSC Group,
Vlasic Foods International Inc., a New Jersey corporation ("Vlasic"), each
member of the Vlasic Group, and their respective successors.
Background
----------
A. CSC has determined to effect the Distribution pursuant to the
Distribution Agreement;
B. The IRS has issued the IRS Ruling which states the tax treatment
of the Distribution and the Other Transactions;
C. The parties are entering into this Agreement: to insure the
continuing effectiveness of the IRS Ruling; to provide for the parties'
respective liabilities for Taxes; to provide certain indemnities; and to provide
for various administrative matters relating to Taxes including: (1) the
preparation and filing of Tax Returns along with the payment of Taxes shown due
and payable thereon, (2) the retention and maintenance of relevant records
necessary to prepare and file appropriate Tax Returns, as well as the provision
for appropriate access to those records by the parties to this Agreement, (3)
the conduct of audits, examinations, and proceedings by appropriate governmental
entities which could result in a redetermination of Taxes, and (4) the
cooperation of all parties with one another in order to fulfill their duties and
responsibilities under this Agreement and under the Code and other applicable
law; and
D. It is the intent of the parties that CSC shall economically bear
the burden of all Taxes imposed upon or attributable to the members of the
Vlasic Group which Taxes are due under any consolidated, combined or unitary Tax
Return (or group relief or similar arrangement) that includes any member or
members of the Vlasic Group and at least one member of the CSC Group that is not
a member of the Vlasic Group (a "CSC Consolidated Return") and that Vlasic or
the appropriate member of the Vlasic Group shall economically bear the burden of
all Taxes otherwise imposed upon or attributable to the members of the Vlasic
Group.
Terms
-----
THEREFORE, in consideration of the mutual promises, covenants, and
conditions contained in this Agreement, and intending to be legally bound
hereby, the parties hereto agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. As used in this Agreement (including the
introduction and Background section hereof), the following definitions apply
(such meanings to be equally applicable to both the singular and plural focus of
the terms involved):
ADJUSTMENT means any proposed or final change in the Tax Liability of
a taxpayer.
AFFILIATE means, when used with respect to a specified Person, another
Person that directly, or indirectly through one or more intermediaries, controls
or is controlled by or is under common control with such Person.
AFFILIATED PERSON has the meaning ascribed to such term in the
Investment Company Act of 1940, as amended, and the rules and regulations
promulgated thereunder.
ASSOCIATES has the meaning ascribed to such term in the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder.
BARBECUE SAUCE BUSINESS means the production and sale of barbecue
sauce.
BEEF PRODUCTS BUSINESS means the production and sale of beef and beef
products.
BENEFICIAL OWNERSHIP has the meaning ascribed to such term in the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
CODE means the Internal Revenue Code of 1986, as amended, and the
Treasury regulations promulgated thereunder, including any comparable successor
legislation.
CSC CONSOLIDATED RETURN has the meaning set forth in paragraph D of
the Background section hereof.
CSC GROUP means, as of any relevant date, CSC and its Subsidiaries,
determined as of such date.
DISQUALIFIED VLASIC STOCK is defined at Section 6.2(a)(iii).
DISTRIBUTION means the distribution of Vlasic common stock to the
holders of CSC capital stock pursuant to the Distribution Agreement.
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DISTRIBUTION AGREEMENT means the Separation and Distribution Agreement
between CSC and Vlasic dated as of _______________.
EFFECTIVE DATE means the date on which the Distribution occurs.
FINAL DETERMINATION means the final resolution of any Tax matter. A
Final Determination shall result from the first to occur of:
1. the expiration of 30 days after the IRS' acceptance of a Waiver
of Restrictions on Assessment and Collection of Deficiency in Tax
and Acceptance of Overassessment on Form 870 or 870-AD (or any
successor comparable form) (the "Waiver"), except as to reserved
matters specified therein, or the expiration of 30 days after
acceptance by any other taxing authority of a comparable
agreement or form under the laws of any other jurisdiction,
including state, local, and foreign jurisdictions; unless, within
such period, the taxpayer gives notice to the other party to this
Agreement of the taxpayer's intention to attempt to recover all
or part of any amount paid pursuant to the Waiver by the filing
of a timely claim for refund;
2. a decision, judgment, decree, or other order by a court of
competent jurisdiction that is not subject to further judicial
review (by appeal or otherwise) and has become final;
3. the execution of a closing agreement under Code section 7121, or
the acceptance by the IRS of an offer in compromise under Code
section 7122, or comparable agreements under the laws of any
other jurisdiction, including state, local, and foreign
jurisdictions; except as to reserved matters specified therein;
4. the expiration of the time for filing a claim for refund or for
instituting suit in respect of a claim for refund that was
disallowed in whole or part by the IRS or any other taxing
authority;
5. the expiration of the applicable statute of limitations; or
6. an agreement by the parties hereto that a Final Determination has
been made.
FRESH MUSHROOMS BUSINESS means the production and sale of fresh
mushrooms.
GROSS ASSETS means, when used with respect to a specified Person, the
fair market value of such Person's assets unencumbered by any liabilities.
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<PAGE>
GROUP has the meaning ascribed to such term in the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated thereunder.
INDEMNIFIED LIABILITY is defined at Section 8.1.
INDEMNIFIED PARTY is defined at Section 7.1.
INDEMNIFYING PARTIES is defined at Section 7.1.
IRS means the U. S. Internal Revenue Service.
IRS INTEREST RATE means the rate of interest imposed from time to time
on underpayments of income tax pursuant to Code section 6621(a)(2).
IRS RULING means the private letter ruling (together with any
supplements) issued by the IRS in respect of the Ruling Request.
NON-PRIMARY PARTY is defined at Section 4.2(a).
OPINION OF COUNSEL means an opinion of independent tax counsel of
recognized national standing and experienced in the issues to be addressed and
otherwise reasonably acceptable to CSC, which sets forth an Unqualified Tax
Opinion in form and substance satisfactory to CSC. In no event shall CSC be
required to conclude that an opinion is satisfactory if there is any risk,
however remote, that the transaction which is the subject of the opinion will
cause the Distribution or any of the Other Transactions to be taxable to any
extent under the Code in a manner that is inconsistent with the IRS Ruling.
OTHER TRANSACTIONS means the transactions related to the Distribution
and described in Sections III.B., III.C., III.D, III.E and III.F of the Ruling
Request, including all modifications to such transactions reflected in
supplements to the Ruling Request.
PERSON means any natural person, corporation, business trust, joint
venture, association, company, partnership or government, or any agency or
political subdivision thereof.
PICKLE BUSINESS means the production and sale of pickles and related
products.
PRIMARY PARTY is defined at Section 4.2(a).
PROCEEDING is defined at Section 9.2(a).
RESTRICTED PERIOD means the two year period following the Effective
Date.
RETAIL FROZEN FOODS BUSINESS means the production and sale of retail
frozen food products.
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RULING PERIOD means the period commencing on the Effective Date and
ending on the seventh anniversary of the close of the taxable year of CSC in
which the Distribution occurs.
RULING REQUEST means the request for rulings (including all exhibits),
as amended and supplemented, under Section 355 and other provisions of the Code,
as originally filed on behalf of CSC on July 25, 1997, in respect of the
Distribution.
SUBSIDIARY means with respect to CSC or Vlasic, any Person of which
CSC or Vlasic, respectively, controls or owns, directly or indirectly, more than
50% of the stock or other equity interest entitled to vote on the election of
members to the board of directors or similar governing body.
TAXES means all federal, state, local and foreign gross or net income,
gross receipts, withholding, payroll, franchise, transfer, sales, use, value
added, estimated or other taxes of any kind whatsoever or similar charges and
assessments, including all interest, penalties and additions imposed with
respect to such amounts which any member of the CSC Group or the Vlasic Group is
required to pay, collect or withhold, together with any interest and any
penalties, additions or additional amounts imposed with respect thereto.
TAX BENEFIT means a reduction in the Tax Liability of a taxpayer (the
CSC Group, the Vlasic Group, or any member thereof) for any taxable period.
Except as otherwise provided in this Agreement, a Tax Benefit shall be deemed to
have been realized or received from a Tax Item in a taxable period only if and
to the extent that the Tax Liability of the taxpayer for such period, after
taking into account the effect of the Tax Item on the Tax Liability of such
taxpayer in all prior periods, is less than it would have been if such Tax
Liability were determined without regard to such Tax Item.
TAX ITEM means any item of income, gain, loss, deduction, credit,
recapture of credit, or any other item which may have the effect of increasing
or decreasing Taxes paid or payable.
TAX LIABILITY means the net amount of Taxes due and paid or payable
for any taxable period, determined after applying all tax credits and all
applicable carrybacks or carryovers for net operating losses, net capital
losses, unused general business tax credits, or any other Tax Items arising from
a prior or subsequent taxable period, and all other relevant adjustments.
TAX RETURNS means all reports, estimates, declarations of estimated
tax, information statements and returns relating to, or required to be filed in
connection with any Taxes, including information returns or reports with respect
to backup withholding and other payments to third parties.
UNQUALIFIED TAX OPINION means an unqualified "will" opinion of tax
counsel to the effect that a transaction does not disqualify the Distribution or
any Other
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<PAGE>
Transaction from qualifying for tax-free treatment for the shareowners of CSC
and any member of the CSC Group under Code Section 355 and any other applicable
sections of the Code, assuming that the Distribution or Other Transaction would
have qualified for tax free treatment if such transaction did not occur. An
Unqualified Tax Opinion may rely upon, and assume the accuracy of, any
representations contained in any application for letter ruling from the IRS,
and any representations contained in an officer's certificate delivered by an
officer of CSC or Vlasic to such counsel.
VLASIC GROUP means: (i) as of any relevant date after the Effective
Date, Vlasic and its Subsidiaries determined as of such date; and (ii) as of any
relevant date on or before the Effective Date, Vlasic and those Persons which
become Subsidiaries of Vlasic as a consequence of the Distribution, whether or
not such Persons were Subsidiaries of Vlasic before the Distribution.
VLASIC RETURNS has the meaning set forth in Section 2.2 hereof.
ARTICLE II
PREPARATION AND FILING OF TAX RETURNS
SECTION 2.1. CSC CONSOLIDATED RETURNS. CSC shall prepare and file, or
cause to be prepared and filed, all CSC Consolidated Returns.
SECTION 2.2. VLASIC RETURNS. Vlasic shall prepare and file, or cause
to be prepared and filed, all Tax Returns of or with respect to one or more
members of the Vlasic Group other than the CSC Consolidated Returns (the "Vlasic
Returns").
SECTION 2.3. TAXABLE PERIOD ENDS ON EFFECTIVE DATE. Unless prohibited
under applicable law, a taxable period of each member of the Vlasic Group that
is included in a CSC Consolidated Return which includes the Effective Date shall
end on the Effective Date.
SECTION 2.4. TAX-BASIS BALANCE SHEETS. In the case of any business
that was conducted prior to the Effective Date as a division of CSC and which
will be conducted after the Effective Date by a member of the Vlasic Group, CSC
shall prepare and furnish to Vlasic, within 120 days after the Effective Date, a
tax-basis Effective Date balance sheet relating to such business.
ARTICLE III
PAYMENT OF TAXES UPON FILING AND UPON SUBSEQUENT ADJUSTMENT
SECTION 3.1. TAXES GENERALLY. Except as provided in Section 3.2 and
Section 3.3 of this Agreement, CSC shall pay or cause to be paid and shall
indemnify and hold Vlasic and the members of the Vlasic Group harmless against
all Tax Liabilities that arise under each CSC Consolidated Return. Vlasic shall
pay or cause to be paid and shall indemnify and hold
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<PAGE>
CSC and the members of the CSC Group harmless against all Tax Liabilities that
arise under each Vlasic Return.
SECTION 3.2. STRADDLE PERIODS. If, for purposes of a CSC Consolidated
Return, a taxable period of any member of the Vlasic Group includes the
Effective Date but does not end on the Effective Date (as otherwise generally
provided under Section 2.3 of this Agreement), CSC shall pay or cause to be paid
and shall indemnify and hold Vlasic and the members of the Vlasic Group harmless
against the Tax Liabilities attributable to the affected member or members of
the Vlasic Group for the portion of such tax period ending on the Effective Date
and Vlasic shall pay or cause to be paid and shall indemnify and hold CSC and
the members of the CSC Group harmless against the Tax Liabilities attributable
to the affected member or members of the Vlasic Group for the remainder of such
tax period beginning with the day after the Effective Date. The determination of
Tax Liabilities up to and following the Effective Date shall be based upon an
interim closing of the books of the affected member or members of the Vlasic
Group as of the opening of the Effective Date.
SECTION 3.3. ADJUSTMENTS. If any Tax Return is examined by a taxing
authority and an Adjustment results from such examination, the party bearing
responsibility for such Taxes determined under Section 3.1 shall pay its share
of any additional Tax Liability resulting from the Adjustment, provided,
however, that if the Adjustment which results in additional Tax Liability to one
party also results in a Tax Benefit to the other party, the party receiving such
Tax Benefit, to the extent it is equal to or less than the other party's
additional Tax Liability, shall pay such Tax Benefit to such other party within
30 days after such Tax Benefit is realized. Promptly after receiving notice from
the party having the Adjustment which results in additional Tax Liability, the
other party shall make a claim for any Tax Benefit resulting from such
Adjustment, on an amended Tax Return or in a formal or informal claim filed with
the IRS, unless the amount of such Tax Benefit is immaterial or unless otherwise
agreed by the parties. If an Adjustment could be governed by both this Section
3.3 and Articles VII, VIII, or IX, those Articles will take precedence over this
Section 3.3.
ARTICLE IV
COOPERATION AND EXCHANGE OF INFORMATION; AUDITS AND ADJUSTMENTS
SECTION 4.1. TAX RETURN INFORMATION.
(a) Vlasic shall, and shall cause each appropriate member of the
Vlasic Group to, provide CSC with all information and other assistance
reasonably requested by CSC to enable the members of the CSC Group to prepare
and file CSC Consolidated Returns required to be filed by them pursuant to this
Agreement.
(b) CSC shall, and shall cause each appropriate member of the CSC
Group to, provide Vlasic with all information and other assistance reasonably
requested by Vlasic to enable the members of the Vlasic Group to prepare and
file Vlasic Returns required to be filed by them pursuant to this Agreement.
7
<PAGE>
SECTION 4.2. AUDITS AND ADJUSTMENTS.
(a) Whenever CSC or Vlasic receives in writing from the IRS or any
other taxing authority notice of an Adjustment that may give rise to a payment
from the other party under this Agreement or otherwise affect the other party's
Taxes, CSC or Vlasic, as the case may be, shall give written notice of the
Adjustment to the other party within thirty (30) days of becoming aware of the
Adjustment but in no case later than ten (10) days before CSC or Vlasic, as the
case may be, is required to respond to the IRS or other taxing authority. The
party primarily liable for any Tax Liability with respect to the Adjustment
under Section 3.1 or Section 3.3 (the "Primary Party") at its own expense shall
have primary control over all matters relating to the Adjustment that may give
rise to a payment obligation by the Primary Party, provided, however, that the
-------- -------
other party (the "Non-Primary Party") may settle, partially settle, or otherwise
resolve any controversy involving the Non-Primary Party's return to which the
particular Adjustment relates, so long as the Non-Primary Party does not settle,
partially settle, or otherwise resolve the controversy in a manner inconsistent
with the Primary Party's position, without prior written consent, which may not
be unreasonably withheld, from the Primary Party.
(b) Vlasic agrees reasonably to cooperate with CSC, in the
negotiation, settlement, or litigation of any liability for Taxes of any member
of the CSC Group.
(c) CSC agrees reasonably to cooperate with Vlasic in the
negotiation, settlement, or litigation of any liability for Taxes of any member
of the Vlasic Group.
(d) CSC will reasonably promptly notify Vlasic in writing of any
Adjustment involving a change in the tax basis of any asset of Vlasic,
specifying the nature of the change so that the Vlasic Group will be able to
reflect the revised basis in its tax books and records for periods beginning on
or after the Effective Date.
(e) In the event of a conflict between the operation of this Section
4.2 and Articles VII, VIII, or IX, those Articles will take precedence over this
Section 4.2.
For purposes of this Article IV, the term "party" shall refer to any member of
the CSC Group and any member of the Vlasic Group, as the case may be.
ARTICLE V
RETENTION OF RECORDS; STATUTES OF LIMITATIONS
SECTION 5.1. RETENTION OF RECORDS. CSC and Vlasic agree to retain the
appropriate records which may affect the determination of the liability for
Taxes of any member of the CSC Group or the Vlasic Group, respectively, until
such time as there has been a Final Determination with respect to such liability
for Taxes. A party may satisfy its obligations under the preceding sentence by
allowing the other party to duplicate records at such second party's request and
expense.
8
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SECTION 5.2. STATUTE OF LIMITATIONS. CSC and Vlasic will notify each
other in writing of any waivers or extensions of the applicable statute of
limitations that may affect the period for which any materials, records, or
documents must be retained.
ARTICLE VI
REPRESENTATIONS AND COVENANTS
SECTION 6.1. REPRESENTATIONS.
(a) Vlasic has reviewed the materials submitted to the IRS in
connection with the IRS Ruling and, to the best of Vlasic's knowledge, these
materials, including, without limitation, any statements and representations
concerning Vlasic, its business operations, capital structure and/or
organization, are complete and accurate in all material respects. Vlasic shall,
and shall cause each member of the Vlasic Group, to comply in all material
respects, and each member of the Vlasic Group shall comply in all material
respects, with each such representation and statement concerning Vlasic and the
Vlasic Group made in the materials so submitted and in the IRS Ruling, including
without limitation, statements relating to actions intended to achieve cost
savings to the Vlasic Group. With respect to any representation or statement
made by or on behalf of Vlasic or the Vlasic Group in connection with the IRS
Ruling and to the extent such representation or statement relates to future
actions or events under their control, neither Vlasic nor any member of the
Vlasic Group will take any action during the Restricted Period that would have
caused such representation or statement to be untrue if Vlasic or any member of
the Vlasic Group had planned or intended to take such action at the time such
representation or statement was made by or on behalf of Vlasic.
(b) Vlasic hereby represents and warrants to CSC that Vlasic has no
intention to undertake any of the transactions set forth in Section 6.2(a)(iii)
nor does Vlasic or any member of the Vlasic Group have any intention to cease to
engage in the active conduct of the trade or business (within the meaning of
Section 355(b)(2) of the Code) of the Retail Frozen Foods Business, the Beef
Products Business, the Fresh Mushrooms Business, the Pickle Business or the
Barbecue Sauce Business.
SECTION 6.2. COVENANTS.
(a) Vlasic and each member of the Vlasic Group covenant and agree
with CSC that during the Restricted Period:
(i) Vlasic and the members of the Vlasic Group will continue to
engage in the Retail Frozen Foods, Beef Products, Fresh
Mushrooms, Pickle and Barbecue Sauce Businesses and will
continue to maintain a substantial portion of their
respective assets and business operations as they existed
prior to the Distribution; provided that the foregoing
--------
shall not be deemed to prohibit Vlasic and the members of
the Vlasic Group from entering into or
9
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acquiring other businesses or operations or from disposing
of or shutting down segments of such Businesses so long as
Vlasic and the members of the Vlasic Group continue to
engage in such Businesses and continue to so maintain such
substantial portion of their assets and business
operations;
(ii) Vlasic will continue to manage and to own (A) directly
assets which represent at least 50% of the Gross Assets
which Vlasic managed and owned directly immediately after
the Distribution, and (B) directly or indirectly through
one or more entities, assets which represent at least 50%
of the Gross Assets which Vlasic owned indirectly through
one or more entities immediately after the Distribution;
(iii) Except as provided in Section 6.2(c), neither Vlasic, nor
any of its Affiliates nor any of its or their respective
directors, officers or other representatives will
undertake, authorize, approve, recommend, permit,
facilitate, or enter into any contract, or consummate any
transaction with respect to:
(1) the issuance of Vlasic common stock (including
options, warrants, rights or securities exercisable
for, or convertible into, Vlasic common stock) in a
single transaction or in a series of related or
unrelated transactions or otherwise or in the
aggregate which would exceed (or could exceed if any
such options, warrants or rights were exercised or
such securities were converted) 20% when expressed as
a percentage of the outstanding shares of Vlasic
common stock immediately following the Distribution;
(2) the issuance of any class or series of capital stock
or any other instrument (other than Vlasic common
stock and options, warrants, rights or securities
exercisable for, or convertible into, Vlasic common
stock) that would constitute equity for federal tax
purposes (such classes or series of capital stock and
other instruments being referred to herein as
"Disqualified Vlasic Stock");
(3) the issuance of any options, rights, warrants,
securities or similar arrangements exercisable for, or
convertible into, Disqualified Vlasic Stock;
(4) any redemptions, repurchases or other acquisitions of
capital stock or other equity interest in Vlasic in a
single
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transaction or a series of related or unrelated
transactions, unless such redemptions, repurchases or
other acquisition satisfy the following requirements
under Section 4.05(1)(b) of Revenue Procedure 96-30:
(A) there is a "sufficient business purpose" for the
transaction,
(B) the stock to be purchased, redeemed or otherwise
acquired is widely held,
(C) the stock purchases or other acquisitions will be
made on the open market, and
(D) the amount of stock purchases, redemptions, or
other acquisitions in a single transaction or in
a series of related or unrelated transactions
will not equal or exceed an amount of stock
representing 20% of the outstanding stock of
Vlasic immediately following the Distributions.
(5) the dissolution, merger, or complete or partial
liquidation of Vlasic or any announcement of such
action.
(iv) Vlasic will take the actions related to cost savings
detailed in materials submitted to the IRS in connection
with the IRS Ruling.
(b) In addition to the other representations, warranties, covenants
and agreements set forth in this Agreement, Vlasic and each member of the Vlasic
Group will take, or refrain from taking, as the case may be, such actions as CSC
may reasonably request during the Ruling Period as necessary to insure that the
Distributions and the Other Transactions qualify for the tax treatment stated in
the IRS Ruling, including, without limitation, such actions as CSC reasonably
determines may be necessary to preserve the IRS Ruling. Without limiting the
generality of the foregoing, Vlasic and the Vlasic Group shall cooperate with
CSC if CSC determines to obtain additional IRS rulings pertaining to whether any
actual or proposed change in facts and circumstances affects the tax status of
the Distributions or the Other Transactions.
(c) Following the Distribution Date, Vlasic and its Affiliates may
take any action or engage in conduct otherwise prohibited by Section 6.2 so long
as prior to such action or conduct, as the case may be, CSC or Vlasic receives
(A) a ruling from the IRS in form and substance reasonably satisfactory to CSC
and upon which CSC can rely to the effect that the proposed action or conduct,
as the case may be, will not cause the Distributions or the Other Transactions
to fail to qualify for the tax treatment stated in the IRS Ruling, or (B) an
Opinion of Counsel in form and substance reasonably satisfactory to CSC and upon
which CSC can rely to
11
<PAGE>
the effect that the proposed action or conduct, as the case may be, will not
cause the Distributions or the Other Transactions to fail to qualify for the tax
treatment stated in the IRS Ruling.
ARTICLE VII
VLASIC INDEMNITY OBLIGATIONS
SECTION 7.1. VLASIC INDEMNITY. If Vlasic, or another member (or
former member) of the Vlasic Group (collectively, jointly and severally, the
"Indemnifying Parties") takes any action prohibited by Article VI or violates a
representation or covenant contained in Article VI, and the Distribution or any
of the Other Transactions fails to qualify for the tax treatment stated in the
IRS Ruling primarily as a result of such action or violation, then the
Indemnifying Parties shall (jointly and severally) indemnify and hold harmless
CSC and each member of the CSC Group (collectively the "Indemnified Party")
against any and all Taxes imposed upon or incurred by the Indemnified Party as a
result of the failure, including, without limitation, any liability of the
Indemnified Party arising from Taxes imposed on shareowners of CSC to the extent
any shareowner or shareowners of CSC or the IRS or other taxing authority
successfully seek recourse against the Indemnified Party on account of any such
failure, or any liability for such Taxes which the Indemnified Party may assume
or otherwise incur.
SECTION 7.2. TENDER OFFER OR PURCHASE OFFER. Notwithstanding anything
to the contrary set forth in this Agreement, if, during the Restricted Period,
any Person or Group of Affiliated Persons or Associates acquires Beneficial
Ownership of Vlasic common stock (or any other class of outstanding Vlasic
stock) or commences a tender or other purchase offer for the capital stock of
Vlasic or initiates any other form of transaction to acquire directly or
indirectly Vlasic capital stock, upon consummation of which such Person or Group
of Affiliated Persons or Associates would acquire Beneficial Ownership of Vlasic
common stock (or any other class of outstanding Vlasic stock) such that the
Distribution or any of the Other Transactions shall fail to qualify for the tax
treatment stated in the IRS Ruling primarily as a result of such acquisition,
tender or other purchase offer, or other form of transaction, then the
Indemnifying Parties shall indemnify and hold harmless the Indemnified Party
against any and all Taxes imposed upon or incurred by the Indemnified Party
and/or its shareowners as a result of the failure of the Distribution or the
Other Transactions to so qualify.
SECTION 7.3. EFFECT OF SUPPLEMENTAL RULING OR OPINION OF COUNSEL. The
Indemnified Party shall be indemnified and held harmless under Section 7.1
without regard to the fact that the Indemnified Party may have received a
supplemental ruling from the IRS or an Opinion of Counsel as contemplated by
Section 6.2(c). The Indemnified Party shall be indemnified and held harmless
under Section 7.2 without regard to whether an acquisition of Beneficial
Ownership results from a transaction which is not prohibited under Article VI.
ARTICLE VIII
CALCULATION OF VLASIC INDEMNITY AMOUNTS
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SECTION 8.1. AMOUNT OF INDEMNITY. The amount indemnified against
under Article VII ("Indemnified Liability") for a tax based on or determined
with reference to income shall be deemed to be the amount of the tax computed by
multiplying (i) the taxing jurisdiction's highest marginal tax rate applicable
to taxable income of corporations such as the Indemnified Party on income of the
character subject to tax and indemnified against under Article VII for the
taxable period in which the Distribution occurs, times (ii) the gain or income
of the Indemnified Party which is subject to tax in the taxing jurisdiction and
indemnified against under Article VII. In the case of an Indemnified Liability
attributable to a payment owed to a shareowner or shareowners of CSC, the amount
of the Indemnified Liability shall be equal to the amount so owed, including
without limitation, interest, costs, additions, expenses and penalties. All
amounts payable under this Agreement shall be grossed-up, based on the tax rate
referred to in clause (i) of the preceding sentence, so that the Indemnified
Party is made whole on an after-tax basis.
ARTICLE IX
PROCEDURAL ASPECTS OF VLASIC INDEMNITY
SECTION 9.1. GENERAL.
(a) If either the Indemnified Party or any of the Indemnifying
Parties receives any written notice of deficiency, claim or adjustment or any
other written communication from a taxing authority that may result in an
Indemnified Liability, the party receiving such notice or communication shall
promptly give written notice thereof to the other party, provided that any delay
by the Indemnified Party in so notifying an Indemnifying Party shall not relieve
the Indemnifying Party of any liability hereunder, except to the extent (i) such
delay restricts the ability of the Indemnifying Party to contest the resulting
Indemnified Liability administratively or in the courts in accordance with
Section 9.2 and (ii) the Indemnifying Party is materially and adversely
prejudiced by such delay.
(b) The parties hereto undertake and agree that from and after such
time as they obtain knowledge that any representative of a taxing authority has
begun to investigate or inquire into the Distribution or any of the Other
Transactions (whether or not such investigation or inquiry is a formal or
informal investigation or inquiry), the party obtaining such knowledge shall (i)
notify the other party thereof, provided that any delay by the Indemnified Party
in so notifying the Indemnifying Party shall not relieve the Indemnifying Party
of any liability hereunder (except to the extent (A) such delay restricts the
ability of the Indemnifying Party to contest the resulting Indemnified Liability
administratively or in the courts in accordance with Section 9.2 and (B) the
Indemnifying Party is materially and adversely prejudiced by such delay), (ii)
consult with the other party from time to time as to the conduct of such
investigation or inquiry, (iii) provide the other party with copies of all
correspondence with such taxing authority or any representative thereof
pertaining to such investigation or inquiry, and (iv) arrange for a
representative of the other party to be present at all meetings with such taxing
authority or any representative thereof pertaining to such investigation or
inquiry.
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(c) Vlasic undertakes and agrees to give to CSC attestations and/or
access to information, as requested by CSC, to document and verify the
achievement of the cost savings detailed in materials submitted to the IRS in
connection with the IRS Ruling.
SECTION 9.2. CONTESTS.
(a) Provided that (i) an Indemnifying Party shall furnish the
Indemnified Party with evidence reasonably satisfactory to the Indemnified Party
of its ability to pay the full amount of the Indemnified Liability and (ii) such
Indemnifying Party acknowledges in writing that the asserted liability is an
Indemnified Liability, such Indemnifying Party shall assume and direct the
defense or settlement of any tax examination, administrative appeal, hearing,
arbitration, suit or other proceeding (each a "Proceeding") commenced, filed or
otherwise initiated or convened to investigate or resolve the existence and
extent of such liability.
(b) If the Indemnified Liability is grouped with other unrelated
asserted liabilities or issues in the Proceeding, the parties shall use their
respective best efforts to cause the Indemnified Liability to be the subject of
a separate proceeding. If such severance is not possible, the Indemnifying Party
shall assume and direct and be responsible only for the matters relating to the
Indemnified Liability.
(c) Notwithstanding the foregoing, if at any time during a Proceeding
controlled by an Indemnifying Party pursuant to Section 9.2(a) such Indemnifying
Party fails to provide evidence reasonably satisfactory to the Indemnified Party
of its ability to pay the full amount of the Indemnified Liability or the
Indemnified Party reasonably determines, after due investigation, that such
Indemnifying Party could not pay the full amount of the Indemnified Liability,
then the Indemnified Party may assume control of the Proceedings upon 7 days
written notice.
(d) In addition to the amounts referred to in Section 7.1, an
Indemnifying Party shall pay all out-of-pocket expenses and other costs related
to the Indemnified Liability, including but not limited to fees for attorneys,
accountants, expert witnesses or other consultants retained by such Indemnifying
Party and/or the Indemnified Party. To the extent that any such expenses and
other costs have been or are paid by an Indemnified Party, the Indemnifying
Party shall promptly reimburse the Indemnified Party therefor.
(e) An Indemnifying Party shall not pay (unless otherwise required by
a proper notice of levy and after prompt notification to the Indemnified Party
of receipt of notice and demand for payment), settle, compromise or concede any
portion of the Indemnified Liability without the written consent of the
Indemnified Party, which consent shall not be unreasonably withheld. An
Indemnifying Party shall, on a timely basis, keep the Indemnified Party informed
of all developments in the Proceeding and provide the Indemnified Party with
copies of all pleadings, briefs, orders, and other written papers.
14
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(f) Any Proceeding which is not controlled or which is no longer
controlled by an Indemnifying Party pursuant to Section 9.2 shall be controlled
and directed exclusively by the Indemnified Party, and any related out-of-pocket
expenses and other costs incurred by the Indemnified Party, including but not
limited to, fees for attorneys, accountants, expert witnesses or other
consultants, shall be reimbursed by such Indemnifying Party. An Indemnified
Party will not be required to pursue the claim in federal district court, the
Court of Federal Claims or any state or foreign court if as a prerequisite to
such court's jurisdiction, the Indemnified Party is required to pay the asserted
liability unless the funds necessary to invoke such jurisdiction are provided by
such Indemnifying Party.
SECTION 9.3. TIME AND MANNER OF PAYMENT. An Indemnifying Party shall
pay to the Indemnified Party the amount of the Indemnified Liability and any
expenses or other costs indemnified against (less any amount paid directly by an
Indemnifying Party to the taxing authority) no less than seven (7) business days
prior to the date payment of the Indemnified Liability is to be made by any
party to the taxing authority (or, if applicable, to one or more CSC
shareowners). Such payment shall be paid by wire transfer of immediately
available funds to an account designated by the Indemnified Party by written
notice to an Indemnifying Party prior to the due date of such payment. If an
Indemnifying Party delays making payment beyond the due date hereunder, such
party shall pay interest on the amount unpaid at the IRS Interest Rate for each
day and the actual number of days for which any amount due hereunder is unpaid.
SECTION 9.4. REFUNDS. In connection with this Agreement, if an
Indemnified Party receives a refund in respect of amounts paid by an
Indemnifying Party to any taxing authority on its behalf, or should any such
amounts that would otherwise be refundable to the Indemnifying Party be applied
by the taxing authority to obligations of the Indemnified Party unrelated to an
Indemnified Liability, then such Indemnified Party shall, promptly following
receipt (or notification of credit), remit such refund and any related interest
to such Indemnifying Party.
SECTION 9.5. COOPERATION. The parties shall cooperate with one
another in a timely manner in any administrative or judicial proceeding
involving any matter that may result in an Indemnified Liability.
ARTICLE X
RESOLUTION OF DISPUTES
SECTION 10.1 DISPUTES.
(a) Resolution of any and all disputes arising from or in connection
with this Agreement, whether based on contract, tort, statute or otherwise,
including, but not limited to, disputes in connection with claims by third
parties (collectively, "Disputes"), shall be subject to the provisions of this
Section 10.1; provided, however, that nothing contained herein shall preclude
either party from
15
<PAGE>
seeking or obtaining (i) injunctive relief or (ii) equitable or other judicial
relief to enforce the provisions hereof or to preserve the status quo pending
resolution of Disputes hereunder.
(b) Either party may give the other party written notice of any
Dispute not resolved in the normal course of business. The parties shall attempt
in good faith to resolve any Dispute promptly by negotiation between executives
of the parties who have authority to settle the controversy and who are at a
higher level of management than the persons with direct responsibility for
administration of this Agreement. Within 30 days after delivery of the notice,
the foregoing executives of both parties shall meet at a mutually acceptable
time and place, and thereafter as often as they reasonably deem necessary for a
period not to exceed 15 days, to attempt to resolve the Dispute. All reasonable
requests for information made by one party to the other will be honored. If the
parties do not resolve the Dispute within such 45 day period (the "Initial
Mediation Period"), the parties shall attempt in good faith to resolve the
Dispute by negotiation between (a) in the case of CSC, the Chief Executive
Officer, and (b) in the case of Vlasic, the Chief Executive Officer
(collectively, the "Designated Officers"). Such officers shall meet at a
mutually acceptable time and place (but in any event no later than 15 days
following the expiration of the Initial Mediation Period) and thereafter as
often as they reasonably deem necessary for a period not to exceed 15 days, to
attempt to resolve the Dispute.
(c) If the Dispute has not been resolved by negotiation within 75
days of the first party's notice, or if the parties failed to meet within 30
days of the first party's notice, or if the Designated Officers failed to meet
within 60 days of the first party's notice, either party may commence any
litigation or other procedure allowed by law.
ARTICLE XI
GENERAL
SECTION 11.1. TERM OF THE AGREEMENT. This Agreement shall become
effective as of the Effective Date and, except as otherwise expressly provided
herein, shall continue in full force and effect indefinitely.
SECTION 11.2. ELECTIONS UNDER CODE SECTION 1552. Nothing in this
Agreement is intended to change or otherwise affect any election made by or on
behalf of the CSC Group with respect to the calculation of earnings and profits
under Code Section 1552.
SECTION 11.3. INJUNCTIONS. The parties acknowledge that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with its specific terms or were otherwise
breached. The parties hereto shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of this Agreement and to enforce
specifically the terms and provisions hereof in any court having jurisdiction,
such remedy being in addition to any other remedy to which they may be entitled
at law or in equity.
16
<PAGE>
SECTION 11.4. ASSIGNMENT. Neither of the parties may assign or
delegate any of its rights or duties under this Agreement without the prior
written consent of the other party, which consent will not be unreasonably
withheld. This Agreement shall be binding upon, and shall inure to the benefit
of, the parties hereto and their respective successors and permitted assigns.
SECTION 11.5. FURTHER ASSURANCES. Subject to the provisions hereof,
the parties hereto shall make, execute, acknowledge, and deliver such other
instruments and documents, and take all such other actions, as may be reasonably
required in order to effectuate the purposes of this Agreement and to consummate
the transactions contemplated hereby. Subject to the provisions hereof, each of
the parties shall, in connection with entering into this Agreement, performing
its obligations hereunder and taking any and all actions relating hereto, comply
with all applicable laws, regulations, orders, and decrees, and promptly provide
the other parties with all such information as they may reasonably request in
order to be able to comply with the provisions of this sentence.
SECTION 11.6. WAIVERS. No failure or delay on the part of the parties
in exercising any power or right hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such right or power, preclude
any other or further exercise thereof or the exercise of any other right or
power. No modification or waiver of any provision of this Agreement nor consent
to any departure by the parties therefrom shall in any event be effective unless
the same shall be in writing, and then such waiver or consent shall be effective
only in the specific instance and for the purpose for which given.
SECTION 11.7. CHANGE OF LAW. If, due to any change in applicable law
or regulations or their interpretation by any court of law or other governing
body having jurisdiction subsequent to the date of this Agreement, performance
of any provision of this Agreement or any transaction contemplated thereby shall
become impracticable or impossible, the parties hereto shall use their best
efforts to find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such provision.
SECTION 11.8. CONFIDENTIALITY. Subject to any contrary requirement of
law and the right of each party to enforce its rights hereunder in any legal
action, each party agrees that it shall keep strictly confidential, and shall
cause its employees and agents to keep strictly confidential, any information
which it or any of its employees or agents may require pursuant to, or in the
course of performing its obligations under, any provision of this Agreement.
SECTION 11.9. HEADINGS. Descriptive headings are for convenience only
and shall not control or affect the meaning or construction of any provision of
this Agreement.
SECTION 11.10. COUNTERPARTS. For the convenience of the parties, any
number of counterparts of this Agreement may be executed by the parties hereto,
and each such executed counterpart shall be, and shall be deemed to be, an
original instrument.
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SECTION 11.11. NOTICES. All notices, requests, claims and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery by
hand, by reputable overnight courier service, by facsimile transmission, or by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the addresses (or at such other address for a party as
shall be specified in a notice given in accordance with this Section 11.11
listed below:
CSC at: Campbell Soup Company
Campbell Place
Camden, New Jersey 08101
Attn.: Vice President-Taxes
Fax No. (609) 342-6033
Vlasic at: Vlasic Foods International Inc.
Campbell Place
Camden, New Jersey
Attn.: Norma B. Carter, Esq.
Fax No. (609) 342-3936
or to such other address as any party may, from time to time, designate in a
written notice given in a like manner. Notice given by hand shall be deemed
delivered when received by the recipient. Notice given by mail as set out above
shall be deemed delivered five (5) calendar days after the date the same is
mailed. Notice given by reputable overnight courier shall be deemed delivered
on the next following business day after the same is sent. Notice given by
facsimile transmission shall be deemed delivered on the day of transmission
provided telephone confirmation of receipt is obtained promptly after completion
of transmission.
SECTION 11.12. PRE-DISTRIBUTION EARNINGS AND PROFITS. CSC and Vlasic
agree to allocate pre-Distribution earnings and profits in accordance with
Treasury Regulation Section 1.312-10.
SECTION 11.13. COSTS AND EXPENSES. Unless otherwise specifically
provided herein, each party agrees to pay its own costs and expenses resulting
from the fulfillment of its respective obligations hereunder.
SECTION 11.14. CANCELLATION OF PRIOR TAX ALLOCATION OR TAX-SHARING
AGREEMENTS. Except as otherwise expressly provided herein, on or prior to the
Effective Date, CSC shall cancel or cause to be canceled all agreements (other
than this Agreement) providing for the allocation or sharing of Taxes to which
any member of the Vlasic Group would otherwise be bound following the
Distribution.
SECTION 11.15. INTEREST ON LATE PAYMENTS. If a party delays making
any payment beyond the due date hereunder, such party shall pay interest on the
amount unpaid at the
18
<PAGE>
IRS Interest Rate for each day and the actual number of days for which any
amount due hereunder is unpaid.
SECTION 11.16. GENERAL. This Agreement, including the attachments,
shall constitute the entire agreement between the parties hereto with respect to
the subject matter hereof and shall supersede all prior agreements and
undertakings, both written and oral, between the parties with respect to the
subject matter hereof and thereof. This Agreement may not be amended or modified
except (a) by an instrument in writing signed by, or on behalf of, the parties
or (b) by a waiver in accordance with Section 11.6. This Agreement shall be
binding upon and inure solely to the benefit of the parties hereto and their
respective present and future subsidiaries, and nothing herein, express or
implied, is intended to or shall confer upon any third parties any legal or
equitable right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement.
SECTION 11.17. GOVERNING LAW AND SEVERABILITY. This Agreement shall
be governed by, and construed in accordance with, the laws of the State of New
Jersey, applicable to contracts executed in and to be performed entirely within
that state. If any term or other provision of this Agreement is invalid, illegal
or incapable of being enforced by any law or public policy, all other terms and
provisions of this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby are consummated as originally contemplated to the greatest extent
possible.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed by their respective officers, each of whom is duly authorized, all
as of the Effective Date.
CAMPBELL SOUP COMPANY
By: ___________________________________
Name:
Title:
VLASIC FOODS INTERNATIONAL INC.
By: ___________________________________
Name:
Title:
19
<PAGE>
ALIGAR, INC.
By: __________________________________
Name:
Title:
CAMPBELL'S FRESH, INC.
By: __________________________________
Name:
Title:
CARGAL, INC.
By: __________________________________
Name:
Title:
VLASIC FOODS, INC.
By: __________________________________
Name:
Title:
VLASIC FOODS SALES COMPANY
By: __________________________________
Name:
Title:
VLASIC INTERNATIONAL BRANDS INC.
By: __________________________________
Name:
Title:
20
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CAMPBELL FROZEN FOODS LIMITED
By: __________________________________
Name:
Title:
[U.K. NEWCO (A UNITED KINGDOM
CORPORATION TO BE FORMED)]
By: __________________________________
Name:
Title:
[CANADA NEWCO (A CANADIAN
CORPORATION TO BE FORMED)]
By: __________________________________
Name:
Title:
SWIFT-ARMOUR S.A. ARGENTINA
By: __________________________________
Name:
Title:
SKANDIAVEIN-UND SUD-IMPORT GMBH
By: __________________________________
Name:
Title:
21
<PAGE>
CAMPBELL GROCERY PRODUCTS GMBH
By: __________________________________
Name:
Title:
22
<PAGE>
Exhibit 10.6
[EXECUTION COPY]
$750,000,000
CREDIT AGREEMENT
dated as of
FEBRUARY 20, 1998
among
VLASIC FOODS INTERNATIONAL INC.
CAMPBELL SOUP COMPANY
THE BANKS PARTY HERETO
THE CHASE MANHATTAN BANK,
AS SYNDICATION AGENT
and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
AS ADMINISTRATIVE AGENT
________________________
Arranged by
J.P. MORGAN SECURITIES INC.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE 1
Definitions
<S> <C>
Section 1.01. Definitions............................................. 2
Section 1.02. Accounting Terms and Determinations..................... 17
Section 1.03. Types of Borrowings..................................... 18
ARTICLE 2
Loans to Campbell
Section 2.01. Commitments to Lend..................................... 18
Section 2.02. Notice of Campbell Closing Date; Funding of Loans....... 18
Section 2.03. Campbell Global Note.................................... 19
Section 2.04. Maturity of Campbell Loans.............................. 19
Section 2.05. Interest Rate........................................... 20
Section 2.06. Other Applicable Provisions............................. 20
Section 2.07. Representations and Warranties of Campbell.............. 20
Section 2.08. Use of Proceeds......................................... 22
Section 2.09. Assumption of Campbell Loans by Company................. 22
ARTICLE 3
Loans to the Company
Section 3.01. Commitments to Lend..................................... 22
Section 3.02. Notice of Committed Borrowing........................... 23
Section 3.03. Money Market Borrowings................................. 23
Section 3.04. Notice to Banks; Funding of Loans....................... 27
Section 3.05. Notes................................................... 28
Section 3.06. Maturity of Loans....................................... 28
Section 3.07. Interest Rates.......................................... 29
Section 3.08. Facility Fees........................................... 32
Section 3.09. Optional Termination or Reduction of Commitments........ 32
Section 3.10. Method of Electing Interest Rates....................... 32
Section 3.11. Optional Prepayments.................................... 34
Section 3.12. General Provisions as to Payments....................... 34
Section 3.13. Funding Losses.......................................... 35
Section 3.14. Computation of Interest and Fees........................ 35
Section 3.15. Regulation D Compensation............................... 36
</TABLE>
i
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<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 3.16. Effect of Asset Securitization.......................... 36
ARTICLE 4
Conditions
Section 4.01. Closing with Campbell................................... 36
Section 4.02. Closing with the Company................................ 38
Section 4.03. Borrowings by the Company............................... 40
ARTICLE 5
Representations and Warranties of the Company
Section 5.01. Corporate Existence and Power........................... 41
Section 5.02. Corporate and Governmental Authorization; No
Contravention........................................... 41
Section 5.03. Binding Effect.......................................... 41
Section 5.04. Financial Information................................... 41
Section 5.05. Litigation.............................................. 42
Section 5.06. Compliance with ERISA................................... 42
Section 5.07. Environmental Matters................................... 43
Section 5.08. Taxes................................................... 43
Section 5.09. Subsidiaries............................................ 43
Section 5.10. No Regulatory Restrictions on Borrowing................. 44
Section 5.11. Full Disclosure......................................... 44
Section 5.12. Fair Value; Solvency.................................... 44
ARTICLE 6
Covenants
Section 6.01. Information............................................. 44
Section 6.02. Maintenance of Property; Insurance...................... 46
Section 6.03. Conduct of Business and Maintenance of Existence........ 46
Section 6.04. Compliance with Laws.................................... 47
Section 6.05. Inspection of Property, Books and Records............... 47
Section 6.06. Use of Proceeds......................................... 47
Section 6.07. Mergers and Sales of Assets............................. 47
Section 6.08. Negative Pledge......................................... 48
Section 6.09. Subsidiary Debt Limitation.............................. 49
Section 6.10. Debt/EBITDA Ratio....................................... 49
Section 6.11. Fixed Charge Coverage Ratio............................. 49
Section 6.12. Restricted Payments..................................... 49
Section 6.13. Investments............................................. 49
</TABLE>
ii
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<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 6.14. Transactions with Affiliates............................ 50
ARTICLE 7
Defaults
Section 7.01. Events of Default....................................... 51
Section 7.02. Notice of Default....................................... 53
ARTICLE 8
The Administrative Agent
Section 8.01. Appointment and Authorization........................... 53
Section 8.02. Administrative Agent and Affiliates..................... 53
Section 8.03. Action by Administrative Agent.......................... 53
Section 8.04. Consultation with Experts............................... 53
Section 8.05. Liability of Administrative Agent....................... 54
Section 8.06. Indemnification......................................... 54
Section 8.07. Credit Decision......................................... 54
Section 8.08. Successor Administrative Agent.......................... 55
Section 8.09. Administrative Agent's Fees............................. 55
Section 8.10. Syndication Agent....................................... 55
ARTICLE 9
Change in Circumstances
Section 9.01. Basis for Determining Interest Rate Inadequate or Unfair 55
Section 9.02. Illegality.............................................. 56
Section 9.03. Increased Cost and Reduced Return....................... 57
Section 9.04. Taxes................................................... 58
Section 9.05. Base Rate Loans Substituted for Affected Fixed Rate..... 60
ARTICLE 10
Miscellaneous
Section 10.01. Notices................................................ 60
Section 10.02. No Waivers............................................. 60
Section 10.03. Expenses; Indemnification.............................. 61
Section 10.04. Sharing of Set-offs.................................... 61
Section 10.05. Amendments and Waivers................................. 62
Section 10.06. Successors and Assigns................................. 62
Section 10.07. No Reliance on Margin Stock............................ 64
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
Section 10.08. Governing Law; Submission to Jurisdiction.............. 64
Section 10.09. Counterparts; Integration; Effectiveness............... 64
Section 10.10. WAIVER OF JURY TRIAL................................... 64
</TABLE>
COMMITMENT SCHEDULE
RATIO-BASED PRICING SCHEDULE
RATINGS-BASED PRICING SCHEDULE
SCHEDULE I - List of Spin-Off Agreements
EXHIBIT A - Form of Note
EXHIBIT B - Money Market Quote Request
EXHIBIT C - Invitation for Money Market Quotes
EXHIBIT D - Money Market Quote
EXHIBIT E - Opinion of Counsel for Campbell
EXHIBIT F - Opinion of Counsel for the Company
EXHIBIT G-1 - Opinion of Special Counsel for the Administrative Agent
delivered on the Campbell Closing Date
EXHIBIT G-2 - Opinion of Special Counsel for the Administrative Agent
delivered on the Company Closing Date
EXHIBIT H - Assignment and Assumption Agreement
EXHIBIT I - Form of Campbell Global Note
iv
<PAGE>
CREDIT AGREEMENT
AGREEMENT dated as of February 20, 1998 among VLASIC FOODS INTERNATIONAL
INC., CAMPBELL SOUP COMPANY, the BANKS party hereto, THE CHASE MANHATTAN BANK,
as Syndication Agent, and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as
Administrative Agent.
WHEREAS, on the date hereof, the Company is a wholly-owned subsidiary of
Campbell;
WHEREAS, the Company and Campbell desire to establish a five year revolving
credit facility in the amount of $750,000,000 as provided herein;
WHEREAS, Campbell will borrow an amount not to exceed $500,000,000 under
this facility on the Campbell Closing Date for the purpose of repaying
outstanding debt of Campbell;
WHEREAS, after such borrowing, Campbell will effect the Spin-Off, pursuant
to which 100% of the shares of capital stock of the Company will be distributed
to the owners of Campbell's common stock;
WHEREAS, upon the consummation of the Company Closing, the Company will
assume all of the obligations of Campbell with respect to the loans made to
Campbell hereunder and Campbell will be released from such obligations;
WHEREAS, after the Company Closing Date, the Company proposes to use funds
available under this facility for its general corporate purposes, including
acquisitions;
WHEREAS, the loans made to Campbell hereunder will mature (i) one month
after the Campbell Closing Date if the Company Closing is not consummated before
the Spin-Off Deadline or (ii) five years after the date hereof if the Company
Closing is consummated before the Spin-Off Deadline; and
WHEREAS, on the terms and conditions provided herein, the Banks are willing
(i) to lend up to $500,000,000 to Campbell on the Campbell Closing Date, (ii) to
release Campbell from its obligations with respect to such loans upon the
assumption of such obligations by the Company on the Company Closing Date and
(iii) to make loans to the Company from time to time after the Company Closing
Date;
NOW, THEREFORE, the parties hereto agree as follows:
<PAGE>
ARTICLE 1
DEFINITIONS
Section 1.01. Definitions. The following terms, as used herein, have the
following meanings:
"ABSOLUTE RATE AUCTION" means a solicitation of Money Market Quotes setting
forth Money Market Absolute Rates pursuant to Section 3.03.
"ADJUSTED CD RATE" has the meaning set forth in Section 3.07(b).
"ADMINISTRATIVE AGENT" means Morgan Guaranty Trust Company of New York in
its capacity as Administrative Agent for the Banks hereunder, and its successors
in such capacity.
"ADMINISTRATIVE QUESTIONNAIRE" means, with respect to each Bank, an
administrative questionnaire in the form prepared by the Administrative Agent
and submitted to the Administrative Agent (with a copy to the Company) duly
completed by such Bank.
"AFFILIATE" means (i) any Person that directly, or indirectly through one
or more intermediaries, controls the Company (a "Controlling Person") or (ii)
any Person (other than the Company or a Subsidiary) which is controlled by or is
under common control with a Controlling Person. As used herein, the term
"control" means possession, directly or indirectly, of the power to vote 10% or
more of any class of voting securities of a Person or to direct or cause the
direction of the management or policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"APPLICABLE LENDING OFFICE" means, with respect to any Bank, (i) in the
case of its Domestic Loans, its Domestic Lending Office, (ii) in the case of its
Euro-Dollar Loans, its Euro-Dollar Lending Office and (iii) in the case of its
Money Market Loans, its Money Market Lending Office.
"APPLICABLE PRICING SCHEDULE" means (i) the Ratio-Based Pricing Schedule
attached hereto, until the senior unsecured long-term debt securities of the
Company (without third party credit enhancement) are assigned a rating by S&P,
Moody's or both, and (ii) thereafter, the Ratings-Based Pricing Schedule
attached hereto.
"ASSESSMENT RATE" has the meaning set forth in Section 3.07(b).
"ASSET SECURITIZATION" means a sale or other disposition by the Company or
any Subsidiary of accounts receivable.
2
<PAGE>
"ASSIGNEE" has the meaning set forth in Section 10.06(c).
"BANK" means each bank listed on the signature pages hereof, each Assignee
which becomes a Bank pursuant to Section 10.06(c), and their respective
successors.
"BASE RATE" means, for any day, a rate per annum equal to the higher of (i)
the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus the Federal Funds
Rate for such day.
"BASE RATE LOAN" means a Committed Loan which bears interest at the Base
Rate pursuant to the applicable Notice of Committed Borrowing or Notice of
Interest Rate Election or the provisions of Article 9.
"BORROWING" has the meaning set forth in Section 1.03.
"CAMPBELL" means Campbell Soup Company, a New Jersey corporation, and its
successors.
"CAMPBELL CLOSING" means the closing with Campbell hereunder on the
Campbell Closing Date.
"CAMPBELL CLOSING DATE" means the date on or after the Effective Date on
which (i) all the conditions specified in Section 4.01 shall have been satisfied
and (ii) the Campbell Loans shall be made.
"CAMPBELL ERISA GROUP" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with Campbell, are treated as a single employer
under Section 414 of the Internal Revenue Code.
"CAMPBELL GLOBAL NOTE" has the meaning set forth in Section 2.03.
"CAMPBELL LOAN AMOUNT" means the aggregate amount (not to exceed
$500,000,000) to be borrowed by Campbell hereunder on the Campbell Closing Date
as specified by Campbell pursuant to Section 2.02(a).
"CAMPBELL LOANS" has the meaning set forth in Section 2.01.
"CAMPBELL'S CONSOLIDATED NET ASSETS" means the total assets of Campbell and
its Consolidated Subsidiaries after deducting therefrom all current liabilities.
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"CAMPBELL'S LATEST FORM 10-Q" means Campbell's quarterly report on Form 10-
Q for the fiscal quarter ended November 2, 1997, as filed with the SEC pursuant
to the Exchange Act.
"CAMPBELL'S 1997 FORM 10-K" means Campbell's annual report on Form 10-K for
the fiscal year ended August 3, 1997, as filed with the SEC pursuant to the
Exchange Act.
"CD BASE RATE" has the meaning set forth in Section 3.07(b).
"CD LOAN" means a Committed Loan which bears interest at a CD Rate pursuant
to the applicable Notice of Committed Borrowing or Notice of Interest Rate
Election.
"CD MARGIN" means a rate per annum determined in accordance with the
Applicable Pricing Schedule.
"CD RATE" means a rate of interest determined pursuant to Section 3.07(b)
on the basis of an Adjusted CD Rate.
"CD REFERENCE BANKS" means The Chase Manhattan Bank, Morgan Guaranty Trust
Company of New York and Wachovia Bank, N.A.
"COMBINED BASIS", when used with respect to determining any amount, means
that such amount is to be determined by combining the relevant amounts for each
of the Company's businesses in the same manner and with the same pro-forma
adjustments as were used in preparing the Company's combined pro-forma financial
statements included in the Form 10.
"COMMITMENT" means, with respect to each Bank listed on the Commitment
Schedule, (i) the amount set forth opposite its name on the Commitment Schedule
or (ii) with respect to any Assignee which becomes a Bank pursuant to Section
10.06(c), the amount of the transferor Bank's Commitment assigned to such
Assignee pursuant to Section 10.06(c), in each case as such amount may be
reduced from time to time pursuant to Section 3.09 or 3.16 or changed as a
result of an assignment pursuant to Section 10.06(c).
"COMMITMENT PERCENTAGE" means, with respect to any Bank at any time, the
percentage which the amount of such Bank's Commitment then constitutes of the
aggregate amount of the Commitments.
"COMMITMENT SCHEDULE" means the Commitment Schedule attached hereto.
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"COMMITTED LOAN" means a loan made by a Bank to Campbell on the Campbell
Closing Date pursuant to Section 2.01 or a loan made by a Bank to the Company
after the Company Closing Date pursuant to Section 3.01; provided that, if any
such loan or loans (or portions thereof) are combined or subdivided pursuant to
a Notice of Interest Rate Election, the term "Committed Loan" shall refer to the
combined principal amount resulting from such combination or to each of the
separate principal amounts resulting from such subdivision, as the case may be.
"COMPANY" means Vlasic Foods International Inc., a New Jersey corporation,
and its successors.
"COMPANY CLOSING" means the closing with the Company hereunder on the
Company Closing Date.
"COMPANY CLOSING DATE" means the date after the Campbell Closing Date on
which (i) all the conditions specified in Section 4.02 shall have been satisfied
and (ii) the Company shall assume the Campbell Loans as provided in Section
2.09.
"COMPANY'S SHARE" means, at any date, with respect to the Debt or interest
expense of any Minority-Owned Affiliate, a percentage of such Debt or interest
expense equal to the percentage of the outstanding aggregate equity interests
(other than preferred stock) in such Minority-Held Affiliate held at such date
by the Company and its Subsidiaries.
"CONSOLIDATED DEBT" means, at any date, the sum of (i) the Debt of the
Company and its Consolidated Subsidiaries, determined on a consolidated basis as
of such date, and (ii) the Company's Share of the Debt of each Minority-Owned
Affiliate.
"CONSOLIDATED EBITDA" means, for any period, Consolidated Net Income for
such period plus, to the extent deducted in determining Consolidated Net Income
for such period, the aggregate amount of (i) Consolidated Interest Expense, (ii)
income tax expense and (iii) depreciation, amortization and other similar non-
cash charges (including, without limitation, a write-off or write-down of
assets); provided that, for any period or portion of a period before the Spin-
Off Date, "Consolidated EBITDA" shall be determined on a Combined Basis.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, the sum of (i) the
interest expense of the Company and its Consolidated Subsidiaries, determined on
a consolidated basis for such period, and (ii) the Company's Share of the
interest expense of each Minority-Owned Affiliate; provided that, for any period
or portion of a period before the Spin-Off Date, the interest expense of the
Company and its Consolidated Subsidiaries referred to in clause (i) shall be
determined on a Combined Basis.
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"CONSOLIDATED NET INCOME" means, for any period, the net income of the
Company and its Consolidated Subsidiaries, determined on a consolidated basis
for such period, adjusted to exclude the effect of any extraordinary or other
non-recurring gain (but not loss); provided that, for any period or portion of a
period before the Spin-Off Date, "Consolidated Net Income" shall be determined
on a Combined Basis.
"CONSOLIDATED SUBSIDIARY" means at any date any Subsidiary or other entity
the accounts of which would be consolidated with those of the Company in its
consolidated financial statements if such statements were prepared as of such
date.
"CONSOLIDATED TANGIBLE ASSETS" means, at any date, the consolidated assets
of the Company and its Consolidated Subsidiaries less their consolidated
Intangible Assets, all determined as of such date. As used herein "INTANGIBLE
ASSETS" means the amount (to the extent reflected in determining such
consolidated assets) of (i) all write-ups (except write-ups resulting from
foreign currency translations and write-ups of assets of a going concern
business made within twelve months after the acquisition of such business) after
November 2, 1997 in the book value of any asset owned by the Company or a
Consolidated Subsidiary, (ii) all Investments in unconsolidated Subsidiaries and
all equity Investments in Persons which are not Subsidiaries and (iii) all
unamortized debt discount and expense, unamortized deferred charges, goodwill,
patents, trademarks, service marks, trade names, anticipated future benefit of
tax loss carry-forwards, copyrights, organization and developmental expenses and
other intangible assets.
"CONTINUING DIRECTOR" means (i) any individual who is a director of the
Company on the Spin-Off Date and (ii) any individual who becomes a director of
the Company after the Spin-Off Date and is elected or nominated for election as
a director of the Company by a majority of the individuals who were Continuing
Directors immediately before such election or nomination.
"CREDIT EXPOSURE" means, with respect to any Bank at any time, (i) the
amount of its Commitment (whether used or unused) at such time or (ii) if the
Commitments have terminated in their entirety, the aggregate outstanding
principal amount of its Loans at such time.
"DEBT" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of
business, (iv) all obligations of such Person as lessee which are capitalized in
accordance with generally accepted accounting principles, (v) all non-contingent
obligations of such Person to reimburse any bank or other Person in respect of
amounts paid under a letter of credit or similar instrument, (vi) all Debt of
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others secured by a Lien on any asset of such Person, whether or not such Debt
is assumed by such Person and (vii) all Debt of others Guaranteed by such
Person.
"DEBT/EBITDA RATIO" means, at the end of any Fiscal Quarter, the ratio of
(i) Consolidated Debt at the end of such Fiscal Quarter to (ii) Consolidated
EBITDA for the period of four consecutive Fiscal Quarters then ended.
"DEFAULT" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"DESIGNATED AFFILIATE" means (i) Bennett Dorrance, (ii) Mary Alice Malone,
(iii) the June 2, 1990 Voting Trust described in the Form 10 or (iv) any group
of Persons (within the meaning of Section 13 or 14 of the Exchange Act) which
includes one or more of the foregoing.
"DOMESTIC BUSINESS DAY" means any day except a Saturday, Sunday or other
day on which commercial banks in New York City are authorized by law to close.
"DOMESTIC INVENTORY" means inventory owned by Campbell or any Subsidiary of
Campbell and located in the United States.
"DOMESTIC LENDING OFFICE" means, as to each Bank, its office located at its
address set forth in its Administrative Questionnaire (or identified in its
Administrative Questionnaire as its Domestic Lending Office) or such other
office as such Bank may hereafter designate as its Domestic Lending Office by
notice to the Company and the Administrative Agent; provided that any Bank may
so designate separate Domestic Lending Offices for its Base Rate Loans, on the
one hand, and its CD Loans, on the other hand, in which case all references
herein to the Domestic Lending Office of such Bank shall be deemed to refer to
either or both of such offices, as the context may require.
"DOMESTIC LOANS" means CD Loans or Base Rate Loans or both.
"DOMESTIC RECEIVABLES" means receivables of Campbell or any Subsidiary of
Campbell which in the ordinary course of business are payable in the United
States.
"DOMESTIC RESERVE PERCENTAGE" has the meaning set forth in Section 3.07(b).
"EFFECTIVE DATE" means the date this Agreement becomes effective in
accordance with Section 10.09.
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"ENVIRONMENTAL LAWS" means any and all federal, state, local and foreign
statutes, laws, judicial decisions, regulations, ordinances, rules, judgments,
orders, decrees, plans, injunctions, permits, concessions, grants, franchises,
licenses, agreements and other governmental restrictions relating to the
environment, the effect of the environment on human health or to emissions,
discharges or releases of pollutants, contaminants, Hazardous Substances or
wastes into the environment including, without limitation, ambient air, surface
water, ground water, or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, Hazardous Substances or wastes or the
clean-up or other remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
"ERISA GROUP" means all members of a controlled group of corporations and
all trades or businesses (whether or not incorporated) under common control
which, together with the Company, are treated as a single employer under Section
414 of the Internal Revenue Code.
"EURO-DOLLAR BUSINESS DAY" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in London.
"EURO-DOLLAR LENDING OFFICE" means, as to each Bank, its office, branch or
affiliate located at its address set forth in its Administrative Questionnaire
(or identified in its Administrative Questionnaire as its Euro-Dollar Lending
Office) or such other office, branch or affiliate of such Bank as it may
hereafter designate as its Euro-Dollar Lending Office by notice to the Company
and the Administrative Agent.
"EURO-DOLLAR LOAN" means a Committed Loan which bears interest at a Euro-
Dollar Rate pursuant to the applicable Notice of Committed Borrowing or Notice
of Interest Rate Election.
"EURO-DOLLAR MARGIN" means a rate per annum determined in accordance with
the Applicable Pricing Schedule.
"EURO-DOLLAR RATE" means a rate of interest determined pursuant to Section
3.07(c) on the basis of a London Interbank Offered Rate.
"EURO-DOLLAR REFERENCE BANKS" means the principal London offices of The
Chase Manhattan Bank, Morgan Guaranty Trust Company of New York and Wachovia
Bank, N.A.
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"EURO-DOLLAR RESERVE PERCENTAGE" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars in
respect of "Eurocurrency liabilities" (or in respect of any other category of
liabilities which includes deposits by reference to which the interest rate on
Euro-Dollar Loans is determined or any category of extensions of credit or other
assets which includes loans by a non-United States office of any Bank to United
States residents).
"EVENTS OF DEFAULT" has the meaning set forth in Section 7.01.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended from
time to time.
"FACILITY FEE RATE" means a rate per annum determined in accordance with
the Applicable Pricing Schedule.
"FEDERAL FUNDS RATE" means, for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Domestic Business Day
next succeeding such day, provided that (i) if such day is not a Domestic
Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Domestic Business Day as so published on the
next succeeding Domestic Business Day, and (ii) if no such rate is so published
on such next succeeding Domestic Business Day, the Federal Funds Rate for such
day shall be the average rate quoted to Morgan Guaranty Trust Company of New
York on such day on such transactions as determined by the Administrative Agent.
"FISCAL QUARTER" means a fiscal quarter of the Company.
"FISCAL YEAR" means a fiscal year of the Company.
"FIXED CHARGE COVERAGE RATIO" means, at the end of any Fiscal Quarter, the
ratio of Consolidated EBITDA for the period of four consecutive Fiscal Quarters
then ended to Consolidated Interest Expense for such period of four consecutive
Fiscal Quarters.
"FIXED RATE BORROWING" means a Borrowing comprised of Fixed Rate Loans.
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"FIXED RATE LOANS" means CD Loans or Euro-Dollar Loans or Money Market
Loans (excluding Money Market LIBOR Loans bearing interest at the Base Rate
pursuant to Section 9.01) or any combination of the foregoing.
"FORM 10" means the Company's report on Form 10, as filed with the SEC
pursuant to the Exchange Act on February 6, 1998 (which report includes the
Information Statement).
"GROUP OF LOANS" or "GROUP" means at any time a group of Loans consisting
of (i) all Committed Loans which are Base Rate Loans at such time, (ii) all
Euro-Dollar Loans having the same Interest Period at such time or (iii) all CD
Loans having the same Interest Period at such time; provided that, if a
Committed Loan of any particular Bank is converted to or made as a Base Rate
Loan pursuant to Article 9, such Loan shall be included in the same Group or
Groups of Loans from time to time as it would have been in if it had not been so
converted or made.
"GUARANTEE" by any Person means any obligation, contingent or otherwise, of
such Person directly or indirectly guaranteeing any Debt of any other Person
and, without limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such Person (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Debt (whether
arising by virtue of partnership arrangements, by agreement to keep-well, to
purchase assets, goods, securities or services, to take-or-pay, or to maintain
financial statement conditions or otherwise), (ii) to reimburse a bank for
amounts drawn under a letter of credit for the purpose of paying such Debt or
(iii) entered into for the purpose of assuring in any other manner the holder of
such Debt of the payment thereof or to protect such holder against loss in
respect thereof (in whole or in part); provided that the term Guarantee shall
not include endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a corresponding meaning.
"HAZARDOUS SUBSTANCES" means any toxic, radioactive, caustic or otherwise
hazardous substance, including petroleum, its derivatives, by-products and other
hydrocarbons, or any substance having any constituent elements displaying any of
the foregoing characteristics.
"INDEMNITEE" has the meaning set forth in Section 10.03(b).
"INFORMATION STATEMENT" means the draft of the Information Statement
furnished to the Banks with respect to the Spin-Off included in the Form 10.
"INTEREST PERIOD" means: (1) in the case of the initial Interest Period
applicable to the Campbell Loans, a period of one month commencing on the
Campbell Closing
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Date; provided that such Interest Period shall be subject to the provisions of
clauses (a) and (b) of paragraph (2) of this definition;
(2) with respect to (i) each Euro-Dollar Loan made to the Company and (ii)
each Campbell Loan which is assumed by the Company on the Company Closing Date
and continued as a Euro-Dollar Loan after the initial Interest Period applicable
thereto expires, the period commencing on the date of borrowing specified in the
applicable Notice of Borrowing or on the date specified in the applicable Notice
of Interest Rate Election and ending one, two, three or six months thereafter,
as the Company may elect in such notice; provided that:
(a) any Interest Period which would otherwise end on a day which is
not a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in
another calendar month, in which case such Interest Period shall end on the
next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall, subject to clause (c) below, end on the last Euro-Dollar Business
Day of a calendar month; and
(c) any Interest Period which would otherwise end after the
Terminatio n Date shall end on the Termination Date.
(3) with respect to each CD Loan, the period commencing on the date of
borrowing specified in the applicable Notice of Borrowing or on the date
specified in the applicable Notice of Interest Rate Election and ending 30, 60,
90 or 180 days thereafter, as the Company may elect in such notice; provided
that:
(a) any Interest Period (other than an Interest Period determined
pursuant to clause (b) below) which would otherwise end on a day which is
not a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day; and
(b) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
(4) with respect to each Money Market LIBOR Loan, the period commencing on
the date of borrowing specified in the applicable Notice of Borrowing and ending
such whole number of months thereafter as the Company may elect in accordance
with Section 3.03; provided that:
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(a) any Interest Period which would otherwise end on a day which is
not a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in
another calendar month, in which case such Interest Period shall end on the
next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall, subject to clause (c) below, end on the last Euro-Dollar Business
Day of a calendar month; and
(c) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
(5) with respect to each Money Market Absolute Rate Loan, the period
commencing on the date of borrowing specified in the applicable Notice of
Borrowing and ending such number of days thereafter (but not less than 30 days)
as the Company may elect in accordance with Section 3.03; provided that:
(a) any Interest Period which would otherwise end on a day which is
not a Euro-Dollar Business Day shall be extended to the next succeeding Euro-
Dollar Business Day; and
(b) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended, or any successor statute.
"INVESTMENT" means any investment in any Person, whether by means of share
purchase, capital contribution, loan, Guarantee, time deposit or otherwise (but
not including any demand deposit). " LIBOR AUCTION" means a solicitation of
Money Market Quotes setting forth Money Market Margins based on the London
Interbank Offered Rate pursuant to Section 3.03.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind, or any other type of
preferential arrangement that has the practical effect of creating a security
interest, in respect of such asset. For the purposes of this Agreement, the
Company or any Subsidiary shall be deemed to own subject to a Lien any asset
which it has acquired or holds subject to the
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interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such asset.
"LOAN" means a Committed Loan or a Money Market Loan and "Loans" means
Committed Loans or Money Market Loans or any combination of the foregoing.
"LONDON INTERBANK OFFERED RATE" has the meaning set forth in Section
3.07(c).
"MATERIAL DEBT" means Debt (except Debt outstanding hereunder) of the
Company and/or one or more of its Subsidiaries, arising in one or more related
or unrelated transactions, in an aggregate principal or face amount exceeding
$30,000,000.
"MATERIAL PLAN" means at any time a Plan or Plans having aggregate Unfunded
Liabilities in excess of $30,000,000.
"MINORITY-OWNED AFFILIATE" means any Person (other than a Subsidiary) in
which the Company and its Subsidiaries hold at least 20% of the aggregate
outstanding equity interests of any class.
"MONEY MARKET ABSOLUTE RATE" has the meaning set forth in Section
3.03(d)(ii).
"MONEY MARKET ABSOLUTE RATE LOAN" means a loan to be made by a Bank
pursuant to an Absolute Rate Auction.
"MONEY MARKET LENDING OFFICE" means, as to each Bank, its Domestic Lending
Office or such other office, branch or affiliate of such Bank as it may
hereafter designate as its Money Market Lending Office by notice to the Company
and the Administrative Agent; provided that any Bank may from time to time by
notice to the Company and the Administrative Agent designate separate Money
Market Lending Offices for its Money Market LIBOR Loans, on the one hand, and
its Money Market Absolute Rate Loans, on the other hand, in which case all
references herein to the Money Market Lending Office of such Bank shall be
deemed to refer to either or both of such offices, as the context may require.
"MONEY MARKET LIBOR LOAN" means a loan to be made by a Bank pursuant to a
LIBOR Auction (including such a loan bearing interest at the Base Rate pursuant
to Section 9.01).
"MONEY MARKET LOAN" means a Money Market LIBOR Loan or a Money Market
Absolute Rate Loan.
"MONEY MARKET MARGIN" has the meaning set forth in Section 3.03(d)(ii).
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"MONEY MARKET QUOTE" means an offer by a Bank to make a Money Market Loan
in accordance with Section 3.03.
"MOODY'S" means Moody's Investors Service, Inc.
"MULTIEMPLOYER PLAN" means at any time an employee pension benefit plan
within the meaning of Section 4001(a)(3) of ERISA to which any member of the
ERISA Group is then making or accruing an obligation to make contributions or
has within the preceding five plan years made contributions, including for these
purposes any Person which ceased to be a member of the ERISA Group during such
five year period.
"NOTES" means promissory notes of the Company, substantially in the form of
Exhibit A hereto, evidencing the obligations of the Company to repay the
Campbell Loans assumed by it and all other Loans made to it, and "Note" means
any one of such promissory notes issued hereunder.
"NOTICE OF BORROWING" means a Notice of Committed Borrowing (as defined in
Section 3.02) or a Notice of Money Market Borrowing (as defined in Section
3.03(f)).
"NOTICE OF INTEREST RATE ELECTION" has the meaning set forth in Section
3.10(a).
"PARENT" means, with respect to any Bank, any Person controlling such Bank.
"PARTICIPANT" has the meaning set forth in Section 10.06(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"PERSON" means an individual, a corporation, a limited liability company, a
partnership, an association, a trust or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"PLAN" means at any time an employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Internal Revenue Code and
either (i) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any time within
the preceding five years been maintained, or contributed to, by any Person which
was at such time a member of the ERISA Group for employees of any Person which
was at such time a member of the ERISA Group.
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"PRIME RATE" means the rate of interest publicly announced by Morgan
Guaranty Trust Company of New York in New York City from time to time as its
Prime Rate.
"PRINCIPAL PROPERTY OF CAMPBELL" means any manufacturing or processing
plant or warehouse (a) located in the United States, (b) owned by Campbell or
any Subsidiary of Campbell and (c) having a gross book value (including related
land and improvements therein and all machinery and equipment included therein
without deduction of any depreciation reserves) on the date as of which the
determination is being made exceeding 2% of Campbell's Consolidated Net Assets.
"PRINCIPAL SUBSIDIARY OF CAMPBELL" means any Subsidiary of Campbell which
(a) owns a Principal Property of Campbell, (b) owns Domestic Inventory and
Domestic Receivables with a combined aggregate book value in excess of
$30,000,000 or (c) owns (directly or indirectly) the stock of any Subsidiary of
Campbell which owns a Principal Property of Campbell or has Domestic Inventory
and Domestic Receivables with a combined aggregate book value in excess of
$30,000,000.
"QUARTERLY DATES" means each March 31, June 30, September 30 and December
31.
"REFERENCE BANKS" means the CD Reference Banks or the Euro-Dollar Reference
Banks, as the context may require, and "Reference Bank" means any one of such
Reference Banks.
"REGULATION U" means Regulation U of the Board of Governors of the Federal
Reserve System, as in effect from time to time.
"REQUIRED BANKS" means at any time Banks having more than 50% of the Credit
Exposures at such time.
"RESTRICTED PAYMENT" means (i) any dividend or other distribution on any
shares of the Company's capital stock (except dividends payable solely in shares
of its capital stock other than mandatorily redeemable preferred stock) or (ii)
any payment on account of the purchase, redemption, retirement or acquisition of
(a) any shares of the Company's capital stock or (b) any option, warrant or
other right to acquire shares of the Company's capital stock (but not including
payments of principal, premium (if any) or interest made pursuant to the terms
of convertible debt securities prior to conversion), provided that the
assumption by the Company of obligations of Campbell pursuant to Section 2.09
shall not constitute a Restricted Payment.
"REVOLVING CREDIT PERIOD" means the period from and including the Company
Closing Date to but not including the Termination Date.
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"SEC" means the Securities and Exchange Commission.
"SOVEREIGN" means (i) the central or federal executive or legislative
governmental authority of a country or (ii) any agency or instrumentality of
such governmental authority (including any central bank or central monetary
authority) to the extent the obligations of such agency or instrumentality are
fully backed by the general taxing power of such governmental authority.
"SPIN-OFF" means the distribution by Campbell of 100% of the capital stock
of the Company to shareowners of Campbell substantially in the manner described
in the Information Memorandum.
"SPIN-OFF AGREEMENTS" means the agreements listed on Schedule I hereto, in
each case complying in all material respects with the description thereof in the
Information Statement.
"SPIN-OFF DATE" means the date on which the Spin-Off is consummated.
"SPIN-OFF DEADLINE" means 5:00 P.M. (New York City time) on the earlier of
(i) May 15, 1998 and (ii) the date which is 30 days after the Campbell Closing
Date.
"S&P" means Standard & Poor's Ratings Services, a division of The McGraw-
Hill Companies.
"SUBSIDIARY" means, as to any Person, any corporation or other entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by such Person. Unless
otherwise specified, "Subsidiary" means a Subsidiary of the Company.
"SYNDICATION AGENT" means The Chase Manhattan Bank in its capacity as
syndication agent for this revolving credit facility.
"TEMPORARY CASH INVESTMENT" means any Investment in (i) direct obligations
of the United States or any agency thereof or obligations guaranteed by the
United States or any agency thereof, (ii) commercial paper rated at least A-1 by
S&P and at least P-1 by Moody's, (iii) time deposits with, including
certificates of deposit issued by, any office located in the United States of
any bank or trust company which is organized or licensed under the laws of the
United States or any State thereof and has capital, surplus and undivided
profits aggregating at least $1,000,000,000, (iv) repurchase agreements with
respect to securities described in clause (i) above entered into with an office
of a bank or trust company meeting the criteria specified in clause (iii) above,
(v) securities issued or fully and unconditionally guaranteed by any state,
commonwealth or territory
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of the United States or by any political subdivision or taxing authority
thereof, and rated, in the case of long-term securities, at least AA by S&P and
Aa2 by Moody's, or, in the case of short-term securities, at least SP1 by S&P
and either MIG1 or VMIG1 by Moody's; (vi) direct obligations of any foreign
Sovereign recognized by the United States whose unguaranteed, unsecured and
otherwise unsupported long-term Sovereign U.S. dollar-denominated debt
obligations are rated at least AA by S&P and Aa2 by Moody's, (vii) time deposits
with, including certificates of deposit issued by, any bank or trust company
which is organized or licensed under the laws of any foreign country recognized
by the United States which has capital, surplus and undivided profits
aggregating at least $1,000,000,000 (or the currency equivalent thereof) or
(viii) shares of any money market or mutual fund, substantially all of the
assets of which are invested in securities and instruments of the types set
forth in clauses (i) through (vii) above, provided in each case that such
Investment matures within one year after it is acquired by the Company or a
Subsidiary.
"TERMINATION DATE" means February 20, 2003, or, if such day is not a Euro-
Dollar Business Day, the next succeeding Euro-Dollar Business Day unless such
Euro-Dollar Business Day falls in another calendar month, in which case the
Termination Date shall be the next preceding Euro-Dollar Business Day.
"UNFUNDED LIABILITIES" means, with respect to any Plan at any time, the
amount (if any) by which (i) the value of all benefit liabilities under such
Plan, determined on a plan termination basis using the assumptions prescribed by
the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the fair market
value of all Plan assets allocable to such liabilities under Title IV of ERISA
(excluding any accrued but unpaid contributions), all determined as of the then
most recent valuation date for such Plan, but only to the extent that such
excess represents a potential liability of a member of the ERISA Group to the
PBGC or any other Person under Title IV of ERISA.
"UNITED STATES" means the United States of America, including the States
and the District of Columbia, but excluding its territories and possessions.
"VLASIC FOODS BUSINESSES" means (i) with respect to any period prior to the
Spin-Off, the businesses to be owned by the Company following the Spin-Off, as
described on page 1 of the Information Statement, and (ii) with respect to any
period after the Spin-Off, the businesses of the Company and its Subsidiaries.
Section 1.02. Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with
generally accepted accounting principles as in effect from time to time, applied
on a basis consistent (except for changes concurred in by the Company's
independent public accountants), with the
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combined financial statements of the Company included in the Information
Statement; provided that, if the Company notifies the Administrative Agent that
the Company wishes to amend any provision hereof to eliminate the effect of any
change in generally accepted accounting principles on the operation of such
provision (or if the Administrative Agent notifies the Company that the Required
Banks wish to amend any provision hereof for such purpose), then the Company's
compliance with such provision shall be determined on the basis of generally
accepted accounting principles in effect immediately before the relevant change
in generally accepted accounting principles became effective, until either such
notice is withdrawn or such provision is amended in a manner satisfactory to the
Company and the Required Banks.
Section 1.03. Types of Borrowings. The term "BORROWING" denotes the
aggregation of Loans by one or more Banks to be made to the Company pursuant to
Article 3, in each case on the same day, all of which Loans are of the same type
(subject to Article 9) and, except in the case of Base Rate Loans, have the same
initial Interest Period. Borrowings are classified for purposes of this
Agreement either by reference to the pricing of Loans comprising such Borrowing
(e.g., a "EURO-DOLLAR BORROWING" is a Borrowing comprised of Euro-Dollar Loans
and a "CD BORROWING" is a Borrowing comprised of CD Loans) or by reference to
the provisions of Article 3 under which participation therein is determined
(i.e., a "COMMITTED BORROWING" is a Borrowing under Section 3.01 in which all
Banks participate in proportion to their Commitments, while a "MONEY MARKET
BORROWING" is a Borrowing under Section 3.03 in which the Bank participants are
determined on the basis of their bids).
ARTICLE 2
LOANS TO CAMPBELL
Section 2.01. Commitments to Lend. Each Bank severally agrees, on the
terms and conditions set forth in this Agreement, to make a loan to Campbell on
the Campbell Closing Date in an amount equal to such Bank's Commitment
Percentage of the Campbell Loan Amount (such loans in an aggregate amount equal
to the Campbell Loan Amount being herein called the "CAMPBELL LOANS").
Section 2.02. Notice of Campbell Closing Date; Funding of Loans. (a)
Campbell shall give the Administrative Agent a notice, not later than 10:30 A.M.
(New York City time) on the third Euro-Dollar Business Day before the Campbell
Closing Date, specifying:
(i) the Campbell Closing Date (which shall be a Euro-Dollar Business
Day); and
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(ii) the Campbell Loan Amount, which shall not exceed $500,000,000.
Promptly after receiving such notice, the Administrative Agent shall notify
each Bank of the Campbell Closing Date, the Campbell Loan Amount and such Bank's
Commitment Percentage thereof, and such notice shall not thereafter be revocable
by Campbell.
(b) Not later than 12:00 Noon (New York City time) on the Campbell Closing
Date, each Bank shall make available an amount equal to its Commitment
Percentage of the Campbell Loan Amount, in Federal or other funds immediately
available in New York City, to the Administrative Agent at its address referred
to in Section 10.01. Unless the Administrative Agent determines that any
applicable condition specified in Section 4.01 has not been satisfied, the
Administrative Agent will make the funds so received from the Banks available to
Campbell at the Administrative Agent's aforesaid address.
(c) Unless the Administrative Agent shall have received notice from a Bank
prior to the Campbell Closing Date that such Bank will not make available to the
Administrative Agent an amount equal to such Bank's Commitment Percentage of the
Campbell Loan Amount, the Administrative Agent may assume that such Bank has
made such amount available to the Administrative Agent on the Campbell Closing
Date in accordance with subsection (b) of this Section and the Administrative
Agent may, in reliance upon such assumption, make a corresponding amount
available to Campbell on the Campbell Closing Date. If and to the extent that
such Bank shall not have so made such amount available to the Administrative
Agent, such Bank and Campbell severally agree to repay to the Administrative
Agent forthwith on demand such corresponding amount together with interest
thereon, for each day from the day such amount is made available to Campbell
until the day such amount is repaid to the Administrative Agent, at (i) in the
case of Campbell, a rate per annum equal to the higher of the Federal Funds Rate
and the interest rate applicable thereto pursuant to Section 2.05 and (ii) in
the case of such Bank, the Federal Funds Rate. If such Bank shall repay such
corresponding amount to the Administrative Agent, such amount so repaid shall
constitute such Bank's Campbell Loan for purposes of this Agreement.
Section 2.03. Campbell Global Note. Campbell's obligations to pay the
principal of and interest on the Campbell Loans shall be evidenced by a single
global promissory note of Campbell, payable to the order of the Administrative
Agent for the accounts of the several Banks in a principal amount equal to the
Campbell Loan Amount. Such note (the "CAMPBELL GLOBAL NOTE") shall be in
substantially the form of Exhibit I hereto.
Section 2.04. Maturity of Campbell Loans. Each Campbell Loan shall
mature, and the principal amount thereof shall be due and payable, on the last
day of the initial one-month Interest Period applicable thereto if the Company
Closing is not
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consummated before the Spin-Off Deadline or on the Termination Date if the
Company Closing is consummated before the Spin-Off Deadline.
Section 2.05. Interest Rate. Each Campbell Loan shall bear interest
initially at a Euro-Dollar Rate for an Interest Period of one month, subject to
the provisions of the definition of Interest Period.
Section 2.06. Other Applicable Provisions. The provisions of Sections 3.11
to 3.15, inclusive, and Article 9 shall apply to the Campbell Loans and
Campbell's obligations in connection therewith (in each case as if each
reference to the Company in said provisions referred instead to Campbell and
each reference to the Notes in said provisions referred instead to the Campbell
Global Note). Campbell (instead of the Company) shall pay (i) any indemnity
payable under Section 9.04(c) for Taxes or Other Taxes with respect to any
payments by Campbell under this Agreement or the Campbell Global Note and (ii)
any indemnity payable under Section 10.03(b) with respect to any actual or
proposed use of proceeds of the Campbell Loans. Campbell shall be liable jointly
and severally with the Company for the facility fee payable pursuant to Section
3.08, excluding any portion of such facility fee accruing on and after the
Company Closing Date..
Section 2.07. Representations and Warranties of Campbell. Campbell
represents and warrants that:
(a) Campbell is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of New Jersey, and has all
corporate powers and all material governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted.
(b) The execution, delivery and performance by Campbell of this
Agreement and the Campbell Global Note are within the corporate powers of
Campbell, have been duly authorized by all necessary corporate action,
require no action by or in respect of, or filing with, any governmental
body, agency or official and do not contravene, or constitute a default
under, any provision of applicable law or regulation or of the certificate
of incorporation or by-laws of Campbell or of any agreement, judgment,
injunction, order, decree or other instrument binding upon Campbell or any
of its Subsidiaries or result in the creation or imposition of any Lien on
any asset of Campbell or any of its Subsidiaries.
(c) This Agreement constitutes a valid and binding agreement of
Campbell and the Campbell Global Note constitutes a valid and binding
obligation of Campbell, in each case enforceable in accordance with its
terms
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except as the same may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and by general principles of equity.
(d) The consolidated balance sheet of Campbell and its consolidated
subsidiaries as of August 3, 1997 and the related consolidated statements
of earnings, of shareowners' equity and of cash flows for the fiscal year
then ended, reported on by Price Waterhouse LLP and set forth in Campbell's
1997 Form 10-K, a copy of which has been delivered to each of the Banks,
fairly present, in conformity with generally accepted accounting
principles, the consolidated financial position of Campbell and its
Consolidated Subsidiaries as of such date and their consolidated results of
operations and cash flows for such fiscal year.
(e) The unaudited consolidated balance sheet of Campbell and its
consolidated subsidiaries as of November 2, 1997 and the related unaudited
consolidated statements of earnings, of shareowners' equity and of cash
flows for the fiscal quarter then ended, a copy of which has been delivered
to each of the Banks, fairly present, in conformity with generally accepted
accounting principles applied on a basis consistent with the financial
statements referred to in subsection (d) of this Section, the consolidated
financial position of Campbell and its consolidated subsidiaries as of such
date and their consolidated results of operations and cash flows for such
fiscal quarter (subject to normal year-end adjustments).
(f) Except for the effects of the Spin-Off, there has been no
material adverse change in the business, financial position or results of
operations of Campbell and its consolidated subsidiaries, considered as a
whole, since August 3, 1997.
(g) Campbell is not (i) an "investment company" within the meaning of
the Investment Company Act of 1940, as amended, (ii) a "holding company" or
a "subsidiary company" of a holding company within the meaning of the
Public Utility Holding Company Act of 1935, as amended, or (iii) otherwise
subject to any regulatory scheme which restricts its ability to incur debt.
(h) All information heretofore furnished by Campbell to the
Administrative Agent or any Bank for purposes of or in connection with this
Agreement or any transaction contemplated hereby does not, and all such
information hereafter furnished by Campbell to the Administrative Agent or
any Bank will not, contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements
therein, in light of the circumstances under which they were or will be
made, not misleading.
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Section 2.08. Use of Proceeds. Campbell will use the proceeds of the
Campbell Loans to repay existing debt of Campbell. None of such proceeds will be
used, directly or indirectly, for the purpose, whether immediate, incidental or
ultimate, of buying or carrying any "margin stock" within the meaning of
Regulation U.
Section 2.09. Assumption of Campbell Loans by Company. If the Company
Closing is consummated before the Spin-Off Deadline, then, effective upon the
consummation of the Company Closing:
(a) the Company will unconditionally and irrevocably assume, as
principal obligor and without recourse to Campbell, all of the obligations
of Campbell to make payments of principal and interest with respect to the
Campbell Loans and the Campbell Global Note; and
(b) the Company, the Administrative Agent and each Bank will
unconditionally and irrevocably release Campbell from all claims and
demands whatsoever which each of them then has against Campbell to make
payments of principal and interest with respect to the Campbell Loans and
the Campbell Global Note.
If the Company Closing is consummated before the Spin-Off Deadline, the
foregoing assumption and release shall become effective concurrently with the
consummation of the Company Closing and without any further action by the
parties hereto, and the Administrative Agent shall promptly cancel the Campbell
Global Note and return it to Campbell.
ARTICLE 3
Loans to the Company
Section 3.01. Commitments to Lend. Each Bank severally agrees, on the
terms and conditions set forth in this Agreement, to make loans to the Company
pursuant to this Section from time to time during the Revolving Credit Period;
provided that, immediately after each such loan is made:
(i) the aggregate outstanding principal amount of such Bank's
Committed Loans shall not exceed its Commitment; and
(ii) the aggregate outstanding principal amount of all the Loans shall
not exceed the aggregate amount of the Commitments.
Each Borrowing under this Section shall be in an aggregate amount of $10,000,000
or any larger multiple of $1,000,000 (except that any such Borrowing may be in
the
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aggregate amount available within the limitations in the foregoing
proviso) and shall be made from the several Banks ratably in proportion to their
respective Commitments. Within the foregoing limits, the Company may borrow
under this Section, prepay Loans (including the Campbell Loans) to the extent
permitted by Section 3.11 and reborrow at any time during the Revolving Credit
Period under this Section.
Section 3.02. Notice of Committed Borrowing. The Company shall give the
Administrative Agent notice (a "NOTICE OF COMMITTED BORROWING") not later than
10:30 A.M. (New York City time) on (x) the date of each Base Rate Borrowing, (y)
the second Domestic Business Day before each CD Borrowing and (z) the third
Euro-Dollar Business Day before each Euro-Dollar Borrowing by it, specifying:
(a) the date of such Borrowing, which shall be a Domestic Business
Day in the case of a Domestic Borrowing or a Euro-Dollar Business Day in
the case of a Euro-Dollar Borrowing;
(b) the aggregate amount of such Borrowing;
(c) whether the Loans comprising such Borrowing are to bear interest
initially at the Base Rate, a CD Rate or a Euro-Dollar Rate; and
(d) in the case of a CD Borrowing or a Euro-Dollar Borrowing, the
duration of the initial Interest Period applicable thereto, subject to the
provisions of the definition of Interest Period.
Section 3.03. Money Market Borrowings. (a) The Money Market Option. In
addition to Committed Borrowings pursuant to Section 3.01, the Company may, as
set forth in this Section, request the Banks to make offers to make Money Market
Loans to the Company from time to time during the Revolving Credit Period. The
Banks may, but shall have no obligation to, make such offers and the Company
may, but shall have no obligation to, accept any such offers in the manner set
forth in this Section.
(b) Money Market Quote Request. When the Company wishes to request offers
to make Money Market Loans under this Section, it shall transmit to the
Administrative Agent by telex or facsimile transmission a Money Market Quote
Request substantially in the form of Exhibit B hereto so as to be received not
later than 10:30 A.M. (New York City time) on (x) the fifth Euro-Dollar Business
Day prior to the date of Borrowing proposed therein, in the case of a LIBOR
Auction or (y) the Domestic Business Day next preceding the date of Borrowing
proposed therein, in the case of an Absolute Rate Auction (or, in either case,
such other time or date as the Company and the Administrative Agent shall have
mutually agreed and shall have notified to the Banks not later than the date of
the Money Market Quote Request for the first LIBOR Auction or Absolute Rate
Auction for which such change is to be effective) specifying:
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(i) the proposed date of Borrowing, which shall be a Euro-Dollar
Business Day in the case of a LIBOR Auction or a Domestic Business Day in
the case of an Absolute Rate Auction;
(ii) the aggregate amount of such Borrowing, which shall be
$10,000,000 or a larger multiple of $1,000,000;
(iii) the duration of the Interest Period applicable thereto, subject
to the provisions of the definition of Interest Period; and
(iv) whether the Money Market Quotes requested are to set forth a
Money Market Margin or a Money Market Absolute Rate.
The Company may request offers to make Money Market Loans for more than one
Interest Period in a single Money Market Quote Request. No Money Market Quote
Request shall be given within five Euro-Dollar Business Days (or such other
number of days as the Company and the Administrative Agent may agree) of any
other Money Market Quote Request.
(c) Invitation for Money Market Quotes. Promptly upon receipt of a Money
Market Quote Request, the Administrative Agent shall send to the Banks by telex
or facsimile transmission an Invitation for Money Market Quotes substantially in
the form of Exhibit C hereto, which shall constitute an invitation by the
Company to each Bank to submit Money Market Quotes offering to make the Money
Market Loans to which such Money Market Quote Request relates in accordance with
this Section.
(d) Submission and Contents of Money Market Quotes. Each Bank may submit a
Money Market Quote containing an offer or offers to make Money Market Loans in
response to any Invitation for Money Market Quotes. Each Money Market Quote must
comply with the requirements of this subsection (d) and must be submitted to the
Administrative Agent by telex or facsimile transmission at its offices specified
in or pursuant to Section 10.01 not later than (x) 2:00 P.M. (New York City
time) on the fourth Euro-Dollar Business Day prior to the proposed date of
Borrowing, in the case of a LIBOR Auction or (y) 9:30 A.M. (New York City time)
on the proposed date of Borrowing, in the case of an Absolute Rate Auction (or,
in either case, such other time or date as the Company and the Administrative
Agent shall have mutually agreed and shall have notified to the Banks not later
than the date of the Money Market Quote Request for the first LIBOR Auction or
Absolute Rate Auction for which such change is to be effective); provided that
Money Market Quotes submitted by the Administrative Agent (or any affiliate of
the Administrative Agent) in the capacity of a Bank may be submitted, and may
only be submitted, if the Administrative Agent or such affiliate notifies the
Company of the terms of the offer or offers contained therein not later than
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(x) one hour prior to the deadline for the other Banks, in the case of a LIBOR
Auction or (y) 15 minutes prior to the deadline for the other Banks, in the case
of an Absolute Rate Auction. Subject to Articles 4 and 7, any Money Market Quote
so made shall be irrevocable except with the written consent of the
Administrative Agent given on the instructions of the Company.
(ii) Each Money Market Quote shall be in substantially the form of
Exhibit D hereto and shall in any case specify:
(A) the proposed date of Borrowing,
(B) the principal amount of the Money Market Loan for which
each such offer is being made, which principal amount (w) may be
greater than or less than the Commitment of the quoting Bank, (x) must
be $5,000,000 or a larger multiple of $1,000,000, (y) may not exceed
the principal amount of Money Market Loans for which offers were
requested and (z) may be subject to an aggregate limitation as to the
principal amount of Money Market Loans for which offers being made by
such quoting Bank may be accepted,
(C) in the case of a LIBOR Auction, the margin above or below
the applicable London Interbank Offered Rate (the "MONEY MARKET
MARGIN") offered for each such Money Market Loan, expressed as a
percentage (specified to the nearest 1/10,000th of 1%) to be added to
or subtracted from such base rate,
(D) in the case of an Absolute Rate Auction, the rate of
interest per annum (specified to the nearest 1/10,000th of 1%) (the
"MONEY MARKET ABSOLUTE RATE") offered for each such Money Market Loan,
and
(E) the identity of the quoting Bank.
A Money Market Quote may set forth up to five separate offers by the quoting
Bank with respect to each Interest Period specified in the related Invitation
for Money Market Quotes.
(iii) Any Money Market Quote shall be disregarded if it:
(A) is not substantially in conformity with Exhibit D hereto
or does not specify all of the information required by subsection
(d)(ii) above,
(B) contains qualifying, conditional or similar language,
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(C) proposes terms other than or in addition to those set
forth in the applicable Invitation for Money Market Quotes, or
(D) arrives after the time set forth in subsection (d)(i).
(e) Notice to the Company. The Administrative Agent shall promptly notify
the Company of the terms of (x) any Money Market Quote submitted by a Bank that
is in accordance with subsection (d) and (y) any Money Market Quote that amends,
modifies or is otherwise inconsistent with a previous Money Market Quote
submitted by such Bank with respect to the same Money Market Quote Request. Any
such subsequent Money Market Quote shall be disregarded by the Administrative
Agent unless such subsequent Money Market Quote is submitted solely to correct a
manifest error in such former Money Market Quote. The Administrative Agent's
notice to the Company shall specify (A) the aggregate principal amount of Money
Market Loans for which offers have been received for each Interest Period
specified in the related Money Market Quote Request, (B) the respective
principal amounts and Money Market Margins or Money Market Absolute Rates, as
the case may be, so offered and (C) if applicable, limitations on the aggregate
principal amount of Money Market Loans for which offers in any single Money
Market Quote may be accepted.
(f) Acceptance and Notice by the Company. Not later than 10:30 A.M. (New
York City time) on (x) the third Euro-Dollar Business Day prior to the proposed
date of Borrowing, in the case of a LIBOR Auction or (y) the proposed date of
Borrowing, in the case of an Absolute Rate Auction (or, in either case, such
other time or date as the Company and the Administrative Agent shall have
mutually agreed and shall have notified to the Banks not later than the date of
the Money Market Quote Request for the first LIBOR Auction or Absolute Rate
Auction for which such change is to be effective), the Company shall notify the
Administrative Agent of its acceptance or non-acceptance of the offers so
notified to it pursuant to subsection (e). In the case of acceptance, such
notice (a "NOTICE OF MONEY MARKET BORROWING") shall specify the aggregate
principal amount of offers for each Interest Period that are accepted. The
Company may accept any Money Market Quote in whole or in part; provided that:
(i) the aggregate principal amount of each Money Market Borrowing
may not exceed the applicable amount set forth in the related Money Market
Quote Request;
(ii) the aggregate principal amount of each Money Market Borrowing
must be $10,000,000 or a larger multiple of $1,000,000;
(iii) acceptance of offers may only be made on the basis of ascending
Money Market Margins or Money Market Absolute Rates, as the case may be;
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(iv) the Company may not accept any offer that is described in
subsection (d)(iii) or that otherwise fails to comply with the requirements
of this Agreement; and
(v) immediately after such Money Market Borrowing is made, the
aggregate outstanding principal amount of the Loans shall not exceed the
aggregate amount of the Commitments.
(g) Allocation by Administrative Agent. If offers are made by two or more
Banks with the same Money Market Margins or Money Market Absolute Rates, as the
case may be, for a greater aggregate principal amount than the amount in respect
of which such offers are accepted for the related Interest Period, the principal
amount of Money Market Loans in respect of which such offers are accepted shall
be allocated by the Administrative Agent among such Banks as nearly as possible
(in multiples of $1,000,000, as the Administrative Agent may deem appropriate)
in proportion to the aggregate principal amounts of such offers. Determinations
by the Administrative Agent of the amounts of Money Market Loans shall be
conclusive in the absence of manifest error.
Section 3.04. Notice to Banks; Funding of Loans. (a) Upon receipt of a
Notice of Borrowing, the Administrative Agent shall promptly notify each Bank of
the contents thereof and of such Bank's share (if any) of such Borrowing and
such Notice of Borrowing shall not thereafter be revocable by the Company.
(b) Not later than 12:00 Noon (New York City time) on the date of each
Borrowing, each Bank participating therein shall make available its share of
such Borrowing, in Federal or other funds immediately available in New York
City, to the Administrative Agent at its address referred to in Section 10.01.
Unless the Administrative Agent determines that any applicable condition
specified in Article 4 has not been satisfied, the Administrative Agent will
make the funds so received from the Banks available to the Company at the
Administrative Agent's aforesaid address.
(c) Unless the Administrative Agent shall have received notice from a Bank
prior to the date of any Borrowing that such Bank will not make available to the
Administrative Agent such Bank's share of such Borrowing, the Administrative
Agent may assume that such Bank has made such share available to the
Administrative Agent on the date of such Borrowing in accordance with subsection
(b) of this Section and the Administrative Agent may, in reliance upon such
assumption, make a corresponding amount available to the Company on such date.
If and to the extent that such Bank shall not have so made such share available
to the Administrative Agent, such Bank and the Company severally agree to repay
to the Administrative Agent forthwith on demand such corresponding amount
together with interest thereon, for each day from the date
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such amount is made available to the Company until the day such amount is repaid
to the Administrative Agent, at (i) in the case of the Company, a rate per annum
equal to the higher of the Federal Funds Rate and the interest rate applicable
thereto pursuant to Section 3.07 and (ii) in the case of such Bank, the Federal
Funds Rate. If such Bank shall repay such corresponding amount to the
Administrative Agent, such amount so repaid shall constitute such Bank's Loan
included in such Borrowing for purposes of this Agreement.
Section 3.05. Notes. (a) With respect to each Bank, the Company's
obligation to repay (i) the Loan made by such Bank to Campbell and assumed by
the Company and (ii) the Loans made by such Bank directly to the Company shall
be evidenced by a single Note payable to the order of such Bank for the account
of its Applicable Lending Office in an amount equal to the aggregate unpaid
principal amount of such Bank's Loans assumed by or made to the Company.
(b) Each Bank may, by notice to the Company and the Administrative Agent,
request that the Company's obligation to repay such Bank's Loans of a particular
type be evidenced by a separate Note in an amount equal to the aggregate unpaid
principal amount of such Loans. Each such Note shall be in substantially the
form of Exhibit A hereto with appropriate modifications to reflect the fact that
it evidences solely Loans of the relevant type. Each reference in this
Agreement to the "Note" of such Bank shall be deemed to refer to and include any
or all of such Notes, as the context may require.
(c) Upon receipt of each Bank's Note pursuant to Section 4.02(b), the
Administrative Agent shall forward such Note to such Bank. Each Bank shall
record the date, amount and type of the Loan made by it to Campbell and assumed
by the Company and each Loan made by it to the Company, and in each case the
date and amount of each payment of principal made with respect thereto, and may,
if such Bank so elects in connection with any transfer or enforcement of its
Note, endorse on the schedule forming a part thereof appropriate notations to
evidence the foregoing information with respect to each such Loan then
outstanding; provided that a Bank's failure to make (or any error in making) any
such recordation or endorsement shall not affect the Company's obligations
hereunder or under the Notes. Each Bank is hereby irrevocably authorized by the
Company so to endorse its Note and to attach to and make a part of such Note a
continuation of any such schedule as and when required.
Section 3.06. Maturity of Loans. (a) Each Committed Loan made to the
Company (including the Campbell Loans if assumed by the Company pursuant to
Section 2.09) shall mature, and the principal amount thereof shall be due and
payable, on the Termination Date.
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(b) Each Money Market Loan included in any Money Market Borrowing shall
mature, and the principal amount thereof shall be due and payable, on the last
day of the Interest Period applicable to such Borrowing.
Section 3.07. Interest Rates. (a) Each Base Rate Loan shall bear interest
on the outstanding principal amount thereof, for each day from the date such
Loan is made until it becomes due, at a rate per annum equal to the Base Rate
for such day. Such interest shall be payable quarterly in arrears on each
Quarterly Date and, with respect to the principal amount of any Base Rate Loan
converted to a CD Loan or a Euro-Dollar Loan, on the day such principal amount
is so converted. Any overdue principal of or interest on any Base Rate Loan
shall bear interest, payable on demand, for each day until paid at a rate per
annum equal to the sum of 1% plus the Base Rate for such day.
(b) Each CD Loan shall bear interest on the outstanding principal amount
thereof, for each day during each Interest Period applicable thereto, at a rate
per annum equal to the sum of the CD Margin for such day plus the Adjusted CD
Rate applicable to such Interest Period; provided that if any CD Loan shall, as
a result of clause (3)(b) of the definition of Interest Period, have an Interest
Period of less than 30 days, such CD Loan shall bear interest during such
Interest Period at the rate applicable to Base Rate Loans during such period.
Such interest shall be payable for each Interest Period on the last day thereof
and, if such Interest Period is longer than 90 days, at intervals of 90 days
after the first day thereof. Any overdue principal of or interest on any CD
Loan shall bear interest, payable on demand, for each day until paid at a rate
per annum equal to the sum of 1% plus the Base Rate for such day.
The "ADJUSTED CD RATE" applicable to any Interest Period means a rate per
annum determined pursuant to the following formula:
[ CDBR ] *
ACDR = ____________ + AR
[ 1.00 -DRP ]
ACDR = Adjusted CD Rate
CDBR = CD Base Rate
DRP = Domestic Reserve Percentage
AR = Assessment Rate
__________
* The fraction in brackets being rounded upward, if necessary, to the next
higher 1/100th of 1%.
The "CD BASE RATE" applicable to any Interest Period is the rate of
interest determined by the Administrative Agent to be the average (rounded
upward, if necessary, to the next higher 1/100th of 1%) of the prevailing rates
per annum bid at
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10:00 A.M. (New York City time) (or as soon thereafter as practicable) on
the first day of such Interest Period by two or more New York certificate of
deposit dealers of recognized standing for the purchase at face value from each
CD Reference Bank of its certificates of deposit in an amount comparable to the
principal amount of the CD Loan of such CD Reference Bank to which such Interest
Period applies and having a maturity comparable to such Interest Period.
"DOMESTIC RESERVE PERCENTAGE" means for any day that percentage (expressed
as a decimal) which is in effect on such day, as prescribed by the Board of
Governors of the Federal Reserve System (or any successor) for determining the
maximum reserve requirement (including without limitation any basic,
supplemental or emergency reserves) for a member bank of the Federal Reserve
System in New York City with deposits exceeding five billion dollars in respect
of new non-personal time deposits in dollars in New York City having a maturity
comparable to the related Interest Period and in an amount of $100,000 or more.
The Adjusted CD Rate shall be adjusted automatically on and as of the effective
date of any change in the Domestic Reserve Percentage.
"ASSESSMENT RATE" means for any day the annual assessment rate in effect on
such day which is payable by a member of the Bank Insurance Fund classified as
adequately capitalized and within supervisory subgroup "A" (or a comparable
successor assessment risk classification) within the meaning of 12 C.F.R. (S)
327.4(a) (or any successor provision) to the Federal Deposit Insurance
Corporation (or any successor) for such Corporation's (or such successor's)
insuring time deposits at offices of such institution in the United States. The
Adjusted CD Rate shall be adjusted automatically on and as of the effective date
of any change in the Assessment Rate.
(c) Each Euro-Dollar Loan shall bear interest on the outstanding principal
amount thereof, for each day during each Interest Period applicable thereto, at
a rate per annum equal to the sum of the Euro-Dollar Margin for such day plus
the London Interbank Offered Rate applicable to such Interest Period. Such
interest shall be payable for each Interest Period on the last day thereof and,
if such Interest Period is longer than three months, at intervals of three
months after the first day thereof.
The "LONDON INTERBANK OFFERED RATE" applicable to any Interest Period means
the average (rounded upward, if necessary, to the next higher 1/16 of 1%) of the
respective rates per annum at which deposits in dollars are offered to each of
the Euro-Dollar Reference Banks in the London interbank market at approximately
11:00 A.M. (London time) two Euro-Dollar Business Days before the first day of
such Interest Period in an amount approximately equal to the principal amount of
the Euro-Dollar Loan of such Euro-Dollar Reference Bank to which such Interest
Period is to apply and for a period of time comparable to such Interest Period.
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(d) Any overdue principal of or interest on any Euro-Dollar Loan shall
bear interest, payable on demand, for each day until paid at a rate per annum
equal to the higher of (i) the sum of 1% plus the Euro-Dollar Margin for such
day plus the quotient obtained (rounded upward, if necessary, to the next higher
1/100th of 1%) by dividing (x) the average (rounded upward, if necessary, to the
next higher 1/16th of 1%) of the respective rates per annum at which one day
(or, if such amount due remains unpaid more than three Euro-Dollar Business
Days, then for such other period of time not longer than three months as the
Administrative Agent may select) deposits in dollars in an amount approximately
equal to such overdue payment due to each of the Euro-Dollar Reference Banks are
offered to such Euro-Dollar Reference Bank in the London interbank market for
the applicable period determined as provided above by (y) 1.00 minus the Euro-
Dollar Reserve Percentage (or, if the circumstances described in clause (a) or
(b) of Section 9.01 shall exist, at a rate per annum equal to the sum of 1% plus
the Base Rate for such day) and (ii) the sum of 1% plus the Euro-Dollar Margin
for such day plus the London Interbank Offered Rate applicable to such Loan
immediately before such payment was due.
(e) Subject to Section 9.01, each Money Market LIBOR Loan shall bear
interest on the outstanding principal amount thereof, for the Interest Period
applicable thereto, at a rate per annum equal to the sum of the London Interbank
Offered Rate for such Interest Period (determined in accordance with Section
3.07(c) as if the related Money Market LIBOR Borrowing were a Committed Euro-
Dollar Borrowing) plus (or minus) the Money Market Margin quoted by the Bank
making such Loan in accordance with Section 3.03. Each Money Market Absolute
Rate Loan shall bear interest on the outstanding principal amount thereof, for
the Interest Period applicable thereto, at a rate per annum equal to the Money
Market Absolute Rate quoted by the Bank making such Loan in accordance with
Section 3.03. Such interest shall be payable for each Interest Period on the
last day thereof and, if such Interest Period is longer than three months, at
intervals of three months after the first day thereof. Any overdue principal of
or interest on any Money Market Loan shall bear interest, payable on demand, for
each day until paid at a rate per annum equal to the sum of 1% plus the Base
Rate for such day.
(f) The Administrative Agent shall determine each interest rate applicable
to the Loans hereunder. The Administrative Agent shall give prompt notice of
each rate of interest so determined to the Company and the participating Banks
(and Campbell in the case of the interest rate initially applicable to the
Campbell Loans), and its determination thereof shall be conclusive in the
absence of manifest error.
(g) Each Reference Bank agrees to use its best efforts to furnish
quotations to the Administrative Agent as contemplated by this Section. If any
Reference Bank does not furnish a timely quotation, the Administrative Agent
shall determine the relevant interest rate on the basis of the quotation or
quotations furnished by the remaining
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Reference Bank or Reference Banks or, if none of such quotations is available on
a timely basis, the provisions of Section 9.01 shall apply.
Section 3.08. Facility Fees. (a) The Company shall pay to the
Administrative Agent, for the account of the Banks ratably in proportion to
their Credit Exposures, a facility fee calculated for each day at the Facility
Fee Rate for such day (determined in accordance with the Applicable Pricing
Schedule) on the aggregate amount of the Credit Exposures on such day. Such
facility fee shall accrue for each day from and including the Effective Date to
but excluding the day on which the Credit Exposures are reduced to zero.
(b) Such fees shall be payable quarterly in arrears on each Quarterly
Payment Date and on the day on which the Commitments terminate in their entirety
(and, if later, on the day on which the Credit Exposures are reduced to zero).
Section 3.09. Optional Termination or Reduction of Commitments.(a) During
the Revolving Credit Period, the Company may, upon at least three Domestic
Business Days' notice to the Administrative Agent, terminate the Commitments at
any time, if no Loans are outstanding at such time, or ratably reduce from time
to time by an aggregate amount of $25,000,000 or a larger multiple of
$1,000,000, the aggregate amount of the Commitments in excess of the aggregate
outstanding principal amount of the Loans. The Administrative Agent shall give
prompt notice to the Banks of any such termination or reduction of the
Commitments.
(b) Unless previously terminated, the Commitments shall terminate in their
entirety on the Termination Date (or on the last day of the initial one-month
Interest Period applicable to the Campbell Loans if the Company Closing has not
been consummated before the Spin-Off Deadline).
Section 3.10. Method of Electing Interest Rates. (a) The Campbell Loans
shall bear interest initially at a Euro-Dollar Rate. The Loans included in each
Committed Borrowing by the Company shall bear interest initially at the type of
rate specified by the Company in the applicable Notice of Committed Borrowing.
Thereafter, the Company may from time to time elect to change or continue the
type of interest rate borne by each Group of Loans (subject in each case to the
provisions of Article 9), as follows:
(i) if such Loans are Base Rate Loans, the Company may elect to
convert such Loans to CD Loans as of any Domestic Business Day or to Euro-
Dollar Loans as of any Euro-Dollar Business Day;
(ii) if such Loans are CD Loans, the Company may elect to convert
such Loans to Base Rate Loans as of any Domestic Business Day or to
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Euro-Dollar Loans as of any Euro-Dollar Business Day or may elect to
continue such Loans as CD Loans for an additional Interest Period, subject
to Section 3.13 in the case of any such conversion effective on any day
other than the last day of the then current Interest Period applicable to
such Loans; and
(iii) if such Loans are Euro-Dollar Loans, the Company may elect to
convert such Loans to Base Rate Loans or CD Loans as of any Euro-Dollar
Business Day or may elect to continue such Loans as Euro-Dollar Loans for
an additional Interest Period, subject to Section 3.13 in the case of any
such conversion effective on any day other than the last day of the then
current Interest Period applicable to such Loans.
Each such election shall be made by delivering a notice (a "NOTICE OF INTEREST
RATE ELECTION") to the Administrative Agent not later than 10:00 A.M. (New York
City time) on the third Euro-Dollar Business Day before the conversion or
continuation selected in such notice is to be effective (unless the relevant
Loans are to be converted to Domestic Loans of the other type or are CD Loans to
be continued as CD Loans for an additional Interest Period, in which case such
notice shall be delivered to the Administrative Agent not later than 10:00 A.M.
(New York City time) on the second Domestic Business Day before such conversion
or continuation is to be effective). A Notice of Interest Rate Election may, if
it so specifies, apply to only a portion of the aggregate principal amount of
the relevant Group of Loans; provided that (i) such portion is allocated ratably
among the Loans comprising such Group and (ii) the portion to which such Notice
applies, and the remaining portion to which it does not apply, are each
$10,000,000 or any larger multiple of $1,000,000.
(b) Each Notice of Interest Rate Election shall specify:
(i) the Group of Loans (or portion thereof) to which such notice
applies;
(ii) the date on which the conversion or continuation selected in
such notice is to be effective, which shall comply with the applicable
clause of subsection (a) above;
(iii) if the Loans comprising such Group are to be converted, the
new type of Loans and, if the Loans being converted are to be Fixed Rate
Loans, the duration of the next succeeding Interest Period applicable
thereto; and
(iv) if such Loans are to be continued as CD Loans or Euro-Dollar
Loans for an additional Interest Period, the duration of such additional
Interest Period.
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Each Interest Period specified in a Notice of Interest Rate Election shall
comply with the provisions of the definition of Interest Period.
(c) Upon receipt of a Notice of Interest Rate Election from the Company
pursuant to subsection (a) above, the Administrative Agent shall promptly notify
each Bank of the contents thereof and such notice shall not thereafter be
revocable by the Company. If the Company fails to deliver a timely Notice of
Interest Rate Election to the Administrative Agent for any Group of CD Loans or
Euro-Dollar Loans, such Loans shall be converted into Base Rate Loans on the
last day of the then current Interest Period applicable thereto.
Section 3.11. Optional Prepayments. Subject in the case of any Fixed Rate
Loans to Section 3.13, the Company may, upon at least one Domestic Business
Day's notice to the Administrative Agent, prepay any Group of Domestic Loans (or
any Money Market Borrowing bearing interest at the Base Rate pursuant to Section
9.01) or upon at least three Euro-Dollar Business Days' notice to the
Administrative Agent, prepay any Group of Euro-Dollar Loans, in each case in
whole at any time, or from time to time in part in amounts aggregating
$5,000,000 or any larger multiple of $1,000,000, by paying the principal amount
to be prepaid together with accrued interest thereon to the date of prepayment.
Each such optional prepayment shall be applied to prepay ratably the Loans of
the several Banks included in such Group.
(b) Except as provided in subsection (a) above, the Company may not prepay
all or any portion of the principal amount of any Money Market Loan prior to the
maturity thereof.
(c) Upon receipt of a notice of prepayment pursuant to this Section, the
Administrative Agent shall promptly notify each Bank of the contents thereof and
of such Bank's ratable share (if any) of such prepayment and such notice shall
not thereafter be revocable by the Company.
Section 3.12. General Provisions as to Payments. (a) The Company shall make
each payment of principal of, and interest on, the Loans and of fees hereunder,
not later than 12:00 Noon (New York City time) on the date when due, in Federal
or other funds immediately available in New York City, to the Administrative
Agent at its address referred to in Section 10.01 and without reduction by
reason of any set-off or counterclaim. The Administrative Agent will promptly
distribute to each Bank its ratable share of each such payment received by the
Administrative Agent for the account of the Banks. Whenever any payment of
principal of, or interest on, the Domestic Loans or of fees shall be due on a
day which is not a Domestic Business Day, the date for payment thereof
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shall be extended to the next succeeding Domestic Business Day. Whenever any
payment of principal of, or interest on, the Euro-Dollar Loans shall be due on a
day which is not a Euro-Dollar Business Day, the date for payment thereof shall
be extended to the next succeeding Euro-Dollar Business Day unless such Euro-
Dollar Business Day falls in another calendar month, in which case the date for
payment thereof shall be the next preceding Euro-Dollar Business Day. Whenever
any payment of principal of, or interest on, the Money Market Loans shall be due
on a day which is not a Euro-Dollar Business Day, the date for payment thereof
shall be extended to the next succeeding Euro-Dollar Business Day. If the date
for any payment of principal is extended by operation of law or otherwise,
interest thereon shall be payable for such extended time.
(b) Unless the Administrative Agent shall have received notice from the
Company before the date on which any payment is due to the Banks hereunder that
the Company will not make such payment in full, the Administrative Agent may
assume that the Company has made such payment in full to the Administrative
Agent on such date and the Administrative Agent may, in reliance upon such
assumption, cause to be distributed to each Bank on such due date an amount
equal to the amount then due to such Bank. If and to the extent that the Company
shall not have so made such payment, each Bank shall repay to the Administrative
Agent forthwith on demand such amount distributed to such Bank together with
interest thereon, for each day from the day such amount is distributed to such
Bank until the day such Bank repays such amount to the Administrative Agent, at
the Federal Funds Rate.
Section 3.13. Funding Losses. If the Company makes any payment of
principal with respect to any Fixed Rate Loan or any Fixed Rate Loan is
converted (pursuant to Article 3, 7 or 9 or otherwise) on any day other than the
last day of an Interest Period applicable thereto, or the last day of an
applicable period fixed pursuant to Section 3.07(d), or if the Company fails to
borrow, prepay, convert or continue any Fixed Rate Loans after notice has been
given to any Bank in accordance with Section 3.04(a), 3.10(c) or 3.11(c), the
Company shall reimburse each Bank within 15 days after demand for any resulting
loss or expense incurred by it (or by an existing or prospective Participant in
the related Loan), including (without limitation) any loss incurred in
obtaining, liquidating or employing deposits from third parties, but excluding
loss of margin for the period after any such payment or conversion or failure to
borrow, prepay, convert or continue; provided that such Bank shall have
delivered to the Company a certificate as to the amount of such loss or expense,
which certificate shall be conclusive in the absence of manifest error.
Section 3.14. Computation of Interest and Fees. Interest based on the
Prime Rate hereunder shall be computed on the basis of a year of 365 days (or
366 days in a leap year) and paid for the actual number of days elapsed
(including the first day but excluding the last day). All other interest and
fees shall be computed on the basis of a year of 360 days and paid for the
actual number of days elapsed (including the first day but excluding the last
day).
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Section 3.15. Regulation D Compensation. Each Bank may require the Company
to pay, contemporaneously with each payment of interest on each of such Bank's
Euro-Dollar Loans, additional interest on such Euro-Dollar Loan at a rate per
annum determined by such Bank up to but not exceeding the excess of (i) (A) the
applicable London Interbank Offered Rate divided by (B) one minus the Euro-
Dollar Reserve Percentage over (ii) the applicable London Interbank Offered
Rate. Any Bank wishing to require payment of such additional interest (x) shall
so notify the Company and the Administrative Agent, in which case such
additional interest on the Euro-Dollar Loans of such Bank shall be payable to
such Bank at the place indicated in such notice with respect to each Interest
Period commencing at least three Euro-Dollar Business Days after the giving of
such notice, and (y) shall notify the Company at least five Euro-Dollar Business
Days prior to each date on which interest is payable on the Euro-Dollar Loans of
the amount then due it under this Section.
Section 3.16. Effect of Asset Securitization. (a) The Company shall, within
three Euro-Dollar Business Days after any net cash proceeds are received from
the lenders or purchasers of securities in any Asset Securitization, ratably
reduce the Commitments by an aggregate amount equal to such net cash proceeds.
(b) Concurrently with each reduction of the Commitments pursuant to
subsection (a), the Company shall prepay Committed Loans in the manner provided
in Section 3.11, to the extent (if any) required so that no Bank has Committed
Loans outstanding in an aggregate principal amount in excess of its Commitment
as so reduced.
ARTICLE 4
CONDITIONS
Section 4.01. Closing with Campbell. The Campbell Closing shall occur and
the Campbell Loans shall be made when all of the following conditions shall have
been satisfied (but only if all of such conditions are satisfied before May 15,
1998):
(a) the Administrative Agent shall have received from Campbell a
notice specifying the Campbell Closing Date as required by Section 2.02(a);
(B) the Administrative Agent shall have received the Campbell Global
Note duly executed by Campbell, dated on or before the Campbell Closing
Date and complying with the provisions of Section 2.03;
(c) the Administrative Agent shall have received an opinion of the
General Counsel or Acting General Counsel of Campbell, substantially in the
form of Exhibit E hereto, dated the Campbell Closing Date and covering such
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additional matters relating to the transactions contemplated hereby as the
Required Banks may reasonably request;
(d) the Administrative Agent shall have received an opinion of Davis
Polk & Wardwell, special counsel for the Administrative Agent, dated the
Campbell Closing Date, substantially in the form of Exhibit G-1 hereto and
covering such additional matters relating to the transactions contemplated
hereby as the Required Banks may reasonably request;
(e) the representations and warranties of Campbell contained in this
Agreement shall be true on and as of the Campbell Closing Date; on the
Campbell Closing Date:
(f) on the Cambell Closing Date:
(i) neither Campbell nor any Principal Subsidiary of Campbell
shall have commenced a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to itself or
its debts under any bankruptcy, insolvency or other similar law or
shall have sought the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of
its property, or shall have consented to any such relief or to the
appointment of or taking possession by any such official in any
involuntary case or other proceeding commenced against it, or shall
have made a general assignment for the benefit of creditors, or shall
have failed generally to pay its debts as they have become due, or
shall have taken any corporate action to authorize any of the
foregoing;
(ii) no involuntary case or other proceeding shall have been
commenced against Campbell or any Principal Subsidiary of Campbell
seeking liquidation, reorganization or other relief with respect to it
or its debts under any bankruptcy, insolvency or other similar law or
seeking the appointment of a trustee, receiver, liquidator, custodian
or other similar official of it or any substantial part of its
property, and no order for relief shall have been entered against
Campbell or any Principal Subsidiary of Campbell under the federal
bankruptcy laws;
(iii) no member of the Campbell ERISA Group shall have failed to
pay when due an amount or amounts aggregating in excess of $30,000,000
which it shall have become liable to pay under Title IV of ERISA; no
notice of intent to terminate a Material Plan of Campbell shall have
been filed under Title IV of ERISA by any member of the Campbell ERISA
Group, any plan administrator or any combination of the foregoing; and
no proceedings shall have been instituted by the PBGC
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under Title IV of ERISA seeking to terminate, to impose liability
(other than for premiums under Section 4007 of ERISA) in respect of,
or to cause a trustee to be appointed to administer any Material Plan
of Campbell; and no condition shall exist by reason of which the PBGC
would be entitled to obtain a decree adjudicating that any Material
Plan of Campbell must be terminated; and no complete or partial
withdrawal from, or default, within the meaning of Section 4219(c)(5)
of ERISA, shall have occurred with respect to one or more
Multiemployer Plans of Campbell which could cause one or more members
of the Campbell ERISA Group to incur a current payment obligation in
excess of $30,000,000;
(iv) no judgment or order for the payment of money in excess of
$100,000,000 shall have been rendered against Campbell or any
Subsidiary of Campbell which has not been satisfied; and
(v) no Default shall have occurred and be continuing under this
Agreement;
(g) the Administrative Agent shall have received a certificate signed
by an authorized officer of Campbell to the effect set forth in clauses (e)
and (f) above; and
(h) the Administrative Agent shall have received all documents it may
reasonably request relating to the existence of Campbell, the corporate
authority for and the validity of this Agreement and the Campbell Global
Note, and any other matters relevant hereto, all in form and substance
satisfactory to the Administrative Agent.
Promptly after the Campbell Closing occurs, the Administrative Agent shall
notify Campbell, the Company and the Banks thereof, and such notice shall be
conclusive and binding on all parties hereto.
Section 4.02. Closing with the Company. The Company Closing will occur,
and the Company will assume the Campbell Loans as provided in Section 2.09, when
all of the following conditions shall have been satisfied (but only if all of
such conditions are satisfied before the Spin-Off Deadline):
(a) the Administrative Agent shall have received from the Company a
notice specifying the Company Closing Date before 3:00 P.M. (New York City
time) on the immediately preceding Domestic Business Day;
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(b) the Administrative Agent shall have received a Note for the
account of each Bank duly executed by the Company, dated on or before the
Company Closing Date and complying with the provisions of Section 3.05;
(c) the Administrative Agent shall have received an opinion of the
General Counsel of the Company, substantially in the form of Exhibit F
hereto, dated the Company Closing Date and covering such additional matters
relating to the transactions contemplated hereby as the Required Banks may
reasonably request;
(d) the Administrative Agent shall have received an opinion of Davis
Polk & Wardwell, special counsel for the Administrative Agent, dated the
Company Closing Date, substantially in the form of Exhibit G-2 hereto and
covering such additional matters relating to the transactions contemplated
hereby as the Required Banks may reasonably request;
(e) the representations and warranties of the Company contained in
this Agreement shall be true on and as of the Company Closing Date;
(f) no Default shall have occurred and be continuing under this
Agreement;
(g) each of the Spin-Off Agreements shall have been executed and
delivered by the parties thereto, shall be a valid and binding agreement of
each party thereto and shall be in full force and effect;
(h) the Spin-Off shall have been consummated and the assets
transferred to the Company in connection with the Spin-Off, the liabilities
assumed by the Company in connection with the Spin-Off and the substance of
the Spin-Off Agreements shall all be substantially as described in the
Information Statement;
(i) the execution, delivery and performance by Campbell of the Spin-
Off Agreements shall be within the corporate powers of Campbell, shall have
been duly authorized by all necessary corporate action, shall require no
action by or in respect of, or filing with, any governmental body, agency
or official (except the filing of the Form 10) and shall not contravene, or
constitute a default under, any provision of applicable law or regulation
or of the certificate of incorporation or by-laws of Campbell or of any
agreement, judgment, injunction, order, decree or other instrument binding
upon Campbell or any of its Subsidiaries;
(j) the Administrative Agent shall have received (A) a certificate
signed by an authorized officer of the Company to the effect set forth in
clauses
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(e), (f) and (g) above and (B) a certificate signed by an authorized
officer of Campbell to the effect set forth in clauses (g), (h) and (i)
above;
(k) the Administrative Agent shall have received all documents it may
reasonably request relating to the existence of the Company, the corporate
authority for and the validity of this Agreement, the Notes and the Spin-
Off Agreements, and any other matters relevant hereto, all in form and
substance satisfactory to the Administrative Agent.
Promptly after the Company Closing occurs, the Administrative Agent shall notify
Campbell, the Company and the Banks thereof, and such notice shall be conclusive
and binding on all parties hereto.
Section 4.03. Borrowings by the Company. The obligation of any Bank to
make a Loan to the Company during the Revolving Credit Period (including any new
Loan to be made on the Company Closing Date) is subject to the satisfaction of
the following conditions:
(a) the Spin-Off shall have been consummated before the Spin-Off
Deadline;
(b) the Administrative Agent shall have received a Notice of
Borrowing as required by Section 3.02 or 3.03, as the case may be;
(c) immediately after such Borrowing, no Default shall have
occurred and be continuing; and
(d) the representations and warranties of the Company contained in
this Agreement (except those set forth in Section 5.12) shall be true on
and as of the date of such Borrowing.
Each Borrowing hereunder by the Company shall be deemed to be a representation
and warranty by the Company that the conditions specified in clauses (c) and (d)
of this Section are satisfied on the date of such Borrowing.
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants that:
Section 5.01. Corporate Existence and Power. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of New Jersey, and has all corporate powers and all material governmental
licenses, authorizations, consents and approvals required to carry on the Vlasic
Foods Businesses as now conducted.
Section 5.02. Corporate and Governmental Authorization; No Contravention.
The execution, delivery and performance by the Company of this Agreement, the
Notes and the Spin-Off Agreements, and the assumption by the Company of
obligations of Campbell as provided in Section 2.09, are within the corporate
powers of the Company, have been duly authorized by all necessary corporate
action, require no action by or in respect of, or filing with, any governmental
body, agency or official (except the filing of the Form 10) and do not
contravene, or constitute a default under, any provision of applicable law or
regulation or of the certificate of incorporation or by-laws of the Company or
of any agreement, judgment, injunction, order, decree or other instrument
binding upon the Company or any of its Subsidiaries or result in the creation or
imposition of any Lien on any asset of the Company or any of its Principal
Subsidiaries.
Section 5.03. Binding Effect. This Agreement constitutes a valid and
binding agreement of the Company, and each Note when executed and delivered by
the Company will constitute a valid and binding obligation of the Company, in
each case enforceable in accordance with its terms except as the same may be
limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally and by general principles of equity.
Section 5.04. Financial Information. (a) The combined balance sheet of the
Company and its Subsidiaries as of August 3, 1997 and the related combined
statements of earnings, of cash flows and of shareowners' equity for the Fiscal
Year then ended, reported on by Price Waterhouse LLP and set forth in the
Information Statement, fairly present, in conformity with generally accepted
accounting principles, the combined financial position of the Vlasic Foods
Businesses as of such date and their combined results of operations and cash
flows for such Fiscal Year.
(b) The unaudited combined balance sheet of the Company and its
Subsidiaries as of November 2, 1997 and the related unaudited combined
statements of earnings, of cash flows and of shareowners' equity for the Fiscal
Quarter then ended, a copy of which has been delivered to each of the Banks,
fairly present, in conformity with
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generally accepted accounting principles applied on a basis consistent with the
financial statements referred to in subsection (a) of this Section, the combined
financial position of the Vlasic Foods Businesses as of such date and their
combined results of operations and cash flows for such Fiscal Quarter (subject
to normal year-end adjustments).
(c) The pro forma condensed combined balance sheet of the Company and its
Subsidiaries as of November 2, 1997 and the pro forma condensed combined
statements of earnings of the Company and its Subsidiaries for the Fiscal Year
ended August 3, 1997 and the Fiscal Quarter ended November 2, 1997, all as set
forth in the Information Statement, as supplemented by a Memorandum to Banks
dated February 11, 1998 (collectively, the "Pro Forma Financial Statements")
fairly present, on a basis consistent with the financial statements referred to
in subsection (a) of this Section, the combined financial position of the Vlasic
Foods Businesses as of November 2, 1997 and their combined results of operations
for such Fiscal Year and Fiscal Quarter, in each case adjusted to give effect to
(i) the Spin-Off and the transactions contemplated thereby, (ii) the payment of
legal, accounting and other fees related thereto and (iii) the assumption by the
Company of obligations of Campbell as provided in Section 2.09, all as if such
events had occurred (x) in the case of such condensed combined balance sheet, on
November 2, 1997 and (y) in the case of such condensed combined statements of
earnings, at the beginning of the Fiscal Year ended August 3, 1997.
(d) Excluding the effects of the Spin-Off as reflected in the Pro Forma
Financial Statements, there has been no material adverse change in the business,
financial position or results of operations of the Vlasic Foods Businesses,
considered as a whole, since November 2, 1997.
Section 5.05. Litigation. There is no action, suit or proceeding pending
against, or to the knowledge of the Company threatened against or affecting, the
Company or any of its Subsidiaries (or any prior owner of any of the Vlasic
Foods Businesses) before any court or arbitrator or any governmental body,
agency or official in which there is a reasonable possibility of an adverse
decision which could materially adversely affect (i) the business, combined
financial position or results of operations of the Vlasic Foods Businesses
considered as a whole, or (ii) the business, consolidated financial position or
consolidated results of operations of the Company and its Subsidiaries
considered as a whole, or which in any manner draws into question the validity
or enforceability of this Agreement, the Notes, or any of the Spin-Off
Agreements.
Section 5.06. Compliance with ERISA. Each member of the ERISA Group has
fulfilled its obligations under the minimum funding standards of ERISA and the
Internal Revenue Code with respect to each Plan and is in compliance in all
material respects with the presently applicable provisions of ERISA and the
Internal Revenue Code with respect to each Plan. No member of the ERISA Group
has (i) sought a waiver of the minimum funding standard under Section 412 of the
Internal Revenue Code in respect of
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any Plan, (ii) failed to make any contribution or payment to any Plan or
Multiemployer Plan, or made any amendment to any Plan, which has resulted or
could result in the imposition of a Lien or the posting of a bond or other
security under ERISA or the Internal Revenue Code or (iii) incurred any
liability under Title IV of ERISA other than a liability to the PBGC for
premiums under Section 4007 of ERISA.
Section 5.07. Environmental Matters. In the ordinary course of their
businesses, the prior owners of the Vlasic Foods Businesses reviewed the effect
of Environmental Laws on the business, operations and properties of the Vlasic
Foods Businesses, and after the Spin-Off Date the Company will continue to
review the effect of Environmental Laws on the business, operations and
properties of the Company and its Subsidiaries. In the course of such reviews,
such prior owners identified and evaluated, and the Company will identify and
evaluate, associated liabilities and costs (including, without limitation, any
capital or operating expenditures required for clean-up or closure of properties
presently or previously owned, any capital or operating expenditures required to
achieve or maintain compliance with environmental protection standards imposed
by law or as a condition of any license, permit or contract, any related
constraints on operating activities, including any periodic or permanent
shutdown of any facility or reduction in the level of or change in the nature of
operations conducted thereat, any costs or liabilities in connection with off-
site disposal of wastes or Hazardous Substances, and any actual or potential
liabilities to third parties, including employees, and any related costs and
expenses). On the basis of these reviews, the Company has reasonably concluded
that such associated liabilities and costs, including the costs of compliance
with Environmental Laws, are unlikely to have a material adverse effect on the
business, financial condition, results of operations or prospects of the Vlasic
Foods Businesses, considered as a whole, or of the Company and its Subsidiaries,
considered as a whole.
Section 5.08. Taxes. The Company and its Subsidiaries have filed all
United States Federal income tax returns and all other material tax returns
which are required to be filed by them and have paid all taxes due pursuant to
such returns or pursuant to any assessment received by the Company or any
Subsidiary. The charges, accruals and reserves on the books of the Company and
its Subsidiaries in respect of taxes or other governmental charges are, in the
opinion of the Company, adequate.
Section 5.09. Subsidiaries. Each Subsidiary of the Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation, and has all corporate powers and all
material governmental licenses, authorizations, consents and approvals required
to carry on its business as now conducted. The Company owns, free and clear of
Liens, all outstanding shares of capital stock of its Subsidiaries and all such
shares are validly issued, fully paid and non-assessable.
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Section 5.10. No Regulatory Restrictions on Borrowing. The Company is not
(i) an "investment company" within the meaning of the Investment Company Act of
1940, as amended, (ii) a "holding company" or a "subsidiary company" of a
holding company within the meaning of the Public Utility Holding Company Act of
1935, as amended, or (iii) otherwise subject to any regulatory scheme which
restricts its ability to incur debt.
Section 5.11. Full Disclosure. All information heretofore furnished by
Campbell or the Company to the Administrative Agent or any Bank for purposes of
or in connection with this Agreement or any transaction contemplated hereby does
not, and all such information hereafter furnished by the Company to the
Administrative Agent or any Bank will not, contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they were or will
be made, not misleading.
Section 5.12. Fair Value; Solvency. (a) The transfer of assets to the
Company and its Subsidiaries and the other transactions contemplated in
connection with the Spin-Off constitute direct economic benefit to the Company
at least equal to the obligations of Campbell assumed by the Company pursuant to
Section 2.09 and the other consideration paid therefor.
(b) As of the Company Closing Date after giving effect to the transactions
contemplated hereby to occur on the Company Closing Date, including without
limitation assumption by the Company of obligations of Campbell as provided in
Section 2.09: (i) the aggregate fair market value of the assets of the Company
will exceed its liabilities (including contingent, subordinated, unmatured and
unliquidated liabilities, (ii) the Company will have sufficient cash flow to
enable it to pay its debts as they mature and (iii) the Company will not have
unreasonably small capital for the business in which the Company and its
Subsidiaries are engaged.
ARTICLE 6
COVENANTS
The Company agrees that, so long as any Bank has any Commitment hereunder
or any amount payable under any Note remains unpaid:
Section 6.01. Information. The Company will deliver to the Administrative
Agent, with a copy for each of the Banks:
(a) as soon as available and in any event within 90 days after the
end of each Fiscal Year, a consolidated balance sheet of the Company and
its Consolidated Subsidiaries as of the end of such Fiscal Year and the
related
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consolidated statements of earnings, of cash flows and of shareowners'
equity of the Company and its Consolidated Subsidiaries for such Fiscal
Year, reported on by independent public accountants of nationally
recognized standing;
(b) as soon as available and in any event within 45 days after the
end of each of the first three Fiscal Quarters of each Fiscal Year, a
consolidated balance sheet of the Company and its Consolidated Subsidiaries
as of the end of such Fiscal Quarter, the related consolidated statement of
earnings for such Fiscal Quarter and the related consolidated statements of
earnings and of cash flows for the portion of the Fiscal Year ended at the
end of such Fiscal Quarter;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) of this Section, a
certificate of the Company's chief financial officer or chief accounting
officer (i) setting forth in reasonable detail the calculations required to
establish (x) whether the Company was in compliance with the requirements
of Sections 6.08 to 6.13, inclusive, on the date of such financial
statements and (y) if the Ratio-Based Pricing Schedule attached hereto was
the Applicable Pricing Schedule on the date of such financial statements,
the Debt/EBITDA Ratio at the date of such financial statements and (ii)
stating whether any Default exists on the date of such certificate and, if
any Default then exists, setting forth the details thereof and the action
which the Company is taking or proposes to take with respect thereto;
(d) within five days after the chief financial officer, the treasurer
or the chief accounting officer of the Company obtains knowledge of any
Default, if such Default is then continuing, a certificate of the chief
financial officer, the treasurer or the chief accounting officer of the
Company setting forth the details thereof and the action which the Company
is taking or proposes to take with respect thereto;
(e) promptly upon the mailing thereof to the shareowners of the
Company generally, copies of all annual reports to shareowners and proxy
statements so mailed;
(f) if and when any member of the ERISA Group (i) gives or is
required to give notice to the PBGC of any "reportable event" (as defined
in Section 4043 of ERISA) with respect to any Plan which might constitute
grounds for a termination of such Plan under Title IV of ERISA, or knows
that the plan administrator of any Plan has given or is required to give
notice of any such reportable event, a copy of the notice of such
reportable event given or required to be given to the PBGC; (ii) receives
notice of complete or partial withdrawal liability under Title IV of ERISA
or notice that any Multiemployer Plan is in reorganization, is insolvent or
has been terminated, a copy of such notice; (iii)
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receives notice from the PBGC under Title IV of ERISA of an intent to
terminate, impose liability (other than for premiums under Section 4007 of
ERISA) in respect of, or appoint a trustee to administer any Plan, a copy
of such notice; (iv) applies for a waiver of the minimum funding standard
under Section 412 of the Internal Revenue Code, a copy of such application;
(v) gives notice of intent to terminate any Plan under Section 4041(c) of
ERISA, a copy of such notice and other information filed with the PBGC;
(vi) gives notice of withdrawal from any Plan pursuant to Section 4063 of
ERISA, a copy of such notice; or (vii) fails to make any payment or
contribution to any Plan or Multiemployer Plan or makes any amendment to
any Plan which has resulted or could result in the imposition of a Lien or
the posting of a bond or other security, a certificate of the chief
financial officer or the chief accounting officer of the Company setting
forth details as to such occurrence and action, if any, which the Company
or applicable member of the ERISA Group is required or proposes to take;
and
(g) from time to time such additional information regarding the
financial position or business of the Company and its Subsidiaries as the
Administrative Agent, at the request of any Bank, may reasonably request.
Section 6.02. Maintenance of Property; Insurance. (a) The Company will
keep, and will cause each Subsidiary to keep, all property useful and necessary
in its business in good working order and condition, ordinary wear and tear
excepted.
(b) The Company will, and will cause each Subsidiary to, either carry
insurance (either in the name of the Company or in such Subsidiary's own name)
with financially sound and responsible insurance companies to the extent
reasonably available or maintain self-insurance, on all their respective
properties and with respect to product liability, in each case against at least
such risks as (and subject to no greater risk retention than) are usually
insured against in the same general area by similarly sized companies of
established repute engaged in the same or a similar business; and will furnish
to the Banks, upon request from the Administrative Agent, information presented
in reasonable detail as to the insurance so carried or the self-insurance so
maintained.
Section 6.03. Conduct of Business and Maintenance of Existence. The
Company will preserve, renew and keep in full force and effect, and will cause
each Subsidiary to preserve, renew and keep in full force and effect, their
respective corporate existences and their respective rights, privileges and
franchises necessary or desirable in the normal conduct of business; provided
that nothing in this Section shall prevent any Subsidiary from merging into,
consolidating with, or transferring all or substantially all of its assets to,
the Company or another Subsidiary.
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Section 6.04. Compliance with Laws. The Company will comply, and cause
each Subsidiary to comply, in all material respects with all applicable laws,
ordinances, rules, regulations, and requirements of governmental authorities
(including, without limitation, Environmental Laws and ERISA and the rules and
regulations thereunder), except (i) where the necessity of compliance therewith
is contested in good faith by appropriate proceedings and (ii) where the failure
to so comply could not reasonably be expected to have a material adverse effect
on the Company and its Consolidated Subsidiaries considered as a whole.
Section 6.05. Inspection of Property, Books and Records. The Company will
keep, and will cause each Subsidiary to keep, proper books of record and account
in which full and correct entries shall be made of all dealings and transactions
in relation to its business and activities. The Company will permit, and will
cause each Subsidiary to permit, representatives of any Bank at such Bank's
expense to visit and inspect any of their respective properties, to examine and
make abstracts from any of their respective books and records and to discuss
their respective affairs, finances and accounts with their respective officers,
employees and independent public accountants, all at such reasonable times and
as often as may reasonably be requested; provided that, unless a Default shall
have occurred and be continuing, such Bank shall have given the Company's chief
financial officer or treasurer at least one Domestic Business Day's notice of
such visit, examination and/or discussion and a reasonable opportunity to
participate therein in person or through a designated representative.
Section 6.06. Use of Proceeds. The Company will use the proceeds of the
Loans (other than the Campbell Loans) for general corporate purposes, including
acquisitions. None of such proceeds will be used, directly or indirectly, for
the purpose, whether immediate, incidental or ultimate, of buying or carrying
any "margin stock" within the meaning of Regulation U.
Section 6.07. Mergers and Sales of Assets. (a) The Company will not
consolidate or merge with or into any other Person, sell, lease or otherwise
transfer, directly or indirectly, all or substantially all of its assets to any
other Person or (iii) sell, lease or otherwise transfer, directly or indirectly,
all or any substantial part of its assets to any other Person; provided that the
Company may merge with another Person if (x) the Company is the corporation
surviving such merger and (y) immediately after giving effect to such merger, no
Default shall have occurred and be continuing.
(b) No Subsidiary will (i) consolidate or merge with or into any other
Person or (ii) sell, lease or otherwise transfer, directly or indirectly, all or
any substantial part of the assets of the Company and its Subsidiaries, taken as
a whole, to any Person (other than the Company or another Subsidiary); provided
that a Subsidiary may consolidate or merge with another Person (x) if the entity
surviving such consolidation or merger is (A) the Company, (B) such Subsidiary
or (C) another Subsidiary or (y) if such Subsidiary
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shall not constitute a substantial part of the assets of the Company and its
Subsidiaries, taken as a whole, and (z) in each case, immediately after giving
effect to such consolidation or merger, no Default shall have occurred and be
continuing.
(c) Notwithstanding the restrictions in subsections (a) and (b) of this
Section, nothing in this Section shall prohibit any Asset Securitization.
Section 6.08. Negative Pledge. Neither the Company nor any Subsidiary will
create, assume or suffer to exist any Lien on any asset now owned or hereafter
acquired by it, except:
(i) Liens existing on the date of this Agreement securing Debt
outstanding on the date of this Agreement in an aggregate principal amount
not exceeding $10,000,000;
(ii) any Lien existing on any asset of any Person at the time such
Person becomes a Subsidiary and not created in contemplation of such event;
(iii) any Lien on any asset securing Debt incurred or assumed for the
purpose of financing all or any part of the cost of acquiring, constructing
or improving such asset; provided that such Lien attaches to such asset
concurrently with or within 180 days after the acquisition, construction or
improvement thereof;
(iv) any Lien on any asset of any Person existing at the time such
Person is merged or consolidated with or into the Company or a Subsidiary
and not created in contemplation of such event;
(v) any Lien existing on any asset prior to the acquisition thereof
by the Company or a Subsidiary and not created in contemplation of such
acquisition;
(vi) any Lien created for the direct or indirect benefit of the
purchasers or lenders in connection with any Asset Securitization;
(vii) any Lien arising out of the refinancing, extension, renewal or
refunding of any Debt secured by any Lien permitted by any of the foregoing
provisions of this Section; provided that such Debt is not increased and is
not secured by any additional assets;
(viii) any lien arising in the ordinary course of its business which
(1) does not secure Debt and (2) does not secure any single obligation (or
class of obligations having a common cause) in an amount exceeding
$50,000,000;
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(ix) any Lien in favor of the Company or any Lien created by a
Subsidiary in favor of another Subsidiary; and
(x) any other Lien; provided that the aggregate amount secured by
all Liens excluded pursuant to this clause (x) shall not exceed 6% of
Consolidated Tangible Assets.
Section 6.09. Subsidiary Debt Limitation. Total Debt of all Subsidiaries
(excluding Debt of a Subsidiary to the Company or to a wholly-owned Subsidiary
of the Company) will at no time exceed 8% of Consolidated Tangible Assets (or
the equivalent thereof in any other currency).
Section 6.10. Debt/EBITDA Ratio. At the end of each Fiscal Quarter ending
during each period set forth below, the Debt/EBITDA Ratio will not be higher
than the ratio set forth opposite such period below:
<TABLE>
<CAPTION>
PERIOD RATIO
------ -----
<S> <C>
End of first three Fiscal Quarters of Fiscal 1998 4.50 to 1
End of fourth Fiscal Quarter of Fiscal 1998 through end of third 4.25 to 1
Fiscal Quarter of Fiscal 1999
End of fourth Fiscal Quarter of Fiscal 1999 and thereafter 3.75 to 1
</TABLE>
Section 6.11. Fixed Charge Coverage Ratio. At the end of each Fiscal
Quarter, the Fixed Charge Coverage Ratio will not be lower than 3.00 to 1.
Section 6.12. Restricted Payments. Neither the Company nor any Subsidiary
will declare or make any Restricted Payment unless, immediately after giving
effect thereto, (i) no Default would exist and (ii) the aggregate of all
Restricted Payments declared or made after August 3, 1997 does not exceed the
sum of (x) $100,000,000 plus (y) 50% of the consolidated net income (or minus
100% of the consolidated net loss) of the Company and its Consolidated
Subsidiaries for the period from August 3, 1997 through the end of the then most
recent Fiscal Quarter (treated for this purpose as a single accounting period);
provided that, for any portion of such period before the Spin-Off Date, such
consolidated net income or consolidated net loss shall be determined on a
Combined Basis.
Section 6.13. Investments. Neither the Company nor any Subsidiary will
hold, make or acquire any Investment in any Person other than:
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(a) any Investment in a Person which is a Subsidiary immediately
after such Investment is made;
(b) Temporary Cash Investments;
(c) any debt obligation constituting all or part of the consideration
received for assets sold by the Company or any Subsidiary if, immediately
after such debt obligation is acquired, the aggregate outstanding principal
amount of all debt obligations held by the Company and its Subsidiaries as
permitted by this clause (c) does not exceed $20,000,000;
(d) any Investment in a Person which is not a Subsidiary immediately
after such Investment is made if, immediately after such Investment is
made, the aggregate unrecovered amount of all Investments permitted by this
clause (d), does not exceed $50,000,000;
(e) any Investment in a trust or other entity created for purposes of
any Asset Securitization; and
(f) Investments not otherwise permitted by the foregoing clauses of
this Section if, immediately after each such Investment is made or
acquired, the aggregate book value of all Investments permitted by this
clause (f) does not exceed $10,000,000.
Section 6.14. Transactions with Affiliates. Except for the assumption of
obligations of Campbell as provided in Section 2.09, the Company will not, and
will not permit any Subsidiary to, directly or indirectly, pay any funds to or
for the account of any Affiliate, make any investment in any Affiliate (whether
by acquisition of stock or indebtedness, by loan, advance, transfer of property,
guarantee or other agreement to pay, purchase or service, directly or
indirectly, any Debt, or otherwise), lease, sell, transfer or otherwise dispose
of any assets, tangible or intangible, to any Affiliate, or participate in, or
effect any transaction with any Affiliate, except in each case on an arms-length
basis on terms at least as favorable to the Company or such Subsidiary as could
have been obtained from a third party that was not an Affiliate; provided that
the foregoing provisions of this Section shall not prohibit any such Person from
declaring or paying any lawful dividend or other payment ratably in respect of
all its capital stock of the relevant class so long as, after giving effect
thereto, no Default shall have occurred and be continuing.
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ARTICLE
DEFAULTS
Section 7.01. Events of Default. If one or more of the following events
("EVENTS OF DEFAULT") shall occur and be continuing:
(a) the Company shall fail to pay when due any principal of any Loan
or fail to pay, within 5 days after the date when due, any interest on any
Loan or any fee or other amount payable hereunder;
(b) the Company shall fail to observe or perform any covenant
contained in Section 6.01(d) or Sections 6.07 to 6.12, inclusive;
(c) the Company shall fail to observe or perform any covenant or
agreement contained in this Agreement (other than those covered by clause
(a) or (b) above) for 30 days after notice thereof has been given to the
Company by the Administrative Agent at the request of any Bank;
(d) any representation, warranty, certification or statement made by
the Company or Campbell in this Agreement or in any certificate, financial
statement or other document delivered pursuant to this Agreement shall
prove to have been incorrect in any material respect when made (or deemed
made pursuant to the last sentence of Section 4.03);
(e) the Company or any Subsidiary shall commence a voluntary case or
other proceeding seeking liquidation, reorganization or other relief with
respect to itself or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or
any substantial part of its property, or shall consent to any such relief
or to the appointment of or taking possession by any such official in an
involuntary case or other proceeding commenced against it, or shall make a
general assignment for the benefit of creditors, or shall fail generally to
pay its debts as they become due, or shall take any corporate action to
authorize any of the foregoing;
(f) an involuntary case or other proceeding shall be commenced
against the Company or any Subsidiary seeking liquidation, reorganization
or other relief with respect to it or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, and such
involuntary case or other proceeding shall remain undismissed and unstayed
for a period of 60 days; or an order for relief shall be
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entered against the Company or any Subsidiary under the federal bankruptcy
laws as now or hereafter in effect;
(g) any member of the ERISA Group shall fail to pay when due an
amount or amounts aggregating in excess of $30,000,000 which it shall have
become liable to pay under Title IV of ERISA; or notice of intent to
terminate a Material Plan shall be filed under Title IV of ERISA by any
member of the ERISA Group, any plan administrator or any combination of the
foregoing; or the PBGC shall institute proceedings under Title IV of ERISA
to terminate, to impose liability (other than for premiums under Section
4007 of ERISA) in respect of, or to cause a trustee to be appointed to
administer any Material Plan; or a condition shall exist by reason of which
the PBGC would be entitled to obtain a decree adjudicating that any
Material Plan must be terminated; or there shall occur a complete or
partial withdrawal from, or a default, within the meaning of Section
4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans which
could cause one or more members of the ERISA Group to incur a current
payment obligation in excess of $30,000,000;
(h) a judgment or order for the payment of money in excess of
$30,000,000 shall be rendered against the Company or any Subsidiary and
such judgment or order shall continue unsatisfied and unstayed for a period
of 30 days;
(i) any event or condition shall occur which results in the
acceleration of the maturity of Material Debt or enables or, with the
giving of notice or lapse of time or both, would enable, the holders of
Material Debt or any Person acting on their behalf to accelerate the
maturity thereof; or
(j) after the Spin-Off, (i) any person or group of persons (within
the meaning of Section 13 or 14 of the Exchange Act), other than a
Designated Affiliate, shall have acquired beneficial ownership (within the
meaning of Rule 13d-3 promulgated by the SEC under said Act) of 25% or more
of the outstanding shares of common stock of the Company, (ii) the
Designated Affiliates, collectively, shall have beneficial ownership
(within the meaning of said Rule 13d-3) of 49% or more of the outstanding
shares of common stock of the Company or (iii) Continuing Directors shall
cease to constitute a majority of the Company's board of directors;
then, and in every such event, the Administrative Agent shall (i) if requested
by Banks having more than 50% in aggregate amount of the Commitments, by notice
to the Company terminate the Commitments and they shall thereupon terminate, and
(ii) if requested by Banks holding more than 50% of the aggregate principal
amount of the Loans, by notice to the Company declare the Loans (together with
accrued interest
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thereon) to be, and the Loans shall thereupon become, immediately due and
payable without presentment, demand, protest or other notice of any kind, all of
which are hereby waived by the Company; provided that (x) if any such notice is
given before the Company Closing Date, a copy thereof shall be given to Campbell
and (y) if any Event of Default specified in clause (e) or (f) above occurs with
respect to the Company, then without any notice to the Company or Campbell or
any other act by the Administrative Agent or the Banks, the Commitments shall
thereupon terminate and the Loans (together with accrued interest thereon) shall
become immediately due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Company and Campbell.
Section 7.02 Notice of Default. The Administrative Agent shall give
notice to the Company under Section 7.01(c) promptly upon being requested to do
so by any Bank and shall thereupon notify all the Banks thereof.
ARTICLE 8
THE ADMINISTRATIVE AGENT
Section 8.01 Appointment and Authorization. Each Bank irrevocably
appoints and authorizes the Administrative Agent to take such action as
Administrative Agent on its behalf and to exercise such powers under this
Agreement, the Notes and the Campbell Global Note as are delegated to the
Administrative Agent by the terms hereof or thereof, together with all such
powers as are reasonably incidental thereto.
Section 8.02 Administrative Agent and Affiliates. Morgan Guaranty Trust
Company of New York shall have the same rights and powers under this Agreement
as any other Bank and may exercise or refrain from exercising the same as though
it were not the Administrative Agent, and Morgan Guaranty Trust Company of New
York and its affiliates may accept deposits from, lend money to, and generally
engage in any kind of business with the Company or Campbell or any Subsidiary or
affiliate of the Company or Campbell as if it were not the Administrative Agent.
Section 8.03 Action by Administrative Agent. The obligations of the
Administrative Agent hereunder are only those expressly set forth herein.
Without limiting the generality of the foregoing, the Administrative Agent shall
not be required to take any action with respect to any Default, except as
expressly provided in Article 7.
Section 8.04 Consultation with Experts. The Administrative Agent may
consult with legal counsel (who may be counsel for the Company or Campbell),
independent public accountants and other experts selected by it and shall not be
liable
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for any action taken or omitted to be taken by it in good faith in accordance
with the advice of such counsel, accountants or experts.
Section 8.05 Liability of Administrative Agent. Neither the
Administrative Agent nor any of its affiliates nor any of their respective
directors, officers, agents or employees shall be liable for any action taken or
not taken by it in connection herewith (i) with the consent or at the request of
the Required Banks or (ii) in the absence of its own gross negligence or willful
misconduct. Neither the Administrative Agent nor any of its affiliates nor any
of their respective directors, officers, agents or employees shall be
responsible for or have any duty to ascertain, inquire into or verify (i) any
statement, warranty or representation made in connection with this Agreement or
any borrowing hereunder; (ii) the performance or observance of any of the
covenants or agreements of the Company or Campbell; (iii) the satisfaction of
any condition specified in Article 4, except receipt of items required to be
delivered to the Administrative Agent; or (iv) the validity, effectiveness or
genuineness of this Agreement, the Notes, the Campbell Global Note or any other
instrument or writing furnished in connection herewith. The Administrative Agent
shall not incur any liability by acting in reliance upon any notice, consent,
certificate, statement, or other writing (which may be a bank wire, telex,
facsimile transmission or similar writing) believed by it to be genuine or to be
signed by the proper party or parties. Without limiting the generality of the
foregoing, the use of the term "AGENT" in this Agreement with reference to the
Administrative Agent is not intended to connote any fiduciary or other implied
(or express) obligations arising under agency doctrine of any applicable law.
Instead, such term is used merely as a matter of market custom and is intended
to create or reflect only an administrative relationship between independent
contracting parties.
Section 8.06 Indemnification. The Banks shall, ratably in accordance with
their respective Credit Exposures, indemnify the Administrative Agent, the
Syndication Agent, their respective affiliates and the directors, officers,
agents and employees of the foregoing (to the extent not reimbursed by the
Company) against any cost, expense (including counsel fees and disbursements),
claim, demand, action, loss or liability (except such as result from such
indemnitees' gross negligence or willful misconduct) that such indemnitees may
suffer or incur in connection with this Agreement or any action taken or omitted
by such indemnitees hereunder.
Section 8.07 Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon the Syndication Agent, the
Administrative Agent or any other Bank, and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Bank also acknowledges that it will,
independently and without reliance upon the Syndication Agent, the
Administrative Agent or any other Bank, and based on such documents and
information as it shall deem appropriate at the time,
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continue to make its own credit decisions in taking or not taking any action
under this Agreement.
Section 8.08 Successor Administrative Agent. The Administrative Agent may
resign at any time by giving notice thereof to the Banks and the Company. Upon
any such resignation, the Required Banks shall have the right to appoint a
successor Administrative Agent. If no successor Administrative Agent shall have
been so appointed by the Required Banks, and shall have accepted such
appointment, within 30 days after the retiring Administrative Agent gives notice
of resignation, then the retiring Administrative Agent may, on behalf of the
Banks, appoint a successor Administrative Agent, which shall be a commercial
bank organized or licensed under the laws of the United States or of any State
thereof and having a combined capital and surplus of at least $50,000,000. Upon
the acceptance of its appointment as Administrative Agent hereunder by a
successor Administrative Agent, such successor Administrative Agent shall
thereupon succeed to and become vested with all the rights and duties of the
retiring Administrative Agent, and the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder. After any retiring
Administrative Agent's resignation hereunder as Administrative Agent, the
provisions of this Article shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Administrative Agent.
Section 8.09 Administrative Agent's Fees. The Company shall pay to the
Administrative Agent for its own account fees in the amounts and at the times
previously agreed upon between the Company and the Administrative Agent.
Section 8.10 Syndication Agent. Nothing in this Agreement shall impose
upon the Syndication Agent, in its capacity as such, any duty or responsibility
whatsoever.
ARTICLE 9
CHANGE IN CIRCUMSTANCES
Section 9.01 Basis for Determining Interest Rate Inadequate or Unfair. If
on or prior to the first day of any Interest Period for any CD Loan, Euro-Dollar
Loan or Money Market LIBOR Loan:
(a) the Administrative Agent is advised by the Reference Banks that
deposits in dollars (in the applicable amounts) are not being offered to
the Reference Banks in the relevant market for such Interest Period, or
(b) in the case of CD Loans or Euro-Dollar Loans, Banks having 50% or
more of the aggregate principal amount of the affected Loans advise the
Administrative Agent that the Adjusted CD Rate or the London Interbank
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Offered Rate, as the case may be, as determined by the Administrative Agent
will not adequately and fairly reflect the cost to such Banks of funding
their CD Loans or Euro-Dollar Loans, as the case may be, for such Interest
Period,
the Administrative Agent shall forthwith give notice thereof to the Company and
the Banks, whereupon until the Administrative Agent notifies the Company that
the circumstances giving rise to such suspension no longer exist, (i) the
obligations of the Banks to make CD Loans or Euro-Dollar Loans, as the case may
be, or to continue or convert outstanding Loans as or into CD Loans or Euro-
Dollar Loans, as the case may be, shall be suspended and (ii) each outstanding
CD Loan or Euro-Dollar Loan, as the case may be, shall be converted into a Base
Rate Loan on the last day of the then current Interest Period applicable
thereto. Unless the Company notifies the Administrative Agent at least two
Domestic Business Days before the date of any Fixed Rate Borrowing for which a
Notice of Borrowing has previously been given that it elects not to borrow on
such date, (i) if such Fixed Rate Borrowing is a Committed Borrowing, such
Borrowing shall instead be made as a Base Rate Borrowing and (ii) if such Fixed
Rate Borrowing is a Money Market LIBOR Borrowing, the Money Market LIBOR Loans
comprising such Borrowing shall bear interest for each day from and including
the first day to but excluding the last day of the Interest Period applicable
thereto at the Base Rate for such day.
Section 9.02 Illegality. If, on or after the date of this Agreement, the
adoption of any applicable law, rule or regulation, or any change in any
applicable law, rule or regulation, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Bank (or its Euro-Dollar Lending Office) with any request or directive
(whether or not having the force of law) of any such authority, central bank or
comparable agency shall make it unlawful or impossible for any Bank (or its
Euro-Dollar Lending Office) to make, maintain or fund its Euro-Dollar Loans and
such Bank shall so notify the Administrative Agent, the Administrative Agent
shall forthwith give notice thereof to the other Banks and the Company,
whereupon until such Bank notifies the Company and the Administrative Agent that
the circumstances giving rise to such suspension no longer exist, the obligation
of such Bank to make Euro-Dollar Loans, or to convert outstanding Loans into
Euro-Dollar Loans, shall be suspended. Before giving any notice to the
Administrative Agent pursuant to this Section, such Bank shall designate a
different Euro-Dollar Lending Office if such designation will avoid the need for
giving such notice and will not, in the judgment of such Bank, be otherwise
disadvantageous to such Bank. If such notice is given, each Euro-Dollar Loan of
such Bank then outstanding shall be converted to a Base Rate Loan either (a) on
the last day of the then current Interest Period applicable to such Euro-Dollar
Loan if such Bank may lawfully continue to maintain and fund such Loan to such
day or (b) immediately if such Bank shall determine that it may not lawfully
continue to maintain and fund such Loan to such day.
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Section 9.03 Increased Cost and Reduced Return. If on or after (x) the
date hereof, in the case of any Committed Loan or any obligation to make
Committed Loans or (y) the date of the related Money Market Quote, in the case
of any Money Market Loan, the adoption of any applicable law, rule or
regulation, or any change in any applicable law, rule or regulation, or any
change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or its Applicable Lending
Office) with any request or directive (whether or not having the force of law)
of any such authority, central bank or comparable agency shall impose, modify or
deem applicable any reserve (including, without limitation, any such requirement
imposed by the Board of Governors of the Federal Reserve System, but excluding
(i) with respect to any CD Loan any such requirement included in an applicable
Domestic Reserve Percentage and (ii) with respect to any Euro-Dollar Loan any
such requirement included in an applicable Euro-Dollar Reserve Percentage),
special deposit, insurance assessment (excluding, with respect to any CD Loan,
any such requirement reflected in an applicable Assessment Rate) or similar
requirement against assets of, deposits with or for the account of, or credit
extended by, any Bank (or its Applicable Lending Office) or shall impose on any
Bank (or its Applicable Lending Office) or on the United States market for
certificates of deposit or the London interbank market any other condition
affecting its Fixed Rate Loans, its Notes or its obligation to make Fixed Rate
Loans and the result of any of the foregoing is to increase the cost to such
Bank (or its Applicable Lending Office) of making or maintaining any Fixed Rate
Loan, or to reduce the amount of any sum received or receivable by such Bank (or
its Applicable Lending Office) under this Agreement or under its Notes with
respect thereto, by an amount deemed by such Bank to be material, then, within
15 days after demand by such Bank (with a copy to the Administrative Agent), the
Company shall pay to such Bank such additional amount or amounts as will
compensate such Bank for such increased cost or reduction.
(b) If any Bank shall have determined that, after the date hereof, the
adoption of any applicable law, rule or regulation regarding capital adequacy,
or any change in any such law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or any request or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on capital
of such Bank (or its Parent) as a consequence of such Bank's obligations
hereunder to a level below that which such Bank (or its Parent) could have
achieved but for such adoption, change, request or directive (taking into
consideration its policies with respect to capital adequacy) by an amount deemed
by such Bank to be material, then from time to time, within 15 days after demand
by such Bank (with a copy to the Administrative Agent), the Company shall pay to
such Bank such additional amount or amounts as will compensate such Bank (or its
Parent) for such reduction.
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(c) Each Bank will promptly notify the Company and the Administrative
Agent of any event of which it has knowledge, occurring after the date hereof,
which will entitle such Bank to compensation pursuant to this Section and will
designate a different Applicable Lending Office if such designation will avoid
the need for, or reduce the amount of, such compensation and will not, in the
judgment of such Bank, be otherwise disadvantageous to such Bank. A certificate
of any Bank claiming compensation under this Section and setting forth the
additional amount or amounts to be paid to it hereunder shall be conclusive in
the absence of manifest error. In determining such amount, such Bank may use any
reasonable averaging and attribution methods.
Section 9.04 Taxes. For the purposes of this Section 9.04, the following
terms have the following meanings:
"TAXES" means any and all present or future taxes, duties, levies, imposts,
deductions, charges or withholdings with respect to any payment by the Company
pursuant to this Agreement or under any Note, and all liabilities with respect
thereto, excluding (i) in the case of each Bank and the Administrative Agent,
taxes imposed on its income, and franchise or similar taxes imposed on it, by a
jurisdiction under the laws of which such Bank or the Administrative Agent (as
the case may be) is organized or in which its principal executive office is
located or, in the case of each Bank, in which its Applicable Lending Office is
located and (ii) in the case of each Bank, any United States withholding tax
imposed on such payments, but only up to the rate (if any) at which United
States withholding tax would apply to such payments to such Bank at the time
such Bank first becomes a party to this Agreement.
"OTHER TAXES" means any present or future stamp or documentary taxes and
any other excise or property taxes, or similar charges or levies, which arise
from any payment made pursuant to this Agreement or under any Note or from the
execution or delivery of, or otherwise with respect to, this Agreement or any
Note.
(b) Any and all payments by the Company to or for the account of any Bank
or the Administrative Agent hereunder or under any Note shall be made without
deduction for any Taxes or Other Taxes; provided that, if the Company shall be
required by law to deduct any Taxes or Other Taxes from any such payments, (i)
the sum payable shall be increased as necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section) such Bank or the Administrative Agent (as the case may be)
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Company shall make such deductions, (iii) the
Company shall pay the full amount deducted to the relevant taxation authority or
other authority in accordance with applicable law and (iv) the Company
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shall furnish to the Administrative Agent, at its address referred to in Section
10.01, the original or a certified copy of a receipt evidencing payment thereof.
(c) The Company (or Campbell, to the extent provided in Section 2.06)
agrees to indemnify each Bank and the Administrative Agent for the full amount
of Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes
imposed or asserted by any jurisdiction on amounts payable under this Section)
paid by such Bank or the Administrative Agent (as the case may be) and any
liability (including penalties, interest and expenses) arising therefrom or with
respect thereto. This indemnification shall be paid within 15 days after such
Bank or the Administrative Agent (as the case may be) makes demand therefor.
(d) Each Bank organized under the laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Bank listed on the signature pages hereof and on
or prior to the date on which it becomes a Bank in the case of each other Bank,
and from time to time thereafter if requested in writing by the Company (but
only so long as such Bank remains lawfully able to do so), shall provide the
Company and the Administrative Agent with Internal Revenue Service form 1001 or
4224, as appropriate, or any successor form prescribed by the Internal Revenue
Service, certifying that such Bank is entitled to benefits under an income tax
treaty to which the United States is a party which exempts the Bank from United
States withholding tax or reduces the rate of withholding tax on payments of
interest for the account of such Bank or certifying that the income receivable
pursuant to this Agreement is effectively connected with the conduct of a trade
or business in the United States.
(e) For any period with respect to which a Bank has failed to provide the
Company or the Administrative Agent with the appropriate form pursuant to
Section 9.04(d) (unless such failure is due to a change in treaty, law or
regulation occurring subsequent to the date on which such form originally was
required to be provided), such Bank shall not be entitled to indemnification
under Section 9.04(b) or (c) with respect to Taxes imposed by the United States;
provided that if a Bank, which is otherwise exempt from or subject to a reduced
rate of withholding tax, becomes subject to Taxes because of its failure to
deliver a form required hereunder, the Company shall take such steps as such
Bank shall reasonably request to assist such Bank to recover such Taxes.
(f) If the Company is required to pay additional amounts to or for the
account of any Bank pursuant to this Section, then such Bank will change the
jurisdiction of its Applicable Lending Office if, in the judgment of such Bank,
such change (i) will eliminate or reduce any such additional payment which may
thereafter accrue and (ii) is not otherwise disadvantageous to such Bank.
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Section 9.05 Base Rate Loans Substituted for Affected Fixed Rate. If the
obligation of any Bank to make, or convert outstanding Loans to, Euro-Dollar
Loans has been suspended pursuant to Section 9.02 or any Bank has demanded
compensation under Section 9.03 or 9.04 with respect to its CD Loans or Euro-
Dollar Loans and the Company shall, by at least five Euro-Dollar Business Days'
prior notice to such Bank through the Administrative Agent, have elected that
the provisions of this Section shall apply to such Bank, then, unless and until
such Bank notifies the Company that the circumstances giving rise to such
suspension or demand for compensation no longer exist, all Loans which would
otherwise be made by such Bank as (or continued as or converted into) CD Loans
or Euro-Dollar Loans, as the case may be, shall instead be Base Rate Loans (on
which interest and principal shall be payable contemporaneously with the related
Fixed Rate Loans of the other Banks). If such Bank notifies the Company that the
circumstances giving rise to such notice no longer apply, the principal amount
of each such Base Rate Loan shall be converted into a CD Loan or Euro-Dollar
Loan, as the case may be, on the first day of the next succeeding Interest
Period applicable to the related CD Loans or Euro-Dollar Loans of the other
Banks.
ARTICLE 10
MISCELLANEOUS
Section 10.01 Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including bank wire, telex, facsimile
transmission or similar writing) and shall be given to such party: (x) in the
case of the Company, Campbell or the Administrative Agent, at its address,
facsimile number or telex number set forth on the signature pages hereof, (y) in
the case of any Bank, at its address, facsimile number or telex number set forth
in its Administrative Questionnaire, (z) or in the case of any party, at such
other address, facsimile number or telex number as such party may hereafter
specify for the purpose by notice to the Administrative Agent and the Company.
Each such notice, request or other communication shall be effective (i) if given
by telex, when such telex is transmitted to the telex number specified in this
Section and the appropriate answerback is received, (ii) if given by facsimile
transmission, when transmitted to the facsimile number specified in this Section
and confirmation of receipt is received, (iii) if given by mail, 72 hours after
such communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid or (iv) if given by any other means, when delivered at
the address specified in this Section; provided that notices to the
Administrative Agent under Article 2, Article 3 or Article 9 shall not be
effective until received.
Section 10.02 No Waivers. No failure or delay by the Administrative Agent
or any Bank in exercising any right, power or privilege hereunder or under any
Note or the
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Campbell Global Note shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
Section 10.03 Expenses; Indemnification. The Company shall pay all
reasonable out-of-pocket expenses of the Administrative Agent, including
reasonable fees and disbursements of special counsel for the Administrative
Agent, in connection with the preparation and administration of this Agreement,
any waiver or consent hereunder or any amendment hereof or any Default or
alleged Default hereunder and if an Event of Default occurs, all out-of-pocket
expenses incurred by the Administrative Agent and each Bank, including (without
duplication) the fees and disbursements of outside counsel and the allocated
cost of inside counsel, in connection with such Event of Default and collection,
bankruptcy, insolvency and other enforcement proceedings resulting therefrom.
(b) The Company (or Campbell, to the extent provided in Section 2.06)
agrees to indemnify the Administrative Agent and each Bank, their respective
affiliates and the respective directors, officers, agents and employees of the
foregoing (each an "INDEMNITEE") and hold each Indemnitee harmless from and
against any and all liabilities, losses, damages, costs and expenses of any
kind, including, without limitation, settlement costs and the reasonable fees
and disbursements of counsel, which may be incurred by such Indemnitee in
connection with any investigative, administrative or judicial proceeding
(whether or not such Indemnitee shall be designated a party thereto) brought or
threatened relating to or arising out of this Agreement or the Commitments
hereunder or any actual or proposed use of proceeds of the Loans; provided that
no Indemnitee shall have the right to be indemnified hereunder for such
Indemnitee's own gross negligence or willful misconduct as determined by a court
of competent jurisdiction.
Section 10.04 Sharing of Set-offs. Each Bank agrees that if it shall, by
exercising any right of set-off or counterclaim or otherwise, receive payment of
a proportion of the aggregate amount of principal and interest due with respect
to any Loan held by it which is greater than the proportion received by any
other Bank in respect of the aggregate amount of principal and interest due with
respect to any Loan held by such other Bank, the Bank receiving such
proportionately greater payment shall purchase such participations in the
relevant Loans held by the other Banks, and such other adjustments shall be
made, as may be required so that all such payments of principal and interest
with respect to the Loans held by the Banks shall be shared by the Banks pro
rata; provided that nothing in this Section shall impair the right of any Bank
to exercise any right of set-off or counterclaim it may have and to apply the
amount subject to such exercise to the payment of indebtedness of the Company or
Campbell, as applicable, other than its indebtedness hereunder. Each of the
Company and Campbell
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agrees, to the fullest extent it may effectively do so under applicable law,
that any holder of a participation in a Loan, whether or not acquired pursuant
to the foregoing arrangements, may exercise rights of set-off or counterclaim
and other rights with respect to such participation as fully as if such holder
of a participation were a direct creditor of the Company or Campbell, as
applicable, in the amount of such participation.
Section 10.05 Amendments and Waivers. Any provision of this Agreement, the
Notes or the Campbell Global Note may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed by the Company and the Required
Banks (and, if the rights or duties of the Administrative Agent or Campbell are
affected thereby, by the Administrative Agent or Campbell, as the case may be);
provided that no such amendment or waiver shall, unless signed by all the Banks,
(i) increase or decrease the Commitment of any Bank (except for a ratable
decrease in the Commitments of all Banks) or subject any Bank to any additional
obligation, (ii) reduce the principal of or rate of interest on any Loan or any
fees hereunder, (iii) postpone the date fixed for any payment of principal of or
interest on any Loan or any fees hereunder or for the termination of any
Commitment, (iv) change the percentage of the Credit Exposures or of the
aggregate unpaid principal amount of Loans or the number of Banks, which shall
be required for the Banks or any of them to take any action under this Section
or any other provision of this Agreement or (v) change any of the provisions
contained in Section 10.04, 10.05 or 10.06(a).
Section 10.06 Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that neither Campbell nor the Company
may assign or otherwise transfer any of its rights under this Agreement without
the prior written consent of all the Banks.
(b) Any Bank may at any time grant to one or more banks or other
institutions (each a "PARTICIPANT") participating interests in its Commitment or
any or all of its Loans. In the event of any such grant by a Bank of a
participating interest to a Participant, whether or not upon notice to the
Company and the Administrative Agent, such Bank shall remain responsible for the
performance of its obligations hereunder, and the Company and the Administrative
Agent shall continue to deal solely and directly with such Bank in connection
with such Bank's rights and obligations under this Agreement. Any agreement
pursuant to which any Bank may grant such a participating interest shall provide
that such Bank shall retain the sole right and responsibility to enforce the
obligations of the Company and Campbell hereunder including, without limitation,
the right to approve any amendment, modification or waiver of any provision of
this Agreement; provided that such participation agreement may provide that such
Bank will not agree to any modification, amendment or waiver of this Agreement
described in clause (i), (ii) or (iii) of Section 10.05 without the consent of
the Participant. Each of the Company and Campbell agrees that each Participant
shall, to the extent
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provided in its participation agreement, be entitled to the benefits of Article
9 and Sections 3.13 and 3.15 with respect to its participating interest. An
assignment or other transfer which is not permitted by subsection (c) or (d)
below shall be given effect for purposes of this Agreement only to the extent of
a participating interest granted in accordance with this subsection (b).
(c) Any Bank may at any time assign to one or more banks or other
institutions (each an "ASSIGNEE") all, or a proportionate part (equivalent to an
initial Commitment of not less than $10,000,000) of all, of its rights and
obligations under this Agreement and its Note, and such Assignee shall assume
such rights and obligations, pursuant to an Assignment and Assumption Agreement
in substantially the form of Exhibit H hereto executed by such Assignee and such
transferor Bank, with (and subject to) the subscribed consent of the Company
(which consent shall not unreasonably be withheld); provided that no such
consent shall be required (i) if the Assignee is an affiliate of such transferor
Bank and its credit is comparable to or better than the credit of such
transferor Bank or (ii) an Event of Default has occurred and is continuing; and
provided further that such assignment may, but need not, include rights of the
transferor Bank in respect of outstanding Money Market Loans. Upon execution and
delivery of such instrument and payment by such Assignee to such transferor Bank
of an amount equal to the purchase price agreed between such transferor Bank and
such Assignee, such Assignee shall be a Bank party to this Agreement and shall
have all the rights and obligations of a Bank with a Commitment as set forth in
such instrument of assumption, and the transferor Bank shall be released from
its obligations hereunder to a corresponding extent, and no further consent or
action by any party shall be required. Upon the consummation of any assignment
pursuant to this subsection (c), the transferor Bank, the Administrative Agent
and the Company shall make appropriate arrangements so that a new Note is issued
to the Assignee, if required to evidence the Loans (or portions thereof)
assigned to and/or made by the Assignee. In connection with any such assignment,
the transferor Bank shall pay to the Administrative Agent an administrative fee
for processing such assignment in the amount of $2,500. If the Assignee is not
incorporated under the laws of the United States or a state thereof, it shall
deliver to the Company and the Administrative Agent certification as to
exemption from deduction or withholding of United States federal income taxes in
accordance with Section 9.04.
(d) Any Bank may at any time assign all or any portion of its rights under
this Agreement and its Note to a Federal Reserve Bank. No such assignment shall
release the transferor Bank from its obligations hereunder.
(e) No Assignee, Participant or other transferee of any Bank's rights
shall be entitled to receive any greater payment under Section 9.03 or 9.04 than
such Bank would have been entitled to receive with respect to the rights
transferred, unless such transfer is made with the Company's prior written
consent or by reason of the provisions of Section 9.02, 9.03 or 9.04 requiring
such Bank to designate a different Lending Office under
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certain circumstances or at a time when the circumstances giving rise to
such greater payment did not exist.
Section 10.07 No Reliance on Margin Stock. Each of the Banks represents to
the Administrative Agent and each of the other Banks that it in good faith is
not relying upon any "margin stock" (as defined in Regulation U) as collateral
in the extension or maintenance of the credit provided for in this Agreement.
Section 10.08 Governing Law; Submission to Jurisdiction. This Agreement,
each Note and the Campbell Global Note shall be governed by and construed in
accordance with the laws of the State of New York. Each of the Company and
Campbell hereby submits to the nonexclusive jurisdiction of the United States
District Court for the Southern District of New York and of any New York State
court sitting in New York City for purposes of all legal proceedings arising out
of or relating to this Agreement or the transactions contemplated hereby. Each
of the Company and Campbell irrevocably waives, to the fullest extent permitted
by law, any objection which it may now or hereafter have to the laying of the
venue of any such proceeding brought in such a court and any claim that any such
proceeding brought in such a court has been brought in an inconvenient forum.
Section 10.09 Counterparts; Integration; Effectiveness. This Agreement may
be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement constitutes the entire agreement and understanding
among the parties hereto and supersedes any and all prior agreements and
understandings, oral or written, relating to the subject matter hereof. This
Agreement shall become effective upon receipt by the Administrative Agent of
counterparts hereof signed by the Company, Campbell, the Banks, the Syndication
Agent and the Administrative Agent (or, in the case of any party as to which an
executed counterpart shall not have been received, receipt by the Administrative
Agent in form satisfactory to it of telegraphic, telex, facsimile or other
written confirmation from such party of execution of a counterpart hereof by
such party).
SECTION 10.10 WAIVER OF JURY TRIAL. THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
VLASIC FOODS INTERNATIONAL INC.
By: _________________________________________
Name:
Title:
Address: Campbell Place
Camden, New Jersey 08103-1799
Facsimile: ______________________________
CAMPBELL SOUP COMPANY
By: _________________________________________
Name:
Title:
By: _________________________________________
Name:
Title:
Address: Campbell Place
Camden, New Jersey 08103-1799
Facsimile: (609) 342-3889
<PAGE>
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By: _________________________________________
Name:
Title:
THE CHASE MANHATTAN BANK
By: _________________________________________
Name:
Title:
BANK OF AMERICA NT&SA
By: _________________________________________
Name:
Title:
BANK OF MONTREAL
By: _________________________________________
Name:
Title:
BARCLAYS BANK PLC
By: _________________________________________
Name:
Title:
<PAGE>
CITIBANK, N.A.
By: _________________________________________
Name:
Title:
DEUTSCHE BANK AG NEW YORK and/or
CAYMAN ISLANDS BRANCHES
By: _________________________________________
Name:
Title:
By: _________________________________________
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO
By: _________________________________________
Name:
Title:
FLEET NATIONAL BANK
By: _________________________________________
Name:
Title:
MELLON BANK, N.A.
By: _________________________________________
Name:
Title:
<PAGE>
PNC BANK, NATIONAL ASSOCIATION
By: _________________________________________
Name:
Title:
WACHOVIA BANK, N.A.
By: _________________________________________
Name:
Title:
THE BANK OF NEW YORK
By: _________________________________________
Name:
Title:
THE BANK OF NOVA SCOTIA
By: _________________________________________
Name:
Title:
CORESTATES BANK, N.A.
By: _________________________________________
Name:
Title:
<PAGE>
SUNTRUST BANK, ATLANTA
By: _________________________________________
Name:
Title:
By: _________________________________________
Name:
Title:
WESTDEUTSCHE LANDESBANK
GIROZENTRALE NEW YORK BRANCH
By: _________________________________________
Name:
Title:
By: _________________________________________
Name:
Title:
BANCA NAZIONALE DEL LAVORO S.p.A.-
NEW YORK BRANCH
By: _________________________________________
Name:
Title:
By: _________________________________________
Name:
Title:
<PAGE>
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Administrative Agent
By: _________________________________________
Name:
Title:
Address: 60 Wall Street
New York, NY 10260-0060
Telex: 177615
Facsimile: (212) 648-5018
THE CHASE MANHATTAN BANK, as
Syndication Agent
By: _________________________________________
Name:
Title:
<PAGE>
COMMITMENT SCHEDULE
<TABLE>
<CAPTION>
BANK COMMITMENT
---- ----------
<S> <C>
Morgan Guaranty Trust Company of New York $70,000,000
The Chase Manhattan Bank $70,000,000
Bank of America NT&SA $46,000,000
Bank of Montreal $46,000,000
Barclays Bank PLC $46,000,000
Citibank, N.A. $46,000,000
Deutsche Bank AG New York and/or
Cayman Islands Branches $46,000,000
The First National Bank of Chicago $46,000,000
Fleet National Bank $46,000,000
Mellon Bank, N.A. $46,000,000
PNC Bank, National Association $46,000,000
Wachovia Bank, N.A. $46,000,000
The Bank of New York $35,000,000
The Bank of Nova Scotia $25,000,000
CoreStates Bank, N.A. $25,000,000
SunTrust Bank, Atlanta $25,000,000
Westdeutsche Landesbank Girozentrale
New York Branch $25,000,000
Banca Nazionale del Lavoro S.p.A.-
New York Branch $15,000,000
------------
Total $750,000,000
</TABLE>
<PAGE>
RATIO-BASED PRICING SCHEDULE
Each of "FACILITY FEE RATE", "EURO-DOLLAR MARGIN" and "CD MARGIN" means (i)
for any day on or before January 31, 1999, the rate per annum set forth below in
the applicable row opposite such term and in the column for Level III Pricing
and (ii) for any day after January 31, 1999, the rate per annum set forth below
in the applicable row opposite such term and in the column corresponding to the
"Pricing Level" that applies for such day:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Level I Level II Level III Level IV Level V
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Facility Fee Rate 0.085% 0.100% 0.125% 0.150% 0.250%
- -------------------------------------------------------------------------------------------------------
Euro-Dollar Margin
If Utilization is 33% 0.200% 0.200% 0.200% 0.350% 0.625%
If Utilization is Greater than 33% 0.250% 0.250% 0.250% 0.400% 0.675%
- -------------------------------------------------------------------------------------------------------
CD Margin
If Utilization is 33% 0.325% 0.325% 0.325% 0.475% 0.750%
If Utilization is Greater than 33% 0.375% 0.375% 0.375% 0.525% 0.800%
- -------------------------------------------------------------------------------------------------------
</TABLE>
For purposes of this Schedule, the following terms have the following
meanings.
"APPLICABLE DEBT/EBITDA RATIO" means, on any day, the Debt/EBITDA Ratio at
the end of the most recently ended Fiscal Quarter for which the Company has
delivered financial statements pursuant to Section 6.01(a) or 6.01(b); provided
that, if a Default exists under Section 6.01(a), 6.01(b) or 6.01(c) on such day,
the Applicable Debt/EBITDA Ratio for such day shall be deemed to be greater than
3.0 to 1.
"LEVEL I PRICING" applies for any day if, on such day, the Applicable
Debt/EBITDA Ratio is less than 1.5 to 1.
"LEVEL II PRICING" applies for any day if, on such day, the Applicable
Debt/EBITDA Ratio is greater than or equal to 1.5 to 1 but less than 2.0 to 1.
"LEVEL III PRICING" applies for any day if, on such day, the Applicable
Debt/EBITDA Ratio is greater than or equal to 2.0 to 1 but less than 2.5 to 1.
"LEVEL IV PRICING" applies for any day if, on such day, the Applicable
Debt/EBITDA Ratio is greater than or equal to 2.5 to 1 but less than 3.0 to 1.
"LEVEL V PRICING" applies for any day if, on such day, no other Pricing
Level applies.
"PRICING LEVEL" refers to the determination of which of Level I, Level II,
Level III, Level IV or Level V Pricing applies for any day.
<PAGE>
"UTILIZATION" means, for any day, the percentage which the aggregate
outstanding principal amount of the Loans represents of the aggregate amount of
the Commitments at the close of business on such day.
2
<PAGE>
RATINGS-BASED PRICING SCHEDULE
Each of "FACILITY FEE RATE", "EURO-DOLLAR MARGIN" and "CD MARGIN" means,
for any day, the rate per annum set forth below in the applicable row opposite
such term and in the column corresponding to the "Pricing Level" that applies
for such day:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Level I Level II Level III Level IV Level V
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Facility Fee Rate 0.085% 0.100% 0.125% 0.150% 0.250%
- -----------------------------------------------------------------------------------------------------
Euro-Dollar Margin
If Utilization is Less than or equal to 33% 0.200% 0.200% 0.200% 0.350% 0.625%
If Utilization is Greater than 33% 0.250% 0.250% 0.250% 0.400% 0.675%
- -----------------------------------------------------------------------------------------------------
CD Margin
If Utilization is Less than or equal to 33% 0.325% 0.325% 0.325% 0.475% 0.750%
If Utilization is Greater than 33% 0.375% 0.375% 0.375% 0.525% 0.800%
- -----------------------------------------------------------------------------------------------------
</TABLE>
For purposes of this Schedule, the following terms have the following
meanings, subject to the concluding paragraphs of this Schedule:
"LEVEL I PRICING" applies for any day if, on such day, the Company's long-
term debt is rated A- or higher by S&P or A3 or higher by Moody's.
"LEVEL II PRICING" applies for any day if, on such day, (i) the Company's
long-term debt is rated BBB+ or higher by S&P or Baa1 or higher by Moody's and
(ii) Level I Pricing does not apply.
"LEVEL III PRICING" applies for any day if, on such day, (i) the Company's
long-term debt is rated BBB or higher by S&P or Baa2 or higher by Moody's and
(ii) neither Level I Pricing nor Level II Pricing applies.
"LEVEL IV PRICING" applies for any day if, on such day, (i) the Company's
long-term debt is rated BBB- or higher by S&P or Baa3 or higher by Moody's and
(ii) none of Level I Pricing, Level II Pricing and Level III Pricing applies.
"LEVEL V PRICING" applies for any day if, on such day, no other Pricing
Level applies.
"PRICING LEVEL" refers to the determination of which of Level I, Level II,
Level III, Level IV or Level V Pricing applies for any day.
"UTILIZATION" means, for any day, the percentage which the aggregate
outstanding principal amount of the Loans represents of the aggregate amount of
the Commitments at the close of business on such day.
<PAGE>
The credit ratings to be utilized for purposes of this Schedule are those
assigned to the senior unsecured long-term debt securities of the Company
without third-party credit enhancement, and any rating assigned to any other
debt security of the Company shall be disregarded. The rating in effect on any
day is that in effect at the close of business on such day.
Split ratings shall be treated as follows:
(i) If the Company is split-rated and the ratings differential is one
level, the higher of the two ratings will apply (e.g., A-/Baa1 results in Level
I Pricing and BBB+/Baa2 results in Level II Pricing).
(ii) If the Company is split-rated and the ratings differential is more
than one level, the midpoint of the two ratings (or, if there is no midpoint,
the higher of two intermediate ratings) shall be used (e.g., A-/Baa2 results in
Level II Pricing and A-/Baa3 results in Level II Pricing).
2
<PAGE>
SCHEDULE I
LIST OF SPIN-OFF AGREEMENTS
Distribution Agreement between Campbell and the Company
Benefits Sharing Agreement between Campbell and the Company
Tax Sharing and Indemnification Agreement between Campbell and the
Company
Trademark License Agreements between Campbell and the Company
Technology Sharing Agreement between Campbell and the Company
Transition Services Agreement between Campbell and the Company
Supply Agreements between Campbell and the Company
Contract Manufacturing ("Co-Pack") Agreements between Campbell and
the Company
<PAGE>
EXHIBIT A- Note
FORM OF NOTE
New York, New York
___________ __, 199_
For value received, VLASIC FOODS INTERNATIONAL INC., a New Jersey
corporation (the "Company"), promises to pay to the order of
______________________ (the "Bank"), for the account of its Applicable Lending
Office, the unpaid principal amount of (i) the Loan (if any) made by the Bank to
Campbell Soup Company on the Campbell Closing Date and assumed by the Company on
the Company Closing Date and (ii) each Loan made by the Bank to the Company
after the Company Closing Date, in each case pursuant to the Credit Agreement
referred to below, on the maturity date provided for in the Credit Agreement,
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by the Company. The Company promises to pay interest on the
unpaid principal amount of each such Loan on the dates and at the rate or rates
provided for in the Credit Agreement. All such payments of principal and
interest shall be made in lawful money of the United States in Federal or other
immediately available funds at the office of Morgan Guaranty Trust Company of
New York, 60 Wall Street, New York, New York.
All Loans evidenced hereby, the respective types thereof and all repayments
of the principal thereof shall be recorded by the Bank and, if the Bank so
elects in connection with any transfer or enforcement hereof, appropriate
notations to evidence the foregoing information with respect to each such Loan
then outstanding may be endorsed by the Bank on the schedule attached hereto, or
on a continuation of such schedule attached to and made a part hereof; provided
that the failure of the Bank to make (or any error in making) any such
recordation or endorsement shall not affect the obligations of the Company
hereunder or under the Credit Agreement.
This Note is one of the Notes referred to in the Credit Agreement dated as
of February 20, 1998 among the Company, Campbell Soup Company, the Banks party
thereto, The Chase Manhattan Bank, as Syndication Agent, and Morgan Guaranty
Trust Company of New York, as Administrative Agent (as the same may be amended
from time to time, the "Credit Agreement"). Terms defined in the Credit
Agreement are used herein with the same meanings. The Bank is entitled to the
benefits of the Credit Agreement and reference is made to the Credit Agreement
for provisions for the prepayment hereof and the acceleration of the maturity
hereof.
This Note shall be governed by and construed in accordance with the laws of
the State of New York.
VLASIC FOODS INTERNATIONAL INC.
By:____________________________________
Name:
Title:
<PAGE>
LOANS AND PAYMENTS OF PRINCIPAL
Amount of Type of Amount of Maturity Notation
Date Loan Loan Principal Repaid Date Made By
================================================================================
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2
<PAGE>
EXHIBIT B - Money Market Quote Request
FORM OF MONEY MARKET QUOTE REQUEST
[Date]
To: Morgan Guaranty Trust Company of New York (the "ADMINISTRATIVE AGENT")
From: VLASIC FOODS INTERNATIONAL INC.
Re: Credit Agreement (the "CREDIT AGREEMENT") dated as of February 20, 1998
among Vlasic Foods International Inc., Campbell Soup Company, the Banks
party thereto, The Chase Manhattan Bank, as Syndication Agent, and the
Administrative Agent.
We hereby give notice pursuant to Section 3.03 of the Credit Agreement
that we request Money Market Quotes for the following proposed Money Market
Borrowing(s):
Date of Borrowing: _______________________
- -----------------
PRINCIPAL AMOUNT/1/ INTEREST PERIOD/2/
------------------- ------------------
$
Such Money Market Quotes should offer a Money Market [Margin] [Absolute
Rate]. [The applicable base rate is the London Interbank Offered Rate.]
Terms used herein have the meanings assigned to them in the Credit
Agreement.
VLASIC FOODS INTERNATIONAL INC.
By:_________________________________
Name:
Title:
________________________
/1/Amount must be $10,000,000 or a larger multiple of $1,000,000.
/2/Not less than one month (LIBOR Auction) or not less than 30 days
(Absolute Rate Auction), subject to the provisions of the definition of Interest
Period.
<PAGE>
EXHIBIT C - Invitation for Money Market Quotes
FORM OF INVITATION FOR MONEY MARKET QUOTES
------------------------------------------
To: [Name of Bank]
Re: Invitation for Money Market Quotes to Vlasic Foods International Inc.
(the "COMPANY")
Pursuant to Section 3.03 of the Credit Agreement dated as of February 20,
1998 among the Company, Campbell Soup Company, the Banks party thereto, The
Chase Manhattan Bank, as Syndication Agent, and the undersigned, as
Administrative Agent, we are pleased on behalf of the Company to invite you to
submit Money Market Quotes to the Company for the following proposed Money
Market Borrowing(s):
Date of Borrowing: ________________________
PRINCIPAL AMOUNT/1/ INTEREST PERIOD/2/
------------------ ------------------
$
Such Money Market Quotes should offer a Money Market [Margin] [Absolute
Rate]. [The applicable base rate is the London Interbank Offered Rate.]
Please respond to this invitation by no later than [2:00 P.M.] [9:30 A.M.]
(New York City time) on [date].
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, as
Administrative Agent
By___________________________
Authorized Officer
____________________
/1/Amount must be $10,000,000 or a larger multiple of $1,000,000.
/2/Not less than one month (LIBOR Auction) or not less than 30 days
(Absolute Rate Auction), subject to the provisions of the definition of Interest
Period.
<PAGE>
EXHIBIT D - Money Market Quote
FORM OF MONEY MARKET QUOTE
--------------------------
[Date]
To: Morgan Guaranty Trust Company of New York, as Administrative Agent
From: [Name of Bank]
Re: Money Market Quote to Vlasic Foods International Inc. (the "Company")
In response to your invitation on behalf of the Company dated _______,
19__, we hereby make the following Money Market Quote on the following terms:
1. Quoting Bank:_______________________________________
2. Person to contact at Quoting Bank:__________________
3. Date of Borrowing: /1/
4. We hereby offer to make Money Market Loan(s) in the following
principal amounts, for the following Interest Periods and at the
following rates:
[Money Market
Principal Amount/2/ Interest Period/3/ Margin/4/] [Absolute Rate/5/]
- ------------------- ------------------ ------------ ------------------
$
$
[provided, that the aggregate principal amount of Money Market Loans for
which the above offers may be accepted shall not exceed $____________.]/2/
____________________________
/1/ As specified in the related Invitation.
/2/ Principal amount bid for each Interest Period may not exceed
principal amount required. Specify aggregate limitation if the sum of the
individual offers exceeds the amount the Bank is willing to lend. Bids must
be made for $5,000,000 or a larger multiple of $1,000,000.
/3/ Not less than one month or not less than 30 days, as specified in
the related Invitation. No more than five bids are permitted for each
Interest Period.
/4/ Margin over or under the London Interbank Offered Rate determined
for the applicable Interest Period. Specify percentage (to the nearest
1/10,000th of 1%) and specify whether "PLUS" or "MINUS".
/5/ Specify rate of interest per annum (to the nearest 1/10,000th of
1%).
<PAGE>
We understand and agree that the offer(s) set forth above, subject to the
satisfaction of the applicable conditions set forth in the Credit Agreement
dated as of February 20, 1998 among the Company, Campbell Soup Company, the
Banks party thereto, The Chase Manhattan Bank, as Syndication Agent, and
yourselves, as Administrative Agent, irrevocably obligates us to make the Money
Market Loan(s) for which any offer(s) are accepted, in whole or in part.
Very truly yours,
[NAME OF BANK]
Dated:____________________________ By: ____________________________
Authorized Officer
2
<PAGE>
EXHIBIT E - Opinion of Counsel for Campbell
OPINION OF COUNSEL FOR CAMPBELL
-------------------------------
________________, 199_
To the Banks, the Syndication Agent
and the Administrative Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Administrative Agent
60 Wall Street
New York, New York 10260
Dear Sirs:
I have advised Campbell Soup Company ("Campbell") in connection with the
Credit Agreement (the "Credit Agreement") dated as of February 20, 1998 among
Vlasic Foods International Inc., Campbell, the banks party thereto (the
"Banks"), The Chase Manhattan Bank, as Syndication Agent, and Morgan Guaranty
Trust Company of New York, as Administrative Agent. Terms defined in the Credit
Agreement are used herein as therein defined. This opinion is being rendered to
you pursuant to Section 4.01(c) of the Credit Agreement.
I have examined originals or copies, certified or otherwise identified to
my satisfaction, of such documents, corporate records, certificates of public
officials and other instruments and have conducted such other investigations of
fact and law as I have deemed necessary or advisable for purposes of this
opinion.
Upon the basis of the foregoing, I am of the opinion that:
1. Campbell is a corporation duly incorporated, validly existing and in
good standing under the laws of New Jersey and has all corporate powers and all
material governmental licenses, authorizations, consents and approvals required
to carry on its business as now conducted.
2. The consummation of the Spin-Off and the execution, delivery and
performance by Campbell of the Spin-Off Agreements, the Credit Agreement and the
Campbell Global Note are within the corporate powers of Campbell, have been duly
authorized by all necessary corporate action, require no action by or in respect
of, or
<PAGE>
filing with, any governmental body, agency or official (except the filing of the
Form 10) and do not contravene, or constitute a default under, any provision of
applicable law or regulation or of the certificate of incorporation or by-laws
of Campbell or of any agreement, judgment, injunction, order, decree or other
instrument binding upon Campbell or any of its Subsidiaries or result in the
creation or imposition of any Lien on any asset of Campbell or any of its
Subsidiaries.
3. The Credit Agreement constitutes a valid and binding agreement of
Campbell, the Campbell Global Note constitutes a valid and binding obligation of
Campbell, and the Spin-Off Agreements when executed and delivered by the Company
and Campbell will constitute valid and binding agreements of Campbell, in each
case enforceable in accordance with its terms except as the same may be limited
by bankruptcy, insolvency or similar laws affecting creditors' rights generally
and by general principles of equity.
Very truly yours,
2
<PAGE>
EXHIBIT F - Opinion of Counsel for the Company
OPINION OF COUNSEL FOR THE COMPANY
----------------------------------
________________, 199_
To the Banks, the Syndication Agent
and the Administrative Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Administrative Agent
60 Wall Street
New York, New York 10260
Dear Sirs:
I have advised Vlasic Foods International Inc. (the "Company") in
connection with the Credit Agreement (the "Credit Agreement") dated as of
February 20, 1998 among the Company, Campbell Soup Company, the banks party
thereto (the "Banks"), The Chase Manhattan Bank, as Syndication Agent, and
Morgan Guaranty Trust Company of New York, as Administrative Agent. Terms
defined in the Credit Agreement are used herein as therein defined. This opinion
is being rendered to you pursuant to Section 4.02(c) of the Credit Agreement.
I have examined originals or copies, certified or otherwise identified to
my satisfaction, of such documents, corporate records, certificates of public
officials and other instruments and have conducted such other investigations of
fact and law as I have deemed necessary or advisable for purposes of this
opinion.
Upon the basis of the foregoing, I am of the opinion that:
1. The Company is a corporation duly incorporated, validly existing and
in good standing under the laws of New Jersey and has all corporate powers and
all material governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted.
2. The execution, delivery and performance by the Company of the Credit
Agreement, the Notes and the Spin-Off Agreements and the assumption by the
Company
<PAGE>
of obligations of Campbell under the Credit Agreement as provided in Section
2.09 thereof, are within the corporate powers of the Company, have been duly
authorized by all necessary corporate action, require no action by or in respect
of, or filing with, any governmental body, agency or official and do not
contravene, or constitute a default under, any provision of applicable law or
regulation or of the certificate of incorporation or by-laws of the Company or
of any agreement, judgment, injunction, order, decree or other instrument
binding upon the Company or any of its Subsidiaries or result in the creation or
imposition of any Lien on any asset of the Company or any of its Subsidiaries.
3. The Credit Agreement constitutes a valid and binding agreement of the
Company and each Note when executed and delivered in accordance with the Credit
Agreement will constitute a valid and binding obligation of the Company, in each
case enforceable in accordance with its terms except as the same may be limited
by bankruptcy, insolvency or similar laws affecting creditors' rights generally
and by general principles of equity.
4. There is no action, suit or proceeding pending against, or to the best
of my knowledge threatened against or affecting, the Company or any of its
Subsidiaries (or any prior owner of any of the Vlasic Foods Businesses) before
any court or arbitrator or any governmental body, agency or official, in which
there is a reasonable possibility of an adverse decision which could materially
adversely affect (i) the business, combined financial position or combined
results of operations of the Vlasic Foods Businesses, considered as a whole, or
(ii) the business, consolidated financial position or consolidated results of
operations of the Company and its Consolidated Subsidiaries, considered as a
whole, or which in any manner draws into question the validity or enforceability
of the Credit Agreement, the Notes or any of the Spin-Off Agreements.
Very truly yours,
2
<PAGE>
EXHIBIT G-1 - Opinion of Special Counsel for the Administrative Agent
OPINION OF
DAVIS POLK & WARDWELL,
SPECIAL COUNSEL FOR THE ADMINISTRATIVE AGENT
ON THE CAMPBELL CLOSING DATE
________________, 199_
To the Banks, the Syndication Agent
and the Administrative Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Administrative Agent
60 Wall Street
New York, New York 10260
Dear Sirs:
We have participated in the preparation of the Credit Agreement (the
"Credit Agreement") dated as of February 20, 1998 among Vlasic Foods
International Inc., a New Jersey corporation (the "Company"), Campbell Soup
Company, a New Jersey corporation, the Banks party thereto (the "Banks"), The
Chase Manhattan Bank, as Syndication Agent, and Morgan Guaranty Trust Company of
New York, as Administrative Agent (the "Administrative Agent"), and have acted
as special counsel for the Administrative Agent for the purpose of rendering
this opinion pursuant to Section 4.01(d) of the Credit Agreement. Terms defined
in the Credit Agreement are used herein as therein defined.
We have examined originals or copies, certified or otherwise identified to
our satisfaction, of such documents, corporate records, certificates of public
officials and other instruments and have conducted such other investigations of
fact and law as we have deemed necessary or advisable for purposes of this
opinion.
Upon the basis of the foregoing, we are of the opinion that:
<PAGE>
1. The execution, delivery and performance by Campbell of the Credit
Agreement and the Campbell Global Note are within its corporate powers and have
been duly authorized by all necessary corporate action.
2. The Credit Agreement constitutes a valid and binding agreement of
Campbell and the Campbell Global Note constitutes a valid and binding obligation
of Campbell, in each case enforceable in accordance with its terms except as the
same may be limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally and by general principles of equity.
We are members of the Bar of the State of New York and the foregoing
opinion is limited to the laws of the State of New York and the federal laws of
the United States. In giving the foregoing opinion, we express no opinion as to
the effect (if any) of any law of any jurisdiction (except the State of New
York) in which any Bank is located which limits the rate of interest that such
Bank may charge or collect.
This opinion is rendered solely to you in connection with the above matter.
This opinion may not be relied upon by you for any other purpose or relied upon
by any other person without our prior written consent.
Very truly yours,
2
<PAGE>
EXHIBIT G-2 - Opinion of Special Counsel for the Administrative Agent
OPINION OF
DAVIS POLK & WARDWELL,
SPECIAL COUNSEL FOR THE ADMINISTRATIVE AGENT
ON THE COMPANY CLOSING DATE
________________, 199_
To the Banks, the Syndication Agent
and the Administrative Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Administrative Agent
60 Wall Street
New York, New York 10260
Dear Sirs:
We have participated in the preparation of the Credit Agreement (the
"Credit Agreement") dated as of February 20, 1998 among Vlasic Foods
International Inc., a New Jersey corporation (the "Company"), Campbell Soup
Company, a New Jersey corporation, the Banks party thereto (the "Banks"), The
Chase Manhattan Bank, as Syndication Agent, and Morgan Guaranty Trust Company of
New York, as Administrative Agent (the "Administrative Agent"), and have acted
as special counsel for the Administrative Agent for the purpose of rendering
this opinion pursuant to Section 4.02(d) of the Credit Agreement. Terms defined
in the Credit Agreement are used herein as therein defined.
We have examined originals or copies, certified or otherwise identified to
our satisfaction, of such documents, corporate records, certificates of public
officials and other instruments and have conducted such other investigations of
fact and law as we have deemed necessary or advisable for purposes of this
opinion.
Upon the basis of the foregoing, we are of the opinion that:
<PAGE>
1. The execution, delivery and performance by the Company of the Credit
Agreement and the Notes are within its corporate powers and have been duly
authorized by all necessary corporate action.
2. The Credit Agreement constitutes a valid and binding agreement of the
Company and each Note when executed and delivered by the Company in accordance
with the Credit Agreement will constitute a valid and binding obligation of the
Company, in each case enforceable in accordance with its terms except as the
same may be limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally and by general principles of equity.
We are members of the Bar of the State of New York and the foregoing
opinion is limited to the laws of the State of New York and the federal laws of
the United States. In giving the foregoing opinion, we express no opinion as to
the effect (if any) of any law of any jurisdiction (except the State of New
York) in which any Bank is located which limits the rate of interest that such
Bank may charge or collect.
This opinion is rendered solely to you in connection with the above matter.
This opinion may not be relied upon by you for any other purpose or relied upon
by any other person without our prior written consent.
Very truly yours,
2
<PAGE>
EXHIBIT H - Assignment and Assumption Agreement
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT dated as of _________, 19__ among [NAME OF ASSIGNOR] (the
"Assignor") and [NAME OF ASSIGNEE] (the "Assignee").
WHEREAS, this Assignment and Assumption Agreement (the "Agreement") relates
to the Credit Agreement dated as of February 20, 1998 among Vlasic Foods
International Inc. (the "Company"), Campbell Soup Company ("Campbell"), the
Assignor and the other Banks party thereto, as Banks, The Chase Manhattan Bank,
as Syndication Agent, and Morgan Guaranty Trust Company of New York, as
Administrative Agent (as the same may be amended from time to time, the "Credit
Agreement");
WHEREAS, as provided under the Credit Agreement, the Assignor has a
Commitment to make Loans in an aggregate principal amount at any time
outstanding not to exceed $__________;
WHEREAS, Committed Loans made by the Assignor under the Credit Agreement in
the aggregate principal amount of $__________ are outstanding at the date
hereof; and
WHEREAS, the Assignor proposes to assign to the Assignee all of the rights
of the Assignor under the Credit Agreement in respect of a portion of its
Commitment thereunder in an amount equal to $__________ (the "Assigned Amount"),
together with a corresponding portion of each of its outstanding Committed
Loans, and the Assignee proposes to accept assignment of such rights and assume
the corresponding obligations from the Assignor on such terms;
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
contained herein, the parties hereto agree as follows:
SECTION 1. Definitions. All capitalized terms not otherwise defined herein
-----------
have the respective meanings set forth in the Credit Agreement.
SECTION 2. Assignment. The Assignor hereby assigns and sells to the
----------
Assignee all of the rights of the Assignor under the Credit Agreement to the
extent of the
<PAGE>
Assigned Amount, and the Assignee hereby accepts such assignment from the
Assignor and assumes all of the obligations of the Assignor under the Credit
Agreement to the extent of the Assigned Amount, including the purchase from the
Assignor of the corresponding portion of the principal amount of each of the
Committed Loans made by the Assignor outstanding at the date hereof. Upon the
execution and delivery hereof by the Assignor and the Assignee and the payment
of the amounts specified in Section 3 required to be paid on the date hereof (i)
the Assignee shall, as of the date hereof, succeed to the rights and be
obligated to perform the obligations of a Bank under the Credit Agreement with a
Commitment in an amount equal to the Assigned Amount, and (ii) the Commitment of
the Assignor shall, as of the date hereof, be reduced by a like amount and the
Assignor released from its obligations under the Credit Agreement to the extent
such obligations have been assumed by the Assignee. The assignment provided for
herein shall be without recourse to the Assignor.
SECTION 3. Payments. As consideration for the assignment and sale
--------
contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on the
date hereof in Federal funds the amount heretofore agreed between them./1/ It is
understood that facility fees accrued to the date hereof are for the account of
the Assignor and such fees accruing from and including the date hereof are for
the account of the Assignee. Each of the Assignor and the Assignee hereby agrees
that if it receives any amount under the Credit Agreement which is for the
account of the other party hereto, it shall receive the same for the account of
such other party to the extent of such other party's interest therein and shall
promptly pay the same to such other party.
[SECTION 4. Consent of the Company. This Agreement is conditioned upon
----------------------
the consent of the Company pursuant to Section 10.06(c) of the Credit Agreement.
The execution of this Agreement by the Company is evidence of its consent.
Pursuant to Section 10.06(c), the Company agrees to execute and deliver a Note
payable to the order of the Assignee, if required to evidence the Loans (or
portions thereof) assigned to and/or made by the Assignee.]
SECTION 5. Non-Reliance on Assignor. The Assignor makes no representation
------------------------
or warranty in connection with, and shall have no responsibility with respect
to, the solvency, financial condition, or statements of the Company [or
Campbell], or the validity and enforceability of the obligations of the Company
[or Campbell] in respect of the Credit Agreement[, the Campbell Global Note] or
any Note. The Assignee acknowledges that it has, independently and without
reliance on the Assignor, and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this
Agreement and will continue to be responsible for
____________________________
/1/ Amount should combine principal together with accrued interest and
breakage compensation, if any, to be paid by the Assignee. It may be
preferable in an appropriate case to specify these amounts generically or by
formula rather than as a fixed sum.
2
<PAGE>
making its own independent appraisal of the business, affairs and financial
condition of the Company [and Campbell].
SECTION 6. Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of New York.
SECTION 7. Counterparts. This Agreement may be signed in any number of
------------
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered by their duly authorized officers as of the date first above
written.
[NAME OF ASSIGNOR]
By: __________________________________
Name:
Title:
[NAME OF ASSIGNEE]
By: __________________________________
Name:
Title:
[The undersigned consents to the foregoing assignment.
VLASIC FOODS INTERNATIONAL INC.
By: __________________________________
Name:
Title: ]
3
<PAGE>
EXHIBIT I - Note
FORM OF CAMPBELL GLOBAL NOTE
New York, New York
_______ __, 1998
For value received, CAMPBELL SOUP COMPANY, a New Jersey corporation
("Campbell"), promises to pay to the order of MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as Administrative Agent (the "Administrative Agent"), for the account
of the Banks party to the Credit Agreement referred to below, the principal
amount of ___________________________________________ ($____________) on the
maturity date provided for in the Credit Agreement, without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by Campbell.
Campbell promises to pay interest on such principal amount on the date and at
the rate provided for in the Credit Agreement. Such payments of principal and
interest shall be made in lawful money of the United States in Federal or other
immediately available funds at the office of Morgan Guaranty Trust Company of
New York, 60 Wall Street, New York, New York.
This Note is the Campbell Global Note referred to in the Credit Agreement
dated as of February 20, 1998 among Vlasic Foods International Inc., Campbell,
the Banks party thereto, The Chase Manhattan Bank, as Syndication Agent, and
Morgan Guaranty Trust Company of New York, as Administrative Agent (as the same
may be amended from time to time, the "Credit Agreement"). Terms defined in the
Credit Agreement are used herein with the same meanings. The Administrative
Agent and the Banks are entitled to the benefits of the Credit Agreement and
reference is made to the Credit Agreement for provisions for the prepayment
hereof and the acceleration of the maturity hereof.
This Note shall be governed by and construed in accordance with the laws of
the State of New York.
CAMPBELL SOUP COMPANY
By: ________________________________
Name:
Title:
<PAGE>
EXHIBIT 10.7
PERSONAL CHOICE
IN RECOGNITION OF YOUR LEADERSHIP
Vlasic Foods International depends on you for a great many things. Our
shareowners look to you to guide the Company through increasingly challenging
times. And your employees count on you to set the direction, tone and example
for how we do business.
To reward you for your contributions to the Company, Vlasic Foods International
offers Personal Choice. It signals the Company's appreciation for your
leadership and commitment and is designed to make your life a little easier to
manage.
This brochure offers a brief description of the program - how it works, what it
offers, and how you use it.
So, please spend a few minutes reviewing the information here. Then take
advantage of the additional rewards that accompany the challenge of your
leadership position.
<PAGE>
HOW THE PROGRAM
WORKS
FOR EXECUTIVES ONLY
Personal Choice is a special program that is available only to the executive
team of Vlasic Foods International. Your participation in the program is a
reflection of your position in the Company, and all the unique challenges that
come with it.
SUPPLEMENTAL COMPENSATION BY LEVEL
Personal Choice provides you with access to supplemental compensation above and
beyond the total compensation you receive as a Vlasic International Foods
executive.
Your level of participation depends on your level of responsibility within the
Company. The greater your responsibility at Vlasic International Foods, the
higher your Personal Choice compensation.
The Company provides different amounts for each of the three executive groups
that qualify for participation in Personal Choice, as follows:
<TABLE>
-----------------------------------------------------------
<S> <C> <C>
GROUP III LEVEL 50 AND ABOVE $32,000
GROUP II LEVEL 44-48 $20,000
GROUP I LEVELS 40-42 $10,000
-----------------------------------------------------------
</TABLE>
FLEXIBILITY IS THE KEY
Personal Choice gives you the flexibility to choose how your supplemental
compensation is spent. You may use your Personal Choice amount for any personal
expenses described in the Personal Choice menu, or any other personal expenses
you may choose.
Under this approach, you tailor the program to fit your lifestyle, preferences
and needs. And, you help ensure that the Company's contribution is applied
toward those items that you and your family value most.
-2-
<PAGE>
PERSONAL CHOICE
SUGGESTED MENU
AUTO PURCHASE OR LEASING
AUTOMOBILE SECURITY SYSTEM
CHILD CARE - If you maintain a Dependent Care Spending Account and have a
sufficient balance, you'll probably want to submit eligible expenses to that
account. The reason for this is that reimbursements from the Dependent Care
Spending Account are made on a before-tax basis.
DINING/UNIVERSITY CLUB
EXERCISE EQUIPMENT
FINANCIAL PLANNING AND TAX PREPARATION
HEALTH/FITNESS CONSULTANT
HEALTH/SPORTS CLUB MEMBERSHIP
HOME COMPUTERS
HOME MAINTENANCE SERVICES
LEGAL SERVICES
PERSONAL EXCESS LIABILITY INSURANCE
RESIDENTIAL SECURITY SYSTEM OR SERVICE
SOCIAL CLUB
SPOUSAL/FAMILY CLUB MEMBERSHIPS
-3-
<PAGE>
HOW YOU WILL RECEIVE
YOUR PERSONAL CHOICE
AMOUNT
At the beginning of each fiscal quarter, the Company will make a lump sum
taxable Personal Choice payment to you of 25% of your Personal Choice account.
You can use this payment to purchase any of the suggested Personal Choice menu
items, or for any other purpose. This payment will be made to eligible Personal
Choice participants who are active employees at the beginning of the quarter.
If you become eligible for Personal Choice after the beginning of the quarter,
your Personal Choice payments will begin with the next fiscal quarter.
Your Personal Choice account is not included as compensation in the calculation
of pensionable earnings or any other pay-related benefits.
YOUR PERSONAL CHOICE COMPENSATION
IS TAXABLE
Your Personal Choice compensation is taxable, which means that, according to
current tax law:
. Your gross Personal Choice payments will be included as taxable income in
your W-2 statement each year, and will be subject to federal, state, and
local taxes; and
. Your gross Personal Choice payments will be subject to 28% federal income tax
withholding (the supplemental rate), as well as withholding for employment
taxes and state and local taxes, where applicable.
The payments you will receive each quarter will be net of tax withholdings.
(Keep in mind: Certain amounts may be deductible on your income return for the
year in which you pay them - for example, the amount you pay for income tax
preparation.)
IF YOUR ASSIGNMENT CHANGES . . .
If you are promoted during the fiscal year and become newly eligible for
participation in the program, or qualify for a higher reimbursement level, the
reimbursement amount that applies to your new level will be effective for the
next quarterly payment following your promotion.
If you retire or terminate during the year, you will receive no further
quarterly payments after your termination date.
-4-
<PAGE>
IF YOU HAVE
QUESTIONS
If you have questions at any time about the program, contact the Human Resources
Department.
The material in this brochure is presented to you by Vlasic Foods International
for information purposes only. It is designed to help you understand the
Personal Choice supplemental compensation program for Vlasic Foods International
executives, but it creates no contract between you and Vlasic Foods
International. The final decision as to your eligibility for Personal Choice is
at the discretion of Vlasic Foods International.
The program is subject to change from time to time, and may be discontinued at
any time, at the sole discretion of the Company.
-5-
<PAGE>
EXHIBIT 10.8
- --------------------------------------------------------------------------------
VLASIC FOODS INTERNATIONAL INC.
_______________________
DEFERRED COMPENSATION PLAN
_______________________
Dated: ______________, 1998
________________________________________________________________________________
<PAGE>
DEFERRED COMPENSATION PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE PAGE
- ------- ----
<S> <C>
I. DEFINITIONS.............................................. 1
II. ELIGIBILITY AND PARTICIPATION............................ 3
III. CONTRIBUTIONS............................................ 4
IV. FORFEITURE............................................... 5
V. PLAN ADMINISTRATION...................................... 5
VI. CLAIMS PROCEDURE......................................... 5
VII. AMENDMENT AND TERMINATION................................ 6
VIII. CHANGE IN CONTROL........................................ 6
IX. MISCELLANEOUS............................................ 10
</TABLE>
-i-
<PAGE>
VLASIC FOODS INTERNATIONAL INC.
DEFERRED COMPENSATION PLAN
(Effective March 30, 1998)
This is the Vlasic Foods International Inc. Deferred Compensation
Plan, which is designed to provide eligible employees with an additional method
of planning for retirement. The Plan is intended to be an "unfunded" plan
maintained for the purpose of providing deferred compensation for a select group
of management or highly compensated employees for purposes of Title I of the
Employee Retirement Income Security Act of 1974, as amended.
ARTICLE I
DEFINITIONS
The following words and phrases, as used in the Plan, shall have these
meanings:
(S)1.1 "ACCOUNT BALANCE" means the total amount of a Participant's
Contributions that are credited to a bookkeeping account, including hypothetical
income, gains and losses credited thereto.
(S)1.2 "ADDITIONAL EMPLOYER MATCHING CONTRIBUTION" has the meaning set
forth in the Savings Plan.
(S)1.3 "ANNUAL INCENTIVE PLAN" means the Vlasic Foods International Inc.
Annual Incentive Plan.
(S)1.4 "AWARD" means an award under the Vlasic Foods International Inc.
Annual Incentive Plan, an approved Employer sales incentive compensation
program, or any other Employer incentive program that is authorized for
eligibility by the Plan Administrator.
(S)1.5 "BENEFICIARY" means the person whom the Participant designates to
receive any unpaid portion of the Participant's Account Balance should the
Participant's death occur before the Participant receives the entire Account
Balance. If the Participant does not designate a Beneficiary, his or her
Beneficiary shall be his or her spouse if he or she is married at the time of
death, or his or her estate if he or she is unmarried at the time of death.
(S)1.6 "BOARD OF DIRECTORS" means the board of directors of Vlasic.
(S)1.7 "CAMPBELL" means Campbell Soup Company and any Campbell subsidiary.
(S)1.8 "CAUSE" means the termination of a Participant's employment by
reason of his or her engaging in conduct that constitutes willful gross
misconduct that is demonstrably and materially injurious to his or her employer,
monetarily or otherwise, misappropriation of funds, willful and material
misrepresentation to the directors or officers of his or her employer, gross
<PAGE>
negligence in the performance of the Participant's duties having a material
adverse effect on the business, operations, assets, properties or financial
condition of Vlasic or a Subsidiary, or entering into competition with Vlasic or
a Subsidiary. No act, nor failure to act, on the Participant's part shall be
considered "willful" unless he or she has acted, or failed to act, with an
absence of good faith and without a reasonable belief that his or her action or
failure to act was in the best interest of Vlasic and its Subsidiaries.
(S)1.9 "CODE" means the Internal Revenue Code of 1986, as amended.
(S)1.10 "COMPENSATION" means:
(a) For purposes of the Salary Deferral Program, all amounts that
are treated as wages for Federal income tax withholding under section 340l(a) of
the Code for the Plan Year plus amounts that would be paid to the Executive
during the year but for the Executive's election under a cash or deferred
arrangement described in section 401(k) of the Code or a cafeteria plan
described in section 125 of the Code. Notwithstanding the preceding sentence,
Compensation shall not include:
(i) an Award under any incentive plan sponsored by the
Employer,
(ii) contributions by the Employer to this or any other plan
or plans for the benefit of its employees, except as otherwise expressly
provided in this Plan, or
(iii) amounts identified by the Employer as expense allowances
or reimbursements regardless of whether such amounts are treated as wages under
the Code.
(b) For purposes of the Supplemental Savings Program, the meaning
set forth in the Savings Plan.
(S)1.11 "CONTRIBUTION" means an amount deferred under the Plan pursuant to
a Participant's election, or credited to a Participant under Article III, and
credited to a Participant's Account Balance. No money or other assets shall
actually be set aside or contributed to such Account Balance.
(S)1.12 "EFFECTIVE DATE" means March 30, 1998.
(S)1.13 "EMPLOYER" means Vlasic and any Subsidiary that the Plan
Administrator designates as an Employer under the Plan.
(S)1.14 "EXECUTIVE" means an employee of the Employer who, for any Plan
Year, is:
(a) classified as "exempt" under the Fair Labor Standards Act of
1938, as amended;
(b) a "highly compensated employee" within the meaning of section
414(q) of the Code; and
-2-
<PAGE>
(c) designated by the Plan Administrator as eligible to
participate in the Plan.
(S)1.15 "IRS COMPENSATION LIMIT" means the annual dollar limit prescribed
under section 401(a)(17) of the Code.
(S)1.16 "LTIP" means the Vlasic 1998 Long-Term Incentive Plan.
(S)1.17 "PARTICIPANT" means an Executive who elects to participate in the
Plan.
(S)1.18 "PLAN" means the Deferred Compensation Plan, as amended, and that
consists of the Salary Deferral Program, the Supplemental Savings Program, the
LTIP Deferral Program and the Annual Incentive Plan Deferral Program.
(S)1.19 "PLAN ADMINISTRATOR" means the Compensation and Organization
Committee of the Board of Directors, or its delegate or successor.
(S)1.20 "PLAN YEAR" means the period beginning on [Distribution Date] and
ending December 31, 1998 and each 12-month period thereafter beginning January 1
and ending December 31.
(S)1.21 "PROGRAMS" are described in Section 2.1.
(S)1.22 "SAVINGS PLAN" means the Vlasic Foods International Inc. Savings
and 401(k) Plan for Salaried Employees.
(S)1.23 "SUBSIDIARY" means a corporation, domestic or foreign, the
majority of the voting stock of which is owned directly or indirectly by Vlasic.
(S)1.24 "VLASIC" means Vlasic Foods International Inc.
(S)1.25 "VLASIC GROUP" means Vlasic and all of its Subsidiaries on and
after the Effective Date.
ARTICLE II
ELIGIBILITY AND PARTICIPATION
(S)2.1 ELIGIBILITY. Each Executive may elect to participate in one or
more of the following Programs under the Plan pursuant to the respective
eligibility requirements indicated:
(a) Salary Deferral Program, LTIP Deferral Program, Annual
------------------------------------------------------
Incentive Program. Each Executive shall be eligible to participate in the Salary
- -----------------
Deferral Program, the LTIP Deferral Program and the Annual Incentive Plan
Deferral Program.
(b) Supplemental Savings Program. Each Executive: (i) who
----------------------------
participates in the Savings Plan, (ii) whose annual Compensation, as defined in
Section 1.10(b), from the Employer exceeds the IRS Compensation Limit and (iii)
whose rate of contribution to the Savings Plan
-3-
<PAGE>
meets or exceeds the amount determined in advance by the Plan Administrator, may
elect to participate in the Supplemental Savings Program.
(S)2.2 EXECUTIVES OUTSIDE THE UNITED STATES. Notwithstanding any other
provision of the Plan to the contrary, an Executive who is subject to tax
outside of the United States is not eligible to participate in any feature of
the Plan unless his or her participation has been approved in advance by the
Plan Administrator.
(S)2.3 PARTICIPATION. Any Executive eligible under this Article II shall
become a Participant immediately upon enrolling as a Participant by the method
required by the Plan Administrator. An individual shall remain a Participant
until all amounts credited to the Participant's Account Balance have been
distributed to the Participant or his or her Beneficiary.
ARTICLE III
CONTRIBUTIONS
(S)3.1 SALARY DEFERRAL PROGRAM. On behalf of a Participant in the Salary
Deferral Program, the Employer shall contribute to his or her Account Balance:
(i) an amount equal to that portion of the Participant's Compensation that he or
she has elected to defer and (ii) with respect to a Participant who has elected
to defer Compensation pursuant to the Salary Deferral Program and who has also
elected to defer amounts under the Savings Plan, an amount equal to the matching
contribution the Employer would have made to the Savings Plan based on the
portion of Compensation the Participant defers under the Plan.
(S)3.2 SUPPLEMENTAL SAVINGS PROGRAM. On behalf of a Participant in the
Supplemental Savings Program, the Employer shall contribute to his or her
Account Balance: (i) an amount equal to 2 1/2% of the difference between the
Participant's Compensation above the IRS Compensation Limit and the IRS
Compensation Limit itself; provided, however, that no amount shall be credited
hereunder for any period during which a Participant in the Supplemental Savings
Program is not also an active participant in the Savings Plan, (ii) such
additional amount as the Employer, in its sole discretion, may determine and
(iii) with respect to a Participant as to whom the Employer is prohibited,
because of Code limitations, from contributing a full Additional Employer
Matching Contribution, an amount equal to the contribution so prohibited.
(S)3.3 LTIP DEFERRAL PROGRAM. On behalf of a Participant who participates
in the LTIP, the Employer shall contribute to his or her Account Balance an
amount equal to that portion of an eligible LTIP Award that the Participant has
elected to defer under the Plan.
(S)3.4 ANNUAL INCENTIVE PLAN DEFERRAL PROGRAM. On behalf of a Participant
who participates in the Annual Incentive Plan, the Employer shall contribute to
his or her Account Balance an amount equal to that portion of an eligible Annual
Incentive Plan Award that the Participant has elected to defer under the Plan.
-4-
<PAGE>
ARTICLE IV
FORFEITURE
Prior to a Change in Control, a Participant who is discharged for
Cause as determined by the Employer shall, unless otherwise determined by the
Plan Administrator in connection with the termination of his or her employment,
lose any right to receive payment of his or her Account Balance.
ARTICLE V
PLAN ADMINISTRATION
(S)5.1 GENERAL. The Plan shall be administered by the Plan Administrator.
The Plan Administrator shall establish procedures and rules regarding the timing
of deferral elections, the time period for deferral, the forms of distribution,
the availability of death benefits, the measurement units for valuing Account
Balances, the transfer of Account Balances among measurement units, the
statements of Account Balances, the time and manner of payment of Account
Balances, and other administrative items for the Plan.
(S)5.2 PLAN INTERPRETATION. The Plan Administrator shall have the
authority and responsibility to interpret and construe the Plan and to decide
all questions arising thereunder, including without limitation, questions of
eligibility for participation, eligibility for Contributions, the amount of
Account Balances and the timing of the distribution thereof, and shall have the
authority to deviate from the literal terms of the Plan to the extent it shall
determine to be necessary or appropriate to operate the Plan in compliance with
the provisions of applicable law.
(S)5.3 RESPONSIBILITIES AND REPORTS. The Plan Administrator may pursuant
to a written instruction name other persons to carry out specific
responsibilities. The Plan Administrator shall be entitled to rely conclusively
upon all tables, valuations, certificates, opinions and reports that are
furnished by any accountant, controller, counsel, or other person employed or
engaged for such purposes.
ARTICLE VI
CLAIMS PROCEDURE
(S)6.1 DENIAL OF CLAIM FOR BENEFITS. Any denial by the Plan Administrator
of a claim for benefits under the Plan by a Participant or Beneficiary shall be
stated in writing by the Plan Administrator and delivered or mailed to the
Participant or Beneficiary. The Plan Administrator shall furnish the claimant
with notice of the decision not later than 90 days after receipt of the claim,
unless special circumstances require an extension of time for processing the
claim. If such an extension of time for processing is required, written notice
of the extension shall be furnished to the claimant prior to the termination of
the initial 90 day period. In no event shall such extension exceed a period of
90 days from the end of such initial period. The extension notice
-5-
<PAGE>
shall indicate the special circumstances requiring an extension of time and the
date by which the Plan Administrator expects to render the final decision. The
notice of the Plan Administrator's decision shall be written in a manner
calculated to be understood by the claimant and shall include (i) the specific
reasons for the denial, including, where appropriate, references to the Plan,
(ii) any additional information necessary to perfect the claim with an
explanation of why the information is necessary, and (iii) an explanation of the
procedure for perfecting the claim.
(S)6.2 APPEAL OF DENIAL. The claimant shall have 60 days after receipt of
written notification of denial of his or her claim in which to file a written
appeal with the Plan Administrator. As a part of any such appeal, the claimant
may submit issues and comments in writing and shall, on request, be afforded an
opportunity to review any documents pertinent to the perfection of his or her
claim. The Plan Administrator shall render a written decision on the claimant's
appeal ordinarily within 60 days after receipt of notice thereof but, in no
case, later than 120 days.
ARTICLE VII
AMENDMENT AND TERMINATION
Vlasic reserves the right to amend or modify the Plan at any time
by action of the Plan Administrator and each Employer reserves the right to
terminate the Plan as to its employees at any time by action of its board of
directors. Notwithstanding the foregoing, no such amendment, modification or
termination shall reduce any Participant's Account Balance as of the date of
such amendment, modification or termination.
ARTICLE VIII
CHANGE IN CONTROL
(S)8.1 PROVISIONS. Notwithstanding anything contained in the Plan to the
contrary, the provisions of this Article VIII shall govern and supersede any
inconsistent terms or provisions of the Plan.
(S)8.2 DEFINITION OF "CHANGE IN CONTROL". For purposes of the Plan
"Change in Control" means any of the following events:
(a) The acquisition in one or more transactions by any "Person"
(as the term person is used for purposes of Section 13(d) or Section 14(d) of
the Securities Exchange Act of 1934, as amended (the "1934 Act")) of "Beneficial
Ownership" (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of
twenty-five percent (25%) or more of the combined voting power of Vlasic's then
outstanding voting securities (the "Voting Securities"); provided, however, that
for purposes of this Section 8.2(a), the Voting Securities acquired directly
from Vlasic by any Person shall be excluded from the determination of such
Person's Beneficial ownership of Voting Securities (but such Voting Securities
shall be included in the calculation of the total number of Voting Securities
then outstanding); or
-6-
<PAGE>
(b) The individuals who, as of the later of April 1, 1998 or the
first date that the membership of the Board of Directors reaches seven (7), are
members of the Board of Directors (the "Incumbent Board"), cease for any reason
to constitute at least two-thirds of the Board of Directors; provided, however,
that if the election, or nomination for election by Vlasic's shareowners, of any
new Director was approved by a vote of at least two-thirds of the Incumbent
Board, such new Director shall, for purposes of the Plan, be considered as a
member of the Incumbent Board; or
(c) Approval by shareowners of Vlasic of (i) a merger or
consolidation involving Vlasic if the shareowners of Vlasic, immediately before
such merger or consolidation, do not own, directly or indirectly, immediately
following such merger or consolidation, more than eighty percent (80%) of the
combined voting power of the outstanding Voting Securities of the corporation
resulting from such merger or consolidation in substantially the same proportion
as their ownership of the Voting Securities immediately before such merger or
consolidation or (ii) a complete liquidation or dissolution of Vlasic or an
agreement for the sale or other disposition of all or substantially all of the
assets of Vlasic; or
(d) Acceptance by shareowners of Vlasic of shares in a share
exchange if the shareowners of Vlasic, immediately before such share exchange,
do not own, directly or indirectly, immediately following such share exchange,
more than eighty percent (80%) of the combined voting power of the outstanding
Voting Securities of the corporation resulting from such share exchange in
substantially the same proportion as their ownership of the Voting Securities
outstanding immediately before such share exchange.
Notwithstanding the foregoing, a Change in Control shall not be deemed to
occur solely because twenty-five percent (25%) or more of the then outstanding
Voting Securities is acquired by (i) a trustee or other fiduciary holding
securities under one or more employee benefit plans maintained by Vlasic or any
of its subsidiaries, (ii) any entity that, immediately prior to such
acquisition, is entirely owned (directly or indirectly) by shareowners of Vlasic
in the same proportions as their ownership of stock in Vlasic immediately prior
to such acquisition, (iii) any "Grandfathered Dorrance Family shareowner" (as
hereinafter defined) or (iv) any Person who has acquired such Voting Securities
directly from any Grandfathered Dorrance Family shareowner but only if such
Person has executed an agreement that is approved by two-thirds of the Board of
Directors and pursuant to which such Person has agreed that he or she (or they)
will not increase his or her (or their) Beneficial Ownership (directly or
indirectly) to thirty percent (30%) or more of the outstanding Voting Securities
(the "Standstill Agreement") and only for the period during which the Standstill
Agreement is effective and fully honored by such Person. For purposes of this
Section, "Grandfathered Dorrance Family shareowner" means at any time a
"Dorrance Family shareowner" (as hereinafter defined) who or which is at the
time in question the Beneficial Owner solely of (v) Voting Securities
beneficially owned by such individual on April 1, 1998, (w) Voting Securities
acquired directly from Vlasic, (x) Voting Securities acquired directly from
another Grandfathered Dorrance Family shareowner, (y) Voting Securities that are
also Beneficially Owned by other Grandfathered Dorrance Family shareowners at
the time in question, and (z) Voting Securities acquired after April 1, 1998
other than directly from Vlasic or from another Grandfathered Dorrance Family
shareowner by any "Dorrance Grandchild" (as
-7-
<PAGE>
hereinafter defined); provided that the aggregate amount of Voting Securities so
acquired by each such Dorrance Grandchild shall not exceed five percent (5%) of
the Voting Securities outstanding at the time of such acquisition. A "Dorrance
Family shareowner" who or which is at the time in question the Beneficial Owner
of Voting Securities that are not specified in clauses (v), (w), (x), (y) and
(z) of the immediately preceding sentence shall not be a Grandfathered Dorrance
Family shareowner at the time in question. For purposes of this Section,
"Dorrance Family shareowners" means individuals who are descendants of the late
Dr. John T. Dorrance, Sr. and/or the spouses, fiduciaries and foundations of
such descendants. A "Dorrance Grandchild" means as to each particular grandchild
of the late Dr. John T. Dorrance, Sr., all of the following taken collectively:
such grandchild, such grandchild's descendants and/or the spouses, fiduciaries
and foundations of such grandchild and such grandchild's descendants.
Moreover, notwithstanding the foregoing, a Change in Control shall
not be deemed to occur solely because any Person (the "Subject Person") acquired
Beneficial Ownership of more than the permitted amount of the outstanding Voting
Securities as a result of the acquisition of Voting Securities by Vlasic that,
by reducing the number of Voting Securities outstanding, increases the
proportional number of shares Beneficially Owned by the Subject Person; provided
that if a Change in Control would occur (but for the operation of this sentence)
as a result of the acquisition of Voting Securities by Vlasic, and after such
share acquisition by Vlasic, the Subject Person becomes the Beneficial Owner of
any additional Voting Securities that increases the percentage of the then
outstanding Voting Securities Beneficially Owned by the Subject Person, then a
Change in Control shall occur.
(S)8.3 DEFINITION OF "TERMINATION FOLLOWING A CHANGE IN CONTROL." For
purposes of the Plan, "Termination Following a Change in Control" means a
termination of employment:
(a) initiated by the employer of the Participant, other than for
Cause; or
(b) initiated by the Participant following one or more of the
following events:
(i) an assignment to the Participant of any duties
materially inconsistent with, or a reduction or change by his or her employer in
the nature or scope of the authority, duties or responsibilities of the
Participant from those assigned to or held by the Participant immediately prior
to the Change in Control;
(ii) any removal of the Participant from the positions held
immediately prior to the Change in Control, except in connection with promotions
to positions of greater responsibility and prestige;
(iii) any reduction by his or her employer in the
Participant's compensation as in effect immediately prior to the Change in
Control or as the same may be increased thereafter;
(iv) revocation or any modification of any employee benefit
plan, or any action taken pursuant to the terms of any such plan, that
materially reduces the opportunity of the Participant to receive benefits under
any such plan;
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(v) a transfer or relocation of the site of employment of
the Participant immediately preceding the Change in Control, without the
Participant's express written consent, to a location more than fifty (50) miles
distant therefrom, or that is otherwise an unacceptable commuting distance from
the Participant's principal residence at the date of the Change in Control; or
(vi) a requirement that the Participant undertake business
travel to an extent substantially greater than the Participant's business travel
obligations immediately prior to the Change in Control.
(S)8.4 CHANGE IN CONTROL YEAR. For purposes of the Plan, "Change in
Control Year" means a fiscal year of Vlasic in which a Change in Control occurs.
(S)8.5 ACCRUED BENEFIT; TRUST ARRANGEMENT.
(a) Upon a Change in Control, the benefits accrued as if invested
in Vlasic common stock shall be converted into a cash equivalent amount equal to
the greater of (i) the highest price per share of such stock (a "Share") paid to
holders of the Shares in any transaction (or series of transactions)
constituting or resulting in a Change in Control or (ii) the highest fair market
value per Share during the ninety (90) day period ending on the date of a Change
in Control multiplied by the number of Shares of Vlasic stock credited to a
Participant's Account Balance under the Plan. The resulting cash equivalent
amount shall promptly be credited to (i) the remaining hypothetical investments
in the Participant's Account Balance, in the same relative proportions as those
hypothetical investments or (ii) if an Participant's Account Balance was
credited entirely in the hypothetical Vlasic Stock fund, the most conservative
hypothetical investment.
(b) Not later than a Change in Control, Vlasic and each of the
other Employers shall contribute to a trust arrangement described in Section 9.8
cash, marketable securities or other property having a fair market value in an
amount equal to the sum of the amounts, determined by an actuary selected by
Vlasic and satisfactory to a majority of the Participants, using reasonable
assumptions, that will be sufficient to fund fully the Employer's obligations to
pay the full amount of all benefits to which the Participants (and their
Beneficiaries) may become entitled pursuant to the Plan.
(S)8.6 AMENDMENT OR TERMINATION.
(a) This Article VIII shall not be amended or terminated at any
time.
(b) For a period of two (2) years following a Change in Control,
the Plan shall not be terminated or amended in any way, nor shall the manner in
which the Plan is administered be changed in a way that adversely affects the
Executive's right to existing or future Employer-provided benefits or
contributions provided hereunder.
(c) Any amendment or termination of the Plan prior to a Change in
Control that (i) is at the request of a third party who has indicated an
intention or taken steps reasonably
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calculated to effect a Change in Control or (ii) otherwise arises in connection
with or in anticipation of a Change in Control, shall be null and void and shall
have no effect whatsoever.
ARTICLE IX
MISCELLANEOUS
(S)9.1 NO EMPLOYMENT CONTRACT. The establishment or existence of the Plan
shall not confer upon any individual the right to be continued as an employee.
The Employer expressly reserves the right to discharge any employee whenever in
its judgment its best interests so require.
(S)9.2 NON-ALIENATION. No amounts payable under the Plan shall be subject
in any manner to anticipation, assignment, or voluntary or involuntary
alienation.
(S)9.3 GOVERNING LAW. The Plan shall be governed by and construed in
accordance with the laws of the State of New Jersey to the extent not preempted
by federal law.
(S)9.4 WITHHOLDING. The Employer shall withhold from any benefits payable
under the Plan all federal, state and local income taxes or other taxes required
to be withheld pursuant to applicable law.
(S)9.5 INCAPACITY. If the Plan Administrator, in its sole discretion,
deems a Participant or Beneficiary who is eligible to receive any payment
hereunder to be incompetent to receive the same by reason of age, illness or any
infirmity or incapacity of any kind, the Plan Administrator may direct the
Employer to apply such payment directly for the benefit of such person, or to
make payment to any person selected by the Plan Administrator to disburse the
same for the benefit of the Participant or Beneficiary. Payments made pursuant
to this Section shall operate as a discharge, to the extent thereof, of all
liabilities of the Employer, the Plan Administrator and the Plan to the person
for whose benefit the payments are made.
(S)9.6 NUMBER. For purposes of the Plan, the singular shall include the
plural, and vice versa.
(S)9.7 BINDING UPON SUCCESSORS. The liabilities under the Plan shall be
binding upon any successor, assign or purchaser of the Employer or any purchaser
of substantially all of the assets of the Employer.
(S)9.8 TRUST ARRANGEMENT. All benefits under the Plan represent an
unsecured promise to pay by the Employer. The Plan shall be unfunded and the
benefits hereunder shall be paid only from the general assets of the Employer
resulting in the Executives having no greater rights than the Employer's other
general creditors. Notwithstanding the foregoing, Section 8.5(b) shall be given
full effect in the event of a Change in Control and nothing herein shall prevent
or prohibit the Employer from establishing a trust or other arrangement for the
purpose of providing for the payment of the benefits payable under the Plan at
any other time.
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EXHIBIT 10.9
________________________________________________________________________________
VLASIC FOODS INTERNATIONAL INC.
_______________________
1998 LONG-TERM INCENTIVE PLAN
_______________________
Dated: ______________, 1998
________________________________________________________________________________
<PAGE>
VLASIC FOODS INTERNATIONAL INC.
1998 LONG-TERM INCENTIVE PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Article Page
- ------- ----
<S> <C>
I. PURPOSE AND EFFECTIVE DATE..................................... 1
II. DEFINITIONS.................................................... 1
III. ADMINISTRATION................................................. 4
IV. AWARDS......................................................... 5
V. STOCK OPTIONS AND STOCK APPRECIATION RIGHTS.................... 6
VI. RESTRICTED STOCK AWARDS........................................ 9
VII. UNRESTRICTED VLASIC STOCK AWARDS...............................11
VIII. AWARD OF PERFORMANCE UNITS.....................................11
IX. DEFERRAL OF CERTAIN PAYMENTS...................................12
X. MISCELLANEOUS PROVISIONS.......................................13
XI. CHANGE IN CONTROL OF THE COMPANY...............................14
</TABLE>
<PAGE>
ARTICLE I
PURPOSE AND EFFECTIVE DATE
(S)1.1. PURPOSE. The purpose of the Plan is to provide financial
incentives for selected employees of the Vlasic Foods International Group,
thereby promoting the long-term growth and financial success of the Vlasic Foods
International Group by (i) attracting and retaining employees of outstanding
ability, (ii) strengthening the Vlasic Foods International Group's capability to
develop, maintain, and direct a competent management team, (iii) providing an
effective means for selected employees to acquire and maintain ownership of
Vlasic Stock, (iv) motivating employees to achieve long-range Performance Goals
and objectives, and (v) providing incentive compensation opportunities
competitive with those of other major corporations.
(S)1.2. EFFECTIVE DATE AND EXPIRATION OF PLAN. The Plan was approved by
Campbell Soup Company, as the sole shareowner of Vlasic Foods International Inc.
and is effective March 30, 1998. Unless earlier terminated by the Board pursuant
to Section 10.3, the Plan shall terminate on the tenth anniversary of its
Effective Date. No Award shall be made pursuant to the Plan after its
termination date, but exercise and payment of Awards made prior to the
termination date may extend beyond that date.
ARTICLE II
DEFINITIONS
The following words and phrases, as used in the Plan, shall have these
meanings:
(S)2.1. "AWARD" means, individually or collectively, any Option, SAR,
Restricted Stock, unrestricted Vlasic Stock or Performance Unit Award.
(S)2.2. "BOARD" means the Board of Directors of the Company.
(S)2.3. "CAMPBELL CONVERSION AWARD" means an award under the Campbell
Soup Company 1994 Long-Term Incentive Plan ("Campbell Plan") that terminates
solely by reason of the spin-off of the Company from Campbell Soup Company and
is converted to a replacement Award under the Plan. The replacement Award shall
have the same aggregate Option Price, cover the same aggregate fair market value
of Vlasic Stock and continue the vesting schedule and other provisions of the
award under the Campbell Plan that it replaces.
(S)2.4. "CAUSE" means the termination of a Participant's employment by
reason of his or her engaging in conduct that constitutes willful gross
misconduct that is demonstrably and materially injurious to his or her employer,
monetarily or otherwise, misappropriation of funds, willful and material
misrepresentation to the directors or officers of his or her employer, gross
negligence in the performance of the Participant's duties having a material
adverse effect on the
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business, operations, assets, properties or financial condition of the Company
or a Subsidiary, or entering into competition with the Company or a Subsidiary.
No act, nor failure to act, on the Participant's part shall be considered
"willful" unless he or she has acted, or failed to act, with an absence of good
faith and without a reasonable belief that his or her action or failure to act
was in the best interest of the Company and its Subsidiaries.
(S)2.5. "CODE" means the Internal Revenue Code of 1986, as amended.
(S)2.6. "COMMITTEE" means the Compensation and Organization Committee
of the Board. All members of the Committee shall be "Outside Directors," as
defined or interpreted for purposes of Section 162(m) of the Code, and
"Disinterested Persons," within the meaning of Rule 16b-3 under the Securities
Exchange Act of 1934 (the "1934 Act").
(S)2.7. "COMPANY" means Vlasic Foods International Inc. and its
successors and assigns.
(S)2.8. "DEFERRED COMPENSATION PLAN" means the Vlasic Foods
International Inc. Deferred Compensation Plan.
(S)2.9. "DIRECTOR" means a member of the Board.
(S)2.10. "EFFECTIVE DATE" means March 30, 1998.
(S)2.11. "EMPLOYEE" means a person who is a regular salaried employee of
the Vlasic Foods International Group and who, in the opinion of the Committee,
is a key employee whose performance can contribute to the success of the Company
or a Subsidiary.
(S)2.12. "FAIR MARKET VALUE" means, as of any specified date, an amount
equal to the mean between the reported high and low prices of Vlasic Stock on
the New York Stock Exchange composite tape on the specified date.
(S)2.13. "FISCAL YEAR" means the fiscal year of the Company, which is the
52- or 53-week period ending on the Sunday closest to July 31.
(S)2.14. "HIGHLY COMPENSATED EMPLOYEE" means an Employee who is determined
by the Committee to be a member of a select group of management or highly
compensated employees for purposes of Section 201(2) of the Employee Retirement
Income Security Act of 1974, as amended.
(S)2.15. "INCENTIVE STOCK OPTION" means an option within the meaning of
Section 422 of the Code.
(S)2.16. "NONQUALIFIED STOCK OPTION" means an Option granted under the
Plan other than an Incentive Stock Option.
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(S)2.17. "OPTION" means either a Nonqualified Stock Option or an Incentive
Stock Option to purchase Vlasic Stock.
(S)2.18. "OPTION PRICE" means the price at which Vlasic Stock may be
purchased under an Option as provided in Section 5.4 or in the case of an SAR
awarded under Section 5.8, the Fair Market Value of Vlasic Stock on the date the
SAR is awarded.
(S)2.19. "PARTICIPANT" means an Employee to whom an Award has been made
under the Plan.
(S)2.20. "PERFORMANCE GOALS" means goals established by the Committee
pursuant to Section 4.5.
(S)2.21. "PERFORMANCE PERIOD" means a period of time over which
performance is measured.
(S)2.22. "PERFORMANCE UNIT" means the unit of measure determined under
Article VIII by which is expressed the value of a Performance Unit Award.
(S)2.23. "PERFORMANCE UNIT AWARD" means an Award granted under Article
VIII.
(S)2.24. "PERSONAL REPRESENTATIVE" means the person or persons who, upon
the death, disability, or incompetency of a Participant, shall have acquired, by
will or by the laws of descent and distribution or by other legal proceedings,
the right to exercise an Option or the right to any Restricted Stock Award or
Performance Unit Award theretofore granted or made to such Participant.
(S)2.25. "PLAN" means the Vlasic Foods International Inc. 1998 Long-Term
Incentive Plan.
(S)2.26. "RESTRICTED PERFORMANCE STOCK" means Vlasic Stock subject to
Performance Goals provided in Section 4.5.
(S)2.27. "RESTRICTED STOCK" means Vlasic Stock subject to the terms and
conditions provided in Article VI and includes Restricted Performance Stock.
(S)2.28. "RESTRICTED STOCK AWARD" means an Award granted under Article VI.
(S)2.29. "RESTRICTION PERIOD" means a period of time determined under
Section 6.2 during which Restricted Stock is subject to the terms and conditions
provided in Section 6.3.
(S)2.30. "SAR" means a stock appreciation right granted under Section 5.8.
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(S)2.31. "STATEMENT" means a written confirmation of an Award under the
Plan furnished to the Participant.
(S)2.32. "SUBSIDIARY" means a corporation, domestic or foreign, the
majority of the voting stock of which is owned directly or indirectly by the
Company.
(S)2.33. "VLASIC FOODS INTERNATIONAL GROUP" means the Company and all of
its Subsidiaries on and after the Effective Date.
(S)2.34. "VLASIC STOCK" means common stock of the Company.
ARTICLE III
ADMINISTRATION
(S)3.1. COMMITTEE TO ADMINISTER. The Plan shall be administered by the
Committee. The Committee shall have full power and authority to interpret and
administer the Plan and to establish and amend rules and regulations for its
administration. The Committee's decisions shall be final and conclusive with
respect to the interpretation of the Plan and any Award made under it.
A majority of the members of the Committee shall constitute a quorum for
the conduct of business at any meeting. The Committee shall act by majority vote
of the members present at a duly convened meeting, which may include a meeting
by conference telephone call held in accordance with applicable law. Action may
be taken without a meeting if written consent thereto is given in accordance
with applicable law.
(S)3.2. POWERS OF COMMITTEE.
(a) Subject to the provisions of the Plan, the Committee shall
have authority, in its discretion, to determine those Employees who shall
receive an Award, the time or times when such Award shall be made, the vesting
schedule, if any, for the Award and the type of Award to be granted, whether an
Incentive Stock Option or a Nonqualified Stock Option shall be granted, the
number of shares to be subject to each Option and Restricted Stock Award, and
the value of each Performance Unit.
(b) The Committee shall determine and set forth in an Award
Statement the terms of each Award, including such terms, restrictions, and
provisions as shall be necessary to cause certain options to qualify as
Incentive Stock Options. The Committee may correct any defect or supply any
omission or reconcile any inconsistency in the Plan or in any Statement relating
to an Award, in such manner and to the extent the Committee shall determine in
order to carry out the purposes of the Plan. The Committee may, in its
discretion, accelerate (i) the date
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on which any Option or SAR may be exercised, (ii) the date of termination of the
restrictions applicable to a Restricted Stock Award, or (iii) the end of a
Performance Period under a Performance Unit Award, if the Committee determines
that to do so will be in the best interests of the Company and the Participants
in the Plan.
ARTICLE IV
AWARDS
(S)4.1. AWARDS. Awards under the Plan shall consist of Incentive Stock
Options, Nonqualified Stock Options, SARs, Restricted Stock, unrestricted Vlasic
Stock and Performance Units. All Awards shall be subject to the terms and
conditions of the Plan and to such other terms and conditions consistent with
the Plan as the Committee deems appropriate. Awards under a particular section
of the Plan need not be uniform and Awards under two or more sections may be
combined in one Statement. Any combination of Awards may be granted at one time
and on more than one occasion to the same Employee. Awards of Performance Units
and Restricted Performance Stock shall be earned solely upon attainment of
Performance Goals and the Committee shall have no discretion to increase such
Awards.
(S)4.2. ELIGIBILITY FOR AWARDS. An Award may be made to any Employee
selected by the Committee. In making this selection and in determining the form
and amount of the Award, the Committee may give consideration to the functions
and responsibilities of the respective Employee, his or her present and
potential contributions to the success of the Vlasic Foods International Group,
the value of his or her services to the Vlasic Foods International Group, and
such other factors deemed relevant by the Committee.
(S)4.3. SHARES AVAILABLE UNDER THE PLAN. The Vlasic Stock to be offered
under the Plan pursuant to Options, SARs, Performance Unit Awards, and
Restricted Stock and unrestricted Vlasic Stock Awards will be authorized but
unissued Vlasic Stock or Vlasic Stock previously issued and outstanding and
reacquired by the Company. Subject to adjustment under Section 10.2, (i) no more
than 5,800,000 shares of Vlasic Stock shall be issuable upon exercise of
Options, SARs, or pursuant to Performance Unit Awards, Restricted Stock or
unrestricted Vlasic Stock Awards granted under the Plan, and (ii) no less than
80% of such shares of Vlasic Stock shall be issuable upon exercise of Options..
Any shares of Vlasic Stock tendered in exercise of an Option or subject to an
Option that for any reason is canceled or terminated without having been
exercised, or any shares of Restricted Stock which are forfeited, shall again be
available for Awards under the Plan. Shares subject to an Option canceled upon
the exercise of an SAR shall not again be available for Awards under the Plan.
(S)4.4. LIMITATION ON AWARDS. The maximum aggregate dollar value of
Restricted Stock and Performance Units awarded to any Employee with respect to a
Performance Period or Restriction Period may not exceed $5,000,000 for each
fiscal year included in such Performance Period or Restriction Period. The
maximum number of shares for which Options may be granted
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to any Participant in any one fiscal year shall not exceed 2,000,000 shares. The
foregoing dollar value and share limits shall not apply to Restricted Stock,
Performance Units and Options attributable to a Campbell Conversion Award.
(S)4.5. GENERAL PERFORMANCE GOALS. Prior to the beginning of a
Performance Period the Committee will establish, in writing, Performance Goals
for the Company and its various operating units and its Subsidiaries. The goals
will be comprised of specified annual levels of one or more performance criteria
as the Committee may deem appropriate. Such goals may include, but shall not be
limited to, earnings per share, net earnings, operating earnings, unit volume,
net sales, market share, balance sheet measurements, revenue, cash flow, cash
return on assets, shareowner return, return on equity, return on capital or
other value-based performance measures. The Committee may disregard or offset
the effect of any special charges or gains, the cumulative effect of a change in
accounting, or the effect of other expenses or losses that are unusual in nature
or infrequent in occurrence, in determining the attainment of Performance Goals.
Awards may also be payable when Company performance, as measured by one or more
of the above criteria, as compared to peer companies, meets or exceeds an
objective target established by the Committee.
ARTICLE V
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
(S)5.1. AWARD OF STOCK OPTIONS. The Committee may, from time to time,
subject to Section 3.2(b) and other provisions of the Plan and such terms and
conditions as the Committee may prescribe, award Incentive Stock Options and
Nonqualified Stock Options to any Employee. Awards of Incentive Stock Options
and Nonqualified Stock Options must be separate and not in tandem.
(S)5.2. PERIOD OF OPTION.
(a) An Option granted under the Plan shall be exercisable only
in accordance with the vesting schedule approved by the Committee. After the
waiting period, the Option may be exercised at any time during the term of the
Option, in whole or in installments, as specified in the related Statement.
Subject to Section 5.6, the duration of each Option shall not be more than ten
years from the date of grant.
(b) Except as provided in Section 5.6, an Option may not be
exercised by a Participant unless such Participant is then, and continually
(except for sick leave, United States military service, or other approved leave
of absence) after the grant of the Option has been, an employee of the Vlasic
Foods International Group.
(S)5.3. STATEMENT. Each Option shall be evidenced by a Statement.
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(S)5.4. OPTION PRICE, EXERCISE AND PAYMENT. The Option Price of Vlasic
Stock under each Option shall be determined by the Committee but shall be a
price not less than 100 percent of the Fair Market Value of Vlasic Stock at the
date such Option is granted, as determined by the Committee. The Board shall
establish the Option Price for each Option attributable to a Campbell Conversion
Award. Options shall not be repriced.
Options may be exercised from time to time by giving notice to the Company,
or the agent of the Company, specifying the number of shares to be purchased.
The notice of exercise shall be accompanied by payment in full of the Option
Price in cash or the Option Price may be paid in whole or in part through the
transfer to the Company of shares of Vlasic Stock.
In the event such Option Price is paid in whole or in part with shares of
Vlasic Stock, the portion of the Option Price so paid shall be equal to the Fair
Market Value, as of the date of exercise of the Option, of such shares or if the
date of exercise is not a trading day the Fair Market Value of the shares on the
immediately preceding trading day. The Company shall not issue or transfer
Vlasic Stock upon exercise of an Option until the Option Price is fully paid.
The Participant may satisfy any amounts required to be withheld by the Company
under applicable federal, state and local tax laws in effect from time to time,
by electing to have the Company withhold a portion of the shares of Vlasic Stock
to be delivered for the payment of such taxes.
(S)5.5. LIMITATIONS ON INCENTIVE STOCK OPTIONS. Each provision of the
Plan and each Option Statement relating to an Incentive Stock Option shall be
construed so that each Incentive Stock Option shall be an incentive stock option
as defined in Section 422 of the Code, and any provisions of the Option
Statement thereof that cannot be so construed shall be disregarded.
(S)5.6. TERMINATION OF EMPLOYMENT. Unless otherwise specifically
provided in the terms of a Statement, the following provisions will govern the
ability of a Participant to exercise any outstanding Options following the
Participant's termination of employment with the Vlasic Foods International
Group:
(a) If the employment of a Participant with the Vlasic Foods
International Group is terminated for reasons other than (i) death or
disability, (ii) discharge for Cause, (iii) retirement, or (iv) resignation, the
Participant may exercise an Option, except an Incentive Stock Option, at any
time within three years after such termination, to the extent of the number of
shares covered by such Option that were exercisable at the date of such
termination; except that an Option shall not be exercisable on any date beyond
the expiration of such three-year period or the expiration date of such Option,
whichever occurs first.
(b) If the employment of a Participant with the Vlasic Foods
International Group is terminated for Cause, any Options of such Participant
shall expire and any rights thereunder shall terminate immediately. Any Option
of a Participant whose service is terminated by resignation may be exercised at
any time within three months of such resignation to the extent that the number
of shares covered by such Option were exercisable at the date of such
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resignation, except that an Option shall not be exercisable on any date beyond
the expiration date of such Option.
(c) Should a Participant die or become disabled either while in
the employ of the Vlasic Foods International Group or after termination of such
employment (other than discharge for Cause), the Option rights of such deceased
or disabled Participant may be exercised by his or her Personal Representative
at any time within three years after the Participant's date of death or
disability to the extent of the number of shares covered by such Option that
were exercisable at the date of such death or disability, except that an Option
shall not be so exercisable on any date beyond the expiration date of such
Option.
If a Participant who was granted a Nonqualified Stock Option should die
within 180 days of the expiration date of such Option, and if on the date of
death the Participant was then entitled to exercise such Option, and if the
Option expires without being exercised, the Personal Representative of the
Participant shall receive in settlement a cash payment from the Company of a sum
equal to the amount, if any, by which the Fair Market Value (determined on the
expiration date of the Option) of Vlasic Stock subject to the Option exceeds the
Option Price.
(d) Any Option of a Participant whose service is terminated
while eligible to retire under the Company's tax qualified pension plan or such
a pension plan of any affiliated company at the date of such termination may be
exercised at any time up to 10 years after such termination, as determined by
the Committee, except that an Option shall not be exercisable on any date beyond
the expiration date of such Option. In the event the Participant's employment
with the Vlasic Foods International Group terminates prior to the vesting of all
Options, and if the Participant is eligible to retire, as described above, any
installment or installments not then exercisable shall become fully exercisable
as of the effective date of such termination.
(S)5.7. SHAREOWNER RIGHTS AND PRIVILEGES. A Participant shall have no
rights as a shareowner with respect to any shares of Vlasic Stock covered by an
Option until the issuance of shares to the Participant.
(S)5.8. AWARD OF SARS.
(a) At any time prior to six months before an Option's
expiration date, the Committee may award to the Participant an SAR related to
the Option. The Committee may also award SARs that are unrelated to any Option.
(b) The SAR shall represent the right to receive payment of an
amount not greater than the spread, if any, by which the Fair Market Value of
the Vlasic Stock on the trading day immediately preceding the date of exercise
of the SAR exceeds the Option Price.
(c) SARs awarded under the Plan shall be evidenced by a
Statement between the Company and the Participant.
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(d) The Committee may prescribe conditions and limitations on
the exercise or transferability of any SAR. SARs may be exercised only when the
value of a share of Vlasic Stock exceeds the Option Price. Such value shall be
determined in the manner specified in Section 5.8(b).
(e) An SAR shall be exercisable only by notice to the Company.
However, an SAR shall in no event be exercisable during the first six months of
its term, except in the event of death or disability of the Participant prior to
the expiration of such six-month period.
(f) All SARs shall automatically be exercised on the last
trading day prior to their expiration, so long as the Fair Market Value of a
share of Vlasic Stock exceeds the Option Price, unless prior to such day the
holder instructs the Treasurer of the Company otherwise in writing. Such Fair
Market Value shall be determined in the manner specified in Section 5.8(b).
(g) Payment of the amount to which a Participant is entitled
upon the exercise of an SAR shall be made in cash, Vlasic Stock, or partly in
cash and partly in Vlasic Stock at the discretion of the Committee. The shares
shall be valued in the manner specified in Section 5.8(b).
(h) At any time when a Participant is, in the judgment of the
Corporate Secretary of the Company, subject with respect to Vlasic Stock to
Section 16 of the 1934 Act, in the event the Committee has not determined the
form in which a SAR will be paid (i.e., cash, shares of Vlasic Stock, or any
combination thereof), any election to exercise such right in whole or in part
for cash shall be subject to the subsequent consent thereto, or disapproval
thereof, by the Committee in its sole discretion.
(i) Each SAR shall expire on a date determined by the Committee
at the date of grant of the Award.
ARTICLE VI
RESTRICTED STOCK AWARDS
(S)6.1. AWARD OF RESTRICTED STOCK.
(a) The Committee may make a Restricted Stock Award to any
Participant, subject to this Article VI and to such other terms and conditions
as the Committee may prescribe.
(b) Each certificate for Restricted Stock may be registered in
book-entry form or may be registered in the name of the Participant and
deposited by him or her, together with a stock power endorsed in blank, with the
Company, unless the Participant is a Highly Compensated Employee and has elected
to defer pursuant to Section 9.1.
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(S)6.2. RESTRICTION PERIOD. At the time of making a Restricted Stock
Award, the Committee shall establish the Restriction Period applicable to such
Award. The Committee may establish different Restriction Periods from time to
time and each Restricted Stock Award may have a different Restriction Period, in
the discretion of the Committee. Restriction Periods, when established for each
Restricted Stock Award, shall not be changed except as permitted by Section 6.3.
(S)6.3. OTHER TERMS AND CONDITIONS. Vlasic Stock, when awarded pursuant
to a Restricted Stock Award, will be represented by a book-entry notation or a
stock certificate registered in the name of the Participant who receives the
Restricted Stock Award, unless the Participant is eligible for and has elected
to defer pursuant to Article IX. Such certificate shall be deposited with the
Company as provided in Section 6.1(b). The Participant shall be entitled to
receive dividends during the Restriction Period and shall have the right to vote
such Vlasic Stock and all other shareowner's rights, with the exception that (i)
the Participant will not be entitled to delivery of a stock certificate during
the Restriction Period, (ii) the Company will retain custody of the certificate,
if any, during the Restriction Period, and (iii) a breach of a restriction or a
breach of the terms and conditions established by the Committee pursuant to the
Restricted Stock Award will cause a forfeiture of the Restricted Stock Award.
The Participant may satisfy any amounts required to be withheld by the Company
under applicable federal, state and local tax laws in effect from time to time,
by electing to have the Company withhold a portion of the Restricted Stock Award
to be delivered for the payment of such taxes. The Committee may, in addition,
prescribe additional restrictions, terms, or conditions upon or to the
Restricted Stock Award, including performance restrictions in accordance with
Section 4.5.
(S)6.4. RESTRICTED STOCK AWARD STATEMENT. Each Restricted Stock Award
shall be evidenced by a Statement.
(S)6.5. TERMINATION OF EMPLOYMENT. The Committee may, in its sole
discretion, establish rules pertaining to the Restricted Stock Award in the
event of termination of employment (by retirement, disability, death, or
otherwise) of a Participant prior to the expiration of the Restriction Period.
(S)6.6. PAYMENT FOR RESTRICTED STOCK. Restricted Stock Awards may be
made by the Committee under which the Participant shall not be required to make
any payment for the Vlasic Stock or, in the alternative, under which the
Participant, as a condition to the Restricted Stock Award, shall pay all (or any
lesser amount than all) of the Fair Market Value of the Vlasic Stock, determined
as of the date the Restricted Stock Award is made. If the latter, such purchase
price shall be paid as provided in the Statement.
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ARTICLE VII
UNRESTRICTED VLASIC STOCK AWARDS
(S)7.1. The Committee may make awards of unrestricted Vlasic Stock to
Employees in recognition of outstanding achievements or as an award for
Employees who receive Restricted Stock Awards when Performance Goals are
exceeded.
(S)7.2. Each Award of unrestricted Vlasic Stock shall be registered in
the name of the Participant and immediately be delivered to him or her or may be
noted as unrestricted in the book-entry records.
ARTICLE VIII
AWARD OF PERFORMANCE UNITS
(S)8.1. AWARD OF PERFORMANCE UNITS. The Committee may award Performance
Units to any Participant. Each Performance Unit shall represent the right of a
Participant to receive an amount equal to the value of the Performance Unit,
determined in the manner established by the Committee at the time of Award.
(S)8.2. PERFORMANCE PERIOD. At the time of each Performance Unit Award,
the Committee shall establish, with respect to each such Award, a Performance
Period during which performance shall be measured. There may be more than one
Award in existence at any one time, and Performance Periods may differ.
(S)8.3. PERFORMANCE MEASURES. Performance Units shall be awarded to a
Participant contingent upon the attainment of Performance Goals in accordance
with Section 4.5.
(S)8.4. PERFORMANCE UNIT VALUE. Each Performance Unit shall have a
maximum dollar value established by the Committee at the time of the Award.
Performance Units earned will be determined by the Committee in respect of a
Performance Period in relation to the degree of attainment of Performance Goals.
The measure of a Performance Unit may, in the discretion of the Committee, be
equal to the Fair Market Value of one share of Vlasic Stock.
(S)8.5. AWARD CRITERIA. In determining the number of Performance Units
to be granted to any Participant, the Committee shall take into account the
Participant's responsibility level, performance, potential, cash compensation
level, other incentive awards, and such other considerations as it deems
appropriate.
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(S)8.6. PAYMENT.
(a) Following the end of a Performance Period, a Participant
holding Performance Units will be entitled to receive payment of an amount, not
exceeding the maximum value of the Performance Units, based on the achievement
of the Performance Goals for such Performance Period, as determined by the
Committee.
(b) Payment of Performance Units shall be made in cash, whether
payment is made at the end of the Performance Period or, in the case of a Highly
Compensated Employee, is deferred pursuant to Section 9.1, except that
Performance Units which are measured using Vlasic Stock shall be paid in Vlasic
Stock. Payment shall be made in a lump sum or in installments and shall be
subject to such other terms and conditions as shall be determined by the
Committee.
(S)8.7. TERMINATION OF EMPLOYMENT.
(a) A Performance Unit Award shall terminate for all purposes if
the Participant does not remain continuously in the employ of the Vlasic Foods
International Group at all times during the applicable Performance Period,
except as may otherwise be determined by the Committee.
(b) In the event that a Participant holding a Performance Unit
ceases to be an employee of the Vlasic Foods International Group following the
end of the applicable Performance Period but prior to full payment according to
the terms of the Performance Unit Award, payment shall be made in accordance
with terms established by the Committee for the payment of such Performance
Unit.
(S)8.8. PERFORMANCE UNIT STATEMENTS. Performance Unit Awards shall be
evidenced by Performance Unit Statements.
ARTICLE IX
DEFERRAL OF CERTAIN PAYMENTS
A Participant who is a Highly Compensated Employee may elect to
defer all or a portion of any related earned Performance Units, Restricted Stock
or gain on any exercised Option pursuant to the terms of the Deferred
Compensation Plan. The value of the Performance Units, Restricted Stock or
Option gain so deferred shall be transferred to the Deferred Compensation Plan
and held in an account under that plan established for the Participant.
Participants who are subject to tax in a foreign country are not eligible to
defer payment of Performance Units, Restricted Stock or Option gain unless a
deferral election has been approved for the Participant by the Company.
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ARTICLE X
MISCELLANEOUS PROVISIONS
(S)10.1. LIMITS AS TO TRANSFERABILITY. With the prior approval of the
Committee, an Option may, at the election of the Participant, be transferred to
the spouse or a descendant of the Participant, or a trust for the benefit of the
spouse or descendants. Unless otherwise provided by the Committee, however, no
SAR, share of Restricted Stock, or Performance Unit under the Plan shall be
transferable by the Participant otherwise than by will or, if the Participant
dies intestate, by the laws of descent and distribution. All Awards other than
Options that are transferred in accordance with the foregoing provisions shall
be exercisable or received during the Participant's lifetime only by such
Participant or his Personal Representative. Any transfer contrary to this
Section 10.1 will nullify the Option, SAR, Performance Unit, or share of
Restricted Stock..
(S)10.2. ADJUSTMENTS UPON CHANGES IN STOCK. In case of any
reorganization, recapitalization, stock split, stock dividend, combination of
shares, merger, consolidation, rights offering, or any other changes in the
corporate structure or shares of the Company, appropriate adjustments may be
made by the Committee (or if the Company is not the surviving corporation in any
such transaction, the board of directors of the surviving corporation) in the
aggregate number and kind of shares subject to the Plan, and the number and kind
of shares and the price per share subject to outstanding Options or that may be
issued under outstanding Restricted Stock Awards or pursuant to unrestricted
Vlasic Stock Awards. Appropriate adjustments may also be made by the Committee
in the terms of any Awards under the Plan, to reflect such changes and to modify
any other terms of outstanding Awards on an equitable basis, including
modifications of Performance Goals and changes in the length of Performance
Periods.
(S)10.3. AMENDMENT, SUSPENSION, AND TERMINATION OF PLAN.
(a) The Board may suspend or terminate the Plan or any portion
thereof at any time, and may amend the Plan from time to time in such respects
as the Board may deem advisable in order that any Awards thereunder shall
conform to any change in applicable laws or regulations or in any other respect
the Board may deem to be in the best interests of the Company. No such
amendment, suspension, or termination shall alter or impair any outstanding
Options, SARs, shares of Restricted Stock, or Performance Units without the
consent of the Participant adversely affected thereby.
(b) With the consent of the Participant adversely affected
thereby, the Committee may amend or modify any outstanding Options, Restricted
Stock Awards, or Performance Unit Awards in any manner to the extent that the
Committee would have had the authority under the Plan initially to award such
Options, SARs, Restricted Stock Awards, or Performance Unit Awards as so
modified or amended, including without limitation, to change the date or dates
as of which such Options or SARs may be exercised, to remove the restrictions
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on shares of Restricted Stock, or to modify the manner in which Performance
Units are determined and paid.
(S)10.4. NONUNIFORM DETERMINATIONS. The Committee's determinations under
the Plan, including without limitation, (i) the determination of the Employees
to receive Awards, (ii) the determination of Highly Compensated Employees
eligible to defer Performance Units or Restricted Stock, (iii) the form, amount,
and timing of such Awards, (iv) the terms and provisions of such Awards and (v)
the Statements evidencing the same, need not be uniform and may be made by it
selectively among Employees who receive, or who are eligible to receive, Awards
under the Plan, whether or not such Employees are similarly situated.
(S)10.5. GENERAL RESTRICTION. Each Award under the Plan shall be subject
to the condition that, if at any time the Committee shall determine that (i) the
listing, registration, or qualification of the shares of Vlasic Stock subject or
related thereto upon any securities exchange or under any state or federal law,
(ii) the consent or approval of any government or regulatory body, or (iii) an
agreement by the Participant with respect thereto, is necessary or desirable,
then such Award shall not become exercisable in whole or in part unless such
listing, registration, qualification, consent, approval, or agreement shall have
been effected or obtained free of any conditions not acceptable to the
Committee.
(S)10.6. NO RIGHT TO EMPLOYMENT. Neither the action of the Company in
establishing the Plan, nor any action taken by it or by the Board or the
Committee under the Plan, nor any provision of the Plan, shall be construed as
giving to any person the right to be retained in the employ of the Company or
any Subsidiary.
(S)10.7. TRUST ARRANGEMENT. All benefits under the Plan represent an
unsecured promise to pay by the Company and its Subsidiaries. The Plan shall be
unfunded and the benefits hereunder shall be paid only from the general assets
of the Company or its respective Subsidiaries, resulting in the Participants
having no greater rights than the general creditors of the Company or such
Subsidiaries. Notwithstanding the foregoing, nothing herein shall prevent or
prohibit the Company or the respective Subsidiaries from establishing a trust or
other arrangement for the purpose of providing for the payment of the benefits
payable under the Plan at any time.
ARTICLE XI
CHANGE IN CONTROL OF THE COMPANY
(S)11.1. CONTRARY PROVISIONS. Notwithstanding anything contained in the
Plan to the contrary, the provisions of this Article XI shall govern and
supersede any inconsistent terms or provisions of the Plan.
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(S)11.2. DEFINITION OF "ADJUSTED FAIR MARKET VALUE." For purposes of
the Plan, "Adjusted Fair Market Value" means, in the event of a Change in
Control, the greater of (i) the highest price per share of Vlasic Stock paid to
holders of the shares of Vlasic Stock in any transaction (or series of
transactions) constituting or resulting in a Change in Control or (ii) the
highest Fair Market Value of a share of Vlasic Stock during the 90 day period
ending on the date of a Change in Control.
(S)11.3. DEFINITION OF "CHANGE IN CONTROL YEAR." For purposes of the
Plan, "Change in Control Year" means a fiscal year of the Company in which a
Change in Control occurs.
(S)11.4. DEFINITION OF "CHANGE IN CONTROL". For purposes of the Plan
"Change in Control" means any of the following events:
(a) The acquisition in one or more transactions by any "Person"
(as the term person is used for purposes of Section 13(d) or Section 14(d) of
the Securities Exchange Act of 1934, as amended (the "1934 Act")) of "Beneficial
Ownership" (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of
twenty-five percent (25%) or more of the combined voting power of the Company's
then outstanding voting securities (the "Voting Securities"); provided, however,
that for purposes of this Section 11.4(a), the Voting Securities acquired
directly from the Company by any Person shall be excluded from the determination
of such Person's Beneficial ownership of Voting Securities (but such Voting
Securities shall be included in the calculation of the total number of Voting
Securities then outstanding); or
(b) The individuals who, as of the later of April 1, 1998 or the
first date that the membership of the Board reaches seven (7), are members of
the Board (the "Incumbent Board"), cease for any reason to constitute at least
two-thirds of the Board; provided, however, that if the election, or nomination
for election by the Company's shareowners, of any new Director was approved by a
vote of at least two-thirds of the Incumbent Board, such new Director shall, for
purposes of the Plan, be considered as a member of the Incumbent Board; or
(c) Approval by shareowners of the Company of (i) a merger or
consolidation involving the Company if the shareowners of the Company,
immediately before such merger or consolidation, do not own, directly or
indirectly, immediately following such merger or consolidation, more than eighty
percent (80%) of the combined voting power of the outstanding Voting Securities
of the corporation resulting from such merger or consolidation in substantially
the same proportion as their ownership of the Voting Securities immediately
before such merger or consolidation or (ii) a complete liquidation or
dissolution of the Company or an agreement for the sale or other disposition of
all or substantially all of the assets of the Company; or
(d) Acceptance by shareowners of the Company of shares in a
share exchange if the shareowners of the Company, immediately before such share
exchange, do not own, directly or indirectly, immediately following such share
exchange, more than eighty percent (80%) of the combined voting power of the
outstanding Voting Securities of the corporation
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resulting from such share exchange in substantially the same proportion as their
ownership of the Voting Securities outstanding immediately before such share
exchange.
Notwithstanding the foregoing, a Change in Control shall not be deemed
to occur solely because twenty-five percent (25%) or more of the then
outstanding Voting Securities is acquired by (i) a trustee or other fiduciary
holding securities under one or more employee benefit plans maintained by the
Company or any of its subsidiaries, (ii) any entity that, immediately prior to
such acquisition, is entirely owned (directly or indirectly) by shareowners of
the Company in the same proportions as their ownership of stock in the Company
immediately prior to such acquisition, (iii) any "Grandfathered Dorrance Family
shareowner" (as hereinafter defined) or (iv) any Person who has acquired such
Voting Securities directly from any Grandfathered Dorrance Family shareowner but
only if such Person has executed an agreement that is approved by two-thirds of
the Board and pursuant to which such Person has agreed that he or she (or they)
will not increase his or her (or their) Beneficial Ownership (directly or
indirectly) to thirty percent (30%) or more of the outstanding Voting Securities
(the "Standstill Agreement") and only for the period during which the Standstill
Agreement is effective and fully honored by such Person. For purposes of this
Section, "Grandfathered Dorrance Family shareowner" means at any time a
"Dorrance Family shareowner" (as hereinafter defined) who or which is at the
time in question the Beneficial Owner solely of (v) Voting Securities
beneficially owned by such individual on April 1, 1998, (w) Voting Securities
acquired directly from the Company, (x) Voting Securities acquired directly from
another Grandfathered Dorrance Family shareowner, (y) Voting Securities that are
also Beneficially Owned by other Grandfathered Dorrance Family shareowners at
the time in question, and (z) Voting Securities acquired after April 1, 1998
other than directly from the Company or from another Grandfathered Dorrance
Family shareowner by any "Dorrance Grandchild" (as hereinafter defined);
provided that the aggregate amount of Voting Securities so acquired by each such
Dorrance Grandchild shall not exceed five percent (5%) of the Voting Securities
outstanding at the time of such acquisition. A "Dorrance Family shareowner" who
or which is at the time in question the Beneficial Owner of Voting Securities
that are not specified in clauses (v), (w), (x), (y) and (z) of the immediately
preceding sentence shall not be a Grandfathered Dorrance Family shareowner at
the time in question. For purposes of this Section, "Dorrance Family
shareowners" means individuals who are descendants of the late Dr. John T.
Dorrance, Sr. and/or the spouses, fiduciaries and foundations of such
descendants. A "Dorrance Grandchild" means as to each particular grandchild of
the late Dr. John T. Dorrance, Sr., all of the following taken collectively:
such grandchild, such grandchild's descendants and/or the spouses, fiduciaries
and foundations of such grandchild and such grandchild's descendants.
Moreover, notwithstanding the foregoing, a Change in Control shall not
be deemed to occur solely because any Person (the "Subject Person") acquired
Beneficial Ownership of more than the permitted amount of the outstanding Voting
Securities as a result of the acquisition of Voting Securities by the Company
that, by reducing the number of Voting Securities outstanding, increases the
proportional number of shares Beneficially Owned by the
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Subject Person; provided that if a Change in Control would occur (but for the
operation of this sentence) as a result of the acquisition of Voting Securities
by the Company, and after such share acquisition by the Company, the Subject
Person becomes the Beneficial Owner of any additional Voting Securities that
increases the percentage of the then outstanding Voting Securities Beneficially
Owned by the Subject Person, then a Change in Control shall occur.
(S)11.5. EFFECT OF CHANGE IN CONTROL ON OPTIONS AND SARS. Upon a Change
in Control, (a) all Options and SARs outstanding on the date of such Change in
Control shall become immediately and fully exercisable and (b) any Participant
who may be subject to liability under Section 16(b) of the 1934 Act, will be
permitted to surrender for cancellation for a period of 60 days commencing after
the later of such Change in Control or the expiration of six months from the
date of grant, any Option or SAR (or portion of an Option or SAR), to the extent
not yet exercised and the Participant will be entitled to receive a cash payment
in an amount equal to the excess, if any, in respect of each Option or SAR
surrendered, (i)(A) except as described in clause (B) below, the greater of (x)
the Fair Market Value, on the date preceding the date of surrender of the shares
subject to the Option or SAR (or portion thereof) surrendered or (y) the
Adjusted Fair Market Value of the Shares subject to the Option or SAR (or
portion thereof) surrendered or (B) in the case of an Incentive Stock Option or
an SAR issued in connection with an Incentive Stock Option, the Fair Market
Value, on the date preceding the date of surrender, of the Shares subject to the
Option or SAR (or portion thereof) surrendered, over (ii) the aggregate purchase
price for such Shares under the Option or SAR.
(S)11.6. EFFECT OF CHANGE IN CONTROL ON RESTRICTED STOCK. Upon a Change
in Control, all restrictions upon any shares of Restricted Stock other than
Restricted Stock that is subject to performance related restrictions
("Performance Restricted Stock") shall lapse immediately and all such shares
shall become fully vested in the Participant and shall promptly be delivered to
the Participant.
(S)11.7. EFFECT OF CHANGE IN CONTROL ON PERFORMANCE RESTRICTED STOCK
AND PERFORMANCE UNITS.
(a) Upon a Change in Control, the Participant shall (i) become
vested in, and restrictions shall lapse on, the greater of (A) fifty percent
(50%) of the Performance Restricted Stock or Performance Units or (B) a pro rata
portion of such Performance Restricted Stock based on the portion of the
Performance Period that has elapsed to the date of the Change in Control and the
aggregate vesting percentage determined pursuant to this clause (B) shall be
applied to vesting first such awards granted the earliest in time preceding the
Change in Control (the "Vested Performance Awards") and (ii) be entitled to
receive (X) in respect of all Performance Units that become vested as a result
of a Change in Control, a cash payment within 30.days after such Change in
Control equal to the product of the then current value of a Performance Unit
multiplied by the number of Performance Units that become vested in accordance
with this Section 11.7 and (Y) in respect of all shares of Performance
Restricted Stock that become vested as a result of a Change in Control, the
prompt delivery of such shares.
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(b) With respect to any shares of Performance Restricted Stock
or Performance Units that do not become vested pursuant to Section 11.7(a) (the
"Continuing Awards"), such shares or units (or the proceeds thereof) shall
continue to be outstanding for the remainder of the applicable Performance
Period (as if such shares or units were the only shares or units granted in
respect of each such Performance Period) and subject to the applicable Award
Criteria as modified below.
(S)11.8. AMENDMENT OR TERMINATION.
(a) This Article XI shall not be amended or terminated at any
time if any such amendment or termination would adversely affect the rights of
any Participant under the Plan.
(b) For a period of 24 months following a Change in Control, the
Plan shall not be terminated (unless replaced by a comparable long-term
incentive plan) and during such period the Plan (or such replacement plan) shall
be administered in a manner such that Participants will be provided with long-
term incentive awards producing reward opportunities generally comparable to
those provided prior to the Change in Control. Any amendment or termination of
the Plan prior to a Change in Control that (i) was at the request of a third
party who has indicated an intention or taken steps reasonably calculated to
effect a Change in Control or (ii) otherwise arose in connection with or in
anticipation of a Change in Control, shall be null and void and shall have no
effect whatsoever.
(c) Following a Change in Control, the Plan shall be amended as
necessary to make appropriate adjustments to the Award Criteria for the
Continuing Awards for (i) any negative effect that the costs and expenses
incurred by the Company and its Subsidiaries in connection with the Change in
Control may have on the achievement of Performance Goals under the Plan and (ii)
any changes to the Company and/or its Subsidiaries (including, but not limited
to, changes in corporate structure, capitalization and increased interest
expense as a result of the incurrence or assumption by the Company of
acquisition indebtedness) following the Change in Control so as to preserve the
reward opportunities and Award Criteria for comparable performance under the
Plan as in effect on the date immediately prior to the Change in Control.
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Exhibit 10.10
________________________________________________________________________________
VLASIC FOODS INTERNATIONAL INC.
_______________________
ANNUAL INCENTIVE PLAN
_______________________
Dated: ______________, 1998
________________________________________________________________________________
<PAGE>
VLASIC FOODS INTERNATIONAL INC.
ANNUAL INCENTIVE PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Article Page
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<S> <C> <C>
I. PURPOSE AND EFFECTIVE DATE.............................. 1
II. DEFINITIONS............................................. 1
III. ADMINISTRATION.......................................... 2
IV. PARTICIPATION........................................... 3
V. AWARDS.................................................. 3
VI. LIMITATIONS............................................. 4
VII. AMENDMENT, SUSPENSION OR TERMINATION OF
THE PLAN IN WHOLE OR IN PART............................ 4
VIII. CHANGE IN CONTROL OF THE COMPANY........................ 5
IX. MISCELLANEOUS........................................... 8
</TABLE>
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ARTICLE I
PURPOSE AND EFFECTIVE DATE
(S)1.1. PURPOSE. The purpose of the Plan is to provide annual
financial incentives for selected employees of the Vlasic Foods International
Group, thereby promoting the growth and financial success of the Vlasic Foods
International Group by (i) attracting and retaining employees of outstanding
ability, (ii) strengthening the Vlasic Foods International Group's capability to
develop, maintain, and direct a competent management team, (iii) motivating
employees to achieve Performance Goals and objectives, and (iv) providing
incentive compensation opportunities competitive with those of other major
corporations.
(S)1.2. EFFECTIVE DATE AND EXPIRATION OF PLAN. The Plan was approved
by Campbell Soup Company, as the sole shareholder of Vlasic Foods International
Inc., and is effective March 30, 1998, which shall be the Effective Date.
Unless earlier terminated by the Board, the Plan shall continue indefinitely.
ARTICLE II
DEFINITIONS
The following words and phrases, as used in the Plan, shall have these
meanings:
(S)2.1. "BOARD" means the Board of Directors of the Company.
(S)2.2. "CAUSE" means the termination of a Participant's employment
by reason of his or her engaging in conduct that constitutes willful gross
misconduct that is demonstrably and materially injurious to the Company or a
Subsidiary, monetarily or otherwise, misappropriation of funds, willful and
material misrepresentation to the directors or officers of his or her employer,
gross negligence in the performance of the Participant's duties having a
material adverse effect on the business, operations, assets, properties or
financial condition of the Company or a Subsidiary, or entering into competition
with the Company or a Subsidiary. No act, nor failure to act, on the
Participant's part shall be considered "willful" unless he or she has acted, or
failed to act, with an absence of good faith and without a reasonable belief
that his or her action or failure to act was in the best interest of the Company
and its Subsidiaries.
(S)2.3. "CODE" means the Internal Revenue Code of 1986, as amended.
(S)2.4. "COMMITTEE" means the Compensation and Organization Committee
of the Board. All members of the Committee shall be "Outside Directors," as
defined or interpreted for purposes of Section 162(m) of the Code, and
"Disinterested Persons," within the meaning of Rule 16b-3 under the Securities
Exchange Act of 1934 (the "1934 Act").
(S)2.5. "COMPANY" means Vlasic Foods International Inc. and its
successors and assigns.
<PAGE>
(S)2.6. "DEFERRED COMPENSATION PLAN" means the Vlasic Foods
International Inc. Deferred Compensation Plan.
(S)2.7. "ELIGIBLE EMPLOYEE" means a person who is a regular salaried
employee of the Vlasic Foods International Group and who, in the opinion of the
Committee, is a key employee whose performance can contribute to the success of
the Company or a Subsidiary.
(S)2.8. "FAMILY MEMBER" means the spouse, a child, a stepchild, a
parent, a brother or a sister of the Participant, or any other person in such
class of relationship to the Participant as the Committee may approve.
(S)2.9. "PERFORMANCE GOALS" means the goals established by the
Committee pursuant to Section 5.1.
(S)2.10. "PARTICIPANT" means a person to whom an award of incentive
compensation has been made under the Plan.
(S)2.11. "PRESIDENT" means the President of the Company.
(S)2.12. "SUBSIDIARY" means a corporation, domestic or foreign, the
majority of the voting stock of which is owned directly or indirectly by the
Company.
(S)2.13. "VLASIC FOODS INTERNATIONAL GROUP" means the Company and all
of its Subsidiaries on and after the Effective Date.
ARTICLE III
ADMINISTRATION
(S)3.1. ADMINISTRATION. The Plan shall be administered by the
Committee or its delegate or successor. The Committee shall have all necessary
powers to administer and interpret the Plan, such powers to include the
authority to select Eligible Employees to whom awards may be granted under the
Plan and to determine the amount of any award of incentive compensation to be
granted to any Eligible Employee.
(S)3.2. COMMITTEE AUTHORITY. The Committee shall have full power and
authority to adopt such rules, regulations and instruments for the
administration of the Plan and for the conduct of its business as the Committee
deems necessary or advisable. The Committee's interpretations of the Plan, and
all actions taken and determinations made by the Committee pursuant to the
powers vested in it hereunder, shall be conclusive and binding on all parties
concerned, including the Company, its shareowners and any employee of the
Company or a Subsidiary.
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ARTICLE IV
PARTICIPATION
Participants in the Plan shall be selected by the Committee from among
Eligible Employees, based upon such criteria as the Committee may from time to
time determine.
ARTICLE V
AWARDS
(S)5.1. ESTABLISHMENT OF PERFORMANCE GOALS. Prior to the beginning of
each fiscal year after the Effective Date, the Committee shall establish, in
writing, Performance Goals for the Company and its various operating units and
its Subsidiaries. The goals shall be comprised of specified annual levels of one
or more performance criteria as the Committee may deem appropriate. Such goals
may include, but shall not be limited to, earnings per share, net earnings,
operating earnings, unit volume, net sales, market share, balance sheet
measurements, revenue, cash flow, cash return on assets, shareowner return,
return on equity, return on capital or other value-based performance measures.
The Committee may disregard or offset the effect of any special charges or
gains, the cumulative effect of a change in accounting, or the effect of other
expenses or losses that are unusual in nature or infrequent in occurrence, in
determining the attainment of Performance Goals. Awards may also be made payable
when Company performance, as measured by one or more of the above criteria, as
compared to peer companies, meets or exceeds an objective target established by
the Committee.
(S)5.2. ESTABLISHMENT OF AWARD CATEGORIES. Prior to the beginning of
each fiscal year of the Company, the Committee shall determine the classes of
employees eligible to receive awards of incentive compensation based upon job
grade and salary levels or such other procedures for eligibility for awards as
the Committee may deem desirable. The class of employees determined to be
eligible for awards shall not change after the close of the fiscal year.
(S)5.3. ESTABLISHMENT OF AWARD AMOUNTS. After the close of the fiscal
year, the Committee may fix a maximum aggregate dollar amount that may be
granted for awards for that fiscal year. The amounts of awards to be granted
with respect to particular employees within the eligible classes may be
determined after the close of the fiscal year under procedures established by
the Committee.
(S)5.4. GRANT OF AWARDS. The Committee shall, in granting awards to
particular Eligible Employees for any fiscal year, take into consideration:
(a) the performance of the Company or the organizational
unit employing the Eligible Employee based upon attainment of Performance Goals;
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(b) as among Participants, the contribution of the
Participant during the fiscal year to the success of the Company, including the
Participant's (i) position and level of responsibility, (ii) business unit,
division or department achievements, and (iii) management assessment of
individual performance.
No award or awards may be granted to any Participant for any fiscal year that
exceeds in the aggregate $3,000,000. The Committee shall have no discretion to
increase such awards.
(S)5.5. COMMITTEE DISCRETION. The Committee shall have complete
discretion with respect to the determination of the Eligible Employees to whom
awards of incentive compensation shall be granted and the granting of such
awards.
(S)5.6. PAYMENT OF AWARDS. Incentive compensation awards made
pursuant to Article V shall be paid entirely in cash as soon as possible after
grant approval, unless the Participant is eligible for and has elected to defer
receipt of a portion or all of such award in accordance with the terms of the
Deferred Compensation Plan.
ARTICLE VI
LIMITATIONS
(S)6.1. RIGHTS NOT ABSOLUTE. No person shall at any time have any
right to be granted an award hereunder for any fiscal year, and no person shall
have authority to enter into an agreement committing the Company to make or pay
an award, nor shall any person have authority to make any representation or
warranty on behalf of the Company with respect thereto.
(S)6.2. PARTICIPANT RIGHTS LIMITED TO PLAN. Participants receiving
awards shall have no rights to such awards except as set forth in this Plan and
the Deferred Compensation Plan.
(S)6.3. NO RIGHT TO CONTINUED EMPLOYMENT. Neither the action of the
Company in establishing the Plan, nor any action taken by it or by the Board or
the Committee under the Plan, nor any provision of the Plan, shall be construed
as giving to any person the right to be retained in the employ of the Company or
any Subsidiary.
ARTICLE VII
AMENDMENT, SUSPENSION OR TERMINATION
OF THE PLAN IN WHOLE OR IN PART
The Board may amend, suspend or terminate the Plan in whole or in part; but
it may not affect adversely rights or obligations with respect to awards
theretofore made.
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ARTICLE VIII
CHANGE IN CONTROL OF THE COMPANY
(S)8.1. CONTRARY PROVISIONS. Notwithstanding anything contained in
the Plan to the contrary, the provisions of this Article VIII shall govern and
supersede any inconsistent terms or provisions of the Plan.
(S)8.2. DEFINITION OF "CHANGE IN CONTROL YEAR." For purposes of the
Plan, "Change in Control Year" means a fiscal year of the Company in which a
Change in Control occurs.
(S)8.3. DEFINITION OF "CHANGE IN CONTROL". For purposes of the Plan
"Change in Control" means any of the following events:
(a) The acquisition in one or more transactions by any "Person"
(as the term person is used for purposes of Section 13(d) or Section 14(d) of
the Securities Exchange Act of 1934, as amended (the "1934 Act")) of "Beneficial
Ownership" (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of
twenty-five percent (25%) or more of the combined voting power of the Company's
then outstanding voting securities (the "Voting Securities"); provided, however,
that for purposes of this Section 8.3(a), the Voting Securities acquired
directly from the Company by any Person shall be excluded from the determination
of such Person's Beneficial Ownership of Voting Securities (but such Voting
Securities shall be included in the calculation of the total number of Voting
Securities then outstanding); or
(b) The individuals who, as of the later of April 1, 1998 or the
first date that the membership of the Board reaches seven (7), are members of
the Board (the "Incumbent Board"), cease for any reason to constitute at least
two-thirds of the Board; provided, however, that if the election, or nomination
for election by the Company's shareowners, of any new Director was approved by a
vote of at least two-thirds of the Incumbent Board, such new Director shall, for
purposes of the Plan, be considered as a member of the Incumbent Board; or
(c) Approval by shareowners of the Company of (i) a merger or
consolidation involving the Company if the shareowners of the Company,
immediately before such merger or consolidation, do not own, directly or
indirectly, immediately following such merger or consolidation, more than eighty
percent (80%) of the combined voting power of the outstanding Voting Securities
of the corporation resulting from such merger or consolidation in substantially
the same proportion as their ownership of the Voting Securities immediately
before such merger or consolidation or (ii) a complete liquidation or
dissolution of the Company or an agreement for the sale or other disposition of
all or substantially all of the assets of the Company; or
(d) Acceptance by shareowners of the Company of shares in a share
exchange if the shareowners of the Company, immediately before such share
exchange, do not own, directly or indirectly, immediately following such share
exchange, more than eighty percent (80%) of the combined voting power of the
outstanding Voting Securities of the corporation
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resulting from such share exchange in substantially the same proportion as their
ownership of the Voting Securities outstanding immediately before such share
exchange.
Notwithstanding the foregoing, a Change in Control shall not be deemed to
occur solely because twenty-five percent (25%) or more of the then outstanding
Voting Securities is acquired by (i) a trustee or other fiduciary holding
securities under one or more employee benefit plans maintained by the Company or
any of its subsidiaries, (ii) any entity that, immediately prior to such
acquisition, is entirely owned (directly or indirectly) by shareowners of the
Company in the same proportions as their ownership of stock in the Company
immediately prior to such acquisition, (iii) any "Grandfathered Dorrance Family
shareowner" (as hereinafter defined) or (iv) any Person who has acquired such
Voting Securities directly from any Grandfathered Dorrance Family shareowner but
only if such Person has executed an agreement that is approved by two-thirds of
the Board and pursuant to which such Person has agreed that he or she (or they)
will not increase his or her (or their) Beneficial Ownership (directly or
indirectly) to thirty percent (30%) or more of the outstanding Voting Securities
(the "Standstill Agreement") and only for the period during which the Standstill
Agreement is effective and fully honored by such Person. For purposes of this
Section, "Grandfathered Dorrance Family shareowner" means at any time a
"Dorrance Family shareowner" (as hereinafter defined) who or which is at the
time in question the Beneficial Owner solely of (v) Voting Securities
beneficially owned by such individual on April 1, 1998, (w) Voting Securities
acquired directly from the Company, (x) Voting Securities acquired directly from
another Grandfathered Dorrance Family shareowner, (y) Voting Securities that are
also Beneficially Owned by other Grandfathered Dorrance Family shareowners at
the time in question, and (z) Voting Securities acquired after April 1, 1998
other than directly from the Company or from another Grandfathered Dorrance
Family shareowner by any "Dorrance Grandchild" (as hereinafter defined);
provided that the aggregate amount of Voting Securities so acquired by each such
Dorrance Grandchild shall not exceed five percent (5%) of the Voting Securities
outstanding at the time of such acquisition. A "Dorrance Family shareowner" who
or which is at the time in question the Beneficial Owner of Voting Securities
that are not specified in clauses (v), (w), (x), (y) and (z) of the immediately
preceding sentence shall not be a Grandfathered Dorrance Family shareowner at
the time in question. For purposes of this Section, "Dorrance Family
shareowners" means individuals who are descendants of the late Dr. John T.
Dorrance, Sr. and/or the spouses, fiduciaries and foundations of such
descendants. A "Dorrance Grandchild" means as to each particular grandchild of
the late Dr. John T. Dorrance, Sr., all of the following taken collectively:
such grandchild, such grandchild's descendants and/or the spouses, fiduciaries
and foundations of such grandchild and such grandchild's descendants.
Moreover, notwithstanding the foregoing, a Change in Control shall not
be deemed to occur solely because any Person (the "Subject Person") acquired
Beneficial Ownership of more than the permitted amount of the outstanding Voting
Securities as a result of the acquisition of Voting Securities by the Company
that, by reducing the number of Voting Securities outstanding, increases the
proportional number of shares Beneficially Owned by the Subject Person; provided
that if a Change in Control would occur (but for the operation of this sentence)
as a result of the acquisition of Voting Securities by the Company, and after
such share acquisition by the Company, the Subject Person becomes the Beneficial
Owner of any additional
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Voting Securities that increases the percentage of the then outstanding Voting
Securities Beneficially Owned by the Subject Person, then a Change in Control
shall occur.
(S)8.4. DEFINITION OF "TERMINATION FOLLOWING A CHANGE IN CONTROL."
For purposes of the Plan, "Termination Following a Change in Control" means a
termination of employment:
(a) initiated by the employer of the Participant, other
than for Cause; or
(b) initiated by the Participant following one or more of
the following events:
(i) an assignment to the Participant of any duties
materially inconsistent with, or a reduction or change by his or her employer in
the nature or scope of the authority, duties or responsibilities of the
Participant from those assigned to or held by the Participant immediately prior
to the Change in Control;
(ii) any removal of the Participant from the positions
held immediately prior to the Change in Control, except in connection with
promotions to positions of greater responsibility and prestige;
(iii) any reduction by his or her employer in the
Participant's compensation as in effect immediately prior to the Change in
Control or as the same may be increased thereafter;
(iv) revocation or any modification of any employee
benefit plan, or any action taken pursuant to the terms of any such plan, that
materially reduces the opportunity of the Participant to receive benefits under
any such plan;
(v) a transfer or relocation of the site of
employment of the Participant immediately preceding the Change in Control,
without the Participant's express written consent, to a location more than fifty
(50) miles distant therefrom, or that is otherwise an unacceptable commuting
distance from the Participant's principal residence at the date of the Change in
Control; or
(vi) a requirement that the Participant undertake
business travel to an extent substantially greater than the Participant's
business travel obligations immediately prior to the Change in Control.
(S)8.5. EFFECT OF CHANGE IN CONTROL. During any Change in Control
Year, each Eligible Employee who is a Participant on the date immediately prior
to the Change in Control (a) who has a Termination Following a Change in
Control prior to the end of the Change in Control Year or (b) who is in the
employ of the Company or any Subsidiary on the last day of the Change in Control
Year, shall be entitled to receive, within 30 days thereafter, a cash payment
equal to the greater of (x) his or her target award for the Change in Control
Year or (y) the
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average of the awards paid or payable under the Plan for the two most recent
fiscal years ended prior to the Change in Control Year (the "Award"); provided,
however that the amount of the Award to be paid to each Participant as provided
in clause (a) above shall be multiplied by a fraction, the numerator of which
shall be the number of calendar days from and including the first day of the
Change in Control Year through and including the date the Participant's
employment is terminated and the denominator of which shall be 365; provided
further, however, that the Award to be paid to any Participant who is a party to
an individual severance agreement shall be reduced by the amount of any
equivalent bonus payment made under such an individual agreement.
(S)8.6. CONTINUATION OF THE PLAN. For a period of two years following
a Change in Control, the Plan shall not be terminated or amended in any way
(including, but not limited to, restricting or limiting any Eligible Employee's
right to participate in the Plan), nor shall the manner in which the Plan is
administered be changed in a way that adversely affects the level of
participation or reward opportunities of any Participant; provided, however,
that the Plan shall be amended as necessary to make appropriate adjustments for
(a) any negative effect that the costs and expenses incurred by the Company and
its Subsidiaries in connection with the Change in Control may have on the
benefits payable under the Plan and (b) any changes to the Company and/or its
Subsidiaries (including, but not limited to, changes in corporate structure,
capitalization and increased interest expense as a result of the incurrence or
assumption by the Company of acquisition indebtedness) following the Change in
Control so as to preserve the reward opportunities and performance targets for
comparable performance under the Plan as in effect on the date immediately prior
to the Change in Control.
(S)8.7. AMENDMENT OR TERMINATION.
(a) This Article XIII shall not be amended or terminated at
any time.
(b) Any amendment or termination of the Plan prior to a
Change in Control that (i) was at the request of a third party who has indicated
an intention or taken steps reasonably calculated to effect a Change in Control
or (ii) otherwise arose in connection with or in anticipation of a Change in
Control, shall be null and void and shall have no effect whatsoever.
ARTICLE IX
MISCELLANEOUS
(S)9.1. NO EMPLOYMENT CONTRACT. The establishment or existence of the
Plan shall not confer upon any individual the right to be continued as an
employee. The employer expressly reserves the right to discharge any employee
whenever in its judgment its best interests so require.
(S)9.2. NON-ALIENATION. No amounts payable under the Plan shall be
subject in any manner to anticipation, assignment, or voluntary or involuntary
alienation.
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(S)9.3. GOVERNING LAW. This Plan shall be governed by and construed
in accordance with the laws of the State of New Jersey to the extent not
preempted by federal law.
(S)9.3. WITHHOLDING. The employer shall withhold from any benefits
payable under the Plan all federal, state and local income taxes or other taxes
required to be withheld pursuant to applicable law.
(S)9.5. INCAPACITY. If the Committee, in its sole discretion, deems a
Participant who is eligible to receive any payment hereunder to be incompetent
to receive the same by reason of age, illness or any infirmity or incapacity of
any kind, the Committee may direct the employer to apply such payment directly
for the benefit of such person, or to make payment to any person selected by the
Committee to disburse the same for the benefit of the Participant. Payments made
pursuant to this Section shall operate as a discharge, to the extent thereof, of
all liabilities of the employer, the Committee and the Plan to the person for
whose benefit the payments are made.
(S)9.6. NUMBER. For purposes of the Plan, the singular shall include
the plural and vice versa.
(S)9.7. BINDING UPON SUCCESSORS. The liabilities under the Plan
shall be binding upon any successor, assign or purchaser of the employer or any
purchaser of substantially all of the assets of the employer.
(S)9.8. TRUST ARRANGEMENT All benefits under the Plan represent an
unsecured promise to pay by the Company and Subsidiaries. The Plan shall be
unfunded and the benefits hereunder shall be paid only from the general assets
of the Company and its respective Subsidiaries, resulting in the Participants
having no greater rights than the general creditors of the Company or such
Subsidiaries. Notwithstanding the foregoing, nothing herein shall prevent or
prohibit the Company or the respective Subsidiaries from establishing a trust or
other arrangement for the purpose of providing for the payment of the benefits
payable under the Plan at any time.
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Exhibit 10.11
________________________________________________________________________________
VLASIC FOODS INTERNATIONAL INC.
_______________
DIRECTOR COMPENSATION PLAN
_______________
Dated: __________, 1998
________________________________________________________________________________
<PAGE>
DIRECTOR COMPENSATION PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE Page
- ------- ----
<S> <C>
I. PURPOSES............................................................1
II. DEFINITIONS.........................................................1
III. ADMINISTRATION......................................................3
IV. SHARES SUBJECT TO THE PLAN..........................................3
V. GRANT OF OPTIONS....................................................4
VI. RESTRICTED STOCK AWARDS.............................................6
VII. UNRESTRICTED STOCK AWARDS...........................................7
VIII. DEFERRAL OF RECEIPT OF CASH COMPENSATION............................7
IX. CHANGE IN CONTROL OF THE COMPANY....................................8
X. AMENDMENTS AND TERMINATION.........................................11
XI. GENERAL PROVISIONS.................................................11
</TABLE>
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ARTICLE I
PURPOSES
The purposes of the Plan are to attract and retain the services
of experienced and knowledgeable directors of Vlasic Foods International Inc.,
to encourage such directors to acquire a proprietary interest in the growth and
performance of the Company, and to provide them with an opportunity to defer
receipt of cash compensation to which they become entitled as directors, thus
enhancing the value of the Company for the benefit of its shareowners.
The Plan shall become effective on March 30, 1998, upon approval
by Campbell Soup Company as sole shareowner of the Company. With respect to new
grants, the Plan shall terminate on March 30, 2008. With respect to outstanding
Options, the Plan shall terminate on the date on which all outstanding Options
have expired or terminated.
ARTICLE II
DEFINITIONS
The following words and phrases, as used in the Plan, shall have
these meanings:
(S)2.1. "AWARD" means, individually or collectively, any Option,
Restricted Stock Award, or Unrestricted Stock Award.
(S)2.2. "BENEFICIARY" means the person that the Eligible Director
designates to receive any unpaid portion of the Eligible Director's Deferred
Account balance should the Eligible Director's death occur before the Eligible
Director receives the entire Deferred Account balance. If the Eligible Director
does not designate a Beneficiary, his or her Beneficiary shall be his or her
spouse if he or she is married at the time of death, or his or her estate if he
or she is unmarried at the time of death.
(S)2.3. "BOARD" means the Board of Directors of the Company.
(S)2.4. "CAUSE" means the termination of an Eligible Director's
membership on the Board by reason of his or her engaging in conduct that
constitutes willful gross misconduct that is demonstrably and materially
injurious to the Company, monetarily or otherwise, misappropriation of funds,
willful and material misrepresentation to the directors, gross negligence in the
performance of the Eligible Director's duties having a material adverse effect
on the business, operations, assets, properties or financial condition of the
Company, or entering into competition with the Company. No act, nor failure to
act, on the Eligible Director's part shall be considered "willful" unless he or
she has acted, or failed to act, with an absence of good faith and without a
reasonable belief that his or her action or failure to act was in the best
interest of the Company and its affiliates.
(S)2.5. "CODE" means the Internal Revenue Code of 1986, as amended.
<PAGE>
(S)2.6. "COMPANY" means Vlasic Foods International Inc.
(S)2.7. "COMPENSATION" for purposes of Article VIII means all amounts
paid to an Eligible Director in exchange for services rendered to the Company as
a member of the Board, excluding amounts paid in the form of Options pursuant to
the terms of the Plan.
(S)2.8. "DEFERRED ACCOUNT" means the bookkeeping investment accounts to
which amounts of deferred Compensation are credited, including earnings credited
thereon.
(S)2.9. "EFFECTIVE DATE" means March 30, 1998.
(S)2.10. "ELIGIBLE DIRECTOR" means each member of the Board who is not an
employee of the Company or any of the Company's subsidiaries (as defined in
section 424(f) of the Code).
(S)2.11. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(S)2.12. "FAIR MARKET VALUE" means, as of any specified date, an amount
equal to the mean between the reported high and low prices of Vlasic Stock on
the New York Stock Exchange composite tape on the specified date.
(S)2.13. "GRANT DATE" means the date on which an Option is granted. If
such date is not a business day, then the Grant Date shall be the following
business day.
(S)2.14. "OPTION" means any right granted to an Optionee allowing such
Optionee to purchase Shares at such price or prices and during such period or
periods as are set forth in the Plan. All Options shall be non-qualified options
and shall not be qualified for the favorable tax treatment afforded under
section 422 of the Code.
(S)2.15. "OPTIONEE" means an Eligible Director who is granted an Option
under the Plan.
(S)2.16. "PERSONAL REPRESENTATIVE" means the person or persons who, upon
the death, disability, or incompetency of an Optionee, shall have acquired, by
will or by the laws of descent and distribution or by other legal proceedings,
the right to exercise an Option theretofore granted to such Optionee.
(S)2.17. "PLAN" means the Vlasic Foods International Inc. Director
Compensation Plan.
(S)2.18. "RESTRICTED STOCK AWARD" means an Award granted under Article VI.
(S)2.19. "RESTRICTION PERIOD" means a period of time determined under Section
6.2 during which Restricted Stock is subject to the terms and conditions
provided under Section 6.3.
(S)2.20. "SHARES" means shares of Vlasic Stock.
(S)2.21. "STATEMENT" means a written confirmation of an Award under the
Plan furnished to the Participant.
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(S)2.22. "UNRESTRICTED STOCK AWARD" means an Award granted under Article
VII.
(S)2.23. "VLASIC STOCK" means the common stock of the Company.
ARTICLE III
ADMINISTRATION
Subject to the terms of the Plan, the Board shall have full and
exclusive power to interpret the provisions and supervise the administration of
the Plan.
ARTICLE IV
SHARES SUBJECT TO THE PLAN
(S)4.1. TOTAL NUMBER. Subject to adjustment as provided in this Section
4.1 and Section 4.4, (i) the total number of Shares as to which Options may be
granted under the Plan, or that may be the subject of Restricted or Unrestricted
Stock Awards grants under the Plan, shall be 350,000 Shares, and (ii) no less
than 80% of such Shares shall be issuable upon exercise as Options. Any Shares
issued pursuant to Options and other Awards hereunder may consist, in whole or
in part, of authorized but unissued Vlasic Stock or Vlasic Stock previously
issued and outstanding and reacquired by the Company.
(S)4.2. REDUCTION IN NUMBER OF SHARES AVAILABLE.
(a) The grant of an Option or a Restricted or Unrestricted Stock
Award shall reduce the number of Shares as to which Awards may be granted
by the number of Shares subject to such Option or Restricted or
Unrestricted Stock Award.
(b) Any Shares issued by the Company through the assumption or
substitution of outstanding grants of an acquired company shall not reduce
the Shares available for grants under the Plan.
(S)4.3. INCREASE IN NUMBER OF SHARES AVAILABLE. The lapse, expiration,
cancellation or other termination of an Option that has not been fully exercised
or of another Award shall increase the number of Shares available for an Award
by the number of Shares that have not been issued upon exercise of such Option
or the number of Shares no longer subject to such other Award. In addition, any
Shares tendered in exercise of an Option shall again be available for Awards
under the Plan.
(S)4.4. OTHER ADJUSTMENTS. In case of any reorganization,
recapitalization, stock split, stock dividend, combination of shares, merger,
consolidation, rights offering, or any other changes in the corporate structure
or shares of the Company, appropriate adjustments may be made by the Board (or
if the Company is not the surviving corporation in any such transaction, the
board of directors of the surviving corporation) in the aggregate number and
kind of shares subject to the Plan, and the number and kind of shares and the
price per share subject to outstanding Options or that may be issued under
outstanding Restricted Stock Awards or
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pursuant to Unrestricted Stock Awards. Appropriate adjustments may also be made
by the Committee in the terms of any Option Letter or Awards under the Plan, to
reflect such changes and to modify any other terms of outstanding Option Letter
or Awards on an equitable basis.
ARTICLE V
GRANT OF OPTIONS
(S)5.1. GRANT OF OPTIONS. [AS DESCRIBED IN THE FORM 10 (PG. 47), ELIGIBLE
DIRECTORS WILL RECEIVE ANNUAL GRANTS OF OPTIONS VALUED AT $40,000.]
(a) On March 30, 1998, each Eligible Director shall be granted
an Option to acquire [__] Shares.
(b) Thereafter, each Eligible Director shall be granted an
Option to acquire [_____] Shares on January 1 of each succeeding year, beginning
January 1, 1999.
(S)5.2. PRO-RATA GRANT OF OPTIONS.
(a) An Eligible Director who is not initially elected at an
annual meeting of shareowners of the Company shall, within 10 business days of
his or her election, be granted an Option to acquire a number of Shares equal to
[___] multiplied by a fraction the numerator of which is the number of months
remaining from date of election until the end of the calendar year and the
denominator of which is twelve (12).
(b) Any fractional Options resulting from such calculations
shall be rounded up to the nearest whole number.
(S)5.3. VESTING. The right to exercise any Option will vest cumulatively
over three years of the rate at 30%, 60% and 100%, respectively on the first
three anniversaries of the Grant Date.
(S)5.4. OPTION PRICE. The purchase price per Share purchasable under an
Option shall be 100% of the Fair Market Value of a Share on the Grant Date.
(S)5.5. OPTION PERIOD. Each Option granted shall expire 10 years from its
Grant Date, and shall be subject to earlier termination as hereinafter provided.
(S)5.6. TRANSFERABILITY. An Option may, at the election of the Eligible
Director, be transferred to the spouse or a descendant of the Eligible Director,
or a trust for the benefit of the spouse or descendants. In addition, Options
shall be transferable by will or the laws of descent and distribution. Any
transfer contrary to this Section 5.6 will nullify the Option.
(S)5.7. EXERCISE.
(a) If the Board service of an Eligible Director is terminated
for reasons other than (i) death, (ii) discharge for Cause, (iii) retirement, or
(iv) resignation, the Eligible Director may exercise an Option at any time
within three years after such termination, to the extent of the
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number of Shares covered by such Option that were exercisable at the date of
such termination; except that an Option shall not be exercisable on any date
beyond the expiration of such three-year period or the expiration date of such
Option, whichever occurs first.
(b) If the Board service of an Eligible Director is terminated
for Cause, any Options of such Eligible Director shall expire and any rights
thereunder shall terminate immediately. Any Option of an Eligible Director whose
Board service is terminated by resignation may be exercised at any time within
three months of such resignation, to the extent that the number of Shares
covered by such Option were exercisable at the date of such resignation; except
that an Option shall not be exercisable on any date beyond the expiration date
of such Option.
(c) Should an Eligible Director die either while a member of the
Board or after termination of Board service (other than removal for Cause), the
Option rights of such deceased Eligible Director may be exercised by his or her
Personal Representative at any time within three years after the Eligible
Director's death, to the extent of the number of Shares covered by such Option
that were exercisable at the date of such death; except that an Option shall not
be so exercisable on any date beyond the expiration date of such Option.
If an Eligible Director who was granted an Option should die
within 180 days of the expiration date of such Option, and if on the date of
death the Eligible Director was then entitled to exercise such Option, and if
the Option expires without being exercised, the Personal Representative of the
Eligible Director shall receive in settlement a cash payment from the Company of
a sum equal to the amount, if any, by which the Fair Market Value (determined on
the expiration date of the Option) of Vlasic Stock subject to the Option exceeds
the Option Price.
(d) Any Option of an Eligible Director whose Board service
terminates after age 55 and five (5) years of Board service shall become fully
vested on such termination date and may be exercised at any time up to three
years after such termination, as determined by the Board, except that an Option
shall not be exercisable on any date beyond the expiration date of such Option.
(S)5.8. METHOD OF EXERCISE. Any Option may be exercised by the Optionee
in whole or in part at such time or times and by such methods as the Board may
specify. The applicable Statement may provide that the Optionee may make payment
of the Option price in cash, Shares, or such other consideration as the Board
may specify, or any combination thereof, having a Fair Market Value on the
exercise date equal to the total Option price.
(S)5.9. ISSUANCE OF CERTIFICATES; PAYMENT OF CASH. Only whole Shares
shall be issuable upon exercise of Options. Any right to a fractional Share
shall be satisfied in cash. Upon payment to the Company of the option price, the
Company shall deliver to the Optionee a certificate for the number of whole
Shares, or a book-entry notation, and a check for the Fair Market Value on the
date of exercise of any fractional share to which the Optionee is entitled.
-5-
<PAGE>
ARTICLE VI
RESTRICTED STOCK AWARDS
(S)6.1. AWARD OF RESTRICTED STOCK.
(a) The Board may make a Restricted Stock Award to any Eligible
Director, subject to this Article VI and to such other terms and conditions as
the Board may prescribe.
(b) Each certificate for Restricted Stock shall be registered in
the name of the Eligible Director and deposited by him or her, together with a
stock power endorsed in blank, with the Company.
(S)6.2. RESTRICTION PERIOD. At the time of making a Restricted Stock
Award, the Board shall establish the Restriction Period applicable to such
Award. The Board may establish different Restriction Periods from time to time
and each Restricted Stock Award may have a different Restriction Period, in the
discretion of the Board. A Restriction Period shall not be changed except as
permitted by Section 6.3.
(S)6.3. OTHER TERMS AND CONDITIONS. Vlasic Stock, when awarded pursuant
to a Restricted Stock Award, will be represented by a book-entry notation or a
stock certificate registered in the name of the Eligible Director who receives
the Restricted Stock Award. Such certificate, if any, shall be deposited with
the Company as provided in Section 6.1(b). The Eligible Director shall be
entitled to receive dividends during the Restriction Period and shall have the
right to vote such Vlasic Stock and shall have all other shareowner's rights,
with the exception that (i) the Eligible Director will not be entitled to
delivery of a stock certificate during the Restriction Period, (ii) the Company
will retain custody of the certificate, if any, during the Restriction Period,
and (iii) a breach of the restriction or a breach of the terms and conditions
established by the Board pursuant to the Restricted Stock Award will cause a
forfeiture of the Restricted Stock Award. The Eligible Director may satisfy his
or her obligations under applicable federal, state and local tax laws in effect
from time to time, by electing to have the Company withhold a portion of the
Restricted Stock Award to be delivered for the payment of such taxes. The Board
may, in its sole discretion, prescribe additional restrictions, terms or
conditions upon or to the Restricted Stock Award from time to time.
(S)6.4. RESTRICTED STOCK AWARD STATEMENT. Each Restricted Stock Award
shall be evidenced by a Restricted Stock Award Statement.
(S)6.5. PAYMENT FOR RESTRICTED STOCK. Restricted Stock Awards may be made
by the Board under which the Eligible Director shall not be required to make any
payment for the Vlasic Stock or, in the alternative, under which the Eligible
Director, as a condition to the Restricted Stock Award, shall pay all (or any
lesser amount than all) of the Fair Market Value of the Vlasic Stock, determined
as of the date the Restricted Stock Award is made. If the latter, such purchase
price shall be paid in cash as provided in the Restricted Stock Award Statement.
-6-
<PAGE>
ARTICLE VII
UNRESTRICTED STOCK AWARDS
(S)7.1. The Board may make an Unrestricted Stock Award to an Eligible
Director in recognition of outstanding achievement or as an award for an
Eligible Director who receives a Restricted Stock Award when performance goals,
as may be established by the Board or its delegate from time to time, are
exceeded.
(S)7.2. Each certificate or book-entry notation for unrestricted Vlasic
Stock shall be registered in the name of the Participant and immediately be
delivered to him or her.
ARTICLE VIII
DEFERRAL OF RECEIPT OF CASH COMPENSATION
(S)8.1. ELECTION TO DEFER RECEIPT OF DIRECTOR'S COMPENSATION. Subject to
the rules and procedures established by the Board, an Eligible Director may
elect to defer receipt of all or a portion of any cash Compensation payable to
him or her. The amount of Compensation so deferred shall be credited to a
Deferred Account established for the Eligible Director. An Eligible Director who
is subject to tax in a foreign jurisdiction shall not be eligible to defer
receipt of Compensation unless a deferral election has been approved by the
Board, or its delegate.
(S)8.2. ADMINISTRATION OF DEFERRED ACCOUNTS. The Board, or its delegate,
shall establish rules and procedures regarding the timing of deferred elections,
the time period for deferral, the maximum number of annual installment payments,
the measurement units for valuing Deferred Accounts, transfer of the balances in
Deferred Accounts among measurement units, statements of Deferred Accounts, the
time and manner of payment of Deferred Accounts, and other administrative items
for Deferred Accounts.
(S)8.3. PAYMENT IN EVENT OF DEATH. If the Eligible Director dies (before
or after his or her retirement), any portion of his or her Deferred Account then
unpaid shall be paid to the Beneficiary named in the most recent Beneficiary
designation filed with the Corporate Secretary of the Company or, in the absence
of such designation, paid to, or as directed by, his or her Personal
Representative, in such one or more installments as the Eligible Director may
have elected, subject to the rules and procedures established by the Board.
(S)8.4. CONDITIONS OF PAYMENT OF DEFERRED ACCOUNTS. Prior to a Change in
Control (as defined in Section 9.2), an Eligible Director who is removed for
Cause by action of the shareowners of the Company or as otherwise determined by
the Board shall, unless otherwise determined by such shareowners or the Board,
respectively, in connection with the termination of Board service, lose any
right to receive payment of his or her Deferred Account.
-7-
<PAGE>
ARTICLE IX
CHANGE IN CONTROL OF THE COMPANY
(S)9.1. CONTRARY PROVISIONS. Notwithstanding anything contained in the
Plan to the contrary, the provisions of this Article IX shall govern and
supersede any inconsistent terms or provisions of the Plan.
(S)9.2. DEFINITION OF "CHANGE IN CONTROL". For purposes of the Plan
"Change in Control" means any of the following events:
(a) The acquisition in one or more transactions by any "Person"
(as the term person is used for purposes of Section 13(d) or Section 14(d) of
the Securities Exchange Act of 1934, as amended (the "1934 Act")) of "Beneficial
Ownership" (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of
twenty-five percent (25%) or more of the combined voting power of the Company's
then outstanding voting securities (the "Voting Securities"); provided, however,
that for purposes of this Section 9.2(a), the Voting Securities acquired
directly from the Company by any Person shall be excluded from the determination
of such Person's Beneficial ownership of Voting Securities (but such Voting
Securities shall be included in the calculation of the total number of Voting
Securities then outstanding); or
(b) The individuals who, as of the later of April 1, 1998 or the
first date that the membership of the Board reaches seven (7), are members of
the Board (the "Incumbent Board"), cease for any reason to constitute at least
two-thirds of the Board; provided, however, that if the election, or nomination
for election by the Company's shareowners, of any new Director was approved by a
vote of at least two-thirds of the Incumbent Board, such new Director shall, for
purposes of the Plan, be considered as a member of the Incumbent Board; or
(c) Approval by shareowners of the Company of (i) a merger or
consolidation involving the Company if the shareowners of the Company,
immediately before such merger or consolidation, do not own, directly or
indirectly, immediately following such merger or consolidation, more than eighty
percent (80%) of the combined voting power of the outstanding Voting Securities
of the corporation resulting from such merger or consolidation in substantially
the same proportion as their ownership of the Voting Securities immediately
before such merger or consolidation or (ii) a complete liquidation or
dissolution of the Company or an agreement for the sale or other disposition of
all or substantially all of the assets of the Company; or
(d) Acceptance by shareowners of the Company of shares in a
share exchange if the shareowners of the Company, immediately before such share
exchange, do not own, directly or indirectly, immediately following such share
exchange, more than eighty percent (80%) of the combined voting power of the
outstanding Voting Securities of the corporation resulting from such share
exchange in substantially the same proportion as their ownership of the Voting
Securities outstanding immediately before such share exchange.
-8-
<PAGE>
Notwithstanding the foregoing, a Change in Control shall not be
deemed to occur solely because twenty-five percent (25%) or more of the then
outstanding Voting Securities is acquired by (i) a trustee or other fiduciary
holding securities under one or more employee benefit plans maintained by the
Company or any of its subsidiaries, (ii) any entity that, immediately prior to
such acquisition, is entirely owned (directly or indirectly) by shareowners of
the Company in the same proportions as their ownership of stock in the Company
immediately prior to such acquisition, (iii) any "Grandfathered Dorrance Family
shareowner" (as hereinafter defined) or (iv) any Person who has acquired such
Voting Securities directly from any Grandfathered Dorrance Family shareowner but
only if such Person has executed an agreement that is approved by two-thirds of
the Board and pursuant to which such Person has agreed that he or she (or they)
will not increase his or her (or their) Beneficial Ownership (directly or
indirectly) to thirty percent (30%) or more of the outstanding Voting Securities
(the "Standstill Agreement") and only for the period during which the Standstill
Agreement is effective and fully honored by such Person. For purposes of this
Section, "Grandfathered Dorrance Family shareowner" means at any time a
"Dorrance Family shareowner" (as hereinafter defined) who or which is at the
time in question the Beneficial Owner solely of (v) Voting Securities
beneficially owned by such individual on April 1, 1998, (w) Voting Securities
acquired directly from the Company, (x) Voting Securities acquired directly from
another Grandfathered Dorrance Family shareowner, (y) Voting Securities that are
also Beneficially Owned by other Grandfathered Dorrance Family shareowners at
the time in question, and (z) Voting Securities acquired after April 1, 1998
other than directly from the Company or from another Grandfathered Dorrance
Family shareowner by any "Dorrance Grandchild" (as hereinafter defined);
provided that the aggregate amount of Voting Securities so acquired by each such
Dorrance Grandchild shall not exceed five percent (5%) of the Voting Securities
outstanding at the time of such acquisition. A "Dorrance Family shareowner" who
or which is at the time in question the Beneficial Owner of Voting Securities
that are not specified in clauses (v), (w), (x), (y) and (z) of the immediately
preceding sentence shall not be a Grandfathered Dorrance Family shareowner at
the time in question. For purposes of this Section, "Dorrance Family
shareowners" means individuals who are descendants of the late Dr. John T.
Dorrance, Sr. and/or the spouses, fiduciaries and foundations of such
descendants. A "Dorrance Grandchild" means as to each particular grandchild of
the late Dr. John T. Dorrance, Sr., all of the following taken collectively:
such grandchild, such grandchild's descendants and/or the spouses, fiduciaries
and foundations of such grandchild and such grandchild's descendants.
Moreover, notwithstanding the foregoing, a Change in Control
shall not be deemed to occur solely because any Person (the "Subject Person")
acquired Beneficial Ownership of more than the permitted amount of the
outstanding Voting Securities as a result of the acquisition of Voting
Securities by the Company that, by reducing the number of Voting Securities
outstanding, increases the proportional number of shares Beneficially Owned by
the Subject Person; provided that if a Change in Control would occur (but for
the operation of this sentence) as a result of the acquisition of Voting
Securities by the Company, and after such share acquisition by the Company, the
Subject Person becomes the Beneficial Owner of any additional Voting Securities
that increases the percentage of the then outstanding Voting Securities
Beneficially Owned by the Subject Person, then a Change in Control shall occur.
-9-
<PAGE>
(S)9.3. EFFECT OF CHANGE IN CONTROL ON OPTIONS. Upon a Change in Control,
(a) all Options outstanding on the date of such Change in Control shall become
immediately and fully exercisable and (b) any Eligible Director who may be
subject to liability under Section 16(b) of the Exchange Act, will be permitted
to surrender for cancellation for a period of sixty (60) days commencing after
the later of such Change in Control or the expiration of six months from the
Grant Date, any Option (or portion of an Option), to the extent not yet
exercised and the Eligible Director will be entitled to receive a cash payment
in an amount equal to the excess, if any, in respect of each Option surrendered,
(i) the greater of (x) the Fair Market Value, on the date preceding the date of
surrender of the Shares subject to the Option (or portion thereof) surrendered
or (y) the Fair Market Value of the Shares subject to the Option (or portion
thereof) surrendered, over (ii) the aggregate purchase price for such Shares
under the Option.
(S)9.4. EFFECT OF CHANGE IN CONTROL OR RESTRICTED STOCK AWARDS. Upon a
Change in Control, the Eligible Director shall (i) become vested in, and
restrictions shall lapse on, the greater of (A) fifty percent (50%) of the
Restricted Stock Award or (B) a pro rata portion of such Restricted Stock Award
based on the portion of the Restriction Period that has elapsed to the date of
the Change in Control and the aggregate vesting percentage determined pursuant
to this clause (B) shall be applied to vesting first such awards granted the
earliest in time preceding the Change in Control (the "Vested Performance
Awards") and (ii) be entitled to receive the prompt delivery of such shares.
(S)9.5. EFFECT OF CHANGE IN CONTROL ON DEFERRED ACCOUNTS.
(a) Upon a Change in Control, the benefits accrued as if
invested in Vlasic Stock shall be converted into a cash equivalent amount equal
to the greater of (i) the highest price per share of such stock paid to holders
of Vlasic Stock in any transaction (or series of transactions) constituting or
resulting in a Change in Control or (ii) the highest fair market value per Share
during the ninety (90) day period ending on the date of a Change in Control
multiplied by the number of Shares of Vlasic Stock credited to an Eligible
Director's Deferred Account under the Plan. The resulting cash equivalent amount
shall promptly be credited to (i) the remaining hypothetical investments in the
Eligible Director's Deferred Account, in the same relative proportions as those
hypothetical investments or (ii) if an Eligible Director's Deferred Account was
credited entirely in the hypothetical Vlasic Stock fund, the most conservative
hypothetical investment.
(b) Upon an Eligible Director's termination of Board service
following a Change in Control for any reason (other than for Cause, as
determined by the Board or the shareowners of the Company) within two years
following a Change in Control, the Company shall pay in a lump sum cash payment
the value of his or her Deferred Account (together with any interest or
investment earnings accrued thereon to the date of payment).
(S)9.6. AMENDMENT OR TERMINATION. This Article IX shall not be amended or
terminated at any time if any such amendment or termination would adversely
affect the rights of any Eligible Director under the Plan.
-10-
<PAGE>
ARTICLE X
AMENDMENTS AND TERMINATION
(S)10.1. BOARD AUTHORITY. The Board may amend, alter, or terminate the
Plan, but no amendment, alteration, or termination shall be made (i) that would
impair or adversely affect the rights of an Eligible Director under an
outstanding Award without the Eligible Director's consent or (ii) without the
approval of the shareowners if such approval is necessary to comply with any
tax, exchange or regulatory requirement.
(S)10.2. PRIOR SHAREOWNER AND OPTIONEE APPROVAL. Notwithstanding any
provision of this Plan to the contrary, in the event that amendments to the Plan
are required in order that the Plan or any other stock-based compensation plan
of the Company comply with the requirement of any exchange, the Code or rule
issued under the Exchange Act, the Board is authorized to make such amendments
without the consent of the affected Eligible Director or the shareowners of the
Company.
ARTICLE XI
GENERAL PROVISIONS
(S)11.1. COMPLIANCE WITH REGULATIONS. All certificates for Shares
delivered under the Plan pursuant to the exercise of any Option shall be subject
to such stock transfer orders and other restrictions as the Board may deem
advisable under the rules, regulations, and other requirements of the Securities
and Exchange Commission, any exchange upon which the Shares are then listed, and
any applicable federal or state securities law, and the Board may cause a legend
or legends to be put on any such certificates to make appropriate reference to
such restrictions. The Company shall not be required to issue or deliver any
Shares under the Plan prior to the completion of any registration or
qualification of such Shares under any federal or state law, or under any ruling
or regulation of any governmental body or exchange that the Board in its sole
discretion shall deem to be necessary or appropriate.
(S)11.2. OTHER PLANS. Nothing contained in the Plan shall prevent the
Board from adopting other or additional compensation arrangements, subject to
shareowner approval if such approval is required by applicable law or the rules
of any exchange on which Vlasic Stock is then listed; any such arrangements may
be either generally applicable or applicable only in specific cases.
(S)11.3. CONFORMITY WITH LAW. If any provision of the Plan is or becomes
or is deemed invalid, illegal, or unenforceable in any jurisdiction, or would
disqualify the Plan or any Award under any law deemed applicable by the Board,
such provision shall be construed or deemed amended in such jurisdiction to
conform to applicable laws or if it cannot be construed or deemed amended
without, in the determination of the Board, materially altering the intent of
the Plan, it shall be stricken and the remainder of the Plan shall remain in
full force and effect
-11-
<PAGE>
(S)11.4. INSUFFICIENT SHARES. In the event there are insufficient Shares
remaining to satisfy all of the Awards under Article V, Article VI and Article
VII made on the same day, such Awards shall be reduced pro-rata.
(S)11.5. NO RIGHT TO CONTINUANCE AS A DIRECTOR. Neither the action of the
Company in establishing the Plan, nor the granting of an Award shall be deemed
(i) to create any obligation on the part of the Board to nominate any director
for reelection by the Company's shareowners or (ii) to be evidence of any
agreement or understanding, express or implied, that the Eligible Director has a
right to continue as a director for any period of time or at any particular rate
of compensation.
(S)11.6. TRUST ARRANGEMENT. All benefits under the Plan represent an
unsecured promise to pay by the Company. The Plan shall be unfunded and the
benefits hereunder shall be paid only from the general assets of the Company
resulting in the Eligible Directors having no greater rights than the Company's
other general creditors. Notwithstanding the foregoing, nothing herein shall
prevent or prohibit the Company from establishing a trust or other arrangement
for the purpose of providing for the payment of the benefits payable under the
Plan at any time.
-12-
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF VLASIC FOODS INTERNATIONAL INC.
-----------------------------------------------
SUBSIDIARIES:
- ------------
Domestic:
--------
Aligar, Inc., a Delaware corporation
Campbell's Fresh, Inc., an Ohio corporation
Cargal, Inc., a Delaware corporation
Vlasic Foods, Inc., a Michigan corporation
Vlasic International Sales Inc., a New Jersey corporation
Vlasic International Brands Inc., a Delaware corporation
FOREIGN:
-------
Campbell Frozen Foods Limited, a United Kingdom corporation
U.K. Newco (a United Kingdom corporation to be formed)
Canada Newco (a Canadian corporation to be formed)
Swift-Armour S.A. Argentina, an Argentine corporation
Skandiavein-und Sud-Import GmbH, a German corporation
Campbell Grocery Products GmbH, a German corporation
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS FOR THE YEAR ENDED AUGUST 3, 1997 AND FOR THE SIX MONTHS
ENDED FEBRUARY 1, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS. (000 omitted)
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 6-MOS
<FISCAL-YEAR-END> AUG-03-1997 AUG-02-1998
<PERIOD-START> JUL-29-1996 AUG-04-1997
<PERIOD-END> AUG-03-1997 FEB-01-1998
<CASH> 9,409 1,456
<SECURITIES> 0 0
<RECEIVABLES> 99,407 166,675
<ALLOWANCES> 5,241 6,556
<INVENTORY> 163,852 163,689
<CURRENT-ASSETS> 295,276 340,334
<PP&E> 865,086 861,990
<DEPRECIATION> 349,440 354,458
<TOTAL-ASSETS> 895,108 937,087
<CURRENT-LIABILITIES> 212,206 166,496
<BONDS> 0 0
0 0
0 0
<COMMON> 0 0
<OTHER-SE> 632,298 719,388
<TOTAL-LIABILITY-AND-EQUITY> 895,108 937,087
<SALES> 1,508,285 723,169
<TOTAL-REVENUES> 1,508,285 723,169
<CGS> 1,048,433 519,224
<TOTAL-COSTS> 1,391,658 666,634
<OTHER-EXPENSES> 2,446 (91)
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 1,600 911
<INCOME-PRETAX> 115,615<F1> 55,769<F1>
<INCOME-TAX> 37,475 20,858
<INCOME-CONTINUING> 78,140 34,911
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 600
<NET-INCOME> 78,140 34,311
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
<FN>
<F1>AMOUNT REPRESENTS EARNINGS BEFORE INCOME TAXES.
</FN>
</TABLE>
