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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 18, 1999
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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VLASIC FOODS INTERNATIONAL INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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NEW JERSEY 2000 52-2067518
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
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VLASIC PLAZA
6 EXECUTIVE CAMPUS
CHERRY HILL, NEW JERSEY 08002-4112
(856) 969-7100
(ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
NORMA B. CARTER, ESQ.
VICE PRESIDENT, GENERAL COUNSEL AND CORPORATE SECRETARY
VLASIC FOODS INTERNATIONAL INC.
VLASIC PLAZA
6 EXECUTIVE CAMPUS
CHERRY HILL, NEW JERSEY 08002-4112
(856) 969-7100
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF AGENT FOR SERVICE)
------------------------
COPY TO:
SUSAN J. SUTHERLAND, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
919 THIRD AVENUE
NEW YORK, NY 10022
(212) 735-3000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this registration statement.
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If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering: [ ] ------------
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [ ] ------------
CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED MAXIMUM
AMOUNT TO MAXIMUM OFFERING AGGREGATE
TITLE OF CLASS OF SECURITIES TO BE REGISTERED BE REGISTERED PRICE PER SECURITY(1) OFFERING PRICE(1)
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10 1/4% Series B Senior Subordinated Notes
due 2009 of Vlasic Foods International
Inc.... $200,000,000 100% $200,000,000
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AMOUNT OF
REGISTRATION
TITLE OF CLASS OF SECURITIES TO BE REGISTERED FEE(1)
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10 1/4% Series B Senior Subordinated Notes
due 2009 of Vlasic Foods International
Inc.... $51,800
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(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(f) promulgated under the Securities Act of 1933, as
amended.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE AND UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 2
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
PROSPECTUS
SUBJECT TO COMPLETION -- DATED AUGUST 18, 1999
OFFER TO EXCHANGE ALL 10 1/4% SERIES A SENIOR SUBORDINATED NOTES DUE 2009
FOR 10 1/4% SERIES B SENIOR SUBORDINATED NOTES DUE 2009, WHICH HAVE BEEN
REGISTERED
UNDER THE SECURITIES ACT OF 1933, OF
[VLASIC FOODS LOGO]
THIS EXCHANGE OFFER WILL EXPIRE AT MIDNIGHT, NEW YORK CITY TIME, ON
, 1999, UNLESS EXTENDED.
TERMS OF THE EXCHANGE OFFER:
- We will exchange all outstanding notes that are validly tendered and not
withdrawn prior to the expiration of the exchange offer.
- You may withdraw tendered outstanding notes at any time prior to the
expiration of the exchange offer.
- The exchange of outstanding notes will not be a taxable exchange for
United States federal income tax purposes, but you should see the section
entitled "Material United States Federal Income Tax Consequences" on page
118 for more information.
- The terms of the notes to be issued are substantially identical to the
terms of the outstanding notes, except for transfer restrictions and
registration rights relating to the outstanding notes.
- We will not receive any proceeds from the exchange offer.
- There is no existing market for the notes to be issued, and we do not
intend to apply for their listing on any securities exchange.
See the "Description of Notes" section on page 80 for more information
about the notes to be issued in this exchange offer.
THIS INVESTMENT INVOLVES RISKS. SEE THE SECTION ENTITLED "RISK FACTORS"
THAT BEGINS ON PAGE 11 FOR A DISCUSSION OF THE RISKS THAT YOU SHOULD CONSIDER
PRIOR TO TENDERING YOUR OUTSTANDING NOTES FOR EXCHANGE.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES AND
EXCHANGE COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED
UPON THE ADEQUACY OR THE ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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The date of this prospectus is , 1999
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TABLE OF CONTENTS
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PAGE
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Prospectus Summary.......................................... 1
Risk Factors................................................ 11
Forward-Looking Information................................. 19
Use of Proceeds............................................. 20
Accounting Treatment........................................ 20
Capitalization.............................................. 21
The Exchange Offer.......................................... 22
Selected Historical Financial Information................... 30
Pro Forma Financial Information............................. 32
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 38
Available Information....................................... 52
Business.................................................... 53
Management.................................................. 63
Ownership of Vlasic Common Stock............................ 72
Relationships Between Vlasic and Campbell................... 75
Description of Senior Credit Facility....................... 78
Description of Notes........................................ 80
Material United States Federal Income Tax Consequences...... 118
Plan of Distribution........................................ 120
Legal Matters............................................... 121
Experts..................................................... 121
Index to Financial Statements............................... F-1
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PROSPECTUS SUMMARY
The following summary highlights selected information from this prospectus
and may not contain all of the information that is important to you. This
prospectus includes the basic terms of the notes we are offering, as well as
information regarding our business and detailed financial data. We encourage you
to read this prospectus in its entirety.
References in this prospectus to the "Company," "Vlasic," "we," "our," and
"us" refer to Vlasic Foods International Inc. and its subsidiaries as a
consolidated entity, except where it is clear that such terms mean only Vlasic
Foods International Inc. Our fiscal year ends on the Sunday closest to July 31
and generally consists of four thirteen-week quarters. Fiscal 1998 consisted of
a fifty-two week year and ended on August 2, 1998 and fiscal 1997 consisted of a
fifty-three week year with fourteen weeks in the fourth quarter and ended on
August 3, 1997. Unless otherwise indicated, pro forma information in this
prospectus gives effect to the sale of our Swift-Armour business in Argentina.
All market and market share information contained in this prospectus for
the Swanson and Vlasic brands was published by Information Resources
Inc.("IRI"), a nationally recognized independent research service, and
represents the market share in the United States in dollars for a fifty-two week
period ended May 9, 1999. All market and market share information for our Open
Pit barbecue sauce brand is based on information published by IRI for 13 major
markets in the Midwest U.S. for a fifty-two week period ended May 9, 1999. All
market and market share information for our mushroom business is based upon
estimates of our management based upon a market survey they conducted during the
summer of 1998. Market and market share information for the Swanson (Canada) and
Freshbake brands is based on material published by independent nationally
recognized syndicate research services based in Canada and the United Kingdom,
respectively, for the annual period ended December 1998. While we believe such
market and market share information and management estimates are reliable, no
assurance can be given that they are accurate in all material respects.
SUMMARY OF THE EXCHANGE OFFER
On June 29, 1999, we privately placed $200 million aggregate principal
amount of 10 1/4% Series A Senior Subordinated Notes due 2009. Simultaneous with
the private placement, we entered into an exchange and registration rights
agreement with the initial purchasers of the outstanding notes, in which we
agreed to deliver this prospectus to you and to complete this exchange offer on
or prior to the 45th business day following the effective date of the
registration statement of which this prospectus is a part, which effective date
must occur on or prior to December 26, 1999. If we do not complete this exchange
offer before such date, we must pay liquidated damages until the exchange offer
is completed. In this exchange offer, you may exchange your outstanding notes
for our 10 1/4% Series B Senior Subordinated Notes due 2009 to be issued in the
exchange offer which have substantially the same terms. You should read the
discussion under the heading "The Exchange Offer" and "Description of Notes" for
further information regarding the notes to be issued in the exchange offer.
We issued the outstanding notes to repay a portion of our existing
indebtedness outstanding under our senior credit facility. For more details, see
"Use of Proceeds."
Securities Offered............ $200 million in principal amount of new 10 1/4%
Series B Senior Subordinated Notes due 2009,
which have been registered under the Securities
Act of 1933. The terms of the notes offered in
the exchange offer are substantially identical
to those of the outstanding notes, except that
certain transfer restrictions, registration
rights and liquidated damages provisions
relating to the outstanding notes do not apply
to the new registered notes.
The Exchange Offer............ We are offering to issue registered notes in
exchange for a like principal amount of our
outstanding notes. We are offering to issue
these registered notes to satisfy our
obligations under an exchange
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and registration rights agreement that we
entered into with the initial purchasers of the
outstanding notes when we sold them in a
transaction exempt from the registration
requirements of the Secu]rities Act. You may
tender your outstanding notes for exchange by
following the procedures described under the
heading "The Exchange Offer."
Tenders; Expiration Date;
Withdrawal.................... The exchange offer will expire at midnight, New
York City time, on , 1999,
unless we extend it. If you decide to exchange
your outstanding notes for the notes to be
issued in the exchange offer, you must
acknowledge that you are not engaging in, and
do not intend to engage in, a distribution of
the notes to be issued in the exchange offer.
You may withdraw any notes that you tender for
exchange at any time prior to midnight on
, 1999. If we decide for any
reason not to accept any notes you have
tendered for exchange, those notes will be
returned to you without cost promptly after the
expiration or termination of the exchange
offer. See "The Exchange Offer -- Terms of the
Exchange Offer" for a more complete description
of the tender and withdrawal provisions.
United States Federal Income
Tax Consequences.............. Your exchange of outstanding notes for notes to
be issued in the exchange offer will not result
in any gain or loss to you for United States
federal income tax purposes. Holders of the
outstanding notes should see "Material United
States Federal Income Tax Consequences" for a
summary of material United States federal
income tax consequences associated with the
exchange of outstanding notes for the notes to
be issued in the exchange offer and the
ownership and disposition of those notes to be
issued in the exchange offer.
Use of Proceeds............... We will not receive any cash proceeds from the
exchange offer.
Exchange Agent................ The Bank of New York is serving as the exchange
agent for the exchange offer.
CONSEQUENCES OF NOT EXCHANGING YOUR OUTSTANDING NOTES
If you do not exchange your outstanding notes in the exchange offer, they
will continue to be subject to the restrictions on transfer that are described
in the legend on the notes. In general, you may offer or sell your outstanding
notes only if they are registered under, or offered or sold under an exemption
from, the Securities Act of 1933, or the Securities Act, and applicable state
securities laws.
If outstanding notes are tendered and accepted in the exchange offer, it
may become more difficult for you to sell or transfer your unexchanged notes. In
addition, if you do not exchange your outstanding notes in the exchange offer,
you will no longer be entitled to have those notes registered under the
Securities Act.
CONSEQUENCES OF EXCHANGING YOUR OUTSTANDING NOTES
Based on interpretations of the staff of the Securities and Exchange
Commission, or the SEC, we believe that you may offer for resale, resell or
otherwise transfer the notes that we issue in the exchange offer without
complying with the registration and prospectus delivery requirements of the
Securities Act if:
- you acquire the notes issued in the exchange offer in the ordinary course
of your business;
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- you are not participating, do not intend to participate, and have no
arrangement or undertaking with anyone to participate, in the
distribution of the notes issued to you in the exchange offer; and
- you are not an "affiliate" of Vlasic, as defined in Rule 405 of the
Securities Act.
If any of these conditions are not satisfied and you transfer any notes issued
to you in the exchange offer without delivering a proper prospectus or without
qualifying for a registration exemption, you may incur liability under the
Securities Act. We will not be responsible for or indemnify you against any
liability you may incur.
Any broker-dealer that acquires notes in the exchange offer for its own
account in exchange for outstanding notes, which it acquired through
market-making or other trading activities, must acknowledge that it will deliver
a prospectus when it resells or transfers any notes issued in the exchange
offer. See "Plan of Distribution."
THE COMPANY
OVERVIEW
We are a leading producer, marketer and distributor of high quality branded
food products. The two largest brands in our portfolio are Swanson and Vlasic,
under which we market Swanson frozen dinners, pot pies, breakfasts and the
larger-portion Hungry Man brand, and Vlasic pickles and relishes. Swanson and
Vlasic are among the most widely recognized food brands in the United States and
maintain leading market shares in the categories in which they compete. These
two brands accounted for approximately 60% of our pro forma net sales and
approximately 80% of our pro forma Adjusted EBITDA (as defined) for the twelve
months ended May 2, 1999. Other brands within our portfolio include Open Pit
barbecue sauces, Vlasic Farms and Campbell's Fresh mushrooms in the United
States, and Freshbake frozen foods, SonA canned beans and vegetables and Rowats
pickles in the United Kingdom. These brands also maintain leading market shares
in the categories in which they compete. For the twelve months ended May 2,
1999, Vlasic had pro forma net sales of $1.1 billion and pro forma Adjusted
EBITDA of $110.9 million.
Vlasic was created through a tax-free spin-off from Campbell Soup Company
("Campbell") on March 30, 1998. As our product portfolio was not core to
Campbell's strategy, we believe substantial opportunity exists to grow sales and
profitability through more active brand management and marketing. The following
factors are the foundation of our future operations:
- STRONG BRAND RECOGNITION. Swanson and Vlasic have established themselves
as American icons. Consumer research undertaken by Vlasic indicates that
both the Swanson and Vlasic brands have over 90% brand awareness. The
Vlasic Stork is one of the most recognized brand symbols in the United
States and celebrated its 25(th) anniversary in 1998. Swanson is credited
with inventing the "TV dinner," which is celebrating its 45(th)
anniversary this year. Our portfolio of strong brands provides a critical
mass of brand name product sales that (a) allows us to operate cost
effectively and achieve economies of scale in manufacturing, marketing,
distribution and raw material sourcing and (b) provides a strong platform
for introducing product line extensions and new products.
- LEADING MARKET POSITIONS. Approximately 75% of our pro forma net sales
are derived from sales of branded products which are number one in the
categories in which they compete. As a result, these products provide a
solid base of consistent cash generation and offer opportunities to grow.
Vlasic is the leading brand in the $772 million U.S. retail pickle market
with a market share of approximately 32%, and management believes Vlasic
has maintained a leading market position for over 20 years. Swanson is
the leading brand in the $1.3 billion U.S. frozen dinner market with a
market share of approximately 27%, and management believes Swanson has
maintained a leading market position since its introduction in 1954.
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RETAIL MARKET POSITION OF OUR BRANDS
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RETAIL MARKET SHARE
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BRAND CATEGORY SHARE POSITION PERCENTAGE
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Swanson........................... Frozen Dinners #1 United States 27%
Swanson........................... Frozen Pot Pies #1 United States 29%
Swanson........................... Frozen Breakfast #1 United States 75%
Entrees
Swanson........................... Frozen Branded Dinners #1 Canada 69%
Vlasic............................ Pickles #1 United States 32%
Open Pit.......................... Barbecue Sauce #1 Midwest U.S. 28%
Campbell's Mushrooms.............. Fresh Branded Mushrooms #1 United States 12%
Freshbake......................... Frozen Meat Pastries #1 United Kingdom 54%
</TABLE>
- STEADY INDUSTRY GROWTH. We operate in segments of the food industry that
have been consistently growing. Between 1994 and 1998 frozen categories
in which Swanson competes have grown by over 1% per year. We believe
between 1981 and 1998 sales of pickles grew by an average of 3% per year.
In addition, Vlasic's introduction in 1995 of Sandwich Stackers, a new
pickle product, contributed to the expansion of the pickle market and we
believe that the launch of another new product, Hamburger Stackers, could
again increase both total sales in the pickle market and our share of
that market.
- EXPERIENCED MANAGEMENT. Mr. Robert F. Bernstock, the President and Chief
Executive Officer of Vlasic, was a senior executive at Campbell for more
than seven years. As President of Campbell's $3.5 billion U.S. Grocery
Division, Mr. Bernstock revitalized brands and improved operating
margins. Mr. Bernstock has assembled an experienced management team
composed of many Campbell executives who chose to join Vlasic as well as
executives who joined from other large companies. The senior management
team is also experienced in revitalizing brands, and the top eleven
executives have an average of twelve years experience in the branded food
industry. Senior management compensation is significantly driven by the
financial and stock price performance of Vlasic.
BUSINESS STRATEGY
Campbell assembled our current brands and established a new Vlasic
corporate structure to complete the spin-off in March 1998. We intend to build
from our core Swanson and Vlasic brands to grow revenues and earnings and
establish a premier branded food company. We seek to accomplish these goals
through a five-part strategy.
1. REVITALIZE OUR WELL-KNOWN BRANDS. Prior to Vlasic's spin-off from
Campbell, our brands were not core to Campbell's strategy, and we believe were
not given the marketing resources to invest in necessary levels of innovation
and advertising to drive sustained sales growth of these brands. We are
undertaking the following three pronged approach to revitalize our well-known
brands:
REFORMULATE AND IMPROVE EXISTING PRODUCTS. Prior to the spin-off, few
improvements had been made to the products within Vlasic's brands. Last year we
began a systematic, multi-year review of our portfolio intended to improve the
quality and increase the appeal of our products to consumers. This review has
led to changes in the way we produce our most basic products. For example, in
1999 we changed how chickens are cut for our fried chicken dinner line, the
largest product group within the Swanson brand. This change has resulted in a
redesigned and relaunched product comprised of larger chicken pieces with more
meat for consumers and fewer unused chicken parts in our production process,
which has improved margins. Since this relaunch, in the twelve-week period ended
May 9, 1999, Swanson fried chicken dinner retail sales have grown by 37%. We
also recently announced the relaunch of Vlasic Sandwich Stackers in the Zesty
Garlic, Bread & Butter, Zesty Dill and Polish Dill varieties.
DEVELOP AND LAUNCH NEW PRODUCTS. In order to expand our brands and meet
changing consumer preferences, we continuously strive to develop and launch new
products. In fiscal 1999, we launched our first boneless fried chicken dinner
line which addresses a consumer preference that has grown dramatically. The
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launch of this product has been well received by our customers, and the new
Swanson Hungry Man boneless fried chicken dinner is now the number one dinner in
dollar sales in the entire frozen dinner category. In February 1999, we began
shipments to retailers of our new Vlasic Hamburger Stackers, large pickle slices
cut from our specially-grown giant cucumbers which fit over an entire hamburger.
Extensive consumer testing leads us to believe this product will be well
received by consumers and it is already in high demand among retailers. We
recently announced several new products for fiscal 2000, including Swanson
Potato-Topped pot pies, Swanson Hungry Man Deep Dish pot pies, several new
breakfast items under the Great Starts brand and Swanson Family Selections, two
new family dinner items which serve a family of four and are designed to be
easily prepared within 20 minutes.
REFOCUS MARKETING AND SALES SUPPORT. We intend to refocus marketing
support for our Swanson and Vlasic brands in order to refresh our already high
consumer awareness with new advertising campaigns and a number of other
promotional programs. Over the past several years, limited consumer-based
marketing was performed to promote the Swanson and Vlasic brands. For example,
no national television advertising had been done for the Swanson brand in over a
decade. We believe more active marketing will attract both consumers who know
our products but have not recently purchased them as well as new consumers who
have not tried the brands. In January 1999, we launched a new television
advertising campaign for Swanson entitled "Make New Memories with Swanson,"
which builds on the traditional role Swanson TV dinners have played in American
life. In addition we began national advertising for Vlasic in the spring of
1999. We have also increased consumer promotional activities such as couponing.
We intend to continue to increase marketing in fiscal 2000 to support our major
product initiatives.
2. REDUCE COSTS THROUGH CONTINUOUS IMPROVEMENT PROGRAMS. We view cost
improvement as a strategic imperative in the management of our business. Cost
reductions across Vlasic have been and we believe will continue to be
accomplished through operating changes in our production facilities and through
better utilization of fixed assets, working capital and raw materials. After
giving pro forma effect to the sale of our Swift-Armour Argentine beef business,
we achieved cost savings of approximately $5 million in fiscal 1998 and we
estimate that we will realize cost savings of approximately $13 million in
fiscal 1999, approximately $8 million of which have been realized through the
nine months ended May 2, 1999. These cost savings have been or are expected to
be generated by production efficiency improvements at the Imlay City, Michigan
pickle plant and the Fayetteville, Arkansas frozen food plant, a reformulation
of our frozen fried chicken which improved raw materials yields from 64% for the
fiscal year ended August 2, 1998 to 84% for the nine months ended May 2, 1999,
and administration reductions and warehouse consolidations in the United
Kingdom.
3. MANAGE OUR ASSETS TO MAXIMIZE CASH FLOW. As part of our ongoing review
of each business, we routinely analyze how each of our assets performs and how
each fits into our business lines' long-term strategy. The goal behind these
reviews is to actively manage our assets to maximize cash flow and improve
return on capital. We periodically utilize co-packing or other outsourcing
agreements and continuously undertake strategies to improve capital expenditure
effectiveness. We currently benefit from the significant capital investment made
prior to the spin-off to rationalize and modernize some of our frozen food and
pickle facilities. Due to this investment program, we believe that our capital
expenditures for the foreseeable future will be focused on cost effective
maintenance, cost saving projects and new product introductions. Recent
initiatives include closure of our pickle plant in Bridgeport, Michigan, closure
of our Dublin, Georgia mushroom farm, our decision to co-pack production of Open
Pit barbecue sauce and our sale of the Peterlee frozen foods facility in the
United Kingdom.
4. EXPLORE OPPORTUNITIES FOR PORTFOLIO RECONFIGURATION. Our portfolio was
assembled by Campbell and represents a diverse group of brands and businesses
with varying returns and prospects. Prior to the spin-off, these products were
managed within multiple Campbell business divisions. Our strategy has been to
focus on our strategic core brands, Swanson and Vlasic, which we believe were
not achieving their potential due to low consumer marketing investment and lack
of a clear strategy for product development. We may also consider divesting
those segments of our business that do not fit within our core branded food
strategy. We sold our Swift-Armour Argentine beef business in July 1999 and our
Kattus German gourmet food
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distribution business in January 1999. In addition, we may in the future pursue
selective acquisitions that complement our existing portfolio.
5. CAPITAL STRUCTURE MANAGEMENT. One of our corporate goals is to manage
our balance sheet to enhance our ability to execute our business strategy. We
strive to achieve liquidity, to have access to multiple sources of capital and
to be in a position to apply excess cash towards debt reduction. We believe this
will allow us to grow the brands which we believe offer significant long-term
potential.
RECENT DEVELOPMENTS
In July 1999, we sold our Swift-Armour Argentine beef business. The agreed
upon price was $85 million. Net proceeds from the divestiture were used to
partially repay indebtedness under the senior credit facility (as defined).
Our principal executive offices are located at Vlasic Plaza, 6 Executive
Campus, Cherry Hill, NJ 08002-4112 and our telephone number is (856) 969-7100.
Vlasic is a New Jersey corporation.
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SUMMARY DESCRIPTION OF THE NOTES
The form and terms of the notes to be issued in the exchange are the same
as the form and terms of the outstanding notes except that the notes to be
issued in the exchange offer have been registered under the Securities Act and,
therefore, will not bear legends restricting their transfer and will not contain
the registration rights and liquidated damages provisions contained in the
outstanding notes. The notes issued in the exchange offer will evidence the same
debt as the outstanding notes and both the outstanding notes and the notes to be
issued in the exchange offer are governed by the same indenture.
Aggregate Amount.............. $200.0 million in principal amount of 10 1/4%
Series B Senior Subordinated Notes due 2009,
registered under the Securities Act.
Maturity Date................. July 1, 2009.
Interest Rate and Interest
Payment Dates................. Annual rate 10 1/4%. Payment frequency -- every
six months on January 1 and July 1. First
payment January 1, 2000.
Ranking....................... The notes to be issued in the exchange offer
are senior subordinated debt of Vlasic Foods
International Inc. They rank behind all of
Vlasic Foods International Inc.'s current and
future indebtedness (other than trade
payables), except indebtedness that expressly
provides that it ranks equal with or
subordinated in right of payment to the notes
to be issued in the exchange offer. The
outstanding notes and the notes to be issued in
the exchange offer will be pari passu with each
other.
Assuming we had completed this offering on May
2, 1999 and applied the proceeds as intended,
the notes to be issued in the exchange offer
would have been subordinated to $391.2 million
(approximately $309.2 million, adjusted for the
sale of our Swift-Armour Argentine beef
business) of senior debt of Vlasic Foods
International Inc. The notes to be issued in
the exchange offer will also be effectively
subordinated to the outstanding indebtedness of
Vlasic Foods International Inc.'s subsidiaries,
which was $8.0 million (approximately $0.5
million, adjusted for the sale of our
Swift-Armour Argentine beef business) at May 2,
1999, and to other liabilities of Vlasic Foods
International Inc.'s subsidiaries, including
obligations owed to trade creditors, lessors,
taxing authorities and creditors holding
guarantees.
Sinking Fund.................. None.
Optional Redemption........... On or after July 1, 2004, we may redeem some or
all of the notes to be issued in the exchange
offer at any time at the redemption prices
listed in the "Description of Notes" section
under the heading "Optional Redemption."
Before July 1, 2002, we may redeem up to $70
million of the notes to be issued in the
exchange offer with the proceeds of certain
public offerings of our common equity at the
price listed in the "Description of Notes"
section under the heading "Optional
Redemption."
Mandatory Offer to
Repurchase.................... If we sell certain assets under certain
circumstances, or experience specific kinds of
changes of control, we must offer to repurchase
the notes to be issued in the exchange offer at
the prices listed in
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the "Description of Notes" section under the
heading "Repurchase at the Option of Holders."
Basic Covenants of
Indenture..................... We will issue the notes being offered in the
exchange offer under an indenture with The Bank
of New York, as trustee. This is the same
indenture under which the outstanding notes
were issued. The indenture will, among other
things, restrict our ability and the ability of
our subsidiaries to:
- incur additional indebtedness;
- pay dividends on, redeem or repurchase our
capital stock;
- make various investments;
- create certain liens;
- utilize certain asset sale proceeds;
- merge or consolidate or dispose of all or
substantially all of our assets;
- incur senior subordinated indebtedness that
does not rank equal to the outstanding notes
and the notes to be offered in the exchange
offer; and
- enter into certain transactions with
affiliates.
These covenants are subject to important
exceptions. For more details, see the heading
"Certain Covenants" in the "Description of
Notes" section.
Form of Notes to be Issued in
the Exchange Offer............ The notes issued in the exchange offer with
respect to notes currently represented by
global securities will be represented by one or
more permanent global securities in bearer form
deposited with The Bank of New York, as
book-entry depository for the benefit of The
Depository Trust Company, or DTC. Notes that
are issued in the exchange offer that have been
exchanged for notes in the form of registered
definitive certificates will be issued in the
form of registered definitive certificates
until holders direct otherwise. For more
information, see "Description of the Notes --
Book-Entry, Delivery and Form."
Use of Proceeds............... We used the net proceeds from the issuance of
the outstanding notes to repay a portion of the
indebtedness outstanding under our senior
credit facility. We will not receive any
proceeds from the issuance of notes issued
pursuant to the exchange offer.
For more details, see "Use of Proceeds."
8
<PAGE> 12
SUMMARY FINANCIAL INFORMATION
The following table sets forth our summary historical financial information
and other financial data. The Summary of Operations Data set forth below for
each of the years ended August 2, 1998, August 3, 1997, July 28, 1996 and July
30, 1995, and the Balance Sheet Data at August 2, 1998, August 3, 1997 and July
28, 1996 have been derived from our historical financial statements audited by
PricewaterhouseCoopers LLP, independent accountants. The Summary of Operations
Data for the nine months ended May 2, 1999 and May 3, 1998, the year ended July
31, 1994 and the twelve months ended May 2, 1999 and the Balance Sheet Data at
May 2, 1999, May 3, 1998, July 30, 1995 and July 31, 1994 are derived from our
unaudited financial statements which, in our opinion, include all adjustments
necessary for a fair presentation. Such historical data should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and our financial statements and notes thereto
included elsewhere in this prospectus. The pro forma financial information gives
effect to the divestiture of our Swift-Armour Argentine beef business and to pro
forma interest expense on the outstanding notes. Our historical financial
statements for periods ended prior to the date of the spin-off, March 30, 1998,
present our combined historical financial position, results of operations and
cash flows of the businesses contributed by Campbell. These results may not
necessarily be indicative of the results of operations that would have occurred
if we had operated as an independent company prior to the spin-off.
<TABLE>
<CAPTION>
NINE MONTHS
TWELVE MONTHS ENDED ENDED FISCAL YEAR ENDED
---------------------- ------------------- ------------------------------------------------------
MAY 2, MAY 2, MAY 2, MAY 3, AUGUST 2, AUGUST 3, JULY 28, JULY 30, JULY 31,
1999 1999 1999 1998 1998 1997 1996 1995 1994
--------- ---------- -------- -------- --------- --------- -------- -------- --------
PRO FORMA HISTORICAL (DOLLARS IN MILLIONS EXCEPT RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS DATA
Net sales................. $1,133.5 $1,317.7 $1,004.3 $1,043.9 $1,357.3 $1,508.3 $1,499.0 $1,504.3 $1,320.6
Cost and expenses
Cost of products sold... 771.4 935.2 707.9 750.7 978.0 1,048.4 1,053.3 1,074.3 951.6
Marketing and selling
expenses.............. 233.3 250.2 175.9 170.8 245.1 266.5 256.7 258.2 227.8
Administrative
expenses.............. 63.5 67.1 49.0 46.0 64.1 53.1 54.5 54.5 46.9
Research and development
expenses.............. 8.0 8.0 5.9 5.8 7.9 8.6 8.1 8.8 10.7
Other (income)
expenses.............. 1.3 (1.9) 0.8 (0.2) (2.9) 2.5 0.2 -- 4.3
Special items........... 11.0 151.0 136.6 28.1 42.5 12.6 37.2 -- --
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total costs and
expenses............ 1,088.5 1,409.6 1,076.1 1,001.2 1,334.7 1,391.7 1,410.0 1,395.8 1,241.3
-------- -------- -------- -------- -------- -------- -------- -------- --------
Earnings (loss) before
interest and taxes...... 45.0 (91.9) (71.8) 42.7 22.6 116.6 89.0 108.5 79.3
Interest expense........ 44.7 41.8 32.7 4.3 13.4 1.6 1.1 2.0 1.3
Interest income......... 0.6 0.6 0.5 0.3 0.4 0.6 0.3 0.2 0.7
-------- -------- -------- -------- -------- -------- -------- -------- --------
Earnings (loss) before
taxes................... 0.9 (133.1) (104.0) 38.7 9.6 115.6 88.2 106.7 78.7
Taxes on earnings......... 12.3 14.7 19.7 20.4 15.4 37.5 27.3 35.7 25.4
-------- -------- -------- -------- -------- -------- -------- -------- --------
Earnings (loss) before
cumulative effect of
accounting change....... (11.4) (147.8) (123.7) 18.3 (5.8) 78.1 60.9 71.0 53.3
Cumulative effect of
accounting change....... -- -- -- (0.6) (0.6) -- -- -- --
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net earnings (loss)....... $ (11.4) $ (147.8) $ (123.7) $ 17.7 $ (6.4) $ 78.1 $ 60.9 $ 71.0 $ 53.3
======== ======== ======== ======== ======== ======== ======== ======== ========
BALANCE SHEET DATA (END OF
PERIOD)
Cash and cash
equivalents............. $ 22.9 $ 26.9 $ 26.9 $ 13.6 $ 16.3 $ 9.4 $ 5.6 $ 1.8 $ 5.0
Working capital........... 157.9 190.9 190.9 74.5 125.9 83.1 116.9 157.8 138.6
Total assets.............. 717.5 824.0 824.0 949.9 959.3 895.1 923.3 923.7 855.4
Total debt................ 509.7 588.2 588.2 503.7 571.4 2.4 3.4 5.3 13.5
Shareowners' equity
(deficit)............... (17.9) (17.9) (17.9) 132.9 106.6 632.3 659.9 693.7 615.3
OTHER FINANCIAL DATA
Adjusted EBITDA(1)........ $ 110.9 $ 110.9 $ 96.0 $ 106.8 $ 121.7 $ 145.3 $ 130.9 $ 112.1 $ 92.9
Depreciation and
amortization............ 34.7 45.2 34.8 34.7 45.1 44.8 45.6 45.5 43.6
Capital expenditures...... 49.3 58.4 35.6 39.5 62.3 79.3 59.1 51.0 69.9
SELECTED CREDIT STATISTICS
Adjusted EBITDA/Pro forma
interest expense(2)..... 2.5x
Net debt(3)/Adjusted
EBITDA.................. 4.5x
</TABLE>
9
<PAGE> 13
- ---------------
(1) EBITDA is calculated by adding net interest expense, taxes on earnings,
depreciation, amortization, effect of accounting change and special items to
our net earnings (loss). Adjusted EBITDA is calculated by (1) adding certain
items of expense related to our spin-off from Campbell that we believe are
not indicative of our future operating performance consisting of (a) costs
incurred in the development of our information technology infrastructure and
duplicative administrative transition costs arising from service charges
from Campbell for services which overlapped our expenses as we completed our
infrastructure and (b) start-up costs associated with new technology at one
of our Vlasic pickle production facilities installed prior to the spin-off
and (2) adjusting by the EBITDA of our divested Kattus business in Germany
and our divested Swift-Armour Argentine beef business.
EBITDA and Adjusted EBITDA are presented because we believe they are
frequently used by investors and other interested parties in the evaluation
of a company's ability to meet its future debt service, capital expenditures
and working capital requirements. However, other companies in our industry
may present EBITDA and Adjusted EBITDA differently than we do. EBITDA and
Adjusted EBITDA are not measurements of financial performance under
generally accepted accounting principles and should not be considered as
alternatives to cash flows from operating activities or as measures of
liquidity or alternatives to net earnings as indicators of our operating
performance or any other measures of performance derived in accordance with
generally accepted accounting principles. See the Consolidated Statements of
Cash Flows included in our financial statements.
The following table summarizes the impact of these adjustments to EBITDA
for the periods indicated to calculate Adjusted EBITDA (see "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
for additional detail):
<TABLE>
<CAPTION>
NINE MONTHS
TWELVE MONTHS ENDED ENDED FISCAL YEAR ENDED
---------------------- --------------- ------------------------------------------------------
MAY 2, MAY 2, MAY 2, MAY 3, AUGUST 2, AUGUST 3, JULY 28, JULY 30, JULY 31,
1999 1999 1999 1998 1998 1997 1996 1995 1994
--------- ---------- ------ ------ --------- --------- -------- -------- --------
PRO FORMA HISTORICAL (DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
EBITDA (as defined)........... $ 90.7 $104.3 $99.6 $105.5 $110.2 $174.0 $171.8 $154.0 $122.9
Adjustments:
Information technology and
transition service
charges..................... 15.2 15.2 7.0 1.0 9.2
Production facility start-up
costs....................... 3.8 3.8 3.5 7.3
EBITDA of divested
businesses -- Loss
(Earnings)
Kattus...................... 1.2 1.2 (0.6) 3.7 5.5 (0.1) (8.4) (10.9) (10.1)
Swift-Armour................ -- (13.6) (10.0) (6.9) (10.5) (28.6) (32.5) (31.0) (19.9)
------ ------ ----- ------ ------ ------ ------ ------ ------
Adjusted EBITDA............... $110.9 $110.9 $96.0 $106.8 $121.7 $145.3 $130.9 $112.1 $ 92.9
====== ====== ===== ====== ====== ====== ====== ====== ======
</TABLE>
(2) Pro forma interest as used in this calculation excludes the amortization of
the original issue discount and issue costs associated with the outstanding
notes as well as previously capitalized debt issue costs related to our
other debt.
(3) Pro forma net debt reflects total debt outstanding of $509.7 million as of
May 2, 1999 and net of cash and cash equivalents adjusted for a $7 million
tax charge taken in the third quarter of fiscal year 1999 for the
repatriation of foreign cash. See "Capitalization."
10
<PAGE> 14
RISK FACTORS
An investment in the notes is subject to a number of risks. You should
consider carefully all the information in this prospectus and, in particular,
the following risks, before deciding to tender your outstanding notes on the
exchange offer. The risk factors set forth below, other than those which discuss
the consequences of failing to exchange your outstanding notes in the exchange
offer, are generally applicable to both the outstanding notes and the notes
issued in the exchange offer. The risks described below are not the only risks
that could affect us or our notes.
YOU MAY HAVE DIFFICULTY SELLING THE NOTES WHICH YOU DO NOT EXCHANGE
If you do not exchange your outstanding notes for the notes offered in this
exchange offer, you will continue to be subject to the restrictions on the
transfer of your notes. Those transfer restrictions are described in the
indenture and in the legend contained on the outstanding notes, and arose
because we originally issued the outstanding notes under exemptions from, and in
transactions not subject to, the registration requirements of the Securities
Act. Except in limited circumstances with respect to specific types of holders
of outstanding notes, we will have no further obligation to provide for
registration under the Securities Act of such outstanding notes. Upon completion
of the exchange offer, holders of outstanding notes will not be entitled to any
further registration rights under the exchange and registration rights
agreement, except under limited circumstances.
In general, you may offer or sell your outstanding notes only if they are
registered under the Securities Act and applicable state securities laws, or if
they are offered and sold under an exemption from those requirements. We do not
intend to register the outstanding notes under the Securities Act.
If a large number of outstanding notes are exchanged for notes issued in
the exchange offer, it may be more difficult for you to sell your unexchanged
notes. In addition, if you do not exchange your outstanding notes in the
exchange offer, you will no longer be entitled to have those notes registered
under the Securities Act.
See "The Exchange Offer -- Consequences of Failure to Exchange Outstanding
Notes" for a discussion of the possible consequences of failing to exchange your
notes.
WE HAVE SUBSTANTIAL DEBT AND DEBT SERVICE REQUIREMENTS
We have substantial debt and debt service requirements. As of May 2, 1999
and on an as adjusted basis to give effect to the issuance of the outstanding
notes and the application of the net proceeds from the issuance of the
outstanding notes, total debt would have been approximately $599.2 million
before giving pro forma effect to the divestiture of our Swift-Armour Argentine
beef business. Our ratio of earnings to fixed charges as adjusted to give effect
to the offering of the outstanding notes for fiscal 1998 was 0.5 times. As a
result of our net loss for the nine months ended May 2, 1999 (principally
attributable to special items of $136.6 million) the pro forma ratio of earnings
to fixed charges was less than 1:1 for such period. In order to achieve a pro
forma ratio of earnings to fixed charges of 1:1, we would have had to generate
additional earnings of $109.7 million for the nine months ended May 2, 1999.
Our substantial debt will have important consequences including:
- our ability to borrow additional amounts for working capital, capital
expenditures and other purposes will be limited or such financing may not
be available on terms favorable to us or at all;
- a substantial portion of our cash flows from operations will be used to
pay our interest expense and debt repayment, which will reduce the funds
that would otherwise be available to us for our operations and future
business opportunities;
- we will be vulnerable to increases in prevailing interest rates;
- we may be substantially more leveraged than certain of our competitors,
which may place us at a competitive disadvantage;
11
<PAGE> 15
- all of the indebtedness outstanding under the senior credit facility is
secured by substantially all the assets of Vlasic, except for Vlasic's
real properties, and will mature prior to the maturity of the notes to be
issued in the exchange offer; and
- our substantial degree of leverage may limit our flexibility to adjust to
changing market conditions, reduce our ability to withstand competitive
pressures and make us more vulnerable to a downturn in general economic
conditions or our business.
See "Description of Senior Credit Facility" and "Description of Notes."
WE AND OUR SUBSIDIARIES MAY BE ABLE TO INCUR SUBSTANTIAL ADDITIONAL INDEBTEDNESS
IN THE FUTURE
We and our subsidiaries may be able to incur substantial additional
indebtedness in the future. This could further exacerbate the risks described
above. The terms of the indenture do not fully prohibit us or our subsidiaries
from incurring other indebtedness. As of May 2, 1999, the senior credit facility
allowed additional borrowings of $69.8 million and all of those borrowings would
be senior to the outstanding notes and the notes to be issued in the exchange
offer. If new debt is added to our and our subsidiaries' current debt levels,
the related risks that we and they now face could intensify.
See "Capitalization," "Selected Historical Financial Information,"
"Description of Notes -- Repurchase at the Option of Holders -- Change of
Control" and "Description of Senior Credit Facility."
TO SERVICE OUR DEBT, WE WILL REQUIRE A SIGNIFICANT AMOUNT OF CASH AND OUR
ABILITY TO GENERATE CASH DEPENDS ON MANY FACTORS
Our ability to repay or refinance our debt, including the outstanding notes
and the notes to be issued in the exchange offer, will depend on our successful
financial and operating performance and on our ability to successfully implement
our business strategy. Unfortunately, we cannot assure you that we will be
successful in implementing our strategy or in realizing our anticipated
financial results. Our financial and operational performance depends on numerous
factors including prevailing economic conditions and on certain financial,
business and other factors beyond our control. We cannot assure you that our
cash flows and capital resources will be sufficient to repay our debt. In the
event that we are unable to pay our debt service obligations, we may be forced
to reduce or delay planned product improvement initiatives and capital
expenditures, sell assets, obtain additional equity capital or refinance or
restructure all or a portion of our debt. However, our ability to raise funds to
service outstanding notes and the notes to be issued in the exchange offer may
be restricted by the senior credit facility and our ability to effect equity
financing is dependent on results of operations and market conditions. In the
event that we are unable to refinance such indebtedness or raise funds through
asset sales, sales of equity or otherwise, our ability to pay principal of, and
interest on, such notes would be adversely affected.
A BREACH IN ANY OF OUR RESTRICTIVE DEBT COVENANTS COULD RESULT IN A DEFAULT
UNDER DEBT AGREEMENTS
Our senior credit facility and the indenture governing the outstanding
notes and the notes to be issued in the exchange offer contain a number of
significant covenants. These covenants may limit our ability to, among other
things:
- incur additional indebtedness;
- make capital expenditures in excess of prescribed thresholds;
- pay dividends on, redeem or repurchase our capital stock;
- make various investments;
- create certain liens;
- utilize certain asset sale proceeds;
- merge or consolidate or dispose of all or substantially all of our
assets;
12
<PAGE> 16
- incur senior subordinated indebtedness that does not rank equal to the
outstanding notes and notes to be issued in the exchange offer; and
- enter into certain transactions with our affiliates.
A breach of any of these covenants could result in a default under our debt
agreements. A default, if not waived, could result in acceleration of our
indebtedness, in which case the debt would become immediately due and payable.
If this occurs, we may not be able to repay our debt or borrow sufficient funds
to refinance it. Even if new financing is available, it may not be on terms that
are acceptable to us.
All our domestic subsidiaries guarantee our outstanding indebtedness under
the senior credit facility, which is currently secured by a first priority lien
on substantially all of our parent company assets and the assets of our domestic
subsidiaries, except our real property, and a pledge of two-thirds of the equity
of our foreign subsidiaries, in each case whether now owned or acquired in the
future. The senior credit facility requires us to maintain specified financial
ratios; namely a coverage ratio and a leverage ratio. Our ability to meet those
financial ratios can be affected by events beyond our control, and there can be
no assurance that we will meet those ratios. If we were unable to borrow under
our senior credit facility due to a default or if we fail to meet certain
specified borrowing base prerequisites for borrowing, we could be left without
sufficient liquidity and the lenders could seize the assets securing these
borrowings. The outstanding notes are not secured by, and the notes to be issued
in the exchange offer will not be secured by, any of our assets.
See "Description of Notes -- Certain Covenants" and "Description of Senior
Credit Facility."
THE OUTSTANDING NOTES AND NOTES TO BE ISSUED IN THE EXCHANGE OFFER RANK BEHIND
ALL OF VLASIC FOODS INTERNATIONAL INC.'S EXISTING INDEBTEDNESS (OTHER THAN TRADE
PAYABLES) AND MAY RANK BEHIND ALL OF VLASIC FOODS INTERNATIONAL INC.'S FUTURE
BORROWINGS (OTHER THAN TRADE PAYABLES)
The outstanding notes and notes to be issued in the exchange offer rank
behind all of Vlasic Foods International Inc.'s existing indebtedness (other
than trade payables) and may rank behind all of Vlasic Foods International
Inc.'s future borrowings (other than trade payables), except any future
indebtedness that expressly provides that it ranks equal with or subordinated in
right of payment to the outstanding notes and notes to be issued in the exchange
offer. As a result, upon any distribution to our creditors in a bankruptcy,
liquidation or reorganization, the holders of any senior debt will be entitled
to be paid in full in cash before we will make any payments on the outstanding
notes and notes to be issued in the exchange offer. In the event of our
bankruptcy, liquidation or dissolution, our assets would be available to pay
obligations on the outstanding notes and notes to be issued in the exchange
offer only after all payments had been made on our senior debt. We cannot assure
you that sufficient assets will remain to make any payments on the outstanding
notes and the notes to be issued in the exchange offer.
In addition, all payments on the outstanding notes and notes to be issued
in the exchange offer will be blocked in the event of a payment default on our
senior debt and may be blocked for up to 179 of 360 consecutive days in the
event of certain non-payment defaults on senior debt.
In the event of a bankruptcy, liquidation or reorganization relating to
Vlasic Foods International Inc., holders of the outstanding notes and notes to
be issued in the exchange offer will participate with trade creditors and all
other holders of Vlasic Foods International Inc.'s subordinated indebtedness in
the assets remaining after we have paid all of the senior debt. However, because
the indenture requires that amounts otherwise payable to holders of the
outstanding notes and notes to be issued in the exchange offer in a bankruptcy
or similar proceeding be paid to holders of senior debt instead, holders of the
outstanding notes and notes to be issued in the exchange offer may receive less,
ratably, than holders of trade payables in any such proceeding. In any of these
case, we may not have sufficient funds to pay all of our creditors, and holders
of outstanding notes and notes to be issued in the exchange offer may receive
less, ratably, than the holders of senior debt.
The outstanding notes and notes to be issued in the exchange offer, which
are pari passu with each other, are subordinated to $391.2 million of senior
debt outstanding under our senior credit facility as of May 2, 1999
(approximately $309.2 million, adjusted for the sale of our Swift-Amour
Argentine beef business).
13
<PAGE> 17
Approximately $69.8 million will be available for borrowing as additional senior
debt under our senior credit facility. We will be permitted to incur substantial
additional indebtedness, including senior debt, in the future under the terms of
the indenture.
THE NOTES ARE EFFECTIVELY SUBORDINATED TO THE OUTSTANDING INDEBTEDNESS OF OUR
SUBSIDIARIES
While our parent company currently owns directly all of the operating
assets of the Swanson and Vlasic businesses and our headquarters assets, other
assets are currently owned by Vlasic Foods International Inc.'s subsidiaries.
Accordingly, the outstanding notes and the notes to be issued in the exchange
offer will be effectively subordinated to the outstanding indebtedness, which
was approximately $8.0 million as of May 2, 1999, and other liabilities of
Vlasic Foods International Inc.'s subsidiaries, including trade payables. The
indenture will permit Vlasic Foods International Inc.'s subsidiaries to incur
certain additional indebtedness, will permit significant investments by Vlasic
Foods International Inc. in its subsidiaries, including Restricted Subsidiaries
(as defined in the indenture), and will not require Vlasic Foods International
Inc.'s subsidiaries to guarantee the outstanding notes and notes to be issued in
the exchange offer, except under certain circumstances. In addition, any right
of our parent company and its creditors to participate in the assets of any of
Vlasic Foods International Inc.'s subsidiaries upon bankruptcy, liquidation or
reorganization of any such subsidiary will be subject to the prior claims of the
subsidiary's creditors, including trade creditors, lessors, taxing authorities
and creditors holding guarantees, except to the extent the parent company may
itself be a creditor of such subsidiary.
As of May 2, 1999, Vlasic Foods International Inc.'s subsidiaries had
outstanding indebtedness, excluding trade payables, of approximately $8.0
million. In addition, all borrowings under the senior credit facility are
guaranteed by all of Vlasic Foods International Inc.'s domestic subsidiaries. If
any indebtedness of a subsidiary were to be accelerated, there can be no
assurance that the assets of such subsidiary would be sufficient to repay such
indebtedness or that our assets and the assets of Vlasic Foods International
Inc.'s other subsidiaries would be sufficient to repay in full our other
indebtedness, including the outstanding notes and the notes to be issued in the
exchange offer. See "Description of Senior Credit Facility."
UPON THE OCCURRENCE OF CERTAIN SPECIFIC KINDS OF CHANGE OF CONTROL EVENTS, WE
WILL BE REQUIRED TO OFFER TO REPURCHASE THE OUTSTANDING NOTES AND NOTES TO BE
ISSUED IN THE EXCHANGE OFFER
However, it is possible that we will not have sufficient funds at the time
of any change of control to make the required purchase of the outstanding notes
and notes to be issued in the exchange offer or that restrictions in our senior
credit facility will not allow such repurchase.
In particular, a change of control may cause an acceleration of the
indebtedness outstanding under the senior credit facility and other senior
indebtedness, if any, of Vlasic in which case such indebtedness would be
required to be repaid in full before redemption or repurchase of the outstanding
notes and notes to be issued in the exchange offer. See "Description of
Notes -- Repurchase at the Option of Holders -- Change of Control" and
"Description of Senior Credit Facility."
IF WE ARE NOT SUCCESSFUL IN EXECUTING OUR BUSINESS STRATEGY, THERE COULD BE A
MATERIAL ADVERSE IMPACT ON OUR BUSINESS, FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Vlasic was formed as a result of a spin-off from Campbell in March 1998.
Accordingly, you have limited historical financial information on which to base
your evaluation of our performance and investment in the outstanding notes and
notes to be issued in the exchange offer. Our portfolio of products was
contributed by Campbell. Prior to the spin-off, these products were managed
within multiple Campbell business divisions. Campbell was principally focused on
its soup, biscuit and bakery product lines which we believe resulted in the
underperformance of our brands, including our core Swanson and Vlasic brands and
a corresponding decline in market share for these brands. The turnaround of our
businesses and brands has been more difficult than we originally anticipated and
we cannot assure you we will be successful in executing our business strategy or
that our financial performance will improve. If we are not successful in
executing our business strategy,
14
<PAGE> 18
there could be a material adverse impact on our business, financial condition
and results of operations. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
THE LOSS OF KEY MANAGEMENT PERSONNEL COULD ADVERSELY AFFECT OUR OPERATIONS
We believe that our ability to successfully implement our business strategy
and operate profitably depends on the continued employment of our senior
management team, and in particular the continued active participation of Mr.
Robert F. Bernstock, President and Chief Executive Officer. If Mr. Bernstock
became unable or unwilling to continue in his present position, our business and
financial results could be adversely affected. See "Management."
OUR CONTROLLING SHAREOWNERS HAVE A SUBSTANTIAL OWNERSHIP INTEREST IN US
Certain descendants of the late Dr. John T. Dorrance, one of the founders
of Campbell, have a substantial ownership interest in Vlasic. Such interest
could have the effect of delaying or preventing a change in control of Vlasic if
these shareowners did not support the change in control. In addition, this
interest could direct the election of a majority of the members of our board of
directors and could, therefore, direct our management and policies.
WE HAVE A SIGNIFICANT RELATIONSHIP WITH CAMPBELL AND THERE IS NO ASSURANCE THAT
THIS RELATIONSHIP WILL CONTINUE
During fiscal 1998, approximately $154.8 million (11%) (approximately
$116.7 million, adjusted for the sale of our Swift-Armour Argentine beef
business) of our total sales were generated from supplying mushrooms, frozen
cooked beef and other beef products to Campbell and from manufacturing certain
frozen food service products for Campbell. Because of the completion of the sale
of the Swift-Armour Argentine beef business, our beef contract with Campbell has
been terminated. The mushroom contract expires on July 30, 2000 and the food
service contract expires on March 29, 2000. After these dates, there can be no
assurance that Campbell will continue to purchase our products in the same
volumes or on the same terms. In addition, there can be no assurance that we
will be able to attract new customers to replace Campbell if it determines not
to renew the contracts or to renew the contracts on less favorable terms. A
material decrease in the quantity of purchases or a change in the purchase terms
of sales to Campbell could have a material adverse effect on our business,
financial condition and results of operations. Such decrease may result from
several factors, including a change in consumer purchasing habits, a downturn in
the business of Campbell (which is intensely competitive), a downturn in the
business of other prospective purchasers of our products or a downturn in the
general economy.
In addition, mushrooms must be farmed in relatively large volumes in order
to achieve the efficiencies that are necessary to enable us to maintain
profitability at current or higher levels and to price our products
competitively. In the event that our cost of production increases due to lower
volumes purchased by Campbell, we may be forced to pass on this increase to
consumers. Due to the competitive nature of the industry, we may not be able to
pass on this increase and this may adversely affect our business, financial
condition and results of operations.
At the time of the spin-off from Campbell, we agreed in a tax sharing and
indemnification agreement that we would undertake certain actions or refrain
from certain actions or transactions in order to ensure that the spin-off
remains exempt from federal income taxation. In addition, we agreed to indemnify
Campbell for any actions that we may take that would cause the spin-off to be
taxable for United States federal income tax purposes or in the event that there
is a tender or other purchase offer for our stock that results in the spin-off
being taxable for United States federal income tax purposes. While we do not
believe that we have taken any actions that would cause such a determination and
we do not intend to take actions in the future that we believe will result in
such a determination, we cannot give you any assurance that our actions will not
be interpreted by United States federal tax authorities to be in breach of the
United States tax regulations or other obligations that exempt the spin-off from
tax liability. Any indemnity payment to Campbell for an
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income tax liability could have a material adverse effect on our business,
financial condition and results of operations. See "-- Use of Trademarks" and
"Relationship between Vlasic and Campbell."
INFORMATION TECHNOLOGY, SOFTWARE OR SYSTEM PROBLEMS COULD DISRUPT OUR OPERATIONS
We have established our information technology services in order to provide
that all software and systems used in our operations will operate effectively to
allow us to properly manage our business, and to operate without disruption due
to Year 2000 issues. However, there can be no assurance that we will not
encounter information technology, software or systems problems, or that entities
who are integral to our business, such as suppliers and customers, will not
encounter software and systems problems whether due to Year 2000 issues or
otherwise. There can be no assurance that software or system failures or
miscalculations causing disruptions of operations or the inability to process
transactions will not occur because of the transition from 1999 to 2000. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Year 2000."
THE FOOD PRODUCTS BUSINESS IS HIGHLY COMPETITIVE AND THERE CAN BE NO ASSURANCE
THAT WE CAN COMPETE SUCCESSFULLY WITH OTHER COMPANIES IN THE INDUSTRY
The food products business is highly competitive. Numerous brands and
products compete for shelf space and sales, with competition based on, among
other things, product quality, convenience, price, brand recognition and
loyalty, customer service, effective advertising and promotional activities and
the ability to identify and satisfy emerging consumer preferences. We compete
with a significant number of companies of varying sizes, including divisions or
subsidiaries of larger companies. A number of these competitors have broader
product lines, substantially greater financial and other resources available to
them, lower fixed costs and/or longer operating histories than Vlasic. There can
be no assurance that we can compete successfully with such other companies.
Competitive pressures or other factors could cause our products to lose market
share or result in significant price erosion, which could have a material
adverse effect on our business, financial condition and results of operations.
The terms of the food service supply agreement and the separation and
distribution agreement with Campbell prohibit us from entering certain product
lines which would directly compete with Campbell. Our Swanson trademark license
does not allow us to sell Swanson branded frozen soups, stocks or broths. This
restricts our ability to compete in certain product lines which we may otherwise
have wished to enter. See "Business" and "Relationship between Vlasic and
Campbell."
A PRODUCT LIABILITY JUDGMENT AGAINST US OR A PRODUCT RECALL COULD HAVE A
MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
We may be subject to significant liability should the consumption of any of
our products cause injury, illness or death and we may be required to recall
certain of our products in the event of contamination, product tampering,
mislabeling or damage to our products. There can be no assurance that product
liability claims will not be asserted against us or that we will not be
obligated to recall our products.
OUR SALES, NET EARNINGS AND CASH FLOWS ARE AFFECTED BY SEASONAL CYCLICALITY
DURING CERTAIN PARTS OF THE YEAR
Sales of frozen foods and mushrooms tend to be marginally higher during the
winter months. Sales of pickles, relishes and barbecue sauce tend to be higher
in the summer months. The majority of pickles are packed during a season
extending from May through September. As a result, we tend to have higher sales
in the fourth quarter of the fiscal year and our inventory levels tend to be
higher in the first quarter of the fiscal year which makes our working capital
requirements significantly higher in the first quarter, requiring us to draw
more heavily on the revolving credit commitments under our senior credit
facility.
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FLUCTUATION OF AGRICULTURAL PRICES COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR
BUSINESS
We use raw materials or grow agricultural produce in our three business
segments:
- The primary raw materials used in our frozen food segment are readily
available from numerous suppliers. The prices of these raw materials are
affected by, among other things, changes in crop size and
government-sponsored agricultural programs. Changes in the price level of
these raw materials may have a corresponding impact on finished product
costs and gross margins. Our ability to pass through increases in costs
of raw materials to our customers is dependent upon competitive
conditions and pricing methodologies employed in the various markets in
which we compete. If we could not pass on these increases, this could
have a material adverse effect on our business, financial condition and
results of operations.
- Our grocery products segment relies primarily on cucumbers and other
produce supplied by third party growers. We buy from a variety of growers
and alternate sources of supply are readily available. However the supply
and price is subject to market conditions and is influenced by numerous
factors beyond our control such as general economic conditions, natural
disasters and weather conditions, general growing conditions, insects,
plant diseases and fungi, competition and governmental programs and
regulations.
- In our agricultural products segment we grow fresh mushrooms. The success
of our mushroom farms is dependent upon factors beyond our control such
as general growing conditions, insects, plant diseases and general
economic conditions. Any increase in the cost of production or raw
materials could have a material adverse effect on our operating profit
and margins unless and until the increased cost can be passed along to
the customer. However, competitive pressures could limit our ability to
raise prices in response to increased costs and, accordingly, increases
in the price of raw materials or production cost could have a material
adverse effect on our business, financial condition and results of
operations. See "Business -- Ingredients."
THERE CAN BE NO ASSURANCE THAT THE ACTIONS TAKEN BY US TO ESTABLISH AND PROTECT
OUR TRADEMARKS AND OTHER PROPRIETARY RIGHTS WILL BE ADEQUATE TO PREVENT
IMITATION OF OUR PRODUCTS BY OTHERS OR TO PREVENT OTHERS FROM SEEKING TO BLOCK
SALES OF OUR PRODUCTS AS A VIOLATION OF THEIR TRADEMARKS AND PROPRIETARY RIGHTS
We believe that our trademarks and other proprietary rights are important
to our success and our competitive position in the market. Moreover, no
assurance can be given that others will not assert rights in, or ownership of,
our trademarks and other proprietary rights or that we will be able to
successfully resolve such conflicts.
We have been granted a perpetual license by Campbell to use the Swanson
trademark and related logos, symbols and marks on frozen food products. We are
prohibited from using the trademarks on frozen soups, stocks or broths. We are
only entitled to use the trademarks in the same manner as they were used by
Campbell prior to the spin-off. In addition, we must receive the prior written
approval of Campbell, which may not be unreasonably withheld, prior to any
change in the labeling, advertising material and other promotional material
bearing the Swanson trademark. See "Business -- Trademarks and Patents" and
"Relationship between Vlasic and Campbell."
OUR FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS MAY BE ADVERSELY AFFECTED BY
GOVERNMENT REGULATION OF OUR BUSINESS
Our operations are subject to extensive regulation by the United States
Food and Drug Administration ("FDA"), the United States Department of
Agriculture ("USDA") and other national, state and local authorities regarding
the processing, packaging, storage, distribution, advertising and labeling of
our products and environmental compliance. We are subject to numerous
regulations, including regulations promulgated under the Federal Food, Drug and
Cosmetic Act, the Nutrition Labeling and Education Act, the Federal Trade
Commission Act and the Occupational Safety and Health Act, each as amended. We
seek to comply with applicable regulations through a combination of employing
internal personnel to ensure quality
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<PAGE> 21
assurance compliance (for example, assuring that food packages contain only
ingredients as specified on the package labeling) and contracting with
third-party laboratories that conduct analyses of products for the nutritional
labeling requirements (for example, determining the percent or amount of
specific ingredients and other components of a food product).
Our frozen food manufacturing facilities are continuously inspected by the
USDA and all of our manufacturing facilities and products are subject to
periodic inspection by federal, state and local authorities. There can be no
assurance, however, that we are in compliance with such laws and regulations or
that we will be able to comply with any future laws and regulations. Failure by
us to comply with applicable laws and regulations could subject us to civil
remedies, including fines, injunctions, recalls, or seizures, as well as
potential criminal sanctions, which could have a material adverse effect on our
business, financial condition and results of operations. See
"Business -- Certain Legal and Regulatory Matters" and "Business --
Environmental Matters."
OUR INTERNATIONAL OPERATIONS CREATE CERTAIN RISKS THAT MAY AFFECT OUR BUSINESS,
FINANCIAL CONDITION OR RESULTS OF OPERATIONS
Companies that operate in foreign countries are exposed to additional
risks, particularly risks of fluctuating currency exchange rates. Fluctuations
in foreign currency exchange rates may affect our results of operations and the
value of our foreign assets, which in turn may adversely affect reported
earnings and, accordingly, the comparison of period to period results of
operations. Changes in currency exchange rates may affect the relative prices at
which we and foreign competitors sell products in the same market. While we may
engage in foreign currency hedging transactions which moderate the overall
effect of currency exchange rate fluctuations, we expect that these fluctuations
will continue and there can be no assurance that we would be successful in any
such hedging activities. Other risks 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 business, financial condition or
results of operations.
THERE IS NO PUBLIC MARKET FOR THE OUTSTANDING NOTES OR THE NOTES TO BE ISSUED IN
THE EXCHANGE OFFER
While the outstanding notes are eligible for trading in PORTAL, the Private
Offering, Resale and Trading through Automated Linkages Market of the National
Association of Securities Dealers, Inc., a screen-based automated market for
trading securities for qualified institutional buyers, there is no public market
for the notes to be issued in the exchange offer. The initial purchasers of the
outstanding notes have informed us that they intend to make a market in the
notes to be issued in the exchange offer, but they may cease their market-making
at any time.
We do not intend to apply for a listing of any of the notes on any
securities exchange. We do not know if an active public market will develop for
the notes or, if developed, will continue. If an active market is not developed
or maintained, the market price and the liquidity of the notes may be adversely
affected.
In addition, the liquidity and the market price of the notes to be offered
in the exchange offer may be adversely affected by changes in the overall market
for high yield securities and by changes in our financial performance or
prospects, or in the prospects for companies in our industry. As a result, you
cannot be sure that an active trading market will develop for these notes.
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<PAGE> 22
FORWARD-LOOKING INFORMATION
This prospectus includes forward-looking statements regarding, among other
things, our plans, strategies and prospects, both business and financial.
Although we believe that our plans, intentions and expectations reflected in or
suggested by these forward-looking statements are reasonable, we can give no
assurance that we will achieve or realize these plans, intentions or
expectations. Forward-looking statements are inherently subject to risks,
uncertainties and assumptions. Important factors that could cause actual results
to differ materially from the forward-looking statements we make in this
prospectus are set forth under the caption "Risk Factors" and elsewhere in this
prospectus and include, but are not limited to:
- The impact of strong competitive response to our efforts and actions.
- Market risks associated with financial instruments that may vary due to
the impact of unforeseen economic changes, such as currency exchange
rates, inflation rates and recessionary trends.
- Changes in prices of raw materials and other inputs.
- Compliance with the covenants and the terms of our senior credit
facility, the outstanding notes and the notes to be issued in the
exchange offer.
- Our ability to maintain capital expenditures within the forecasted
limits.
- The impact of the Year 2000 issues associated with our business and
information systems and embedded technology as well as the information
technology of our vendors, suppliers, service providers and customers.
- Implementation and functioning of information technology systems.
- Inherent risks in the marketplace associated with new product
introductions, including uncertainties about trade and consumer
acceptance.
- Our ability to achieve the forecasted savings related to restructuring
programs.
- Global business and economic conditions.
- Campbell Soup Company's future requirements for mushrooms and foodservice
products.
All forward-looking statements attributable to us or persons acting on our
behalf are expressly qualified in their entirety by those cautionary statements.
We will not update these forward-looking statements even though our situation
will change in the future.
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USE OF PROCEEDS
We will not receive any proceeds from the exchange offer. All outstanding
notes that are tendered in the exchange offer will be retired and cancelled. The
net proceeds that we received from the issuance of the outstanding notes were
approximately $189.0 million, after we deducted discounts and expenses. We used
the net proceeds to repay a portion of our existing indebtedness under the
senior credit facility. The indebtedness under the senior credit facility (of
which $580.2 million was outstanding at May 2, 1999) bears interest as
determined by various interest rate setting mechanisms and has a final maturity
date of February 20, 2003. We most frequently use a eurodollar borrowing
mechanism, which is LIBOR plus a credit margin. The credit margin is a function
of our financial performance. In accordance with the senior credit facility, the
net proceeds of the issuance of the outstanding notes were used to repay a
portion of the outstanding revolving loans under the senior credit facility and
the revolving credit commitments under the senior credit facility were
permanently reduced by such amount. However, the unused amount under the
revolving credit commitments was not affected and will not be affected by the
issuance of the exchange notes. See "Description of Senior Credit Facility."
ACCOUNTING TREATMENT
The notes to be issued in the exchange offer will be recorded at the same
carrying value as the outstanding notes as reflected in our accounting records
on the date of exchange. Accordingly, no gain or loss for accounting purposes
will be recognized by us. The expenses of the exchange offer and the unamortized
expenses related to the issuance of the outstanding notes will be amortized over
the term of the outstanding notes and notes to be issued in the exchange offer.
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<PAGE> 24
CAPITALIZATION
The following table sets forth our consolidated capitalization as of May 2,
1999 on an actual basis, on a pro forma basis after giving effect to the sale of
our Swift-Armour Argentine beef business, and on a pro forma as adjusted basis
to show the issuance of the outstanding notes and application of the net
proceeds from the issuance of the outstanding notes as described under "Use of
Proceeds" as if the issuance occurred on May 2, 1999. This table should be read
in conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and our historical consolidated financial statements
and the notes thereto contained elsewhere in this prospectus.
<TABLE>
<CAPTION>
AS OF MAY 2, 1999
----------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
------ --------- -----------
(IN MILLIONS)
<S> <C> <C> <C>
Senior credit facility...................................... $580.2 $498.2 $309.2(1)
10 1/4% Senior Subordinated Notes due 2009.................. -- -- 200.0
Other debt.................................................. 8.0 0.5 0.5
------ ------ ------
Total debt........................................ 588.2 498.7 509.7
------ ------ ------
Total shareowners' equity (deficit)......................... (17.9) (17.9) (17.9)
------ ------ ------
Total capitalization.............................. $570.3 $480.8 $491.8
====== ====== ======
</TABLE>
- ---------------
(1) Pro Forma As Adjusted borrowings under the senior credit facility consisted
of $209.2 million under the revolving credit commitments and $100.0 million
term loan. As of May 2, 1999, we had $69.8 million of additional borrowing
capacity under the revolving credit commitments.
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THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
When we sold the outstanding notes on June 29, 1999, we entered into an
exchange and registration rights agreement with the initial purchasers of those
notes. Under the exchange and registration rights agreement, we agreed to file a
registration statement regarding the exchange of the outstanding notes for notes
which are registered under the Securities Act. We also agreed to use our
reasonable best efforts to cause the registration statement to become effective
with the SEC, and to conduct this exchange offer after the registration
statement is declared effective. We will use our best efforts to keep this
registration statement effective at least until the exchange offer is completed.
The exchange and registration rights agreement provides that we will be required
to pay liquidated damages to the holders of the outstanding notes if:
(1) the registration statement is not filed by September 27, 1999;
(2) the registration statement is not declared effective by December 26,
1999; or
(3) the exchange offer has not been completed by February 28, 2000 or 45
business days after the registration statement becomes effective, whichever is
earlier.
A copy of the exchange and registration rights agreement is filed as an exhibit
to the registration statement of which this prospectus is a part.
TERMS OF THE EXCHANGE OFFER
This prospectus and the accompanying letter of transmittal together
constitute the exchange offer. Upon the terms and subject to the conditions set
forth in this prospectus and in the letter of transmittal, we will accept for
exchange outstanding notes which are properly tendered on or before the
expiration date and are not withdrawn as permitted below. The expiration date
for this exchange offer is midnight, New York City time, on ,
1999, or such later date and time to which we, in our sole discretion, extend
the exchange offer.
The form and terms of the notes being issued in the exchange offer are the
same as the form and terms of the outstanding notes, except that:
(1) the notes being issued in the exchange offer will have been registered
under the Securities Act;
(2) the notes issued in the exchange offer will not bear the restrictive
legends restricting their transfer under the Securities Act; and
(3) the notes being issued in the exchange offer will not contain the
registration rights and liquidated damages provisions contained in the
outstanding notes.
Outstanding notes tendered in the exchange offer must be in denominations
of the principal amount of $1,000 and any integral multiple thereof.
We expressly reserve the right, in our sole discretion:
(1) to extend the expiration date;
(2) to delay accepting any outstanding notes;
(3) if any of the conditions set forth below under "-- Conditions to the
Exchange Offer" have not been satisfied, to terminate the exchange
offer and not accept any notes for exchange; or
(4) to amend the exchange offer in any manner.
We will give oral or written notice of any extension, delay,
non-acceptance, termination or amendment as promptly as practicable by a public
announcement, and in the case of an extension, no later than 9:00 a.m., New York
City time, on the next business day after the previously scheduled expiration
date.
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During an extension, all outstanding notes previously tendered will remain
subject to the exchange offer and may be accepted for exchange by us. Any
outstanding notes not accepted for exchange for any reason will be returned
without cost to the holder that tendered them as promptly as practicable after
the expiration or termination of the exchange offer.
HOW TO TENDER NOTES FOR EXCHANGE
When the holder of outstanding notes tenders, and we accept, notes for
exchange, a binding agreement between us and the tendering holder is created,
subject to the terms and conditions set forth in this prospectus and the
accompanying letter of transmittal. Except as set forth below, a holder of
outstanding notes who wishes to tender notes for exchange must do so on or prior
to the expiration date:
(1) transmit a properly completed and duly executed letter of transmittal,
including all other documents required by such letter of transmittal,
to The Bank of New York, the "exchange agent", at the address set forth
below under the heading "Exchange Agent"; or
(2) if notes are tendered pursuant to the book-entry procedures set forth
below, the tendering holder must transmit an agent's message to the
exchange agent at the address set forth below under the heading
"Exchange Agent."
In addition, either:
(1) the exchange agent must receive the certificates for the outstanding
notes and the letter of transmittal;
(2) the exchange agent must receive, prior to the expiration date, a timely
confirmation of the book-entry transfer of the notes being tendered
into the exchange agent's account at DTC along with the letter of
transmittal or an agent's message; or
(3) the holder must comply with the guaranteed delivery procedures
described below.
The term "agent's message" means a message, transmitted to DTC and received by
the exchange agent and forming a part of a book-entry transfer, which states
that DTC has received an express acknowledgment that the tendering holder agrees
to be bound by the letter of transmittal and that we may enforce the letter of
transmittal against such holder.
THE METHOD OF DELIVERY OF THE OUTSTANDING NOTES, THE LETTERS OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDERS. IF SUCH
DELIVERY IS BY MAIL, WE RECOMMEND REGISTERED MAIL, PROPERLY INSURED, WITH RETURN
RECEIPT REQUESTED. IN ALL CASES, YOU SHOULD ALLOW SUFFICIENT TIME TO ASSURE
TIMELY DELIVERY. NO LETTERS OF TRANSMITTAL OR NOTES SHOULD BE SENT DIRECTLY TO
US.
Signatures on a letter of transmittal or a notice of withdrawal, as the
case may be, must be guaranteed unless the notes surrendered for exchange are
tendered:
(1) by a holder of outstanding notes who has not completed the box entitled
"Special Issuance Instructions" or "Special Delivery Instructions" on
the letter of transmittal; or
(2) for the account of an eligible institution.
An "eligible institution" is a firm which is a member of a registered national
securities exchange or a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
If signatures on a letter of transmittal or notice of withdrawal are
required to be guaranteed, the guarantor must be an eligible institution. If
notes are registered in the name of a person other than the signer of the letter
of transmittal, the notes surrendered for exchange must be endorsed by, or
accompanied by a written instrument or instruments of transfer or exchange, in
satisfactory form as determined by us in our sole discretion, duly executed by
the registered holder with the holder's signature guaranteed by an eligible
institution.
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We will determine all questions as to the validity, form, eligibility and
acceptance of notes tendered for exchange in our sole discretion, including
questions as to time of receipt. Our determination will be final and binding. We
reserve the absolute right to:
(1) reject any and all tenders of any note improperly tendered;
(2) refuse to accept any note if, in our judgment or the judgment of our
counsel, acceptance of the note may be deemed unlawful; and
(3) waive any defects or irregularities or conditions of the exchange offer
as to any particular note either before or after the expiration date,
including the right to waive the ineligibility of any holder who seeks
to tender notes in the exchange offer.
Our interpretation of the terms and conditions of the exchange offer as to any
particular notes either before or after the expiration date, including the
letter of transmittal and the instructions to it, will be final and binding on
all parties. Holders must cure any defects and irregularities in connection with
tenders of notes for exchange within such reasonable period of time as we will
determine, unless we waive such defects or irregularities. Neither we, the
exchange agent nor any other person shall be under any duty to give notification
of any defect or irregularity with respect to any tender of notes for exchange,
nor shall any of us incur any liability for failure to give such notification.
If a person or persons other than the registered holder or holders of the
outstanding notes tendered for exchange signs the letter of transmittal, the
tendered notes must be endorsed or accompanied by appropriate powers of
attorney, in either case signed exactly as the name or names of the registered
holder or holders that appear on the outstanding notes.
If trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity sign the letter of transmittal or any notes or any power of attorney,
such persons should so indicate when signing, and you must submit proper
evidence satisfactory to us of such person's authority to so act unless we waive
this requirement.
By tendering, each holder will represent to us that, among other things,
that the person acquiring notes in the exchange offer is obtaining them in the
ordinary course of its business, whether or not such person is the holder, and
that neither the holder nor such other person has any arrangement or
understanding with any person to participate in the distribution of the notes
issued in the exchange offer. If any holder or any such other person is an
"affiliate," as defined under Rule 405 of the Securities Act, of Vlasic, or is
engaged in or intends to engage in or has an arrangement or understanding with
any person to participate in a distribution of such notes to be acquired in the
exchange offer, such holder or any such other person:
(1) may not rely on the applicable interpretations of the staff of the SEC;
and
(2) must comply with the registration and prospectus delivery requirements
of the Securities Act in connection with any resale transaction.
Each broker-dealer who acquired its outstanding notes as a result of
market-making activities or other trading activities and thereafter receives
notes issued for its own account in the exchange offer, must acknowledge that it
will deliver a prospectus in connection with any resale of such notes issued in
the exchange offer. The letter of transmittal states that by so acknowledging
and by delivering a prospectus, a broker-dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act. See "Plan of
Distribution" for a discussion of the exchange and resale obligations of
broker-dealers in connection with the exchange offer.
ACCEPTANCE OF OUTSTANDING NOTES FOR EXCHANGE; DELIVERY OF NOTES ISSUED IN THE
EXCHANGE OFFER
Upon satisfaction or waiver of all of the conditions to the exchange offer,
we will accept, promptly after the expiration date, all outstanding notes
properly tendered and will issue notes registered under the Securities Act. For
purposes of the exchange offer, we will be deemed to have accepted properly
tendered outstanding notes for exchange when, as and if we have given oral or
written notice to the exchange agent,
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<PAGE> 28
with written confirmation of any oral notice to be given promptly thereafter.
See "-- Conditions to the Exchange Offer" for a discussion of the conditions
that must be satisfied before we accept any notes for exchange.
For each outstanding note accepted for exchange, the holder will receive a
note registered under the Securities Act having a principal amount equal to that
of the surrendered outstanding note. Accordingly, registered holders of notes
issued in the exchange offer on the relevant record date for the first interest
payment date following the consummation of the exchange offer will receive
interest accruing from the most recent date to which interest has been paid or,
if no interest has been paid on the outstanding notes, from June 29, 1999.
Outstanding notes that we accept for exchange will cease to accrue interest from
and after the date of consummation of the exchange offer. Under the exchange and
registration rights agreement, we may be required to make additional payments in
the form of liquidated damages to the holders of the outstanding notes under
circumstances relating to the timing of the exchange offer.
In all cases, we will issue notes in the exchange offer for outstanding
notes that are accepted for exchange only after the exchange agent timely
receives:
(1) certificates for such outstanding notes or a timely book-entry
confirmation of such outstanding notes into the exchange agent's
account at DTC;
(2) a properly completed and duly executed letter of transmittal or an
agent's message; and
(3) all other required documents.
If for any reason set forth in the terms and conditions of the exchange
offer we do not accept any tendered outstanding notes, or if a holder submits
outstanding notes for a greater principal amount than the holder desires to
exchange, we will return such unaccepted or non-exchanged notes without cost to
the tendering holder. In the case of notes tendered by book-entry transfer into
the exchange agent's account at DTC, such non-exchanged notes will be credited
to an account maintained with DTC. We will return the notes or have them
credited to DTC account as promptly as practicable after the expiration or
termination of the exchange offer.
BOOK ENTRY TRANSFERS
The exchange agent will make a request to establish an account with respect
to the outstanding notes at DTC for purposes of the exchange offer within 2
business days after the date of this prospectus. Any financial institution that
is a participant in DTC's systems must make book-entry delivery of outstanding
notes by causing DTC to transfer such outstanding notes into the exchange
agent's account at DTC in accordance with DTC's procedures for transfer. Such
participant should transmit its acceptance to DTC on or prior to the expiration
date or comply with the guaranteed delivery procedures described below. DTC will
verify such acceptance, execute a book-entry transfer of the tendered
outstanding notes into the exchange agent's account at DTC and then send to the
exchange agent confirmation of such book-entry transfer. The confirmation of
such book-entry transfer will include an agent's message confirming that DTC has
received an express acknowledgment from such participant that such participant
has received and agrees to be bound by the letter of transmittal and that we may
enforce the letter of transmittal against such participant. Delivery of notes
issued in the exchange offer may be effected through book-entry transfer at DTC.
However, the letter of transmittal or facsimile thereof or an agent's message,
with any required signature guarantees and any other required documents, must:
(1) be transmitted to and received by the exchange agent at the address set
forth below under "-- Exchange Agent" on or prior to the expiration
date; or
(2) comply with the guaranteed delivery procedures described below.
GUARANTEED DELIVERY PROCEDURES
If a holder of outstanding notes desires to tender such notes and the
holder's notes are not immediately available, or time will not permit such
holder's notes or other required documents to reach the exchange agent
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before the expiration date, or the procedure for book-entry transfer cannot be
completed on a timely basis, a tender may be effected if:
(1) the holder tenders the outstanding notes through an eligible
institution;
(2) prior to the expiration date, the exchange agent receives from such
eligible institution a properly completed and duly executed notice of
guaranteed delivery, substantially in the form we have provided, by
telegram, telex, facsimile transmission, mail or hand delivery, setting
forth the name and address of the holder of the outstanding notes being
tendered and the amount of the outstanding notes being tendered. The
notice of guaranteed delivery shall state that the tender is being made
and guarantee that within 3 New York Stock Exchange trading days after
the date of execution of the notice of guaranteed delivery, the
certificates for all physically tendered notes, in proper form for
transfer, or a book-entry confirmation, as the case may be, together
with a properly completed and duly executed letter of transmittal or
agent's message with any required signature guarantees and any other
documents required by the letter of transmittal will be deposited by
the eligible institution with the Exchange Agent; and
(3) the exchange agent receives the certificates for all physically
tendered outstanding notes, in proper form for transfer, or a
book-entry confirmation, as the case may be, together with a properly
completed and duly executed letter of transmittal or agent's message
with any required signature guarantees and any other documents required
by the letter of transmittal, within 3 New York Stock Exchange trading
days after the date of execution of the notice of guaranteed delivery.
WITHDRAWAL RIGHTS
You may withdraw tenders of your outstanding notes at any time prior to
midnight, New York City time, on the expiration date.
For a withdrawal to be effective, you must send a written notice of
withdrawal to the exchange agent at one of the addresses set forth below under
"-- Exchange Agent." Any such notice of withdrawal must:
(1) specify the name of the person having tendered the outstanding notes to
be withdrawn;
(2) identify the outstanding notes to be withdrawn, including the principal
amount of such outstanding notes; and
(3) where certificates for outstanding notes are transmitted, specify the
name in which outstanding notes are registered, if different from that
of the withdrawing holder.
If certificates for outstanding notes have been delivered or otherwise
identified to the exchange agent, then, prior to the release of such
certificates the withdrawing holder must also submit the serial numbers of the
particular certificates to be withdrawn and signed notice of withdrawal with
signatures guaranteed by an eligible institution unless such holder is an
eligible institution. If notes have been tendered pursuant to the procedure for
book-entry transfer described above, any notice of withdrawal must specify the
name and number of the account at DTC to be credited with the withdrawn notes
and otherwise comply with the procedures of such facility. We will determine all
questions as to the validity, form and eligibility of such notices, including
questions as to time of receipt; our determination will be final and binding on
all parties. Any tendered notes so withdrawn will be deemed not to have been
validly tendered for exchange for purposes of the exchange offer. Any notes
which have been tendered for exchange but which are not exchanged for any reason
will be returned to the holder thereof without cost to such holder. In the case
of notes tendered by book-entry transfer into the exchange agent's account at
DTC, the notes withdrawn will be credited to an account maintained with DTC for
the outstanding notes. The notes will be returned or credited to DTC account as
soon as practicable after withdrawal, rejection of tender or termination of the
exchange offer. Properly withdrawn notes may be re-tendered by following one of
the procedures described under "-- How to Tender Notes for Exchange" above at
any time on or prior to midnight, New York City time, on the expiration date.
26
<PAGE> 30
CONDITIONS TO THE EXCHANGE OFFER
We are not required to accept for exchange, or to issue notes in the
exchange offer for, any outstanding notes. We may terminate or amend the
exchange offer, if at any time before the acceptance of such outstanding notes
for exchange:
(1) any federal law, statute, rule or regulation shall have been adopted or
enacted which, in our judgment, would reasonably be expected to impair
our ability to proceed with the exchange offer;
(2) any stop order shall be threatened or in effect with respect to the
registration statement of which this prospectus constitutes a part or
the qualification of the indenture under the Trust Indenture Act of
1939, as amended; or
(3) there shall occur a change in the current interpretation by staff of
the SEC which permits the notes to be issued in the exchange offer in
exchange for the outstanding notes to be offered for resale, resold and
otherwise transferred by such holders, other than broker-dealers and
any such holder which is an "affiliate" of Vlasic within the meaning of
Rule 405 under the Securities Act, without compliance with the
registration and prospectus delivery provisions of the Securities Act,
provided that such notes acquired in the exchange offer are acquired in
the ordinary course of such holder's business and such holder has no
arrangement or understanding with any person to participate in the
distribution of such notes to be issued in the exchange offer.
The preceding conditions are for our sole benefit and we may assert them
regardless of the circumstances giving rise to any such condition. We may waive
the preceding conditions in whole or in part at any time and from time to time
in our sole discretion. If we do so, the exchange offer will remain open for at
least 3 business days following any waiver of the preceding conditions. Our
failure at any time to exercise the foregoing rights shall not be deemed a
waiver of any such right and each such right shall be deemed an ongoing right
which we may assert at any time and from time to time.
THE EXCHANGE AGENT
The Bank of New York has been appointed as our exchange agent for the
exchange offer. All executed letters of transmittal should be directed to our
exchange agent at the address set forth below. Questions and requests for
assistance, requests for additional copies of this prospectus or of the letter
of transmittal and requests for notices of guaranteed delivery should be
directed to the exchange agent addressed as follows:
Main Delivery To:
The Bank of New York, as Exchange Agent
<TABLE>
<S> <C>
By mail, hand or overnight courier to: By Facsimile (for eligible institutions
only):
The Bank of New York (212) 815-6339
101 Barclay Street 7 East
New York, New York 10286 Confirm by telephone:
Attn: -- Confidential
(212) 815-6337
</TABLE>
DELIVERY OF THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF SUCH LETTER OF TRANSMITTAL VIA FACSIMILE OTHER THAN AS
SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY OF SUCH LETTER OF
TRANSMITTAL.
FEES AND EXPENSES
We will not make any payment to brokers, dealers, or others soliciting
acceptance of the exchange offer except for reimbursement of mailing expenses.
The estimated cash expenses to be incurred in connection with the exchange
offer will be paid by us and are estimated in the aggregate to be approximately
$0.5 million.
27
<PAGE> 31
TRANSFER TAXES
Holders who tender their outstanding notes for exchange will not be
obligated to pay any transfer taxes in connection with the exchange. If,
however, notes issued in the exchange offer are to be delivered to, or are to be
issued in the name of, any person other than the holder of the notes tendered,
or if a transfer tax is imposed for any reason other than the exchange of
outstanding notes in connection with the exchange offer, then the holder must
pay any such transfer taxes, whether imposed on the registered holder or on any
other person. If satisfactory evidence of payment of, or exemption from, such
taxes is not submitted with the letter of transmittal, the amount of such
transfer taxes will be billed directly to the tendering holder.
CONSEQUENCES OF FAILURE TO EXCHANGE OUTSTANDING NOTES
Holders who desire to tender their outstanding notes in exchange for notes
registered under the Securities Act should allow sufficient time to ensure
timely delivery. Neither the exchange agent nor Vlasic is under any duty to give
notification of defects or irregularities with respect to the tenders of notes
for exchange.
Outstanding notes that are not tendered or are tendered but not accepted
will, following the consummation of the exchange offer, continue to be subject
to the provisions in the indenture regarding the transfer and exchange of the
outstanding notes and the existing restrictions on transfer set forth in the
legend on the outstanding notes and in the offering circular dated June 29,
1999, relating to the outstanding notes. Except in limited circumstances with
respect to specific types of holders of outstanding notes, we will have no
further obligation to provide for the registration under the Securities Act of
such outstanding notes. In general, outstanding notes, unless registered under
the Securities Act, may not be offered or sold except pursuant to an exemption
from, or in a transaction not subject to, the Securities Act and applicable
state securities laws. We do not currently anticipate that we will take any
action to register the outstanding notes under the Securities Act or under any
state securities laws.
Upon completion of the exchange offer, holders of the outstanding notes
will not be entitled to any further registration rights under the exchange and
registration rights agreement, except under limited circumstances.
Holders of the notes issued in the exchange offer and any outstanding notes
which remain outstanding after consummation of the exchange offer will vote
together as a single class for purposes of determining whether holders of the
requisite percentage of the class have taken certain actions or exercised
certain rights under the indenture.
CONSEQUENCES OF EXCHANGING OUTSTANDING NOTES
Based on interpretations of the staff of the SEC, as set forth in no-action
letters to third parties, we believe that the notes issued in the exchange offer
may be offered for resale, resold or otherwise transferred by holders of such
notes, other than by any holder which is an "affiliate" of Vlasic within the
meaning of Rule 405 under the Securities Act. Such notes may be offered for
resale, resold or otherwise transferred without compliance with the registration
and prospectus delivery provisions of the Securities Act, if:
(1) such notes issued in the exchange offer are acquired in the ordinary
course of such holder's business; and
(2) such holders, other than broker-dealers, have no arrangement or
understanding with any person to participate in the distribution of the
notes to be issued in the exchange offer.
However, the SEC has not considered our exchange offer in the context of a
no-action letter and we cannot guarantee that the staff of the SEC would make a
similar determination with respect to our exchange offer as in such other
circumstances.
28
<PAGE> 32
Each holder, other than a broker-dealer, must furnish a written
representation, at our request, that:
(1) it is not an affiliate of Vlasic;
(2) it is not engaged in, and does not intend to engage in, a distribution
of the notes issued in the exchange offer and has no arrangement or
understanding to participate in a distribution of notes issued in the
exchange offer; and
(3) it is acquiring the notes issued in the exchange offer in the ordinary
course of its business.
Each broker-dealer that receives notes issued in the exchange offer for its
own account in exchange for outstanding notes must acknowledge that such
outstanding notes were acquired by such broker-dealer as a result of
market-making or other trading activities and that it will deliver a prospectus
in connection with any resale of such notes issued in the exchange offer. See
"Plan of Distribution" for a discussion of the exchange and resale obligations
of broker-dealers in connection with the exchange offer.
In addition, to comply with state securities laws of certain jurisdictions,
the notes issued in the exchange offer may not be offered or sold in any state
unless they have been registered or qualified for sale in such state or an
exemption from registration or qualification is available and complied with by
the holders selling the notes. We have agreed in the exchange and registration
rights agreement that, prior to any public offering of transfer restricted
securities, we will register or qualify the transfer restricted securities for
offer or sale under the securities laws of any jurisdiction requested by a
holder. Unless a holder requests, we currently do not intend to register or
qualify the sale of the notes issued in the exchange offer in any state where an
exemption from registration or qualification is required and not available.
"Transfer restricted securities" means each outstanding note until:
(1) the date on which an outstanding note has been exchanged by a person
other than a broker-dealer for a note in the exchange offer;
(2) following the exchange by a broker-dealer in the exchange offer of an
outstanding note for a note issued in the exchange offer, the date on
which the note issued in the exchange offer is sold to a purchaser who
receives from such broker-dealer on or prior to the date of such sale a
copy of this prospectus;
(3) the date on which an outstanding note has been effectively registered
under the Securities Act and disposed of in accordance with a shelf
registration statement that we file in accordance with the exchange and
registration rights agreement; or
(4) the date on which an outstanding note is distributed to the public in a
transaction under Rule 144 of the Securities Act.
29
<PAGE> 33
SELECTED HISTORICAL FINANCIAL INFORMATION
The following table sets forth our selected historical financial
information and other financial data. The Summary of Operations Data set forth
below for each of the years ended August 2, 1998, August 3, 1997, July 28, 1996
and July 30, 1995, and the Balance Sheet Data at August 2, 1998, August 3, 1997
and July 28, 1996 have been derived from our historical financial statements
audited by PricewaterhouseCoopers LLP, independent accountants. The Summary of
Operations Data for the nine months ended May 2, 1999 and May 3, 1998 and the
year ended July 31, 1994 and the Balance Sheet Data at May 2, 1999, May 3, 1998,
July 30, 1995 and July 31, 1994 are derived from our unaudited financial
statements which, in our opinion, include all adjustments necessary for a fair
presentation. Such historical data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and our financial statements and notes thereto included elsewhere in
this prospectus. Our historical financial statements for periods ended prior to
the date of the spin-off, March 30, 1998, present our combined historical
financial position, results of operations and cash flows of the businesses
contributed by Campbell. These results may not necessarily be indicative of the
results of operations that would have occurred if we had operated as an
independent company prior to the spin-off. Per share data for the years prior to
fiscal 1998 has not been presented because we were not a publicly held company
for those periods.
<TABLE>
<CAPTION>
NINE MONTHS ENDED FISCAL YEAR ENDED
---------------------- -------------------------------------------------------
MAY 2, MAY 3, AUGUST 2, AUGUST 3, JULY 28, JULY 30, JULY 31,
1999 1998 1998 1997 1996 1995 1994
------ ------ --------- --------- -------- -------- --------
(DOLLARS IN MILLIONS EXCEPT FOR PER SHARE AMOUNTS AND RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS DATA
Net sales..................................... $1,004.3 $1,043.9 $1,357.3 $1,508.3 $1,499.0 $1,504.3 $1,320.6
Cost and expenses
Cost of products sold........................ 707.9 750.7 978.0 1,048.4 1,053.3 1,074.3 951.6
Marketing and selling expenses............... 175.9 170.8 245.1 266.5 256.7 258.2 227.8
Administrative expenses...................... 49.0 46.0 64.1 53.1 54.5 54.5 46.9
Research and development expenses............ 5.9 5.8 7.9 8.6 8.1 8.8 10.7
Other (income) expenses...................... 0.8 (0.2) (2.9) 2.5 0.2 -- 4.3
Special items................................ 136.6 28.1 42.5 12.6 37.2 -- --
-------- -------- -------- -------- -------- -------- --------
Total costs and expenses................... 1,076.1 1,001.2 1,334.7 1,391.7 1,410.0 1,395.8 1,241.3
-------- -------- -------- -------- -------- -------- --------
Earnings (loss) before interest and taxes..... (71.8) 42.7 22.6 116.6 89.0 108.5 79.3
Interest expense............................. 32.7 4.3 13.4 1.6 1.1 2.0 1.3
Interest income.............................. 0.5 0.3 0.4 0.6 0.3 0.2 0.7
-------- -------- -------- -------- -------- -------- --------
Earnings (loss) before taxes.................. (104.0) 38.7 9.6 115.6 88.2 106.7 78.7
Taxes on earnings............................. 19.7 20.4 15.4 37.5 27.3 35.7 25.4
-------- -------- -------- -------- -------- -------- --------
Earnings (loss) before cumulative effect of
accounting change............................ (123.7) 18.3 (5.8) 78.1 60.9 71.0 53.3
Cumulative effect of accounting change........ -- (0.6) (0.6) -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Net earnings (loss)........................... $ (123.7) $ 17.7 $ (6.4) $ 78.1 $ 60.9 $ 71.0 $ 53.3
======== ======== ======== ======== ======== ======== ========
Earnings (loss) per share basic............... $ (2.72) $ 0.39 $ (0.14)
Weighted average shares
outstanding -- basic......................... 45.5 45.5 45.5
Earnings (loss) per share assuming dilution... $ (2.72)(3) $ 0.39 $ (0.14)(3)
Weighted average shares
outstanding -- assuming dilution............. 45.5 46.0 45.5
BALANCE SHEET DATA (END OF PERIOD)
Cash and cash equivalents..................... $ 26.9 $ 13.6 $ 16.3 $ 9.4 $ 5.6 $ 1.8 $ 5.0
Working capital............................... 190.9 74.5 125.9 83.1 116.9 157.8 138.6
Total assets.................................. 824.0 949.9 959.3 895.1 923.3 923.7 855.4
Total debt.................................... 588.2 503.7 571.4 2.4 3.4 5.3 13.5
Shareowners' equity (deficit)................. (17.9) 132.9 106.6 632.3 659.9 693.7 615.3
OTHER FINANCIAL DATA
Ratio of earnings to fixed charges(1)......... --(4) 1.6x 26.3x 21.9x 20.2x 17.2x
Pro forma ratio of earnings to fixed charges
(2).......................................... --(4) 0.5x
</TABLE>
30
<PAGE> 34
- ---------------
(1) For purposes of determining the ratio of earnings to fixed charges, earnings
are defined as net earnings (loss) before taxes on earnings plus fixed
charges. Fixed charges consist of interest expense on our actual outstanding
indebtedness, amortization of deferred financing fees and one-third of
rental expense on operating leases, representing that portion of rental
expense considered by us to be attributable to interest. For periods prior
to the spin-off, our historical financial statements reflected minimal
interest expense as there was no allocation of interest expense on
Campbell's net investment.
(2) For purposes of determining the pro forma ratio of earnings to fixed
charges, earnings are defined as net earnings (loss) before taxes on
earnings plus fixed charges. Fixed charges, as used in this ratio, consist
of pro forma interest expense and amortization of debt issue costs giving
effect to the issuance of the outstanding notes and one-third of rental
expense on operating leases, representing that portion of rental expense
considered by us to be attributable to interest. Pro forma interest expense
and amortization of debt issue costs are calculated as if the spin-off and
the issuance of the outstanding notes had taken place on the first day of
fiscal 1998 and the net proceeds from the issuance of the outstanding notes
were used to repay a portion of the outstanding indebtedness under the
senior credit facility. Pro forma interest expense, as used in this ratio,
is calculated as the annual aggregate cash and non-cash interest expense
based on the $500 million of debt assumed from Campbell at the spin-off as
well as the $60 million incurred to repay certain intercompany payables
representing advances from Campbell to Vlasic's subsidiaries, as adjusted
for the issuance of the outstanding notes and the related application of
proceeds. The calculation reflects interest rates of 7.0% on the debt
assumed or incurred in connection with the spin-off and 10.25% on the
outstanding notes.
(3) Excludes potentially dilutive shares as the result would be antidilutive.
(4) As a result of our net loss for the nine months ended May 2, 1999
(principally attributable to special items of $136.6 million) the ratio of
earnings to fixed charges and the pro forma ratio of earnings to fixed
charges were less than 1:1 for such period. In order to achieve a ratio of
earnings to fixed charges and a pro forma ratio of earnings to fixed charges
of 1:1, we would have had to generate additional earnings for the nine
months ended May 2, 1999 of $103.3 and $109.7 million, respectively.
31
<PAGE> 35
PRO FORMA FINANCIAL INFORMATION
The Pro Forma Consolidated Statements of Earnings for the nine months ended
May 2, 1999 and May 3, 1998 and for the year ended August 2, 1998 present our
consolidated results of operations, assuming that the divestiture of our
Swift-Armour Argentine beef business and the offering of the outstanding notes
occurred as of the beginning of the periods presented. The Pro Forma
Consolidated Balance Sheet as of May 2, 1999 presents our consolidated financial
position assuming that the divestiture and the offering of the outstanding notes
had been completed as of that date.
In addition, the Pro Forma Consolidated Statements of Earnings for the nine
months ended May 2, 1998 and for the year ended August 2, 1998 present our
consolidated results, assuming that the spin-off from Campbell had occurred as
of the beginning of the periods presented and reflects interest expense on the
incremental debt incurred as of the spin-off.
The Pro Forma Financial Information presented is for informational purposes
only and is not intended to be indicative of the results of operations that
would have occurred had the divestiture been consummated as of the beginning of
the periods presented, and had we been independent as of the beginning of the
periods presented nor is it intended to be indicative of our future results of
operations or financial position.
32
<PAGE> 36
PRO FORMA CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
(IN MILLIONS EXCEPT FOR PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED MAY 2, 1999
---------------------------------------------------
AS
ADJUSTED
FOR THE
DIVESTED OUTSTANDING PRO
ACTUAL BUSINESS(1)(2) NOTES(3) FORMA
------ -------------- ----------- -----
<S> <C> <C> <C> <C>
Net sales.............................................. $1,004.3 $(137.5) $866.8
Costs and expenses
Cost of products sold................................ 707.9 (119.7) 588.2
Marketing and selling expenses....................... 175.9 (12.5) 163.4
Administrative expenses.............................. 49.0 (2.5) 46.5
Research and development expenses.................... 5.9 -- 5.9
Other (income) expenses.............................. 0.8 (0.6) 0.2
Special items........................................ 136.6 (140.0) (3.4)
-------- ------- ------
Total costs and expenses........................... 1,076.1 (275.3) 800.8
-------- ------- ------
Earnings (loss) before interest and taxes.............. (71.8) 137.8 66.0
Interest expense..................................... 32.7 (5.3) $ 6.4 33.8
Interest income...................................... 0.5 -- 0.5
-------- ------- ------- ------
Earnings (loss) before taxes........................... (104.0) 143.1 (6.4) 32.7
Taxes on earnings...................................... 19.7 0.6 (2.4) 17.9
-------- ------- ------- ------
Net earnings (loss).................................... $ (123.7) $ 142.5 $ (4.0) $ 14.8
======== ======= ======= ======
Earnings (Loss) Per Share
Per share -- basic................................... $ (2.72) $ 0.33
Weighted average shares outstanding -- basic......... 45.5 45.5
Per share -- assuming dilution....................... $ (2.72) $ 0.32
Weighted average shares outstanding -- assuming
dilution........................................... 45.5(4) 45.7
</TABLE>
See Notes to Pro Forma Financial Information.
33
<PAGE> 37
PRO FORMA CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
(IN MILLIONS EXCEPT FOR PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED MAY 3, 1998
----------------------------------------------------------------
AS
PRO FORMA ADJUSTED
INTEREST FOR THE
DIVESTED PRIOR TO OUTSTANDING PRO
ACTUAL BUSINESS(1)(2) SPIN-OFF(5) NOTES(3) FORMA
------ -------------- ----------- ----------- -----
<S> <C> <C> <C> <C> <C>
Net sales....................................... $1,043.9 $ (150.6) $ 893.3
Costs and expenses
Cost of products sold......................... 750.7 (140.6) 610.1
Marketing and selling expenses................ 170.8 (12.4) 158.4
Administrative expenses....................... 46.0 (2.9) 43.1
Research and development expenses............. 5.8 -- 5.8
Other (income) expenses....................... (0.2) 4.5 4.3
Special items................................. 28.1 -- 28.1
-------- -------- --------
Total costs and expenses.................... 1,001.2 (151.4) 849.8
-------- -------- --------
Earnings (loss) before interest and taxes....... 42.7 0.8 43.5
Interest expense.............................. 4.3 (5.0) $ 25.6 $ 6.2 31.1
Interest income............................... 0.3 (0.2) 0.1
-------- -------- -------- -------- --------
Earnings (loss) before taxes.................... 38.7 5.6 (25.6) (6.2) 12.5
Taxes on earnings............................... 20.4 1.6 (7.6) (2.4) 12.0
-------- -------- -------- -------- --------
Earnings (loss) before cumulative effect of
accounting change(6).......................... $ 18.3 $ 4.0 $ (18.0) $ (3.8) $ 0.5
======== ======== ======== ======== ========
Earnings (Loss) Before Cumulative Effect of
Accounting Change Per Share Per
share -- basic................................ $ 0.40 $ 0.01
Weighted average shares
outstanding -- basic........................ 45.5 45.5
Per share -- assuming dilution................ $ 0.40 $ 0.01
Weighted average shares outstanding --
assuming dilution........................... 46.0 46.0
</TABLE>
See Notes to Pro Forma Financial Information.
34
<PAGE> 38
PRO FORMA CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
(IN MILLIONS EXCEPT FOR PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 2, 1998
----------------------------------------------------------------
AS
PRO FORMA ADJUSTED
INTEREST FOR THE
DIVESTED PRIOR TO OUTSTANDING PRO
ACTUAL BUSINESS(1)(2) SPIN-OFF(5) NOTES(3) FORMA
------ -------------- ----------- ----------- -----
<S> <C> <C> <C> <C> <C>
Net sales........................................ $1,357.3 $ (197.3) $1,160.0
Costs and expenses
Cost of products sold.......................... 978.0 (184.7) 793.3
Marketing and selling expenses................. 245.1 (16.8) 228.3
Administrative expenses........................ 64.1 (4.0) 60.1
Research and development expenses.............. 7.9 -- 7.9
Other (income) expenses........................ (2.9) 8.3 5.4
Special items.................................. 42.5 -- 42.5
-------- -------- --------
Total costs and expenses..................... 1,334.7 (197.2) 1,137.5
-------- -------- --------
Earnings (loss) before interest and taxes........ 22.6 (0.1) 22.5
Interest expense............................... 13.4 (6.6) $ 25.6 $ 9.6 42.0
Interest income................................ 0.4 (0.2) 0.2
-------- -------- -------- -------- --------
Earnings (loss) before taxes..................... 9.6 6.3 (25.6) (9.6) (19.3)
Taxes on earnings................................ 15.4 2.2 (7.6) (3.6) 6.4
-------- -------- -------- -------- --------
Earnings (loss) before cumulative effect of
accounting change(6)........................... $ (5.8) $ 4.1 $ (18.0) $ (6.0) $ (25.7)
======== ======== ======== ======== ========
Earnings (Loss) Before Cumulative Effect of
Accounting Change
Per Share
Per share -- basic............................. $ (0.13) $ (0.56)
Weighted average shares outstanding -- basic... 45.5 45.5
Per share -- assuming dilution................. $ (0.13) $ (0.56)
Weighted average shares outstanding -- assuming
dilution(4).................................. 45.5 45.5
</TABLE>
See Notes to Pro Forma Financial Information.
35
<PAGE> 39
PRO FORMA CONSOLIDATED BALANCE SHEET (UNAUDITED)
(IN MILLIONS)
<TABLE>
<CAPTION>
MAY 2, 1999
--------------------------------------------------
AS
ADJUSTED
FOR THE
DIVESTED OUTSTANDING
ACTUAL BUSINESS(7) NOTES(3) PRO FORMA
------ ----------- ----------- ---------
<S> <C> <C> <C> <C>
Current assets
Cash and cash equivalents............................. $ 26.9 $ (4.0) $ 22.9
Accounts receivable................................... 165.9 (30.2) 135.7
Inventories........................................... 166.1 (25.3) 140.8
Other current assets.................................. 18.0 (2.1) 15.9
------- ------- -------
Total current assets................................ 376.9 (61.6) 315.3
------- ------- -------
Plant assets, net..................................... 367.8 (51.5) 316.3
Other assets, principally intangible assets, net...... 79.3 (4.4) $ 11.0 85.9
------- ------- ------- -------
Total assets............................................ $ 824.0 $(117.5) $ 11.0 $ 717.5
======= ======= ======= =======
Current liabilities
Notes payable......................................... $ 7.5 $ (7.5) $ --
Payable to suppliers and other........................ 96.1 (14.4) 81.7
Accrued liabilities................................... 82.4 (6.7) 75.7
------- ------- -------
Total current liabilities........................... 186.0 (28.6) 157.4
------- ------- -------
Long-term debt.......................................... 580.7 (82.0) $ 11.0 509.7
Deferred income taxes................................... 25.9 (6.9) 19.0
Other liabilities....................................... 49.3 -- 49.3
------- ------- ------- -------
Total liabilities..................................... 841.9 (117.5) 11.0 735.4
------- ------- ------- -------
Shareowners' equity (deficit)
Preferred stock, no par value, authorized 4.0 shares;
none issued......................................... -- -- --
Common stock, no par value; authorized 56.0 shares;
issued shares 45.5.................................. 137.8 -- 137.8
Accumulated deficit................................... (148.8) -- (148.8)
Accumulated other comprehensive earnings (loss)....... (6.9) -- (6.9)
------- ------- -------
Total shareowners' equity (deficit)................. (17.9) -- (17.9)
------- ------- ------- -------
Total liabilities and shareowners' equity (deficit)..... $ 824.0 $(117.5) $ 11.0 $ 717.5
======= ======= ======= =======
</TABLE>
See Notes to Pro Forma Financial Information.
36
<PAGE> 40
NOTES TO PRO FORMA FINANCIAL INFORMATION
(1) Eliminates the results of operations of our Swift-Armour Argentine beef
business as if the divestiture had been completed as of the beginning of the
period presented.
(2) Gives effect to pro forma interest expense to reflect the application of the
estimated net proceeds from the divestiture of our Argentine beef business
as a reduction of long-term debt as if the divestiture had been completed as
of the beginning of the periods presented. The calculation reflects interest
rates of 7.2% and 6.9% for the nine months ended May 2, 1999 and May 3, 1998
and 6.7% for the year ended August 2, 1999. The related tax impact of the
pro forma interest expense is included within taxes on earnings.
(3) Adjusted for the issuance of the outstanding notes and the application of
the net proceeds. Pro forma interest expense reflects an interest rate of
10.25% on the outstanding notes.
(4) Excludes potentially dilutive shares, as the result would be antidilutive.
(5) Gives effect to pro forma interest expense on the $500 million of debt
assumed from Campbell at the spin-off as well as the $60 million incurred to
repay certain intercompany payables representing advances from Campbell to
our subsidiaries. Pro forma interest expense was adjusted to reflect the
spin-off as if it had been completed as of the beginning of the periods
presented. The calculation reflects an interest rate of 7% for the nine
months ended May 3, 1998 and the year ended August 2, 1998.
(6) Excludes the cumulative effect of a change in accounting principle of $0.6
million relating to the write-off of previously capitalized business process
reengineering costs in accordance with EITF 97-13. For all periods
presented, the cumulative effect of accounting change on a per share basis
for both basic and diluted was $0.01.
(7) Eliminates the net assets of our Argentine beef business as if the
divestiture had been completed as of the balance sheet date. The estimated
net proceeds from disposition are reflected as a reduction of long-term debt
outstanding.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis includes the historical results of
our operations and financial condition. This discussion and analysis should be
read in conjunction with our historical financial statements and the related
accompanying notes appearing elsewhere in the prospectus.
INTRODUCTION
On March 30, 1998, Campbell distributed one share of Vlasic common stock to
shareowners of Campbell for every ten shares of Campbell capital stock held at
the record date in a tax-free distribution (the "spin-off"). At the time of the
spin-off, we began operations as a separate independent publicly-owned company.
In connection with the spin-off, Campbell contributed the following businesses:
Swanson frozen foods in the United States and Canada, Vlasic pickles, Open Pit
barbecue sauce, Campbell mushrooms in the U.S., Freshbake and non-branded frozen
foods and SonA and Rowats pickles and beans in the United Kingdom, Swift and
non-branded processed beef in Argentina and Kattus gourmet foods distribution
(the "Kattus business") in Germany. Our historical financial statements at dates
and for periods ended prior to the date of the spin-off present the combined
historical financial position, results of operations and cash flows of these
businesses. We sold the Kattus business in January 1999 and our Argentine beef
business, Swift-Armour, in July 1999. Prior to the spin-off, the businesses
contributed by Campbell had been separately managed within multiple Campbell
business divisions.
In connection with the spin-off, we incurred incremental debt of
approximately $560 million under a five-year $750 million unsecured revolving
credit facility, consisting of $500 million of indebtedness assumed from
Campbell and $60 million incurred to repay certain intercompany payables
representing advances from Campbell to subsidiaries of Vlasic. On a historical
basis, we were not allocated any amount of Campbell's debt and our historical
financial statements prior to the spin-off do not reflect the interest expense
associated with the debt incurred in connection with the spin-off. Therefore, we
believe that pro forma earnings, reflecting pro forma interest expense as if the
spin-off had occurred at the beginning of fiscal 1997, provide more meaningful
comparisons than our historical financial statements.
Our results have also been affected to a significant extent by a number of
unusual and special, cash and non-cash charges, including: (a) restructuring
charges associated with the implementation of our strategies of reducing costs,
improving operational efficiencies and divesting non-strategic assets; (b)
duplicative expenses arising from transition service charges from Campbell for
certain services (such as payroll, employee benefits administration, information
technology, research and development, customer service and accounting services)
which overlapped our internal expenses until the completion of our
infrastructure; (c) costs incurred by us for the development of an independent
information technology structure; (d) losses on divestiture of the Kattus
business and of Swift-Armour in Argentina; and (e) tax on repatriation of
foreign dividends.
For periods prior to the spin-off, our historical financial statements
reflect expenses allocated by Campbell for selling, general and administrative
services (including finance, legal, information systems, research and
development, benefits, facilities and shared sales and distribution support).
Such expenses were allocated based on net sales, utilization or other methods.
The allocated expenses for these services are not necessarily indicative of the
expenses that we would have incurred had we been a separate, independent entity
that managed these functions. As described above, Campbell had been providing
certain of these services to us on a transitional basis since the spin-off. We
have established a new corporate infrastructure to operate on a stand-alone
basis, and as of April 1999 we had substantially completed all of the operating
and management systems and capabilities necessary to handle internally the
services that had previously been provided by Campbell.
The discussion below summarizes the significant factors affecting our
consolidated operating results, financial condition and liquidity for the fiscal
years ended August 2, 1998, August 3, 1997 and July 28, 1996 and for the nine
months ended May 2, 1999 and May 3, 1998. The results of operations for the
periods prior to the spin-off may not necessarily be indicative of the results
of operations that would have occurred if we had operated as an independent
company prior to the spin-off and are not necessarily indicative of our future
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performance. The results for the nine months ended May 2, 1999 are not
necessarily indicative of the results of operations to be expected for the full
year. The following discussion of results of operations and liquidity and
capital resources should be read in conjunction with our historical and pro
forma consolidated financial statements and the related accompanying notes
appearing elsewhere in this prospectus. Unless otherwise noted, fiscal years in
the discussion below refer to our fiscal years ended on the Sunday closest to
July 31.
RESULTS OF OPERATIONS
OVERVIEW
Net sales for the first nine months of fiscal 1999 were $1.0 billion, a
decrease of 3.8% from net sales in the first nine months of fiscal 1998.
Excluding sales from the divested Kattus business, net sales decreased 3.2% in
the first nine months of fiscal 1999 compared to last year. Net sales for the
third quarter of fiscal 1999 were $320.6 million, versus $320.7 million a year
ago. Excluding sales from the divested Kattus business, sales increased 5.3% in
the third quarter compared to last year.
Net earnings (loss) for the first nine months of fiscal 1999 were $(123.7)
million compared to $17.7 million for the first nine months of fiscal 1998.
Included within this fiscal 1999 net loss were the following special items and
one-time costs (credits):
- $140.0 million non-cash impairment loss associated with the then pending
divestiture of the Swift-Armour Argentine beef business;
- $(3.2) million loss (gain) on the January 1999 sale of the Kattus
business;
- $3.0 million restructuring charge pertaining to the closure of the
Dublin, Georgia mushroom farm;
- $(3.2) million charge (benefit) from completion of the fiscal 1998
restructuring program at amounts less than originally planned;
- $7.0 million tax charge for the impact of the repatriation of foreign
dividends; and
- $7.0 million one-time costs ($4.4 million after tax) for duplicative
administrative transition costs and costs related to the development of
our information technology infrastructure.
Excluding the special items, one-time charges and tax impact of repatriated
dividends described above, net earnings for the first nine months of fiscal 1999
were $24.3 million, or $0.54 per diluted share. On a comparable basis, excluding
special items of $28.1 million ($21.8 million net of tax) and one-time costs of
$5.5 million ($3.7 million net of tax) recorded during the first nine months of
fiscal 1998, pro forma net earnings, as adjusted for interest expense, were
$25.9 million, or $0.56 per diluted share. On May 24, 1999, we announced that we
expect our operating earnings (excluding special items) for our Swanson and
Vlasic businesses will be approximately flat in fiscal 1999 compared to fiscal
1998. However, as with all forward-looking information, our actual results could
differ.
The historical financial statements for the first nine months of fiscal
1998 reflected minimal interest expense prior to the spin-off, as there was no
allocation of interest expense on Campbell's net investment. Subsequent to the
spin-off, interest expense included interest on the debt assumed from Campbell
as well as the debt related to the increase in working capital. We believe that
pro forma earnings, reflecting pro forma interest expense for the spin-off,
provide more meaningful comparisons. Assuming that the spin-off had been
consummated as of the beginning of fiscal 1998, pro forma net interest expense
would have been approximately $29.6 million for the first nine months of fiscal
1998.
Net sales for the fiscal year ended August 2, 1998 were $1.4 billion, a
decrease of 10.0% from net sales of $1.5 billion for the fiscal year ended
August 3, 1997 (or down 8.3% from fiscal 1997 on a comparable 52 week basis).
The net loss of $6.4 million for fiscal 1998 represented an $84.5 million
decrease in net earnings from fiscal 1997. The fiscal 1998 net loss included:
- the 1998 fourth quarter special charge of $14.4 million for the
impairment loss on assets of the Kattus business in Germany;
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<PAGE> 43
- the 1998 third quarter restructuring charge of $28.1 million ($21.8
million after tax or $0.48 per share); and
- several unusual and transition charges totaling $17.5 million ($11.2
million after tax or $0.24 per share), including start-up costs
associated with new technology at our Vlasic pickle production
facilities; marketing costs in the Kattus business relating to the
stimulation of demand that was required as a result of significant
disruptions caused by information systems implementation issues during
1996; costs incurred in the development of an independent information
technology capability; and duplicative internal expenses arising from
transition service charges from Campbell for certain services which
overlapped internal expenses incurred by us as we completed our
infrastructure.
CONSOLIDATED STATEMENTS OF EARNINGS
The following table sets forth certain items in our consolidated statements
of earnings as percentages of our net sales for the periods indicated:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED FISCAL YEAR ENDED
---------------- --------------------------------
MAY 2, MAY 3, AUGUST 2, AUGUST 3, JULY 28,
1999 1998 1998 1997 1996
------ ------ --------- --------- --------
<S> <C> <C> <C> <C> <C>
Net sales............................... 100.0% 100.0% 100.0% 100.0% 100.0%
----- ----- ----- ----- -----
Cost of products sold................... 70.5% 71.9% 72.0% 69.5% 70.3%
Marketing and selling expenses.......... 17.5% 16.4% 18.1% 17.7% 17.1%
Administrative expenses................. 4.9% 4.4% 4.7% 3.5% 3.6%
Research and development expenses....... 0.6% 0.6% 0.6% 0.6% 0.6%
Other (income) expenses................. 0.1% 0.0% (0.2)% 0.2% 0.0%
Special items........................... 13.5% 2.6% 3.1% 0.8% 2.5%
----- ----- ----- ----- -----
Total costs and expenses........... 107.1% 95.9% 98.3% 92.3% 94.1%
----- ----- ----- ----- -----
Earnings (loss) before interest and
taxes................................. (7.1)% 4.1% 1.7% 7.7% 5.9%
===== ===== ===== ===== =====
</TABLE>
NINE MONTHS ENDED MAY 2, 1999 COMPARED TO NINE MONTHS ENDED MAY 3, 1998
NET SALES. Net sales of $1.0 billion in the first nine months of fiscal
1999 decreased 3.8% from net sales of the first nine months of fiscal 1998.
Excluding sales from the divested Kattus business, net sales decreased 3.2% in
the first nine months of fiscal 1999 compared to last year. The sales decrease
was primarily driven by sales declines in our international businesses,
particularly our businesses in the U.K. and, prior to the sale of Swift-Armour,
in Argentina, which was partially offset by sales increases in our core Swanson
and Vlasic businesses.
COST OF PRODUCTS SOLD. Cost of products sold as a percentage of net sales
decreased to 70.5% in the first nine months of fiscal 1999 compared to 71.9% in
the same period of the prior year resulting primarily from lower cattle costs in
Argentina in the first nine months of fiscal 1999 and cost savings in the
Swanson and Vlasic plants, which were partially offset by yield problems at a
few of our mushroom farms.
MARKETING AND SELLING EXPENSES. Marketing and selling expenses as a
percentage of net sales increased in the first nine months of fiscal 1999 to
17.5% from 16.4% in the first nine months of fiscal 1998. This increase was
primarily caused by greater trade spending resulting from heavier promotions and
new product introductions such as Vlasic Hamburger Stackers and the relaunch of
the Swanson frozen fried chicken line. Partially offsetting this increase was
lower selling costs in the first nine months of fiscal 1999 compared to the same
period last year.
ADMINISTRATIVE EXPENSES. Administrative expenses as a percentage of net
sales increased in the first nine months of fiscal 1999 to 4.9% from 4.4% in the
same period of the prior year primarily as a result of
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<PAGE> 44
duplicative administrative transition costs and costs related to the development
of our information technology infrastructure experienced in the first and second
quarters of fiscal 1999 which were partially offset by a reduction in incentive
plan programs.
RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses as a
percentage of net sales remained unchanged in the first nine months of fiscal
1999 compared to the same period of fiscal 1998.
OTHER (INCOME) EXPENSES. Other (income) expenses in the first nine months
of fiscal 1998 included a gain on a fire insurance settlement, which was
partially offset by expenses pertaining to a Campbell-related long term
incentive program that ended in fiscal 1998.
SPECIAL ITEMS. During the first nine months of fiscal 1999, special items
of $136.6 million were recorded which included the following:
- $140.0 million non-cash impairment loss associated with the then pending
divestiture of the Swift-Armour Argentine beef business;
- $3.0 million restructuring charge pertaining to the closure of the
Dublin, Georgia mushroom farm;
- $(3.2) million charge (benefit) from completion of the fiscal 1998
restructuring program at amounts less than originally planned; and
- $(3.2) million loss (gain) on the January 1999 sale of the Kattus
business.
A special charge of $28.1 million ($21.8 million after tax) was recorded in
the third quarter of fiscal 1998 to cover the costs of a restructuring program.
The restructuring program was designed to improve operational efficiency by
exiting certain U.S. and European administrative offices and production
facilities and was completed in the third quarter of fiscal 1999. These charges
are described below under "Special Items."
EARNINGS (LOSS) BEFORE INTEREST AND TAXES. The loss before interest and
taxes in the first nine months of fiscal 1999 was ($71.8) million compared to
earnings before interest and taxes of $42.7 million in the first nine months of
fiscal 1998. Excluding the fiscal 1999 and 1998 special items discussed above,
earnings before interest and taxes were $64.8 million, or 6.5% of net sales, in
the first nine months of fiscal 1999, compared to earnings before interest and
taxes of $70.8 million, or 6.8% of net sales in the first nine months of fiscal
1998. The net decrease from the same period in the prior year was driven by:
- duplicative administrative transition costs and costs related to the
development of our information technology infrastructure experienced in
the first and second quarters of fiscal 1999;
- increased marketing and advertising costs; and
- yield problems at a few of our mushroom farms; partially offset by
- improvements in Argentine cattle costs experienced in the first nine
months of fiscal 1999 compared to the same period of fiscal 1998; and
- lower incentive plan expense in fiscal 1999.
INTEREST EXPENSE, NET. Interest expense, net, for the first nine months of
fiscal 1999 was $32.2 million. The historical financial statements for the first
nine months of fiscal 1998 reflected minimal interest expense prior to the
spin-off as there was no allocation of interest expense on Campbell's net
investment. Subsequent to the spin-off, interest expense included interest on
the $500 million of debt assumed from Campbell as well as the $60 million
incurred to repay certain intercompany payables representing advances from
Campbell to Vlasic's subsidiaries. We believe that pro forma earnings,
reflecting pro forma interest expense for the spin-off, provide more meaningful
comparisons. Assuming that the spin-off had been consummated as of the beginning
of fiscal 1998, pro forma net interest expense would have been approximately
$29.6 million for the first nine months of fiscal 1998.
TAXES ON EARNINGS. Included in taxes on earnings for the first nine months
of fiscal 1999 was $7.0 million for the impact of the repatriation of foreign
dividends. Excluding the impact of our special items and the $7.0 million tax
charge related to dividend repatriation, the effective tax rate was 38.9% in
first nine
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months of fiscal 1999 compared to 40.0% in the first nine months of fiscal 1998.
For fiscal year 1999, we expect an effective tax rate of approximately 39% which
includes the impact of a new minimum tax law imposed by the Argentine government
in December 1998 on business assets in that country. For fiscal year 1998, we
had an effective tax rate of 41.5% excluding special items.
CUMULATIVE EFFECT OF ACCOUNTING CHANGE. In the second quarter of fiscal
1998, we recorded the cumulative effect of an accounting change of $0.6 million,
after tax, for the adoption of the Emerging Issues Task Force (EITF) Issue
97-13, "Accounting for Costs Incurred in Connection with Consulting Contract
that Combines Business Process Reengineering and Information Technology
Transformation."
FISCAL YEAR ENDED AUGUST 2, 1998 COMPARED TO FISCAL YEAR ENDED AUGUST 3, 1997
NET SALES. Net sales of $1.4 billion in fiscal 1998 decreased 10.0% from
net sales of $1.5 billion for fiscal 1997 (down 8.3% from fiscal 1997 on a
comparable 52 week basis). The sales decrease was primarily due to lower sales
in the Swanson U.S. frozen food and Vlasic pickle businesses. The decreased
volumes were driven about equally by a reduction of retail inventories in
connection with our efforts to align shipments with consumption and by reduced
consumption driven by a lack of product innovation and advertising support.
Declines in exports from Swift-Armour as well as the U.K. frozen and the Kattus
businesses contributed to the decline in net sales.
COST OF PRODUCTS SOLD. Cost of products sold as a percentage of net sales
increased by 2.5 points to 72.0% in fiscal 1998, up from 69.5% in fiscal 1997,
as a result of the highest cattle costs in over a decade in Argentina and
start-up costs associated with new technology at the pickle plants and lower
absorption of fixed costs, offset by benefits of continuing manufacturing
efficiency programs.
MARKETING AND SELLING EXPENSES. Marketing and selling expenses as a
percentage of net sales increased in fiscal 1998 to 18.1% from 17.7% in fiscal
1997, principally due to increased selling expense for Swanson U.S. frozen food.
ADMINISTRATIVE EXPENSES. Administrative expenses as a percentage of net
sales increased 1.2 points in fiscal 1998 to 4.7% from 3.5% in fiscal 1997, as a
result of duplicative transition related costs and initial costs related to the
development of our information technology infrastructure.
RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses as a
percentage of net sales were unchanged in fiscal 1998 compared to fiscal 1997.
OTHER (INCOME) EXPENSES. Other income, net, in fiscal 1998 was $2.9
million compared to $2.4 million of other expense, net, in fiscal 1997. The
variance was principally attributable to reduced expense associated with the
Campbell long-term incentive plan.
SPECIAL ITEMS. Restructuring charges and impairment losses of $42.5
million ($36.2 million after tax) were recorded in fiscal 1998 and restructuring
charges of $12.6 million ($7.8 million after tax) were recorded in fiscal 1997.
These charges are described below under "Special Items."
EARNINGS (LOSS) BEFORE INTEREST AND TAXES. Earnings before interest and
taxes as a percentage of net sales were 1.7% in fiscal 1998 compared to 7.7% in
fiscal 1997. Excluding the restructuring charges and the impairment loss
described below under "Special Items," earnings before interest and taxes would
have been 4.8% of net sales in fiscal 1998 compared to 8.6% in fiscal 1997. The
decrease was primarily driven by:
- lower consumption linked to lack of innovation and advertising support;
- the alignment of shipments with consumption;
- higher cattle costs in Argentina;
- fiscal year 1998 operating losses of $6.7 million in the Kattus business;
and
- several unusual and transition charges totaling $17.5 million ($11.2
million after tax).
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The unusual and transition charges described above included $7.3 million of
start-up costs associated with new technology at our Vlasic pickle production
facilities; $1.0 million of marketing costs in the Kattus business relating to
the stimulation of demand that was required as a result of significant
disruptions caused by an information systems conversion during 1996; and $9.2
million for costs incurred in the development of an independent information
technology capability and duplicative expenses arising from transition service
charges from Campbell for certain services (such as payroll, employee benefits
administration, information technology, research and development, customer
service and accounting services) which overlapped expenses incurred by us as we
completed our infrastructure.
INTEREST EXPENSE. Our historical financial statements reflected minimal
interest expense prior to the spin-off as there was no allocation of interest
expense on Campbell's net investment. Subsequent to the spin-off, interest
expense included interest on the $500 million of debt assumed from Campbell as
well as the $60 million incurred to repay certain intercompany payables
representing advances from Campbell to Vlasic's subsidiaries. We believe that
pro forma earnings, reflecting pro forma interest expense for the spin-off,
provide more meaningful comparisons. Assuming that the spin-off had been
consummated as of the beginning of fiscal 1997, pro forma net interest expense
would have been approximately $38.6 million for fiscal 1998 and approximately
$40.1 million for fiscal 1997.
TAXES ON EARNINGS. Excluding the restructuring charges and impairment loss
described below under "Special Items," the effective tax rates would have been
41.5% and 33.0% for fiscal 1998 and fiscal 1997, respectively. The higher tax
rate in fiscal 1998 was driven by losses in Germany which generated no tax
benefit and lower earnings in Argentina where the effective tax rates were
reduced by export rebates and other tax incentives which lower taxable income.
A valuation allowance was recorded as a reduction to our estimate of the
deferred tax assets relating to non-U.S. tax loss carryforwards due to the
uncertainty of the ultimate realization of future benefits from such assets.
These deferred tax assets pertained to our operations in Argentina, frozen foods
business in the U.K. and the Kattus business in Germany. The uncertainty
surrounding the use of U.K. tax loss carryforwards stemmed from significant tax
law restrictions regarding their use. Moreover, the limited tax loss
carryforward periods and exclusion from current taxable income of export rebates
created uncertainty about whether we would be able to utilize our tax loss
carryforwards from our operations in Argentina. Finally, the German tax loss
carryforwards were not expected to be utilized prior to the sale of the Kattus
business.
CUMULATIVE EFFECT OF ACCOUNTING CHANGE. Fiscal 1998 was also impacted by
the second quarter fiscal 1998 cumulative effect of an accounting change of $0.6
million after tax for the adoption of EITF Issue 97-13, "Accounting for Costs
Incurred in Connection with Consulting Contract that Combines Business Process
Reengineering and Information Technology Transformation."
FISCAL YEAR ENDED AUGUST 3, 1997 COMPARED TO FISCAL YEAR ENDED JULY 28, 1996
NET SALES. Net sales of $1.5 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 mushrooms was more than offset
by declines in the Kattus business, Argentine frozen cooked beef and Vlasic
pickles.
COST OF PRODUCTS SOLD. 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 the Kattus business.
MARKETING AND SELLING EXPENSES. 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. 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.
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OTHER (INCOME) EXPENSES. Other expenses, net, increased by $2.3 million in
fiscal 1997 due to higher accruals for long-term incentive plan charges related
to the increase in the market price of Campbell common stock.
SPECIAL ITEMS. Restructuring charges of $12.6 million ($7.8 million after
tax) were recorded in the first quarter of 1997 and $37.2 million ($22.8 million
after tax) were recorded in the fourth quarter of fiscal 1996. Such charges are
described below under "Special Items."
TAXES ON EARNINGS. 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.
SPECIAL ITEMS
A special charge of $3 million was recorded in the third quarter of fiscal
1999 associated with the closure of the Dublin, Georgia mushroom farm. The farm
was identified for closure due to the high costs of production and mechanical
harvesting methodology that prevents it from producing high quality retail
mushrooms. As part of the closure, approximately 70 people were severed. The
assets were written down to the estimated fair value less costs to sell. The $3
million cost of the program included $2.4 million of non-cash charges for losses
on the disposition of plant assets and $0.6 million principally related to
severance and employee benefit costs that will be paid in cash. This
restructuring program is expected to be completed by the third quarter of fiscal
2000.
As part of our portfolio reconfiguration program, during the third quarter
of fiscal 1999 we entered into a divestiture agreement to sell our Argentine
beef business, Swift-Armour. We received approval for the transaction from our
Board of Directors on May 24, 1999. The divestiture was completed in July 1999.
The carrying value of the Argentine beef assets was reduced to fair value based
on the sale price less costs to sell. Third quarter of fiscal 1999 results
included a $140.0 million charge against Special items within the Statement of
Earnings to reduce the assets held for sale to fair value of which $6.2 million
represented a charge for goodwill impairment with the balance of the charge
recorded against plant assets.
Special items of $42.5 million ($36.2 million after tax) were recorded in
fiscal 1998. A special charge of $28.1 million ($21.8 million after tax) was
recorded in the third quarter of fiscal 1998 to cover the costs of a
restructuring program. The restructuring program was designed to improve
operational efficiency by exiting certain U.S. and European administrative
offices and production facilities. The restructuring program provided for the
reduction of our worldwide workforce by approximately 425 full-time
administrative and operational positions. In September 1998 we sold our Peterlee
frozen foods facility in the United Kingdom. Additionally during November 1998,
we commenced closing our seasonal pickle plant in Bridgeport, Michigan. The
plant employed approximately 25 full time workers and an additional 375 seasonal
workers from May through September. The restructuring charge included
approximately $11.6 million primarily related to severance and employee benefit
costs that will be paid in cash. The balance of the restructuring charge,
amounting to $16.5 million, related to non-cash charges for losses on the
disposition of plant assets. This program was completed during the third quarter
of fiscal 1999. Third quarter results included a $3.2 million benefit recorded
against Special items within the Statement of Earnings to reverse the remaining
unutilized restructuring charge. The fiscal 1998 restructuring program is
expected to result in approximately $9 million in aggregate savings in fiscal
1999 primarily from reductions in plant overhead and depreciation and employee
salaries and benefits.
During the fourth quarter of fiscal 1998, we designed and began to
implement a program to pursue asset reduction and cost improvement
opportunities. As part of that plan, we decided to sell our Kattus business in
Germany and began to actively seek buyers. The carrying value of the assets held
for sale was reduced to fair value based on estimates of selling values less
costs to sell. Fourth quarter 1998 earnings reflected a $14.4 million special
charge to reduce assets held for sale to fair value of which approximately $10
million represented a charge for goodwill impairment with the balance of the
charge recorded against the other long-lived assets. In January 1999, we sold
the business for a gain on sale of $3.2 million that is recorded on the Special
items line of our Statement of Earnings for the nine month period ended May 2,
1999.
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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 program was completed during the first quarter of fiscal 1998. The
restructuring program was designed to improve our operational efficiency by
closing various U.S. pickle facilities and reducing approximately 50
administrative and operational positions from our worldwide workforce. The
restructuring charge included 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, related to non-cash charges
for losses on the disposition of plant assets. The fiscal 1997 restructuring
program resulted in approximately $10 million in aggregate savings in fiscal
1997 and fiscal 1998 from reductions in employee salaries and benefits, plant
overhead and depreciation.
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 Kattus business in Germany (by combining certain sales functions from two
locations into the unit's headquarters). The restructuring charge included
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.
RESULTS BY SEGMENT
We group our businesses into three operating segments. The frozen foods
segment consists of Swanson frozen foods in the United States and Canada and
Freshbake frozen foods in the United Kingdom. The grocery products segment
includes Vlasic retail and foodservice pickles and condiments in the United
States, Open Pit barbecue sauce in the United States, SonA and Rowats pickles,
canned beans and vegetables in the United Kingdom, Kattus business in Germany
(which was sold in January 1999) and Swift canned meat pates and other grocery
products in Argentina (which was sold in July 1999). The agricultural products
segment includes the fresh mushroom business in the United States, chilled and
frozen beef, frozen cooked beef and canned corned beef exported from Argentina
and contract manufacturing of frozen foodservice product for Campbell's
Foodservice in the United States. These operating segments are managed as
strategic units due to their distinct manufacturing processes, marketing
strategies and distribution channels. Corporate expenses and assets have been
allocated to the segments. Intersegment sales presented below as eliminations
represent the sale of beef between agricultural products and frozen foods
segments.
The following table sets forth certain segment information for the periods
indicated:
<TABLE>
<CAPTION>
NINE MONTHS ENDED FISCAL YEAR ENDED
-------------------- --------------------------------
MAY 2, MAY 3, AUGUST 2, AUGUST 3, JULY 28,
1999 1998 1998 1997 1996
------ ------ --------- --------- --------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Net Sales
Frozen Foods............................. $ 422.0 $ 436.6 $ 541.4 $ 614.5 $ 583.4
Grocery Products......................... 329.5 342.4 477.4 538.7 561.2
Agricultural Products.................... 258.1 272.4 347.9 366.1 369.1
Eliminations............................. (5.3) (7.5) (9.4) (11.0) (14.7)
-------- -------- -------- -------- --------
Total............................ $1,004.3 $1,043.9 $1,357.3 $1,508.3 $1,499.0
======== ======== ======== ======== ========
Earnings (Loss) Before Interest
and Taxes
Frozen Foods............................. $ 39.5 $ 34.2 $ 31.4 $ 56.3 $ 15.9
Grocery Products......................... 37.3 12.9 (2.5) 49.5 53.8
Agricultural Products.................... (148.6) (4.4) (6.3) 10.8 19.3
-------- -------- -------- -------- --------
Total............................ $ (71.8) $ 42.7 $ 22.6 $ 116.6 $ 89.0
======== ======== ======== ======== ========
</TABLE>
45
<PAGE> 49
NINE MONTHS ENDED MAY 2, 1999 COMPARED TO NINE MONTHS ENDED MAY 3, 1998
Net sales of the frozen foods segment decreased 3.4% to $422.0 million in
the first nine months of fiscal 1999 compared to the first nine months of fiscal
1998. Higher Swanson U.S. volumes attributable to new fried chicken products and
increased marketing efforts were partially offset by sales declines in the U.K.
frozen foods business. The segment's earnings before interest and taxes were
$39.5 million in the first nine months of fiscal 1999 compared to $34.2 million
in the first nine months of fiscal 1998. Excluding the impact of special items
recorded in the third quarter of fiscal 1999 and 1998, earnings before interest
and taxes for the segment were $37.4 million and $44.0 million, respectively, a
decrease of 14.8%. This change was driven primarily by lower volumes in the U.K.
and Canada and the allocation of one-time charges for duplicative administrative
transition costs and certain information technology expenses in fiscal 1999.
Net sales of the grocery products segment decreased 3.8% to $329.5 million
in the first nine months of fiscal 1999 compared to the first nine months of
fiscal 1998. Excluding sales from the divested Kattus business, net sales
decreased 1.7% in the first nine months of fiscal 1999 compared to last year.
This decrease was primarily driven by lower domestic sales in Argentina
resulting from the weakening market conditions as a result of the economic
situation in Brazil, partially offset by increased sales in the Vlasic pickles
business. The segment's earnings before interest and taxes were $37.3 million
for the first nine months of fiscal 1999 compared to $12.9 million in the first
nine months of fiscal 1998. Excluding the impact of special items in the third
quarters of fiscal 1999 and 1998 and the Kattus gain recorded in the second
quarter of fiscal 1999, earnings before interest and taxes for this segment were
$33.0 million and $30.8 million, respectively, an increase of 7.1%. This
increase was due to improvements from sales growth offset by greater marketing
and advertising costs and the allocation of one-time charges for duplicative
administrative transition costs and certain information technology expenses in
fiscal 1999.
Net sales of the agricultural products segment decreased 5.3% to $258.1
million in the first nine months of fiscal 1999 compared to the first nine
months of fiscal 1998 principally due to lower Swift-Armour export sales. The
segment's loss before interest and taxes was $(148.6) million in the first nine
months of fiscal 1999 compared to a loss of $(4.4) million in the same period of
the prior year. Excluding the impact of the special items recorded in the third
quarters of fiscal 1999 and 1998, the loss before interest and taxes for the
segment was $(5.6) million and $(4.0) million, respectively. This was primarily
a result of lower mushroom earnings as a result of yield problems at a few of
our farms, a gain on an insurance settlement in last year's first quarter and
the allocation of one-time charges for duplicative administrative transition
costs and certain information technology expenses. Partially offsetting these
factors were improvements in Argentine cattle costs in the first nine months of
fiscal 1999 compared to the first nine months of fiscal 1998.
FISCAL YEAR ENDED AUGUST 2, 1998 COMPARED TO FISCAL YEAR ENDED AUGUST 3, 1997
Net sales of the frozen foods segment decreased 11.9% in fiscal 1998
compared to fiscal 1997 (down 10.2% from fiscal 1997 on a comparable 52 week
basis) to $541.4 million. The decrease was primarily driven by the lower Swanson
U.S. volume related to aligning shipments with consumption as well as decreased
consumption driven by lack of product innovation and lower advertising.
Excluding the fiscal 1998 and 1997 restructuring charges, this segment's
earnings before interest and taxes decreased 30.2%, driven by lower sales
volumes.
Net sales of the grocery products segment decreased 11.4% in fiscal 1998
compared to fiscal 1997 (down 9.7% from fiscal 1997 on a comparable 52 week
basis) to $477.4 million. The decrease was primarily driven by lower Vlasic
pickle volume related to aligning shipments with consumption as well as
decreased consumption driven by lack of product innovation and lower
advertising. This segment also experienced lower volume in the Kattus business
and Argentina. Excluding the fiscal 1998 and 1997 restructuring charges and the
1998 impairment loss, this segment's earnings before interest and taxes
decreased 49.8% in fiscal 1998 driven by the decline in sales, start-up costs
associated with new technology at the pickle plants and an increase in German
marketing costs.
Net sales of the agricultural products segment decreased 5.0% in fiscal
1998 compared to fiscal 1997 (down 3.2% from fiscal 1997 on a comparable 52 week
basis) to $347.9 million. This segment incurred a loss
46
<PAGE> 50
of $6.3 million in fiscal 1998 compared to earnings before interest and taxes of
$10.8 million in fiscal 1997. The improvements in mushroom production costs in
fiscal 1998 were not significant enough to offset the higher cattle costs in
Argentina.
FISCAL YEAR ENDED AUGUST 3, 1997 COMPARED TO FISCAL YEAR ENDED JULY 28, 1996
Net sales of the frozen foods segment increased 5.3% in fiscal 1997
compared to fiscal 1996 (up 3.5% from fiscal 1996 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 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
20.1%, 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 United Kingdom.
Net sales of the grocery products segment decreased 4.0% in fiscal 1997
compared to fiscal 1996 (down 6.3% from fiscal 1996 on a comparable 52 week
basis) to $538.7 million, driven principally by weakness in the Kattus 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. The fiscal 1997 net sales of most other businesses included in this
segment approximated those for fiscal 1996 (down 2.3% from fiscal 1996 on a
comparable 52 week basis). This segment's earnings before interest and taxes
decreased 7.9% in fiscal 1997 to $49.5 million. Excluding restructuring charges
from fiscal 1997 and fiscal 1996, earnings before interest and taxes increased
2.9% as a 25.3% increase in Vlasic pickle earnings was largely offset by the
poor volume performance of the Kattus 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 business declined in fiscal 1997.
Net sales of the agricultural products segment declined 0.8% in fiscal 1997
compared to fiscal 1996 (down 2.9% from fiscal 1996 on a comparable 52 week
basis) to $366.1 million. Reduced overall demand for beef products in Europe and
reduced beef 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 43.9% in fiscal 1997 to
$10.8 million from $19.3 million in fiscal 1996. The decline was due in
approximately equal parts to reduced sales of frozen cooked beef and unfavorable
mushroom costs.
LIQUIDITY AND CAPITAL RESOURCES
In connection with the spin-off, we incurred incremental debt of
approximately $560 million under a five-year $750 million unsecured revolving
credit facility, consisting of $500 million of indebtedness assumed from
Campbell and $60 million incurred to repay certain intercompany payables
representing advances from Campbell to subsidiaries of Vlasic. We amended the
revolving credit facility on September 30, 1998. As a result of this amendment,
$100 million of indebtedness outstanding under the revolving credit facility was
converted to a term loan and the commitment under the revolving credit facility
was reduced to $550 million. The term loan has the same terms and conditions as
the amended revolving credit facility. Borrowings under the amended revolving
credit facility and the term loan bear interest at rates, which at our option,
vary with the prime rate, CD rate, LIBOR or money market rates plus applicable
credit margins. The average interest rate at May 2, 1999 was 7% per annum. In
addition, we pay a facility fee of 0.50%. The applicable credit margin is based
on the timing of the issuance of longer term debt. The amended agreement
contains covenants including, but not limited to: the mandatory repayment of
debt; the reduction of the commitment upon the sale of assets (including the
sale of Swift-Armour in Argentina); issuance of equity and the incurrence of
additional debt; restrictions on the issuance of new debt; limitations on
capital spending; restrictions on dividend payments; and certain other financial
ratio covenants. During the third quarter of fiscal 1999, we received a waiver
from the bank group permitting the sale of Swift-Armour in Argentina. The net
proceeds from the sale of Swift-Armour were used to repay a portion of the
outstanding debt under the revolving credit facility and reduced our revolving
credit commitment.
47
<PAGE> 51
In order to gain greater financial flexibility for the future, on June 9,
1999, we amended our existing credit facility, whereby certain financial
covenants were revised. The amendment, among other things, increases both the
interest rate and the facility fee paid to the bank group. The amendment also
requires the payment of a fee to the bank group and further restricts future
capital spending.
The approximately $189.0 million in net proceeds from the sale of the
outstanding notes were used to repay a portion of the indebtedness outstanding
under the senior credit facility. As a result of this repayment and application
of the net proceeds from the sale of our Swift-Armour Argentine beef business,
the amount available to be borrowed under the revolving credit commitments was
permanently reduced to $279.0 million. At May 2, 1999, after giving effect to
the offering of the outstanding notes and the application of net proceeds from
the sale, $209.2 million was outstanding under our revolving credit commitments
and $100.0 million was outstanding under the term loan, with an additional $69.8
million available to support our capital requirements including working capital
needs and capital expenditures. For a description of the interest rates and
other terms of the senior credit facility and the outstanding notes and notes to
be issued in the exchange offer, see "Description of Senior Credit Facility" and
"Description of Notes."
Our liquidity needs will be primarily for capital expenditures, working
capital and interest service requirements on our debt obligations. Capital
expenditures for fiscal year 1999 are expected to approximate $50 million, of
which $35.6 million had already been expended as of May 2, 1999. We believe that
our capital expenditures for the foreseeable future will be focused on
preventive maintenance and equipment replacement, projects intended to result in
cost savings and projects related to new product introductions. The amended
revolving credit facility imposes annual limits on capital expenditures which
were revised as of June 9, 1999 as follows: $52 million in fiscal 1999; $41
million in fiscal 2000; $41 million in fiscal 2001; $42 million in fiscal 2002;
and $42 million in fiscal 2003. The reason for the lower capital spending limits
going forward is the divestiture of Swift-Armour in Argentina and the nearly
completed status of our information technology infrastructure.
We anticipate that our operating cash flows, together with available
borrowings under our credit facility, will be sufficient to meet our working
capital requirements, capital expenditure requirements and interest service
requirements on our debt obligations.
Interest payments on the outstanding notes and notes to be issued in the
exchange offer and interest and principal payments on the indebtedness
outstanding under our senior credit facility and term loan will represent
significant cash requirements. However, our ability to raise funds to service
the outstanding notes and notes to be issued in the exchange offer may be
restricted by the revolving credit facility and our ability to effect equity
financing is dependent on results of operations and market conditions. In the
event that we are unable to refinance such indebtedness or raise funds through
asset sales, sales of equity or otherwise, our ability to pay principal of, and
interest on, the outstanding notes and notes to be issued in the exchange offer
would be adversely affected.
NINE MONTHS ENDED MAY 2, 1999 COMPARED TO NINE MONTHS ENDED MAY 3, 1998
Net cash provided by operating activities was $0.7 million in the first
nine months of fiscal 1999 compared to net cash used of $25.7 million in the
first nine months of fiscal 1998. The improvement in cash flows from operations
was principally driven by a smaller seasonal increase in working capital of
$61.4 million in the first nine months of fiscal 1999 compared to $105.5 million
in the first nine months of fiscal 1998, partially offset by the impact of lower
net earnings in the first nine months of fiscal 1999. The increase in
receivables to date has been larger in fiscal 1999 than in fiscal 1998 due to
transition issues related to the conversion from Campbell's systems to our own.
We are taking steps to collect these receivables and expect the balances to be
substantially reduced by our fiscal year-end.
Net cash used in investing activities was $8.9 million in the first nine
months of fiscal 1999 compared to $40.3 million in the first nine months of
1998. Proceeds of $20.7 million from the sale of the Kattus business were used
to pay down debt on our revolving credit facility. Capital expenditures were
$35.6 million in the first nine months of fiscal 1999 compared to $39.5 million
in the same period of the prior year.
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<PAGE> 52
Net cash provided by financing activities of $18.8 million in the first
nine months of fiscal 1999 was principally a net increase in borrowings under
the revolving credit facility. Financing activities were used primarily for
working capital requirements.
FISCAL YEAR ENDED AUGUST 2, 1998 COMPARED TO FISCAL YEAR ENDED AUGUST 3, 1997
Net cash provided by operating activities was $7.3 million in fiscal 1998
compared to $178.4 million in fiscal 1997. The variance in cash flows from
operations was driven by lower net earnings and changes in working capital. The
increase in working capital was attributed to an increase in receivables
resulting from trade receivables from Campbell previously eliminated as
intercompany balances and extended payment terms of certain receivables from the
government in Argentina, increased inventories, primarily pickles, and a
decrease in domestic marketing accruals.
Cash used in investing activities was principally for capital expenditures.
Capital expenditures were $62.3 million in fiscal 1998 compared to $79.3 million
in fiscal 1997. Capital expenditures were higher in the prior year due to new
capacity added to certain Vlasic pickle and Swanson frozen food production
facilities. During the second quarter of fiscal 1998, we acquired the SAFRA
trademark and certain equipment for the canned spreadable meats business in
Argentina for $6.4 million.
Cash provided by financing activities was principally funded from $56.5
million of net borrowing under the credit facility. Such financing activities
were used primarily for working capital requirements.
SEASONALITY
Our sales, net earnings and cash flows are affected by seasonal cyclicality
during certain parts of the year. Sales of frozen foods and mushrooms tend to be
marginally higher during the winter months. Sales of pickles, relishes and
barbecue sauce tend to be higher in the summer months. The majority of pickles
are packed during a season extending from May through September. As a result, we
tend to have higher sales in the fourth quarter of the fiscal year and our
inventory levels tend to be higher in the first quarter of the fiscal year which
makes our working capital requirements significantly higher in the first
quarter, requiring us to draw more heavily on the revolving credit commitments
under our senior credit facility.
YEAR 2000
The Year 2000 issue is the result of date-sensitive computer programs using
two digits rather than four to define the applicable year. If not corrected,
this could result in system failures or miscalculations leading to significant
disruptions in a company's operations. Prior to our spin-off from Campbell, a
worldwide information technology project was initiated to identify areas
impacted by Year 2000 issues. The purpose of this high-priority project was to
identify and remediate non-ready systems and devices before business processes
were affected. We completed a global business impact assessment and formulated
plans for timely correction, retirement, replacement or updating of non-ready
systems. We were aided in this effort by the fact that we were only recently
spun-off as an independent entity on March 30, 1998 and many of our business and
information systems in the U.S. have been newly purchased and implemented with
Year 2000 compliant technologies. The implementation of newly purchased systems
was substantially completed as of May 1999.
We have completed the work on our identified critical systems and
substantially completed the work on our other systems. Critical systems include
business planning and control process manufacturing, sales order billing and
warehouse management systems, that, if shut down or interrupted, could have a
material adverse effect on our results of operations, financial condition and
cash flows. We partner with experienced systems integration and Year 2000
vendors in the execution of our Year 2000 master plan.
The project has clear management responsibility, budgets, plans and
reporting requirements. Monthly project tracking and management reporting
processes are in place. The tracking process measures progress (plan versus
actual) for applications at a milestone level. The scope of the project covers
information technology systems, our infrastructure, including plant floor
devices, and our service partners, including logistical operations. An
assessment of our global information technology infrastructure has been
completed
49
<PAGE> 53
and engineers are currently remediating the plant production facilities.
Remediation of the technology infrastructure is targeted for completion by
October 31, 1999 and was approximately 95% completed as of July 1999.
We completed our testing of electronic interfaces with trading partners and
suppliers as part of the new system development project. Additionally,
questionnaires have been sent to major suppliers. Responses from suppliers are
continually evaluated and updated reports are being requested.
We reviewed the risks of Year 2000 issues and believe the risks are
minimized due to our policy of implementing standard tested and certified Year
2000 systems. The completed risk analysis performed by the independent engineers
for plant non-information technology systems has not identified any significant
risks. Because our Year 2000 compliance is dependent upon key third parties also
being Year 2000 compliant on a timely basis, there can be no guarantee that our
efforts will prevent a material adverse impact on our results of operations,
financial condition and cash flows. The possible consequences of not being fully
Year 2000 compliant include temporary plant closings, delays in the delivery of
finished products, delays in the receipt of key ingredients, containers and
packaging supplies, invoice and collection errors and inventory and supply
obsolescence. These consequences could have a material adverse impact on our
results of operations, financial condition and cash flows if we are unable to
conduct business in the ordinary course. We believe that our readiness program
should significantly reduce the adverse effect any such disruptions may have.
Concurrently with the Year 2000 readiness measures described above, we and
our operating subsidiaries are developing contingency plans intended to mitigate
the possible disruption in business operations that may result from the Year
2000 issue. Once developed, contingency plans and related cost estimates will be
continually refined as additional information becomes available.
The anticipated costs associated with modifying current systems to be Year
2000 compliant will be expensed as incurred; such anticipated costs total $3
million of which approximately $0.9 million was incurred during the first nine
months of fiscal 1999 and $1 million was incurred during fiscal 1998. While
there can be no assurance that we and our suppliers and customers will fully
resolve all Year 2000 issues, neither the estimated cost to become Year 2000
operationally effective nor the outcome of the Year 2000 issue is expected to
have a material impact on our operations, liquidity or financial position.
RECENT DEVELOPMENT
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities". This statement established accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. The
statement requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value. We must adopt the statement in fiscal 2001. We are currently
evaluating the effect that implementation of the new standard will have on our
results of operations and financial position.
MARKET RISK SENSITIVITY
We use or are permitted to use financial instruments, including fixed and
variable rate debt, as well as swap, forward and option contracts, to finance
our operations and to hedge interest rate and currency exposures. The swap,
forward and option contracts are entered into for periods consistent with
related underlying exposures and do not constitute positions independent of
those exposures. We do not enter into contracts for speculative purposes, nor
are we a party to any leveraged instrument.
The information below summarizes our market risks associated with debt
obligations and other significant financial instruments outstanding as of August
2, 1998. Fair values included herein have been determined based on quoted market
prices. The information presented below should be read in conjunction with Note
21 and Note 22 to our historical consolidated financial statements for the
fiscal year ended August 2, 1998 appearing elsewhere in this prospectus.
50
<PAGE> 54
For debt obligations outstanding as of August 2, 1998, the table presents
principal cash flows and related interest rates by fiscal year of maturity.
Capital lease obligations of $0.8 million are not included in the table.
Variable interest rates disclosed represent the weighted average rates of the
portfolio at the period end. For interest rate swaps, the table presents
notional amounts and related interest rates by fiscal year of maturity.
Both domestically and internationally, prior to the issuance of the
outstanding notes, we relied primarily on bank borrowings to meet our funding
requirements. For a description of our principal bank agreements, see
"Description of Senior Credit Facility."
<TABLE>
<CAPTION>
FAIR
DEBT 1999 2000 2001 2002 THEREAFTER TOTAL VALUE
- ---- ---- ---- ---- ---- ---------- ----- -----
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
Fixed rate....................... $ 0.2 $1.5 $-- $-- $ -- $ 1.7 $ 1.8
Average interest rate............ 7.42% 7.72%
Variable rate.................... $12.0 $557.0 $569.0 $569.0
Average interest rate............ 7.81% 6.45% 6.48%
Interest Rate Swaps:
Variable to fixed(1)............. $150.0 $150.0 $ (0.4)
Average pay rate................. 5.87% 5.87%
Average receive rate............. 5.70% 5.70%
</TABLE>
- ---------------
(1) Hedges U.S. bank borrowings.
As of May 2, 1999 the interest rate swap contracts provided that we pay an
average rate of 5.9% and receive an average interest rate of 5.1%. It would have
cost approximately $1.6 million to settle the interest rate swap contracts as of
May 2, 1999.
We entered into a forward starting swap contract with a 10 year maturity
and a notional amount of $50 million that hedged a portion of the interest rate
exposure associated with the issuance of the outstanding notes. In March 1999,
we settled the forward starting swap at no expense or benefit.
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<PAGE> 55
AVAILABLE INFORMATION
We have filed with the SEC a registration statement on Form S-4 under the
Securities Act of 1933, covering the notes to be issued in the exchange offer
(File No. 333- ). This prospectus does not contain all of the information
included in the registration statement. If we have filed any contract, agreement
or other document as an exhibit to the registration statement, you should read
the exhibit for a more complete understanding of the document or matter
involved.
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy the registration statement,
including the attached exhibits, and any reports, statements or other
information filed by us, at the SEC's public reference room at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the
SEC at 1-800-SEC-0330 for further information on the public reference room. Our
filings with the SEC are also available to the public from commercial document
retrieval services and at the SEC's Web site at "http://www.sec.gov." Shares of
Vlasic's common stock, no par value, are quoted on the New York Stock Exchange
("NYSE") (under the symbol "VL"), and copies of reports and other information
concerning Vlasic can also be inspected at the offices of the NYSE, 20 Broad
Street, New York, New York 10005.
This prospectus incorporates by reference the following documents filed by
us with the SEC:
- Annual Report on Form 10-K for the fiscal year ended August 2, 1998;
- Quarterly Reports on Form 10-Q for the fiscal quarters ended November 1,
1998, January 31, 1999 and May 2, 1999; and
- Current Reports on Form 8-K dated June 8, 1999 and August 16, 1999.
In addition, all reports and other documents we subsequently file under
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act will be deemed to be
incorporated by reference into this prospectus and to be part of this prospectus
from the date we subsequently file the reports and documents.
Any statements contained in a document incorporated or deemed to be
incorporated by reference into this prospectus are deemed to be modified or
superseded for purposes of this prospectus to the extent modified or superseded
by another statement contained in any subsequently filed document also
incorporated by reference in this prospectus. Any statement so modified or
superseded will not be deemed, except as so modified or superseded, to
constitute part of this prospectus.
In addition, you may request a copy of any of these filings, at no cost, by
writing or telephoning us at the following address or phone number:
Vlasic Foods International Inc.
Vlasic Plaza
6 Executive Campus
Cherry Hill, New Jersey 08002-4112
(856) 969-7100
Attention: Corporate Secretary
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<PAGE> 56
BUSINESS
THE COMPANY
We are a leading producer, marketer and distributor of high quality branded
food products. The two largest brands in our portfolio are Swanson and Vlasic,
under which we market Swanson frozen dinners, pot pies, breakfasts and the
larger-portion Hungry Man brand, and Vlasic pickles and relishes. Swanson and
Vlasic are among the most widely recognized food brands in the United States and
maintain leading market shares in the categories in which they compete. These
two brands accounted for approximately 60% of our pro forma net sales and
approximately 80% of our pro forma Adjusted EBITDA for the twelve months ended
May 2, 1999. Other brands within our portfolio include Open Pit barbecue sauces,
Vlasic Farms and Campbell's Fresh mushrooms in the United States, and Freshbake
frozen foods, SonA canned beans and vegetables and Rowats pickles in the United
Kingdom. These brands also maintain leading market shares in the categories in
which they compete. For the twelve months ended May 2, 1999, Vlasic had pro
forma net sales of $1.1 billion and pro forma Adjusted EBITDA of $110.9 million.
Vlasic was created through a tax-free spin-off from Campbell on March 30,
1998. As our product portfolio was not core to Campbell's strategy, we believe
substantial opportunity exists to grow sales and profitability through more
active brand management and marketing. The following factors are the foundation
of our future operations:
- STRONG BRAND RECOGNITION. Swanson and Vlasic have established themselves
as American icons. Consumer research undertaken by Vlasic indicates that
both the Swanson and Vlasic brands have over 90% brand awareness. The
Vlasic Stork is one of the most recognized brand symbols in the United
States and celebrated its 25(th) anniversary in 1998. Swanson is credited
with inventing the "TV dinner," which is celebrating its 45(th)
anniversary this year. Our portfolio of strong brands provides a critical
mass of brand name product sales that (a) allows us to operate cost
effectively and achieve economies of scale in manufacturing, marketing,
distribution and raw material sourcing and (b) provides a strong platform
for introducing product line extensions and new products.
- LEADING MARKET POSITIONS. Approximately 75% of our pro forma net sales
are derived from sales of branded products which are number one in the
categories in which they compete. As a result, these products provide a
solid base of consistent cash generation and offer opportunities to grow.
Vlasic is the leading brand in the $772 million U.S. retail pickle market
with a market share of approximately 32%, and management believes Vlasic
has maintained a leading market position for over 20 years. Swanson is
the leading brand in the $1.3 billion U.S. frozen dinner market with a
market share of approximately 27%, and management believes Swanson has
maintained a leading market position since its introduction in 1954.
RETAIL MARKET POSITION OF OUR BRANDS
<TABLE>
<CAPTION>
RETAIL MARKET SHARE
------------------------------
BRAND CATEGORY SHARE POSITION PERCENTAGE
----- -------- -------------- ----------
<S> <C> <C> <C>
Swanson............................... Frozen Dinners #1 United States 27%
Swanson............................... Frozen Pot Pies #1 United States 29%
Frozen Breakfast
Swanson............................... Entrees #1 United States 75%
Swanson............................... Frozen Branded Dinners #1 Canada 69%
Vlasic................................ Pickles #1 United States 32%
Open Pit.............................. Barbecue Sauce #1 Midwest U.S. 28%
Campbell's Mushrooms.................. Fresh Branded Mushrooms #1 United States 12%
Freshbake............................. Frozen Meat Pastries #1 United Kingdom 54%
</TABLE>
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<PAGE> 57
- STEADY INDUSTRY GROWTH. We operate in segments of the food industry that
have been consistently growing. Between 1994 and 1998 frozen categories
in which Swanson competes have grown by over 1% per year. We believe
between 1981 and 1998 sales of pickles grew by an average of 3% per year.
In addition, Vlasic's introduction in 1995 of Sandwich Stackers, a new
pickle product, contributed to the expansion of the pickle market and we
believe that the launch of another new product, Hamburger Stackers, could
again increase both total sales in the pickle market and our share of
that market.
- EXPERIENCED MANAGEMENT. Mr. Robert F. Bernstock, the President and Chief
Executive Officer of Vlasic, was a senior executive at Campbell for more
than seven years. As President of Campbell's $3.5 billion U.S. Grocery
Division, Mr. Bernstock revitalized brands and improved operating
margins. Mr. Bernstock has assembled an experienced management team
composed of many Campbell executives who chose to join Vlasic as well as
executives who joined from other large companies. The senior management
team is also experienced in revitalizing brands, and the top eleven
executives have an average of twelve years experience in the branded food
industry. Senior management compensation is significantly driven by the
financial and stock price performance of Vlasic.
BUSINESS STRATEGY
Campbell assembled our current brands and established a new Vlasic
corporate structure to complete the spin-off in March 1998. We intend to build
from our core Swanson and Vlasic brands to grow revenues and earnings and
establish a premier branded food company. We seek to accomplish these goals
through a five-part strategy.
1. REVITALIZE OUR WELL-KNOWN BRANDS. Prior to Vlasic's spin-off from
Campbell, our brands were not core to Campbell's strategy, and we believe were
not given the marketing resources to invest in necessary levels of innovation
and advertising to drive sustained sales growth of these brands. We are
undertaking the following three pronged approach to revitalize our well-known
brands:
REFORMULATE AND IMPROVE EXISTING PRODUCTS. Prior to the spin-off, few
improvements had been made to the products within Vlasic's brands. Last year we
began a systematic, multi-year review of our portfolio intended to improve the
quality and increase the appeal of our products to consumers. This review has
led to changes in the way we produce our most basic products. For example, in
1999 we changed how chickens are cut for our fried chicken dinner line, the
largest product group within the Swanson brand. This change has resulted in a
redesigned and relaunched product comprised of larger chicken pieces with more
meat for consumers and fewer unused chicken parts in our production process,
which has improved margins. Since this relaunch, in the twelve-week period ended
May 9, 1999, Swanson fried chicken dinner retail sales have grown by 37%. We
also recently announced the relaunch of Vlasic Sandwich Stackers in the Zesty
Garlic, Bread & Butter, Zesty Dill and Polish Dill varieties.
DEVELOP AND LAUNCH NEW PRODUCTS. In order to expand our brands and meet
changing consumer preferences, we continuously strive to develop and launch new
products. In fiscal 1999, we launched our first boneless fried chicken dinner
line which addresses a consumer preference that has grown dramatically. The
launch of this product has been well received by our customers and the new
Swanson Hungry Man boneless fried chicken dinner is now the number one dinner in
dollar sales in the entire frozen dinner category. In February 1999, we began
shipments to retailers of our new Vlasic Hamburger Stackers, large pickle slices
cut from our specially-grown giant cucumbers which fit over an entire hamburger.
Extensive consumer testing leads us to believe this product will be well
received by consumers and it is already in high demand among retailers. We
recently announced several new products for fiscal 2000, including Swanson
Potato-Topped pot pies, Swanson Hungry Man Deep Dish pot pies, several new
breakfast items under the Great Starts brand and Swanson Family Selections, two
new family dinner items which serve a family of four and are designed to be
easily prepared within 20 minutes.
REFOCUS MARKETING AND SALES SUPPORT. We intend to refocus marketing
support for our Swanson and Vlasic brands in order to refresh our already high
consumer awareness with new advertising campaigns and a number of other
promotional programs. Over the past several years, limited consumer-based
marketing was performed to promote the Swanson and Vlasic brands. For example,
no national television advertising had
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been done for the Swanson brand in over a decade. We believe more active
marketing will attract both consumers who know our products but have not
recently purchased them as well as new consumers who have not tried the brands.
In January 1999, we launched a new television advertising campaign for Swanson
entitled "Make New Memories with Swanson," which builds on the traditional role
Swanson TV dinners have played in American life. In addition we began national
advertising for Vlasic in the spring of 1999. We have also increased consumer
promotional activities such as couponing. We intend to continue to increase
marketing in fiscal 2000 to support our major product initiatives.
2. REDUCE COSTS THROUGH CONTINUOUS IMPROVEMENT PROGRAMS. We view cost
improvement as a strategic imperative in the management of our business. Cost
reductions across Vlasic have been and we believe will continue to be
accomplished through operating changes in our production facilities and through
better utilization of fixed assets, working capital and raw materials. After
giving pro forma effect to the sale of our Swift-Armour Argentine beef business,
we achieved cost savings of approximately $5 million in fiscal 1998 and we
estimate that we will realize cost savings of approximately $13 million in
fiscal 1999, approximately $8 million of which have been realized through the
nine months ended May 2, 1999. These cost savings have been or are expected to
be generated by production efficiency improvements at the Imlay City, Michigan
pickle plant and the Fayetteville, Arkansas frozen food plant, a reformulation
of our frozen fried chicken which improved raw materials yields from 64% for the
fiscal year ended August 2, 1998 to 84% for the nine months ended May 2, 1999,
and administration reductions and warehouse consolidations in the United
Kingdom.
3. MANAGE OUR ASSETS TO MAXIMIZE CASH FLOW. As part of our ongoing review
of each business, we routinely analyze how each of our assets performs and how
each fits into our business lines' long-term strategy. The goal behind these
reviews is to actively manage our assets to maximize cash flow and improve
return on capital. We periodically utilize co-packing or other outsourcing
agreements and continuously undertake strategies to improve capital expenditure
effectiveness. We currently benefit from the significant capital investment made
prior to the spin-off to rationalize and modernize some of our frozen food and
pickle facilities. Due to this investment program, we believe that our capital
expenditures for the foreseeable future will be focused on cost effective
maintenance, cost saving projects and new product introductions. Recent
initiatives include closure of our pickle plant in Bridgeport, Michigan, closure
of our Dublin, Georgia mushroom farm, our decision to co-pack production of Open
Pit barbecue sauce and our sale of the Peterlee frozen foods facility in the
United Kingdom.
4. EXPLORE OPPORTUNITIES FOR PORTFOLIO RECONFIGURATION. Our portfolio was
assembled by Campbell and represents a diverse group of brands and businesses
with varying returns and prospects. Prior to the spin-off, these products were
managed within multiple Campbell business divisions. Our strategy has been to
focus on our strategic core brands, Swanson and Vlasic, which we believe were
not achieving their potential due to low consumer marketing investment and lack
of a clear strategy for product development. We may also consider divesting
those segments of our business that do not fit within our core branded food
strategy. We sold our Swift-Armour Argentine beef business in July 1999 and we
sold our Kattus German gourmet food distribution business in January 1999. In
addition, we may in the future pursue selective acquisitions that complement our
existing portfolio.
5. CAPITAL STRUCTURE MANAGEMENT. One of our corporate goals is to manage
our balance sheet to enhance our ability to execute our business strategy. We
strive to achieve liquidity, to have access to multiple sources of capital and
to be in a position to apply excess cash towards debt reduction. We believe this
will allow us to grow the brands which we believe offer significant long-term
potential.
PRODUCTS
We manufacture and market popular branded food products that are leaders in
their respective markets. Approximately 80% of our pro forma net sales are
derived from sales of branded products which are number one in the categories in
which they compete. Despite the lack of consumer marketing attention given to
the brands in the years immediately preceding the spin-off, these brands have
developed broad customer
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recognition based on a heritage of innovative products and packaging and through
strong marketing and advertising support over the years.
FROZEN FOOD SEGMENT
- We manufacture and market frozen food products in the United States,
primarily frozen dinners, pot pies and breakfasts, under the Swanson,
Hungry-Man, Great Starts and Fun Feast brands. In addition, we market
frozen food products in Canada, primarily frozen dinners and pot pies,
under the Swanson, Hungry-Man, Lunch and More and Great Starts brands. We
also manufacture and distribute a variety of frozen food products in the
United Kingdom under our Freshbake brand.
- The Swanson brand of frozen foods has been in the market since 1951. The
product that made the Swanson name known nationwide was our first frozen
TV dinner introduced in 1954 that consisted of sliced turkey and gravy on
cornbread dressing with buttered peas and sweet potatoes. Mashed potatoes
soon replaced sweet potatoes and fried chicken and beef joined the line.
Sales escalated and within a short time the brand Swanson had become an
integral part of America's rapidly transforming television-based culture.
It is now among the most recognized brands in the United States with
brand recognition of approximately 93%.
- Swanson targets those consumers who desire nutritious and satisfying
meals that are convenient to prepare. The frozen food product lines
consist of approximately 50 varieties of frozen dinners, 8 varieties of
pot pies and 22 varieties of breakfasts. A frozen dinner typically
consists of a combination of a meat, vegetable, starch and a dessert. A
frozen breakfast typically consists of a complete breakfast meal (a
combination of an egg product, sausage, bacon and/or a pancake) or a
breakfast sandwich or breakfast burrito.
- We believe the Swanson brand has consistently been the leading national
brand of frozen, traditional dinners in the United States over the last
45 years, and now holds approximately 27% of the $1.3 billion frozen
dinner market. Between 1994 and 1998, frozen categories in which Swanson
competes have grown by over 1% per year. In addition, Swanson frozen pot
pies are the market leader in their product category with approximately
29% of the $292 million frozen pot pie market. Overall, we are the
nation's third largest producer of frozen dinners and entrees, pot pies
and breakfasts, with approximately 12% of this $4.6 billion market.
- Swanson frozen foods are sold primarily on a wholesale basis through a
broker sales force. The brokers sell directly to large grocery chains,
mass merchandisers and club stores and also to frozen food distributors
who resell the product to smaller grocery stores and chains.
- Our United Kingdom operations manufacture and distribute frozen foods
such as sausages, pies and vegetable and meat filled pastries under our
Freshbake brand, as well as the private label brands of certain
customers. Our primary customers are grocery chains and other retail
establishments and foodservice wholesalers.
GROCERY PRODUCTS SEGMENT
The main product offerings of our grocery products businesses are pickles
and relishes, barbecue sauce and international grocery products.
PICKLES AND RELISHES
- Our Vlasic brand is the leading national retail brand of pickles with
approximately 32% of the $772 million United States national retail
pickle market.
- Vlasic began as a family owned business in 1916 by a Croatian cheesemaker
from Austria. Long recognized for their authentic Eastern European
flavor, Vlasic pickles received national attention in the 1970's with the
appearance of the successful television campaign which introduced the
popular Vlasic
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stork. The company merged with Campbell in 1978 and the product line grew
with a variety of pickles, relishes, peppers and sauerkraut.
- In 1995 we introduced an innovation in the retail pickle market with the
introduction of Sandwich Stackers, our brand for pickles that have been
pre-sliced longitudinally. Sandwich Stackers appeals to the consumer
market by allowing the consumer to only place one or two slices of pickle
on each sandwich and alleviating the problem of small slices of pickles
falling out of sandwiches. We believe this innovation contributed
substantially to the expansion of the retail pickle market as a whole
from an average of approximately $600 million per year between 1990 and
1994 to an average of over $700 million per year between 1995 and 1998
and to increase our share of the market. During 1999 we introduced
Hamburger Stackers, a pre-sliced pickle similar in size to a hamburger
(and cut from a giant cucumber). Hamburger Stackers are marketed as "the
best pickle for your burger because they provide pickle taste and crunch
in every bite." Hamburger Stackers are sliced from an all natural giant
cucumber that is more than 10 times the size of a traditional cucumber
and produces pickle slices large enough to cover an entire hamburger.
Since over one-third of all hamburgers consumed in the United States
contain a pickle, we believe that sales of Hamburger Stackers could
increase the size of the pickle market and our level of net sales
attributable to this market.
- We also manufacture and sell jarred, shelf-stable pickles under the
Milwaukee's and Wiejske Wyroby brands, and relishes, peppers and
sauerkraut under the Vlasic and Milwaukee's brand names. We sell
shelf-stable pickles and other condiments to foodservice customers,
including quick service restaurants such as McDonald's. We also
manufacture and sell a small quantity of refrigerated pickles that are
sold through the same distributors as our shelf stable pickles.
BARBECUE SAUCE
- The product line consists of a variety of sizes and flavors of Open Pit
brand barbecue sauces. In the Midwestern region of the United States,
Open Pit is the leading barbecue sauce with a 28% share of the retail
market. Open Pit is manufactured through a co-pack arrangement. During
1999, we introduced Open Pit barbecue sauce in a plastic squeezable
bottle, responding to changing consumer preferences.
INTERNATIONAL GROCERY PRODUCTS
- In the United Kingdom, we produce canned beans and vegetables under our
SonA brand and pickles under our Rowats brand. Canned products are
primarily sold directly to restaurants and cafeterias or through
foodservice distributors. Pickles are sold to retail outlets by our
direct sales force. We also manufacture private label brand grocery
products consisting of pickles and canned beans and vegetables for large
supermarket chains.
AGRICULTURAL PRODUCTS SEGMENT
We are one of the largest producers of fresh mushrooms in the United
States. Additionally, we manufacture a variety of frozen foods for Campbell.
MUSHROOMS
- We own and operate seven mushroom farms across the United States. In
1999, we closed our Dublin, Georgia mushroom farm. Our mushroom sales
under the Campbell's and Campbell's Fresh labels accounted for
approximately 12% of the United States fresh branded mushroom market in
1998, which makes us the largest brand and one of the largest fresh
mushroom operations in the United States. Approximately 95% of the
mushrooms we grow are traditional white button mushrooms. The rest are
fancy mushrooms, such as portabella and crimini mushrooms.
- Campbell is a major purchaser of our mushrooms pursuant to a supply
agreement expiring on July 30, 2000. Sales to Campbell of mushrooms
accounted for approximately 27% of our total net sales of
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mushrooms in fiscal 1998. The remainder are packed by us prior to
shipment and transported to restaurants, retail chains and farmer
markets, and have an average shelf life of 7 days. These are sold under
the Campbell's and Campbell's Fresh trademark but are being transitioned
to the Vlasic Farms brand beginning in fiscal 1999.
CONTRACT PACKING
- We manufacture a variety of frozen foods for Campbell, such as Prego
Family Size Lasagna and entrees for consumption by restaurants and
cafeterias, under the terms of a co-pack agreement expiring on March 29,
2000. Approximately 35% of the production volume of our Omaha, Nebraska
facilities is devoted to this contract.
MARKETING, SALES AND DISTRIBUTION
Our marketing programs consist of consumer-based marketing, such as
advertising and trade promotions. Trade promotions focus on obtaining retail
display support, achieving temporary price reduction and securing and increasing
retail shelf space. We engage in radio, television and print advertising to
build brand equity by emphasizing the heritage and characteristics of our
products and promoting new products within brand segments. In January 1999, we
commenced a new advertising campaign entitled "Make New Memories with Swanson."
Other consumer promotions include couponing to generate trial usage and increase
purchase frequency. Our coupons are printed in magazines and in advertising
inserted in magazines and newspapers.
We manage the sales and distribution of our products based on the channels
through which they are sold. Combined sales to Campbell of frozen foods, beef
and mushrooms accounted for 11% of our net sales in fiscal 1998. None of our
other customers accounted for 10% or more of our net sales in fiscal 1998.
We use an independent broker sales force to sell frozen foods and grocery
products in the United States and Canada to grocery chains and wholesalers. We
have recently established a broker website to improve broker effectiveness and
communication between us and the brokers. In some instances, we sell directly to
mass merchandisers such as Wal-Mart and club stores. We use independent
commercial carriers to distribute these products from our manufacturing
facilities directly to our customers or third party warehouses. Historically,
our frozen foods and grocery products have been sold through the same brokers.
While the delivery of domestic retail grocery products has been integrated into
a single system, frozen foods are delivered separately because of the need for
refrigeration during shipping. Brokers also sell frozen foods to frozen foods
distributors and grocery products to grocery distributors, both of which in turn
sell and deliver the products to smaller grocery chains and retailers. We sell
mushrooms through a dedicated team of either independent brokers or employed
salespeople, depending on the region, and deliver them refrigerated to our
customers by a combination of independent commercial carriers and our own
transport, depending on location.
In the United Kingdom, we operate a dedicated sales force to market our
products to our retail and foodservice customers. We sell frozen and grocery
products marketed under the Freshbake, SonA and Rowats brands, as well as the
private labels of customers, directly to retail and foodservice customers or
through wholesalers.
INVENTORY
We employ an inventory forecasting technique that has allowed us to
increase operating efficiency. In general, the food industry does not receive
product returns and we primarily operate using the pricing terms and conditions
that are standard in the food industry.
COMPETITION
We face intense competition in each of our product lines. We compete with
other producers of similar products on the basis of, among other things, product
quality, convenience, price, brand recognition and loyalty, customer service,
effective advertising and promotional activities and the ability to identify and
satisfy emerging consumer preferences. We compete with a significant number of
companies of varying sizes,
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including divisions or subdivisions or subsidiaries of larger companies. A
number of these competitors have broader product lines, substantially greater
financial and other resources available to them, lower fixed costs and/or longer
operating histories than Vlasic. Our ability to grow our business could be
impacted by the relative effectiveness of and competitive response to our new
product efforts, product innovation and new advertising and promotional
activities. In addition, from time to time, we experience margin pressure in
certain markets as a result of competitors' pricing practices or as a result of
price increases for the ingredients used in our products. Although we compete in
a highly competitive industry for representation in the retail food and
foodservice channels, we believe that our brand strength in our various markets
has resulted in a strong competitive position.
The terms of the food service supply agreement with Campbell and the
separation and distribution agreement with Campbell prohibit us from entering
certain product lines which would directly compete with Campbell. Our Swanson
trademark license does not allow us to sell Swanson branded frozen soups, stocks
or broths. This restricts our ability to compete in certain product lines which
we may otherwise have wished to enter.
INGREDIENTS
We believe that sources of raw materials used in the frozen food businesses
are readily available. Our frozen food business uses beef and poultry we obtain
from third party suppliers.
Our grocery products businesses rely primarily on cucumbers, peppers and
other produce 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.
In the agricultural products segment, we purchase fresh mushrooms from
third parties to fulfill seasonal requirements.
Prices of raw materials can fluctuate due to a number of factors, including
changes in crop size, cattle cycles, government-sponsored agricultural programs,
natural disasters, weather conditions during the growing and harvesting seasons,
general growing conditions and the effect of insects, plant diseases and fungi.
Adverse weather conditions in Argentina during the latter part of calendar 1997
and during most of calendar 1998 resulted in a decrease in the availability of
beef and higher cattle costs in our agricultural products segment. Commencing in
October 1998, we experienced a decrease in 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 and results of operations. On May 24, 1999 we announced our decision
to divest the Swift-Armour Argentine business. The sale was completed within our
fiscal year ended August 1, 1999. In connection with the sale of the
Swift-Armour Argentine beef business, we entered into a supply agreement under
which we will purchase beef produced by Swift-Armour. Although we have sold the
Swift-Armour business, we do not expect any adverse impact on our beef supply.
We purchase a variety of packaging materials, which we believe are readily
available from a number of suppliers.
TRADEMARKS AND PATENTS
We own many popular trademarks registered in various countries, including
Vlasic, Hungry-Man, Sandwich Stackers, Hamburger Stackers, Great Starts, Open
Pit, Freshbake, SonA and Rowats. Our trademarks are very important to the Vlasic
businesses. We protect our trademarks by obtaining registrations where
appropriate and aggressively opposing any infringement.
We also have a perpetual, royalty-free license to use the Swanson trademark
for frozen foods except soups and broths. However, we are required to use the
licensed trademarks in the same manner as they were used by Campbell immediately
before the spin-off and to obtain the prior written approval of Campbell (such
approval not to be unreasonably withheld or delayed by more than five (5)
working days from receipt of a
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notice requesting approval) to the visual appearance and labeling of all
packaging, advertising materials and promotions bearing the licensed trademarks
which we intend to use. We have the right to continue to sell fresh mushrooms
under the Campbell's brand for a transition period of up to three years from
March 30, 1998. These license agreements contain standard provisions, including
those dealing with assignability, quality control and termination upon, among
other things, material breach and bankruptcy. We have granted the previous
owners of Open Pit a trademark license to use the Open Pit trademark in the
foodservice industry.
Although we own a number of patents covering manufacturing processes, we do
not believe the Vlasic businesses depend on any of these patents to a material
extent.
RESEARCH AND DEVELOPMENT
Our research and development is conducted at multiple sites within and
outside the United States. The research and development organization consists of
approximately 60 people. The research and development staff works on, among
other things, new products, improving the nutrition and taste of existing
product lines and packaging innovations. About 46 people are located in the
United States and the rest are located outside the United States. Expenditures
for research and development in fiscal 1998, 1997 and 1996 were $7.9 million,
$8.6 million and $8.1 million, respectively.
An agricultural research and development company developed the "giant
cucumber" that will be used for the production of Hamburger Stackers. Under our
agreement with this agricultural company, we have the exclusive right to
purchase "giant cucumber" seeds from the agricultural company in the United
States until November 2000.
EMPLOYEES
Our work force consists of approximately 5,600 full time employees. Of the
total number of employees, approximately 5,200 are engaged in manufacturing and
approximately 400 are engaged in marketing and sales and administration.
Our United States work force consists of approximately 4,700 employees,
approximately 2,600 of whom are represented by collective bargaining agreements
with various unions. Such collective bargaining agreements expire on various
dates beginning on January 21, 2000. Outside of the United States, our work
force consists of approximately 900 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 and 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.
PRODUCTION AND FACILITIES
We currently own or lease 14 principal production facilities in the United
States and the United Kingdom. In July 1999, we sold our Swift-Armour Argentine
beef business including its facilities. In April 1999, we announced our plans to
close our Dublin, Georgia mushroom farm, which has ceased operation. Our
corporate headquarters is leased. We believe that these facilities 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>
Fayetteville, Arkansas................................... Frozen Foods
Omaha, Nebraska.......................................... Frozen Foods
Salford, England......................................... Frozen Foods
Glasgow, Scotland........................................ Frozen Foods
Imlay City, Michigan..................................... Pickles and Relishes
Millsboro, Delaware...................................... Pickles and Relishes
</TABLE>
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<TABLE>
<CAPTION>
FACILITY LOCATION PRINCIPAL PRODUCTS
- ----------------- ------------------
<S> <C>
Stratford, England....................................... Pickles, Canned Beans and Vegetables
Blandon, Pennsylvania.................................... Mushrooms
West Chicago, Illinois................................... Mushrooms
Brighton, Indiana........................................ Mushrooms
Fennville, Michigan...................................... Mushrooms
Hillsboro, Texas......................................... Mushrooms
Jackson, Ohio............................................ Mushrooms
Pescadero, California.................................... Mushrooms
</TABLE>
CERTAIN LEGAL AND REGULATORY MATTERS
LITIGATION
Vlasic, in the ordinary course of business, is involved in various legal
proceedings. We are, however, not aware of any pending claims or litigation the
outcome of which would have a material adverse effect on our business, financial
position or results of operations.
PUBLIC HEALTH
We are subject to the Federal Food, Drug and Cosmetic Act and regulations
promulgated thereunder by the FDA. This comprehensive regulatory program
governs, among other things, the manufacturing, composition and ingredients,
labeling, packaging and safety of food. For example, the FDA regulates
manufacturing practices for foods through its current "good manufacturing
practices" regulations and specifies the "recipes," called standards of
identity, for certain foods. In addition, the Nutrition Labeling and Education
Act of 1990, as amended, prescribes the format and content of certain
information required to appear on the labels of food products. We are subject to
regulation by certain other governmental agencies, including the USDA. Our
frozen food manufacturing facilities are continuously inspected by the USDA.
Our operations and our products are also subject to federal, state and
local regulation through such measures as licensing of plants, enforcement by
state health agencies of various state standards and inspection of the
facilities. Enforcement actions for violation of federal, state, and local
regulations may include seizure and condemnation of violative products, cease
and desist orders, injunctions and/or monetary penalties. We believe that our
facilities and practices are sufficient to maintain compliance with applicable
government regulations, although there can be no assurances in this regard.
FEDERAL TRADE COMMISSION
We are subject to certain regulations by the Federal Trade Commission
("FTC"). Advertising of our products is subject to regulation by the FTC
pursuant to the Federal Trade Commission Act and the regulations promulgated
thereunder.
EMPLOYEE SAFETY REGULATIONS
We are subject to certain health and safety regulations including
regulations issued pursuant to the Occupational Safety and Health Act. These
regulations require us to comply with certain manufacturing, health and safety
standards to protect our employees.
INSURANCE
We maintain general liability, property, workers compensation and other
insurance in amounts and on terms that we believe are customary for companies
similarly situated.
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OUTSIDE THE UNITED STATES
Outside the United States, we are regulated by the regulatory authorities
of countries in which we have operations or to which we ship products. 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 United States and other countries in which we have
operations. Laws and regulations relating to worker health and workplace safety
also apply to our operations.
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 from this exposure, after taking into consideration
amounts already provided for, should not have a material adverse effect on our
business, 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. We believe
that our operations are in substantial compliance with existing environmental
and occupational health and safety regulations.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
Set forth below is certain information regarding the directors and
executive officers of Vlasic as of August 2, 1999:
<TABLE>
<CAPTION>
NAME AGE POSITION AND OFFICES
- ---- --- --------------------
<S> <C> <C>
Robert F. Bernstock.... 48 Director, President and Chief Executive Officer
Mitchell P.
Goldstein............ 38 Vice President and Chief Financial Officer
Norma B. Carter........ 52 Vice President, General Counsel and Corporate Secretary
Lynne A. Alvarez....... 42 Vice President, President -- Europe
Murray S. Kessler...... 40 Vice President, President -- Swanson Division
Mark I. McCallum....... 44 Vice President, President -- Grocery Division
Donald J. Keller....... 67 Director, Chairman of the Board of Directors
Robert T. Blakely...... 57 Director
Morris A. Cohen........ 51 Director
Tristram C. Colket,
Jr. ................. 61 Director
Lawrence C. Karlson.... 56 Director
Shaun F. O'Malley...... 64 Director
</TABLE>
ROBERT F. BERNSTOCK. Mr. Bernstock has been President and Chief Executive
Officer of Vlasic since March 1998. Mr. Bernstock served as Executive Vice
President of Campbell Soup Company and President of its Specialty Foods Division
since July 1997. Prior to that, he was appointed President -- U.S. Grocery
Division and Senior Vice President of Campbell Soup Company in March 1996. Mr.
Bernstock served as President -- International Grocery Division of Campbell Soup
Company from August 1994 to February 1996. He served as President --
International Soup Division of Campbell Soup Company from June 1993 to July 1994
and was Vice President of Campbell Soup Company. Mr. Bernstock is a director of
the National Food Processors Association, the Rowan University College of
Business Administration, the Philadelphia Tennis Patrons, and Grocery
Manufacturers of America and is a Trustee Emeritus for the Campbell Soup
Foundation, Conference Board of Canada and Canada's National Institute of
Nutrition.
MITCHELL P. GOLDSTEIN. Mr. Goldstein was named Vice President and Chief
Financial Officer in October 1998. Prior to that he was Vice President,
Strategic Planning and Corporate Development and President of Vlasic Farms, Inc.
from June 1998. Mr. Goldstein was elected Vice President -- Strategic Planning
and Corporate Development in March 1998. Prior to joining Vlasic, Mr. Goldstein
served as the head of Strategic Planning for the Specialty Foods division of
Campbell Soup Company. 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.
NORMA B. CARTER. Prior to joining Vlasic, Ms. Carter served in the Legal
Department of Campbell Soup Company since January 1981, most recently as Vice
President -- Legal. Ms. Carter joined Campbell after six years as a trial lawyer
for the Antitrust Division of the U.S. Department of Justice.
LYNNE A. ALVAREZ. Ms. Alvarez was named President -- Europe in August
1999. Prior to that she was Vice President -- Global Marketing and Sales
Services from March 1998. Prior to joining Vlasic Ms. Alvarez served as Vice
President of Customer Marketing, Planning and Promotion with Cambell Soup
Company since May 1996. Prior to that Ms. Alvarez served six years as the
principal in the management consulting firm L.A. Associates.
MURRAY S. KESSLER. Prior to joining Vlasic, Mr. Kessler served as General
Manager for the Swanson division of Campbell Soup Company. 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
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<PAGE> 67
various positions, including Vice President of Sauces and Vice President --
National Sales Manager for the Meal Enhancement Group of Campbell.
MARK I. MCCALLUM. Mr. McCallum was named President of the Grocery Division
in June 1998 and served as Vice President and General Manager -- Grocery since
March 1998. Prior to joining Vlasic, Mr. McCallum served Campbell Soup Company
as General Manager for the Mushroom, Open Pit and the Canadian Swanson Frozen
businesses. Prior to that, he served as Vice President and General Manager for
the Sanwa, Campbell's 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.
DONALD J. KELLER. Mr. Keller is Chairman of Vlasic Foods International
Inc. He served as Chairman for Prestone Products Corporation from 1995-1997 and
as Chairman of B. Manischewitz Co. from 1993-1998. His experience includes
WestPoint Pepperell Inc. where he served as President and Chief Operating
Officer and General Foods Corporation, where he became an Executive Vice
President. Mr. Keller is a Director of Dan River Inc. and Air Express
International.
ROBERT T. BLAKELY. Mr. Blakely has been an Executive Vice President and
Chief Financial Officer of Tenneco Inc. since 1981. He is a Director of the New
York City Ballet, the Manhattan and Bronx Council of the Boy Scouts of America,
Solutia Inc. and the United Way of Greenwich. He is also a Trustee of Cornell
University.
MORRIS A. COHEN. Mr. Cohen is the Matsushita Professor of Manufacturing
and Logistics at the Wharton School of the University of Pennsylvania. He has
been a Professor at the Wharton School since 1974. He has been a visiting
faculty member at Stanford University and the Massachusetts Institute of
Technology, and is Co-Director of Wharton's Fishman-Davidson Center for Service
and Operations Management. He is currently a member of Editorial Advisory Board
of Supply Chain Management Review, the Journal of Production and Operations
Management, and the Journal of Manufacturing and Service Operations Management.
He has also done consulting work at Saturn Corporation, Intel Corporation,
International Business Machines Corporation, Campbell Soup Company, the U.S.
Navy and Teradyne, Inc.
TRISTRAM C. COLKET, JR. Mr. Colket owns Tekloc Enterprises, a private
investment firm. He is a Trustee of the Colket Foundation
LAWRENCE C. KARLSON. Mr. Karlson is Chairman of AmeriSource Health
Corporation. He also provides consulting services to a wide variety of
businesses. Prior to 1993, he served as Chairman of Spectra-Physics AB, formerly
Pharos AB, where he had also served as President and CEO. Mr. Karlson is a
director of AmeriSource Health Corporation, CDI Corporation and Spectra-Physics
Lasers Inc.
SHAUN F. O'MALLEY. Mr. O'Malley retired from Price Waterhouse in 1995. He
served at Price Waterhouse for many years, most recently as Chairman and Senior
Partner. Mr. O'Malley is a director of the Wharton School at the University of
Pennsylvania, Horace Mann Educators Corporation, Coty, Inc. and the Curtis
Institute of Music.
COMMITTEES OF THE BOARD
Our Board of Directors has an Audit Committee, a Compensation and
Organization Committee and a Governance Committee.
AUDIT COMMITTEE
The Audit Committee is composed of non-employee directors and currently
consists of Robert Blakely (Chair), Morris Cohen and Lawrence Karlson. The Audit
Committee's mission is to oversee the adequacy of our internal control systems
and the accuracy and integrity of our financial reporting. In addition, the
Audit Committee sets a positive "tone at the top" which fosters a company-wide
attitude of integrity and control
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<PAGE> 68
consciousness. The Audit Committee recommends the appointment of our independent
accountants and confers independently with the internal auditors and the
independent accountants. The Audit Committee reviews non-audit services to be
performed by the independent accountants and determines appropriate fees for
both audit and non-audit services.
COMPENSATION AND ORGANIZATION COMMITTEE
The Compensation and Organization Committee is composed of non-employee
directors and currently consists of Shaun O'Malley (Chair), Tristram C. Colket,
Jr. and Donald Keller. The mission of the Compensation and Organization
Committee is to provide an independent review of our organization, our
performance objectives and management compensation. The committee is responsible
for the Chief Executive Officer evaluation process.
GOVERNANCE COMMITTEE
The Governance Committee is composed of non-employee directors and
currently consists of Donald Keller (Chair), Robert Blakely and Shaun O'Malley
and its mission is to assure the independence of the Board as it exercises
corporate governance and oversight roles. The Governance Committee seeks
potential nominees for board membership in various ways and will consider
suggestions submitted by shareowners. Such suggestions, together with
appropriate biographical information, are submitted to the Corporate Secretary
of Vlasic.
COMPENSATION OF DIRECTORS
A director who is a Vlasic employee does not receive any payment for his
services as a director. For the 1998 fiscal year, each non-employee director
received a board attendance fee of $2,000 per meeting of the board of directors
at which he participated ($500 if the meeting was held by conference call) and a
committee attendance fee of $1,500 per committee meeting ($500 if the meeting
was held by conference call).
In addition, on March 30 of each year (beginning March 30, 1999),
non-employee directors will be granted stock options that have a Black-Scholes
value of approximately $40,000 with the exercise price based on the fair market
value of Vlasic common stock on March 30 or the next business day, if March 30
is not a business day, which will vest cumulatively over three years at the rate
of 30%, 60% and 100%, respectively, on the first three anniversaries (new
directors will receive a prorated amount of options based on date of election).
The stock options have a term of ten years. On April 6, 1998, Shaun O'Malley and
Robert Blakely each received an option to purchase 5,100 shares of Vlasic common
stock. Upon their election as directors, Lawrence Karlson was granted 4,250
options on June 2, 1998 and Richard Huber (a former director) and Morris Cohen
were each granted 3,825 options on July 7, 1998. On April 6, 1998, Donald Keller
received a retainer of $100,000 and a grant of 35,000 options. Included in the
35,000 options was a special grant of options to compensate for his loss of
certain options to acquire Sysco Corp. stock that he forfeited to become the
Chairman of Vlasic.
Non-employee directors do not have a retirement plan nor do they
participate in our benefit plans. They are covered under our business travel
accident insurance policy while traveling on Vlasic business. Directors have the
option to elect to defer all or a portion of any cash compensation. Directors
are reimbursed for actual travel costs.
COMPENSATION OF EXECUTIVE OFFICERS
Prior to the spin-off by Campbell, the executive officers named in the
Summary Compensation Table in this prospectus were employees of Campbell. Their
compensation for services prior to the effective date of the spin-off and their
1998 annual bonuses were determined solely by Campbell. In anticipation of the
spin-off, Campbell developed a compensation structure for Vlasic that it
considered appropriate for us. The Compensation and Organization Committee,
working with management, is evaluating this compensation structure. A
description of the current program follows.
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<PAGE> 69
POLICIES AND OBJECTIVES
The key components of our current executive compensation program are base
salary, annual bonus, and long-term incentive. The intention is to maintain base
salaries for the executives at approximately the 50th percentile of a
compensation peer group composed of 31 consumer packaged goods companies whose
size have been comparably regressed. Bonus and long-term incentive are targeted
at about the 75th percentile of the same comparably regressed compensation peer
group.
ANNUAL BONUS PLAN
The annual bonus plan for eligible management level employees provides for
awards to be determined shortly after the end of the fiscal year. For the 1998
fiscal year, Campbell established the incentive opportunities prior to the
spin-off.
For the 1999 fiscal year, annual bonus awards will depend principally upon
achieving corporate earnings per share and divisional earnings before interest
and taxes targets set prior to the beginning of the year. In addition, subject
to certain exceptions, if our rate of annual growth of our earnings per share
places us in the top quartile of all companies in the S&P 500 Food Group and the
S&P 400 Mid-Cap Food Group, each bonus-eligible employee would receive an
additional 50% of his or her bonus target. Our Compensation and Organization
Committee may also consider adjusting the target awards based on the employee's
personal performance as measured against his or her particular responsibilities.
LONG-TERM INCENTIVE PLAN
Our long-term incentive plan currently utilizes stock option grants for
eligible management level employees. Non-qualified stock options were granted
commencing on April 6, 1998. All outstanding options have a ten-year term and an
exercise price equal to the fair market value of a share of Vlasic common stock
on the grant date.
In order to compensate for long-term incentive awards forfeited when
leaving Campbell after the spin-off, the options granted in April 1998 to the
top 15 key executives were triple the size of a target grant and vest
cumulatively over three years at the rate of 30%, 60% and 100%, respectively, on
the first three anniversaries beginning in April 2000. Options granted to other
management level employees vest approximately in thirds on each of the first
three anniversaries of the stock option grant date beginning in April 1999.
BASE SALARIES FOR FISCAL YEAR 1998
Except where two executive officers assumed new duties after the spin-off,
base salaries for the executive officers, including Robert Bernstock, remained
set at the levels established by Campbell prior to the spin-off to reflect the
new responsibilities that they were assuming with Vlasic.
POLICY ON DEDUCTIBILITY OF COMPENSATION
Section 162(m) of the Internal Revenue Code limits the tax deduction to $1
million for compensation paid one or more of the executive officers listed in
the table captioned "Directors and Executive Officers," unless certain
requirements are met. Our philosophy with respect to the limit on the
tax-deductibility of executive compensation is to use certain objective
performance standards to qualify for exceptions to any applicable loss of tax
deductions.
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<PAGE> 70
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation received by our President
and Chief Executive Officer and the four other most highly compensated Executive
Officers for fiscal 1998.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM AWARDS
---------------------- -----------------------
SECURITIES
RESTRICTED UNDERLYING ALL OTHER
FISCAL STOCK OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR BASE SALARY BONUS AWARDS(1) (#)(2) ($)(3)
- --------------------------- ------ ----------- ----- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Robert F. Bernstock...................... 1998 $446,667 $347,489 $ 0 450,000 $23,825
President and 1997 $336,875 $282,093 $1,880,177 100,000 $18,352
Chief Executive Officer
Carlos Oliva Funes(4).................... 1998 $443,433 $129,720 $ 0 60,000 $22,172
Vice President and 1997 $430,500 $ 95,696 $ 468,988 10,700 $30,000
President -- Swift-Armour
Norma B. Carter.......................... 1998 $170,000 $121,849 $ 22,006 65,000 $ 8,755
Vice President, 1997 $151,667 $ 75,172 $ 231,488 6,750 $ 6,805
General Counsel
and Corporate Secretary
Rolf B. Richter(4)....................... 1998 $182,593 $ 82,310 $ 16,504 50,000 $ 7,947
Vice President and 1997 $168,920 $ 87,599 $ 201,856 5,625 $ 0
President -- Europe and
Vlasic Farms, Inc.
Mitchell P. Goldstein.................... 1998 $190,000 $ 73,665 $ 13,779 50,000 $ 7,910
Vice President and 1997 $174,375 $ 57,097 $ 158,482 4,950 $ 6,944
Chief Financial Officer
</TABLE>
- ---------------
(1) The Restricted Stock Awards for 1997 for the fiscal 1998 to 2000 performance
period were forfeited at the time of the spin-off from Campbell. In order to
compensate for this, the options granted in April 1998 to the top 15 key
executives were triple the size of a target grant.
(2) The stock option grants shown for 1998 represent options on Vlasic common
stock and are described in the footnotes to the table captioned "Option
Grants in Last Fiscal Year." The stock option grants shown for 1997
represent options on Campbell common stock. Under a benefits sharing
agreement between Campbell and Vlasic these Campbell stock options were
converted in connection with the spin-off into replacement options on Vlasic
common stock, with the award preserving the economic value of the original
Campbell grant at the time of the spin-off. As a result, Robert Bernstock's
stock options for 1997 were converted into 253,357 Vlasic options, Carlos
Oliva Funes' were converted into 27,109 Vlasic options, Norma Carter's were
converted into 17,102 Vlasic options, Rolf Richter's were converted into
14,251 Vlasic options, and Mitchell Goldstein's were converted into 12,541
Vlasic options.
(3) "All Other Compensation" consists of Campbell/Vlasic contributions or
allocations to savings plans (tax-qualified and supplemental) or, in the
case of Carlos Oliva Funes, consulting fees for services rendered to other
Campbell businesses in Latin America prior to the spin-off.
(4) Mr. Funes and Mr. Richter are no longer executive officers of Vlasic
effective July 29, 1999 and August 1, 1999, respectively.
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<PAGE> 71
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth the stock options granted to the executive
officers during the fiscal year ended August 2, 1998.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1)
-------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE OR GRANT DATE
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION PRESENT VALUE
GRANTED (#)(2) FISCAL YEAR(3) ($/SH) DATE ($)(4)
-------------- -------------- ----------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Robert F. Bernstock...................... 450,000 28.0% 22.6875 4/6/08 $3,924,000
Carlos Oliva Funes(5).................... 60,000 3.7% 22.6875 4/6/08 $ 523,200
Norma B. Carter.......................... 65,000 4.0% 22.6875 4/6/08 $ 566,800
Rolf B. Richter(5)....................... 50,000 3.1% 22.6875 4/6/08 $ 436,000
Mitchell P. Goldstein.................... 50,000 3.1% 22.6875 4/6/08 $ 436,000
</TABLE>
- ---------------
(1) The options shown in this table are options to purchase Vlasic common stock.
These options have a ten-year vesting term and vest cumulatively over three
years at the rate of 30%, 60% and 100%, respectively, on the first three
anniversaries beginning in April 2000.
(2) The numbers shown do not include grants made as the result of the conversion
of options on Campbell common stock granted prior to 1998. These Campbell
options were converted in connection with the spin-off into replacement
Vlasic common stock options, preserving the economic value of the original
Campbell grant at the time of the spin-off. As a result of these
conversions, the named executive officers received options on Vlasic common
stock, as follows: Robert Bernstock, options on 447,327 shares; Carlos Oliva
Funes, options on 91,056 shares; Norma Carter, options on 47,378 shares;
Rolf Richter, options on 100,545 shares; and Mitchell Goldstein, options on
33,152 shares. All options for these executives have exercise prices ranging
from $9.7072 to $19.0689 and are with expiration dates ranging from June 22,
2005 to June 26, 2007.
(3) Percentages are based upon the total number of options on Vlasic common
stock granted after the spin-off under the Vlasic Foods International
Long-Term Incentive Plan.
(4) In accordance with the rules of the SEC, the Black-Scholes option pricing
model was chosen to estimate the grant date present value of the options set
forth in this table. The use of this model should not be construed as an
endorsement of its accuracy at valuing options. All stock option pricing
models require a prediction about the future movement of stock price. The
following assumptions were made for the purposes of calculating the grant
date present value: option term of 6 years, volatility of 27.0%, 0% dividend
yield, and interest of 5.63% (six-year Treasury note rate at January 2,
1998). The real value of options in this table depends upon the actual
performance of Vlasic common stock during the applicable period and upon
when they are exercised.
(5) Mr. Funes and Mr. Richter are no longer executive officers of Vlasic after
July 29, 1999 and August 1, 1999, respectively.
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<PAGE> 72
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FY-END(#) AT FY-END($)(2)
SHARES VALUE ---------------------- --------------------
ACQUIRED ON REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) ($)(1) UNEXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ---------------------- --------------------
<S> <C> <C> <C> <C>
Robert F. Bernstock
Vlasic Options......................... 0 $ 0 177,552/719,775 $520,651/$356,668
Campbell Options....................... 13,927 $648,013 178,586/0 $ 6,235,999/$0
Carlos Oliva Funes(3)
Vlasic Options......................... 0 $ 0 44,513/106,543 $203,168/$106,543
Campbell Options....................... 0 $ 0 48,373/0 $ 1,570,063/$0
Norma B. Carter
Vlasic Options......................... 0 $ 0 21,724/90,654 $ 89,349/$52,799
Campbell Options....................... 0 $ 0 18,604/0 $ 587,946/$0
Rolf B. Richter(3)
Vlasic Options......................... 0 $ 0 18,816/131,729 $ 81,430/$324,137
Campbell Options....................... 0 $ 0 44,979/0 $ 1,624,760/$0
Mitchell P. Goldstein
Vlasic Options......................... 0 $ 0 14,795/68,357 $ 57,966/$36,962
Campbell Options....................... 0 $ 0 5,566/0 $ 146,040/$0
</TABLE>
- ---------------
(1) The amounts in this column reflect the fair market value of shares received
on the exercise date minus the exercise price. Exercise of options on
Campbell common stock are shown only if they occurred prior to March 30,
1998, the effective date of the spin-off.
(2) These year-end values represent the difference between (a) the fair market
value of Vlasic common stock underlying the options on July 31, 1998 (Vlasic
market price of $17.5625 and Campbell market price of $54.00) and (b) the
exercise prices of the options. "In-the-money" means that the fair market
value of the underlying stock is greater than the option's exercise price on
the valuation date.
(3) Mr. Funes and Mr. Richter are no longer executive officers of Vlasic after
July 29, 1999 and August 1, 1999, respectively.
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<PAGE> 73
PENSION PLANS
The following table illustrates the approximate annual pension that may
become payable to an employee in the higher salary classifications under our
regular and supplementary pension plans.
ESTIMATED ANNUAL PENSIONS
<TABLE>
<CAPTION>
AVERAGE COMPENSATION IN YEARS OF SERVICE
HIGHEST 5 YEARS OF LAST ----------------------------------------------------
10 YEARS OF EMPLOYMENT 20 25 30 35 40
- ----------------------- -- -- -- -- --
<S> <C> <C> <C> <C> <C>
$200,000.................................... $ 56,887 $ 71,109 $ 85,331 $ 90,331 $ 95,331
$300,000.................................... $ 86,887 $108,609 $130,331 $137,831 $145,331
$400,000.................................... $116,887 $146,109 $175,331 $185,331 $195,331
$500,000.................................... $146,887 $183,609 $220,331 $232,831 $245,331
$600,000.................................... $176,887 $221,109 $265,331 $280,331 $295,331
$700,000.................................... $206,887 $258,609 $310,331 $327,831 $345,331
$800,000.................................... $236,887 $296,109 $355,331 $375,331 $395,331
$900,000.................................... $266,887 $333,609 $400,331 $422,831 $445,331
$1,000,000.................................. $296,887 $371,109 $445,331 $470,331 $495,331
</TABLE>
Compensation covered for executive officers named in the table captioned
"Summary Compensation Table" is the same as the total salary and bonus shown in
that table. These 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 or other offsets. The years of service set forth below for
Robert Bernstock include additional years of service pursuant to a Mid-Career
Hire Pension Agreement designed to replace a similar plan at Campbell and
include years of service while an employee of Campbell. As of the end of fiscal
1998, the full years of accrued service under the pension plans for Robert
Bernstock was 21. As of the end of fiscal 1998, the full years of accrued
service under the pension plan for the following three individuals other than
Robert Bernstock named in the table captioned "Summary Compensation Table" were
as follows: Norma Carter, 17; Rolf Richter, 5; and Mitchell Goldstein, 3. Carlos
Oliva Funes did not participate in our pension plan.
TERMINATION ARRANGEMENT
We have entered into a severance protection agreement with Robert
Bernstock. The severance protection agreement provides severance pay and
continuation of certain benefits should a Change in Control occur. The
independent members of the Board of Directors unanimously approved entry into
the severance protection agreement. In order to receive benefits under the
severance protection agreement, Robert Bernstock's employment must be
terminated: (a) involuntarily by us, without cause, whether actual or
"constructive," within two years following a Change in Control; or (b) by Robert
Bernstock within a thirty day "window period" beginning one year after a Change
in Control.
Generally, a "Change in Control" will be deemed to have occurred in any of
the following circumstances:
(i) the acquisition of 25% or more of the Vlasic outstanding voting
stock by any person or entity, with certain exceptions for John T. Dorrance
family members;
(ii) the persons serving as our directors as of July 7, 1998 and those
replacements or additions subsequently approved by a two-thirds vote of the
Board, cease to make up at least two-thirds of the Board;
(iii) a merger, consolidation or share exchange in which our shareowners
prior to the merger wind up owning 80% or less of the surviving
corporation; or
(iv) a complete liquidation or dissolution or disposition of all or
substantially all of our assets.
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<PAGE> 74
If triggered under the severance protection agreement, severance pay would
equal three years' base salary and bonus. Medical, dental, life and disability
benefits would be provided at our expense for the lesser of: (i) 30 months; or
(ii) the number of months remaining until Robert Bernstock's 65th birthday. We
would pay in a single payment an amount equal to the value of the benefit Robert
Bernstock would have accrued under our pension plans had he remained in our
employ for an additional 30 months or until his 65th birthday, if earlier. Under
the severance protection agreement, Robert Bernstock would be eligible for a
gross-up payment for excess taxes, interest or penalties imposed by Section 4999
of the Internal Revenue Code, and all options outstanding on the date of such
Change in Control would become immediately and fully exercisable.
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<PAGE> 75
OWNERSHIP OF VLASIC COMMON STOCK
OWNERSHIP BY DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information regarding beneficial ownership
as of October 2, 1998, of the Vlasic common stock of each director, our five
most highly compensated executive officers and the directors and executive
officers as a group and also sets forth stock units credited to the individual's
deferred compensation account. The account reflects the election of the
individuals to defer previously earned compensation into Vlasic stock units. The
individuals are fully at risk as to the price of Vlasic common stock in their
deferred stock accounts. Additional stock units are credited to the accounts to
reflect accrual of dividends, if any. The stock units do not carry any voting
rights.
<TABLE>
<CAPTION>
AGGREGATE NUMBER OF VLASIC TOTAL NUMBER OF
SHARES BENEFICIALLY STOCK SHARES AND
OWNED(1) DEFERRED DEFERRED STOCK
------------------- -------- ---------------
<S> <C> <C> <C>
Robert F. Bernstock.................................. 210,154 200,715 410,869
Robert T. Blakely.................................... 0 30 30
Morris A. Cohen...................................... 0 0 0
Richard L. Huber(2).................................. 0 0 0
Lawrence C. Karlson.................................. 12,000 100 12,100
Donald J. Keller..................................... 10,000 0 10,000
Shaun F. O'Malley.................................... 500 119 619
Norma B. Carter...................................... 41,068 14,257 55,325
Mitchell P. Goldstein................................ 19,268 11,431 30,699
Carlos Oliva Funes(2)................................ 51,378 582 51,960
Rolf B. Richter(2)................................... 20,751 115 20,866
All directors and executive officers (8) as a
group.............................................. 403,994 227,446 631,440
</TABLE>
- ---------------
(1) The shares shown include 307,611 shares of Vlasic common stock with respect
to which executive officers have a right, as of December 2, 1998, to acquire
beneficial ownership because of vested stock options. All persons listed own
less than 1% of Vlasic's outstanding shares of common stock. All directors
and executive officers (8 persons) as a group own 1.4% of outstanding
shares. This includes shares owned directly or indirectly.
(2) No longer serving in such capacity.
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<PAGE> 76
PRINCIPAL SHAREHOLDERS
The following is Information concerning the owners of more than 5% of the
outstanding Vlasic common stock as of October 2, 1998:
<TABLE>
<CAPTION>
PERCENT OF
AMOUNT/NATURE OF OUTSTANDING
NAME/ADDRESS(1) BENEFICIAL OWNERSHIP OWNERSHIP
- --------------- -------------------- -----------
<S> <C> <C>
Bennett Dorrance............................................ 5,363,903(2) 11.8%
DMB Associates
4201 North 24th Street
Suite 120
Phoenix, AZ 85016
Mary Alice Malone........................................... 5,442,537(3) 12.0%
Iron Spring Farm
R.D. #3,
Coatesville, PA 19320
Dorrance H. Hamilton,
Charles H. Mott and
John A. van Beuren
Voting Trustees under the Major Stockholders' Voting Trust
dated as of June 2, 1990 and related persons................ 6,150,738(5) 13.5%
P.O. Box 4098
Middletown, RI 02842(4)
</TABLE>
- ---------------
(1) The owners of more than 5% of Vlasic common stock are descendants of the
late Dr. John T. Dorrance, one of the founders of Campbell. They were
shareholders of record as of March 9, 1998 of Campbell and received shares
of Vlasic common stock pursuant to the spin-off.
(2) Bennett Dorrance is a grandson of Dr. John T. Dorrance and the brother of
Mary Alice Malone. Share ownership shown does not include 30,694 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. It does
not include 98,242 shares held by Bennett Dorrance as one of the trustees
for trusts for, or as guardian of, his children, as to which shares he
disclaims beneficial ownership.
(3) Mary Alice Malone is a granddaughter of Dr. John T. Dorrance. Share
ownership shown does not include 30,694 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. It does not include 2,911 shares
held by her cousin as trustee of a trust for her children, as to which
shares she disclaims beneficial ownership.
(4) The June 2, 1990 Voting Trust was formed by certain descendants (and
spouses, fiduciaries and a related foundation) of the late Dr. John T.
Dorrance. The voting trust initially covered shares of Campbell. By the
terms of the voting trust, shares of Vlasic received by the trustees
pursuant to the spin-off became subject to the voting trust. 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. It is expected that the voting trust will act in the same
capacity with respect to Vlasic.
The trustees act for participants in communications with the Vlasic board
of directors. Participants believe the voting trust may also facilitate
communications between the Vlasic 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.
(5) Includes 6,080,690 shares (13.4% of the outstanding shares) held by the
voting trustees with sole voting power and 70,048 shares held by
participants outside the voting trust or by persons related to them, for a
total of 6,150,738 shares (13.5% of the outstanding shares). Includes (i)
2,949,835 shares (6.5% of the
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outstanding shares) with sole dispositive power held by the Dorrance H.
Hamilton Trust of which Mrs. Hamilton is the sole trustee, 200 Eagle Road,
Suite 316, Wayne, PA 19087; and (ii) 675,678 shares with sole dispositive
power held by Hope H. van Beuren and 672,000 shares with sole dispositive
power held by her husband, John A. van Beuren, P.O. Box 4098, Middletown, RI
02842. John and Hope van Beuren also hold 1,400,556 shares with shared
dispositive power, including shares held by a family partnership. In
addition John van Beuren holds 201,076 shares with shared dispositive power.
Participants in the voting trust have certain rights to withdraw shares
deposited with the voting trustees including the right to withdraw these
shares prior to any annual or special meeting of our shareowners.
Dispositive power as used above means the power to direct the sale of
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 shareowners is based upon our stock
records, 13D filings, and data supplied to us by the shareowners as of the
record date for our last annual meeting.
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RELATIONSHIP BETWEEN VLASIC AND CAMPBELL
Since the spin-off, there have been significant transactions between Vlasic
and Campbell involving supplies and services, such as beef and mushroom supply
by us to Campbell, and payroll, other financial services and transaction
processing activities furnished by Campbell to us (most such services by
Campbell ceased effective March 30, 1999). For purposes of governing certain
ongoing relationships between us and Campbell and to facilitate implementation
of the spin-off, Vlasic (including certain officers of Vlasic) and Campbell
entered into various agreements, including those described below. The agreements
summarized below are included as exhibits to reports previously filed by Vlasic
with the SEC pursuant to the Exchange Act. These summaries do not contain all
the information contained in the agreements and we suggest that you refer to the
full documents for more complete information. Capitalized terms used below and
not defined have the meanings set forth in the particular documents that are
summarized below.
SEPARATION AND DISTRIBUTION AGREEMENT
The Separation and Distribution Agreement provides 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 relating to
the spin-off.
The Separation and Distribution Agreement provides that we are prohibited
from engaging in certain businesses in the U.S. for a period of three years from
March 30, 1998. Under the terms of the covenant, for a period of three years
after March 30, 1998, we are 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 March 30, 1998: soups, broths, vegetable juices,
salsa and picante and other Mexican sauces or dips, Italian sauces, heat
processed prepared pasta and gravies.
BERNSTOCK AND RICHTER NON-COMPETITION AGREEMENTS
Robert Bernstock, President and Chief Executive Officer and Rolf Richter,
Vlasic's former Vice President -- Europe and Vlasic Farms, Inc. have signed
agreements with Campbell agreeing that they will not engage in manufacturing,
distributing, marketing or selling of soup or broth products anywhere in the
world for 18 months from March 30, 1998.
Vlasic is not a party to these agreements.
TAX SHARING AND INDEMNIFICATION AGREEMENT
The Tax Sharing and Indemnification Agreement sets forth Vlasic's and
Campbell's rights and obligations with respect to payment and refunds, if any,
with respect to taxes for periods before and after March 30, 1998 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 is responsible for filing consolidated U.S. federal
and consolidated, combined or unified state income tax returns for periods
through March 30, 1998, 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 also allocated liability between us and Campbell 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, we agreed that
for a two-year period following the spin-off (1) we will continue to engage in
certain businesses, including retail frozen foods and the pickle business, and
will continue to maintain a substantial portion of our respective assets and
business operations as they existed prior to the spin-off, provided that this
obligation shall not be deemed to prohibit us from entering into or acquiring
other businesses or operations or from disposing of or shutting down certain
segments of such businesses so long as we continue to engage in such businesses
and continue to maintain a substantial portion of our assets and business
operations, (2) we will continue to own and manage at least
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50% of the assets which we owned directly or indirectly immediately after the
Distribution Date and (3) we will not, unless we obtain an IRS tax ruling or a
legal opinion reasonably 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 March 30, 1998, 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, we agreed
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.
In the event that our obligations under the Tax Sharing and Indemnification
Agreement are 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, we would be
required to indemnify Campbell for the tax liabilities described above. Any
indemnity payment to Campbell for an income tax liability could have a material
adverse effect on our business, financial condition and results of operations.
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
We entered into a number of intellectual property license agreements with
Campbell, including a license agreement pursuant to which Campbell granted us a
perpetual, royalty-free license to use the Swanson trademark and related logos,
symbols and marks (collectively, "Swanson Marks") in connection with our
operations after the spin-off. Under the terms of this license agreement, we
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. We are required to use the licensed
trademarks in the same manner as they were used by Campbell immediately before
the spin-off and to obtain the prior written approval of Campbell (such approval
not to be unreasonably withheld or delayed by more than five (5) working days
from receipt of a notice requesting approval) prior to any change in the
labeling, advertising materials and other promotional material bearing the
licensed trademarks which we intend to use.
Campbell granted us a license to use the Campbell's trademark for up to
three years in connection with our U.S. retail mushroom business. The license is
on royalty-free terms for its initial 12 months. Thereafter, we are obligated to
pay a royalty of 1% of our retail net sales of mushrooms.
These license agreements contain standard provisions, including those
dealing with assignability, quality control and termination upon, among other
things, material breach and bankruptcy.
SUPPLY AGREEMENTS
In fiscal 1998, Campbell was our largest single customer accounting for net
sales of $154.8 million, or approximately 11% of our total net sales. Sales to
Campbell under our mushroom supply agreement accounted for $32.0 million, or
approximately 27%, of our total net sales of mushrooms in fiscal 1998. This
contract expires on July 30, 2000. Sales to Campbell under our terminated beef
supply agreement accounted for $34.5 million, or approximately 17%, of our total
net sales by our Argentine subsidiary in fiscal 1998. Our beef supply agreement
with Campbell was terminated at the time of the sale of our Swift-Armour
Argentine
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beef business. Approximately 35% of the production volume of our Omaha, Nebraska
facility is devoted to our food service supply contract with Campbell and the
net sales derived from the contract in fiscal 1998 were $83.4 million. The
consideration received from Campbell under this contract is the fully absorbed
cost of production. The food service contract expires March 29, 2000.
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DESCRIPTION OF SENIOR CREDIT FACILITY
The description below does not purport to be a complete or comprehensive
description of the senior credit facility and for further or detailed
information of the senior credit facility, we recommend that you refer to the
full text of the underlying agreements that comprise the senior credit facility,
which have been filed as exhibits to our annual report on Form 10-K for the
fiscal year ended August 2, 1998 and Form 10-Q for the quarter and the nine
months ended May 2, 1999. Capitalized terms used below and not defined have the
meanings set forth in the senior credit facility.
We entered into an Amended and Restated Credit Agreement dated September
30, 1998 with various lenders providing for senior secured credit facilities
(the "restated senior credit facility"). Effective June 9, 1999 (the "amendment
date"), we further amended our restated senior credit facility with amendment
no. 1 to the restated senior credit facility (the "first amendment to the
restated senior credit facility" and, together with the restated senior credit
facility, "senior credit facility"). In connection with such financing, the
Chase Manhattan Bank acted or is acting as Syndication Agent, J.P. Morgan
Securities Inc. acted or is acting as Arranging Agent, and Morgan Guaranty Trust
Company of New York, acted or is acting as Administrative Agent and Collateral
Agent. The senior credit facility provides as follows:
The senior credit facility consists of (1) a senior secured term loan in a
principal amount of $100 million and (2) senior secured revolving credit
commitments providing for revolving loans to Vlasic initially in the aggregate
amount of up to $550 million. As a result of the application of the net proceeds
from the sale of the outstanding notes and the sale of our Swift-Armour
Argentine beef business, the amount available to be borrowed under the revolving
credit commitments was permanently reduced to $279.0 million. Loans under the
revolving credit commitments will be available at any time through the final
maturity date on February 20, 2003 and the term loan will have a final maturity
date of February 20, 2003.
We are required to make mandatory prepayments on the senior credit facility
and permanently reduce revolving credit commitments under certain circumstances,
including upon certain asset sales (including the sale of the Swift-Armour
business), issuance of debt securities, issuance of equity securities and
receipt of Casualty Proceeds which include property insurance proceeds and
condemnation awards. At our option, subject to certain requirements, loans may
be prepaid in whole or in part.
The senior credit facility permits us to borrow under three interest rate
options. The three interest rate options and the spreads after the issuance of
the outstanding notes are as follows. At our option the interest rate per annum
applicable to loans under the senior credit facility will be the Base Rate plus
the Base Rate Margin ranging from 0.0% to 1.0%, the Adjusted CD Rate plus the CD
Margin ranging from 0.475% to 2.125% or the LIBOR plus the Euro-Dollar Margin
ranging from 0.35% to 2.0%. As of the date of the issuance of the outstanding
notes and going forward, we are obligated to pay a facility fee ranging from
0.15% to 0.5% on the credit exposure of the banks.
The senior credit facility contains a number of significant covenants that,
among other things, restrict our ability to engage in mergers and sales of
assets, create liens on our assets, incur additional indebtedness, make
investments and acquisitions, or engage in transactions with our subsidiaries
and affiliates. In addition, under the senior credit facility, we are required
to comply with specified ratios and tests, including maximum debt/ EBITDA ratio,
minimum fixed charge coverage ratio and a limitation on capital expenditures.
An event of default under the senior credit facility will occur (1) if we
fail to make payments under the senior credit facility; (2) if we breach the
covenants contained in the senior credit facility or any financing document; (3)
if we breach the warranties contained in the senior credit facility; (4) in the
event of the bankruptcy, insolvency or reorganization of Vlasic; (5) if any
judgment or attachment involving, in an individual case, an amount in excess of
$10.0 million shall be entered against us and shall remain undischarged or
unstayed for a period of 30 days; (6) if any judgment or decree of dissolution
is entered against us; (7) certain specified ERISA events occur; (8) if any
person or group of persons, other than Designated Affiliates, acquires
beneficial ownership of 25% or more of the outstanding shares of common stock of
Vlasic; (9) the Designated Affiliates, collectively, have beneficial ownership
of 49% or more of the outstanding
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shares of common stock of Vlasic; or (10) the continuing directors cease to
constitute a majority of our board of directors.
Under the senior credit facility, all our domestic subsidiaries guarantee
our outstanding indebtedness under the senior credit facility, which is
currently secured by a first priority lien on substantially all of our parent
company assets and the assets of our domestic subsidiaries, except our real
property, and a pledge of two-thirds of the equity of our foreign subsidiaries,
in each case whether now owned or acquired in the future, which will be released
upon attainment of credit rating criteria.
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DESCRIPTION OF NOTES
You can find the definitions of certain terms used in this description
under the subheading "Certain Definitions" below. In this description, the word
"Vlasic" refers only to Vlasic Foods International Inc. and not to any of its
subsidiaries.
Vlasic issued the outstanding notes under an indenture between itself and
The Bank of New York, as trustee, in a private transaction that was not subject
to the registration requirements of the Securities Act. A copy of the indenture
is filed as an exhibit to the registration statement which includes this
prospectus and is available to you upon request.
The terms of the outstanding notes and the notes to be issued in the
exchange offer include those stated in the indenture and those made part of the
indenture by reference to the Trust Indenture Act of 1939, as amended.
The terms of the notes to be issued in the exchange offer are identical in
all material respects to the terms of the outstanding notes, except for transfer
restrictions relating to the outstanding notes. Any outstanding notes that
remain outstanding after the exchange offer, together with the notes issued in
the exchange offer, will be treated as a single class of securities under the
indenture for voting purposes. When we refer to the term "note" or "notes" in
this "Description of Notes" section, we are referring to both the outstanding
notes and the notes to be issued in the exchange offer. When we refer to
"holders" of the notes, we are referring to those persons who are the registered
holders of the notes on the books of the registrar appointed under the
indenture.
The following description is a summary of the material provisions of the
indenture and the exchange and registration rights agreement. It does not
restate those agreements in their entirety. We urge you to read the indenture
and the exchange and registration rights agreement because they, and not this
description, define your rights as holders of the notes. None of our
subsidiaries will guarantee the notes.
BRIEF DESCRIPTION OF THE NOTES
The notes:
- are general unsecured obligations of Vlasic;
- are subordinated in right of payment to all existing and future Senior
Debt of Vlasic; and
- are pari passu in right of payment with any future senior subordinated
Indebtedness of Vlasic.
As of the date of the indenture, all of our subsidiaries will be
"Restricted Subsidiaries." However, under the circumstances described below
under the subheading "-- Certain Covenants -- Designation of Restricted and
Unrestricted Subsidiaries," we will be permitted to designate certain of our
subsidiaries as "Unrestricted Subsidiaries." Our Unrestricted Subsidiaries will
not be subject to many of the restrictive covenants in the indenture.
PRINCIPAL, MATURITY AND INTEREST
Vlasic has issued notes with an aggregate principal amount of $200.0
million, in denominations of $1,000 and integral multiples of $1,000. The notes
will mature on July 1, 2009.
Interest on the notes will accrue at the rate of 10 1/4% per annum and will
be payable semi-annually in arrears on January 1 and July 1 of each year,
commencing on January 1, 2000. Vlasic will make each interest payment to the
holders of record on the immediately preceding December 15 and June 15.
Interest on the notes will accrue from the date of original issuance or, if
interest has already been paid, from the date it was most recently paid.
Interest will be computed on the basis of a 360-day year comprised of twelve
30-day months.
The interest rate on the outstanding notes is subject to increase if Vlasic
does not file a registration statement relating to the exchange offer on a
timely basis, if the registration statement is not declared effective
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on a timely basis or if certain other conditions are not satisfied, all as
further described under the caption "Registration Rights; Special Interest."
METHODS OF RECEIVING PAYMENTS ON THE NOTES
If a holder has given wire transfer instructions to Vlasic, Vlasic will pay
all principal, interest (including Special Interest) and premium, if any, on
those notes in accordance with those instructions. All other payments on notes
will be made at the office or agency of the Paying Agent and Registrar within
the City and State of New York unless Vlasic elects to make interest payments by
check mailed to the holders at their addresses set forth in the register of
holders.
PAYING AGENT AND REGISTRAR FOR THE NOTES
The trustee will initially act as paying agent and registrar. Vlasic may
change the paying agent or registrar without prior notice to the holders, and
Vlasic or any of its subsidiaries may act as paying agent or registrar.
TRANSFER AND EXCHANGE
A holder may transfer or exchange notes in accordance with the indenture.
The registrar and the trustee may require a holder, among other things, to
furnish appropriate endorsements and transfer documents and Vlasic may require a
holder to pay any taxes and fees required by law or permitted by the indenture.
Vlasic is not required to transfer or exchange any note selected for redemption.
Also, Vlasic is not required to transfer or exchange any note for a period of 15
days before a selection of notes to be redeemed. The registered holder of a note
will be treated as the owner of it for all purposes.
SUBORDINATION
The payment of principal, interest (including Special Interest) and
premium, if any, on the notes will be subordinated to the prior payment in full
of all Senior Debt of Vlasic, including Senior Debt incurred after the date of
the indenture. The outstanding notes and the notes to be issued in the exchange
offer will be pari passu with each other.
The holders of Senior Debt will be entitled to receive payment in full of
all Obligations due in respect of Senior Debt (including interest after the
commencement of any bankruptcy proceeding at the rate specified in the
applicable Senior Debt) before the holders of notes will be entitled to receive
any payment with respect to the notes, in the event of any distribution to
creditors of Vlasic:
(1) in a liquidation or dissolution of Vlasic;
(2) in a bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to Vlasic or its property;
(3) in an assignment for the benefit of Vlasic's creditors; or
(4) in any marshaling of Vlasic's assets and liabilities.
Vlasic also may not make any payment in respect of the notes if:
(1) a default in the payment of any Obligation on Designated Senior Debt
occurs and is continuing beyond any applicable grace period; or
(2) any other default occurs and is continuing on any series of Designated
Senior Debt that permits holders of that series of Designated Senior
Debt to accelerate its maturity and the trustee receives a notice of
such default (a "Payment Blockage Notice") from Vlasic or the holders
of any Designated Senior Debt.
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Payments on the notes may and shall be resumed:
(1) in the case of a payment default, upon the date on which such default
is cured or waived; and
(2) in case of a nonpayment default, the earlier of the date on which such
nonpayment default is cured or waived or 179 days after the date on
which the applicable Payment Blockage Notice is received, unless the
maturity of any Designated Senior Debt has been accelerated.
No new Payment Blockage Notice may be delivered unless and until:
(1) 360 days have elapsed since the delivery of the immediately prior
Payment Blockage Notice; and
(2) all scheduled payments of principal, interest (including Special
Interest) and premium, if any, on the notes that have come due have
been paid in full in cash.
No nonpayment default that existed or was continuing on the date of
delivery of any Payment Blockage Notice to the trustee shall be, or be made, the
basis for a subsequent Payment Blockage Notice unless such default shall have
been cured or waived for a period of not less than 180 days.
Vlasic must promptly notify holders of Senior Debt if payment of the notes
is accelerated because of an Event of Default.
As a result of the subordination provisions described above, in the event
of a bankruptcy, liquidation or reorganization of Vlasic, holders of notes may
recover less ratably than creditors of Vlasic who are holders of Senior Debt.
See "Risk Factors -- Ranking of the Notes; Structural Subordination."
OPTIONAL REDEMPTION
At any time prior to July 1, 2002, Vlasic may on any one or more occasions
redeem up to 35% of the aggregate principal amount of notes originally issued
under the indenture at a redemption price of 110.25% of the principal amount
thereof, plus accrued and unpaid interest (including Special Interest) to the
redemption date, with the net cash proceeds of one or more Public Equity
Offerings; provided that:
(1) at least 65% of the aggregate principal amount of notes issued under
the indenture remains outstanding immediately after the occurrence of
such redemption (excluding notes held by Vlasic and its subsidiaries);
and
(2) the redemption must occur within 90 days of the date of the closing of
such Public Equity Offering.
Except pursuant to the preceding paragraph, the notes will not be
redeemable at Vlasic's option prior to July 1, 2004.
After July 1, 2004, Vlasic may redeem all or a part of the notes upon not
less than 30 nor more than 60 days' notice, at the redemption prices (expressed
as percentages of principal amount) set forth below plus accrued and unpaid
interest (including Special Interest) thereon, to the applicable redemption
date, if redeemed during the twelve-month period beginning on July 1 of the
years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---- ----------
<S> <C>
2004........................................................ 105.125%
2005........................................................ 103.417%
2006........................................................ 101.708%
2007 and thereafter......................................... 100.000%
</TABLE>
MANDATORY REDEMPTION
Except as set forth below under "-- Repurchase at the Option of Holders,"
Vlasic is not required to make mandatory redemption or sinking fund payments
with respect to the notes.
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REPURCHASE AT THE OPTION OF HOLDERS
CHANGE OF CONTROL
If a Change of Control occurs, each holder of notes will have the right to
require Vlasic to repurchase all or any part (equal to $1,000 or an integral
multiple thereof) of that holder's notes pursuant to a Change of Control Offer
on the terms set forth in the indenture. In the Change of Control Offer, Vlasic
will offer a Change of Control Payment in cash equal to 101% of the aggregate
principal amount of notes repurchased plus accrued and unpaid interest
(including Special Interest) thereon, to the date of purchase. Within 30 days
following any Change of Control, Vlasic will mail a notice to each holder
describing the transaction or transactions that constitute the Change of Control
and offering to repurchase notes on the Change of Control Payment Date specified
in such notice which date shall be no earlier than 30 days and no later than 60
days from the date such notice is mailed, pursuant to the procedures required by
the indenture and described in such notice. Vlasic will comply with the
requirements of Rule 14e-1 under the Exchange Act and any other securities laws
and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of the notes as a result of a
Change of Control. To the extent that the provisions of any securities laws or
regulations conflict with the Change of Control provisions of the indenture,
Vlasic will comply with the applicable securities laws and regulations and will
not be deemed to have breached its obligations under the Change of Control
provisions of the indenture by virtue of such conflict.
On the Change of Control Payment Date, Vlasic will, to the extent lawful:
(1) accept for payment all notes or portions thereof properly tendered
pursuant to the Change of Control Offer;
(2) deposit with the Paying Agent an amount equal to the Change of Control
Payment in respect of all notes or portions thereof so tendered; and
(3) deliver or cause to be delivered to the trustee the notes so accepted
together with an Officers' Certificate stating the aggregate principal
amount of notes or portions thereof being purchased by Vlasic.
The paying agent will promptly mail to each holder of notes so tendered the
Change of Control Payment for such notes, and the trustee will promptly
authenticate and mail (or cause to be transferred by book entry) to each holder
a new note equal in principal amount to any unpurchased portion of the notes
surrendered, if any; provided that each such new note will be in a principal
amount of $1,000 or an integral multiple thereof. Vlasic will publicly announce
the results of the Change of Control Offer on or as soon as practicable after
the Change of Control Payment Date.
The provisions described above that require Vlasic to make a Change of
Control Offer following a Change of Control will be applicable regardless of
whether or not any other provisions of the indenture are applicable. Except as
described above with respect to a Change of Control, the indenture does not
contain provisions that permit the holders of the notes to require that Vlasic
repurchase or redeem the notes in the event of a takeover, recapitalization or
similar transaction. As a result, the provisions of the indenture would not
necessarily afford holders of the notes protection in the event of a highly
leveraged transaction, reorganization, restructuring, merger or similar
transaction involving Vlasic that may adversely affect such holders.
Vlasic will not be required to make a Change of Control Offer upon a Change
of Control if a third party makes the Change of Control Offer in the manner, at
the times and otherwise in compliance with the requirements set forth in the
indenture applicable to a Change of Control Offer made by Vlasic and purchases
all notes validly tendered and not withdrawn under such Change of Control Offer.
Prior to complying with any of the provisions of this "Change of Control"
covenant, but in any event within 90 days following a Change of Control, Vlasic
will either repay all outstanding Senior Debt or obtain the requisite consents,
if any, under all agreements governing outstanding Senior Debt to permit the
repurchase of notes required by this covenant. The occurrence of certain of the
events that would constitute a Change of Control would constitute a default
under the senior credit facility. Future Senior Debt of Vlasic
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and its subsidiaries may contain prohibitions of certain events that would
constitute a Change of Control or require such Senior Debt to be repurchased
upon a Change of Control. Moreover, the exercise by the holders of their right
to require Vlasic to repurchase the notes could cause a default under such
Senior Debt, even if the Change of Control itself does not, due to the financial
effect of such repurchase on Vlasic. Finally, Vlasic's ability to pay cash to
the holders upon a repurchase may be limited by Vlasic's then existing financial
resources. There can be no assurance that sufficient funds will be available
when necessary to make any required repurchases. Consequently, if Vlasic is not
able to repay the borrowings under the senior credit facility and any other
Senior Debt containing similar restrictions or obtain requisite consents or
waivers, as described above, Vlasic will be unable to fulfill its repurchase
obligations if holders of the notes exercise their repurchase rights following a
Change of Control, thereby resulting in a default under the indenture.
The definition of Change of Control includes a phrase relating to the sale,
lease, transfer, conveyance or other disposition of "all or substantially all"
of the assets of Vlasic and its subsidiaries taken as whole. Although there is a
limited body of case law interpreting the phrase "substantially all," there is
no precise established definition of the phrase under applicable law.
Accordingly, the ability of a holder of notes to require Vlasic to repurchase
such notes as a result of a sale, lease, transfer, conveyance or other
disposition of less than all of the assets of Vlasic and its subsidiaries taken
as whole to another person or group may be uncertain.
ASSET SALES
Vlasic will not, and will not permit any of its Restricted Subsidiaries to,
consummate an Asset Sale unless:
(1) Vlasic (or the Restricted Subsidiary, as the case may be) receives, in
the opinion of a Financial Officer of Vlasic, consideration at the time
of such Asset Sale at least equal to the fair market value of the
assets or Equity Interests issued or sold or otherwise disposed of; and
(2) at least 75% of the consideration therefor received by Vlasic or such
Restricted Subsidiary is in the form of cash or Cash Equivalents. For
purposes of this provision, each of the following shall be deemed to be
cash:
(a) any liabilities (as shown on Vlasic's or such Restricted
Subsidiary's most recent balance sheet or in the notes thereto), of
Vlasic or any Restricted Subsidiary (other than liabilities that are
by their terms subordinated to the notes) that are assumed by the
transferee of any such assets pursuant to a customary novation
agreement that releases Vlasic or such Restricted Subsidiary from
further liability; and
(b) any securities, notes or other obligations received by Vlasic or any
such Restricted Subsidiary from such transferee that are converted
by Vlasic or such Restricted Subsidiary into cash or Cash
Equivalents within 90 days of the consummation of such Asset Sale
(to the extent of the cash or Cash Equivalents received in that
conversion).
Within 365 days after the receipt of any Net Proceeds from an Asset Sale,
Vlasic may apply such Net Proceeds at its option:
(1) to prepay, repay or purchase Obligations relating to Senior Debt;
(2) to acquire all or substantially all of the assets of, or a majority of
the Voting Stock of, another Permitted Business;
(3) to make a capital expenditure;
(4) to repair or replace (or to reimburse Vlasic or its Restricted
Subsidiary for amounts previously spent to repair or replace) the asset
or assets sold in such Asset Sale;
(5) to acquire other long-term assets that are used or useful in a
Permitted Business; or
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(6) if required by the terms of any Indebtedness of a Restricted
Subsidiary, to prepay, repay or purchase such Indebtedness.
Pending the final application of any such Net Proceeds, Vlasic may
temporarily reduce revolving credit borrowings or otherwise invest such Net
Proceeds in any manner that is not prohibited by the Indenture.
Any Net Proceeds from Asset Sales that are not applied or invested as
provided in the preceding paragraph will constitute "Excess Proceeds." When the
aggregate amount of Excess Proceeds exceeds $10.0 million, Vlasic will make an
Asset Sale Offer to all holders of notes and all holders of other Indebtedness
that is pari passu with the notes containing provisions similar to those set
forth in the indenture with respect to offers to purchase or redeem with the
proceeds of sales of assets to purchase the maximum principal amount of notes
and such other pari passu Indebtedness that may be purchased out of the Excess
Proceeds. The offer price in any Asset Sale Offer will be equal to 100% of
principal amount plus accrued and unpaid interest (including Special Interest),
if any, to the date of purchase, and will be payable in cash. If any Excess
Proceeds remain after consummation of an Asset Sale Offer, Vlasic may use such
Excess Proceeds for any purpose not otherwise prohibited by the indenture. If
the aggregate principal amount of notes and such other pari passu Indebtedness
tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the
trustee shall select the notes and such other pari passu Indebtedness to be
purchased on a pro rata basis based on the principal amount of notes and such
other pari passu Indebtedness tendered. Upon completion of each Asset Sale
Offer, the amount of Excess Proceeds shall be reset at zero. The Senior Debt of
Vlasic may prohibit the use of Excess Proceeds to repurchase the notes.
Vlasic will comply with the requirements of Rule 14e-1 under the Exchange
Act and any other securities laws and regulations thereunder to the extent such
laws and regulations are applicable in connection with each repurchase of notes
pursuant to an Asset Sale Offer. To the extent that the provisions of any
securities laws or regulations conflict with the Asset Sales provisions of the
indenture, Vlasic will comply with the applicable securities laws and
regulations and will not be deemed to have breached its obligations under the
Asset Sale provisions of the indenture by virtue of such conflict.
SELECTION AND NOTICE
If less than all of the notes are to be redeemed at any time, the trustee
will select notes for redemption as follows:
(1) if the notes are listed, in compliance with the requirements of the
principal national securities exchange on which the notes are listed;
or
(2) if the notes are not so listed, on a pro rata basis, by lot or by such
method as the trustee shall deem fair and appropriate.
No notes of $1,000 or less shall be redeemed in part. Notices of redemption
shall be mailed by first class mail at least 30 but not more than 60 days before
the redemption date to each holder of notes to be redeemed at its registered
address. Notices of redemption may not be conditional.
If any note is to be redeemed in part only, the notice of redemption that
relates to that note shall state the portion of the principal amount thereof to
be redeemed. A new note in principal amount equal to the unredeemed portion of
the original note will be issued in the name of the Holder thereof upon
cancellation of the original note. Notes called for redemption become due on the
date fixed for redemption. On and after the redemption date, interest ceases to
accrue on notes or portions of them called for redemption.
CERTAIN COVENANTS
RESTRICTED PAYMENTS
Vlasic will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly:
(1) declare or pay any dividend or make any other payment or distribution
on account of Vlasic's or any of its Restricted Subsidiaries' Equity
Interests (including, without limitation, any payment in
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connection with any merger or consolidation involving Vlasic or any of
its Restricted Subsidiaries) or to the direct or indirect holders of
Vlasic's or any of its Restricted Subsidiaries' Equity Interests in
their capacity as such (other than dividends or distributions payable
in Equity Interests (other than Disqualified Stock) of Vlasic or
dividends or distributions payable to Vlasic or a Restricted Subsidiary
of Vlasic);
(2) purchase, redeem or otherwise acquire or retire for value (including,
without limitation, in connection with any merger or consolidation
involving Vlasic) any Equity Interests of Vlasic or any direct or
indirect parent of Vlasic;
(3) make any payment on or with respect to, or purchase, redeem, defease or
otherwise acquire or retire for value, any Indebtedness that is
subordinated to the notes, except (i) scheduled payments of interest or
principal at the Stated Maturity of such Indebtedness and (ii) the
purchase, repurchase or other acquisition of subordinated Indebtedness
in anticipation of satisfying a sinking fund obligation, principal
installment or final maturity, in each case due within one year of the
date of purchase, repurchase or acquisition; or
(4) make any Restricted Investment;
(all such payments and other actions set forth in clauses (1) through
(4) above being collectively referred to as "Restricted Payments"),
unless, at the time of and after giving effect to such Restricted Payment:
(1) no Default or Event of Default shall have occurred and be continuing or
would occur as a consequence thereof;
(2) Vlasic would, at the time of such Restricted Payment and after giving
pro forma effect thereto as if such Restricted Payment had been made at
the beginning of the applicable four-quarter period, have been
permitted to incur at least $1.00 of additional Indebtedness pursuant
to the Fixed Charge Coverage Ratio test set forth in the first
paragraph of the covenant described below under the caption
"-- Incurrence of Indebtedness and Issuance of Preferred Stock;" and
(3) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by Vlasic and its Restricted
Subsidiaries after the date of the indenture (excluding Restricted
Payments permitted by clauses (2), (3) and (4) of the next succeeding
paragraph) is less than the sum, without duplication, of:
(a) 50% of the Consolidated Net Income of Vlasic for the period (taken
as one accounting period) from the beginning of the first full
fiscal quarter commencing after the date of the indenture to the end
of Vlasic's most recently ended fiscal quarter for which internal
financial statements are available at the time of such Restricted
Payment (or, if such Consolidated Net Income for such period is a
deficit, less 100% of such deficit); plus
(b) 100% of the aggregate net cash proceeds received by Vlasic since the
date of the indenture as a contribution to its common equity capital
or received by Vlasic from the issue or sale since the date of the
indenture of Equity Interests of Vlasic (other than Disqualified
Stock) or from the issue or sale of convertible or exchangeable
Disqualified Stock or convertible or exchangeable debt securities of
Vlasic that have been converted into or exchanged for such Equity
Interests (other than Equity Interests (or Disqualified Stock or
debt securities) sold to a subsidiary of Vlasic); plus
(c) to the extent that any Restricted Investment that was made after the
date of the indenture is sold for cash or otherwise liquidated or
repaid for cash, the lesser of (i) the cash return of capital with
respect to such Restricted Investment (less the cost of disposition,
if any) and (ii) the initial amount of such Restricted Investment;
plus
(d) the amount equal to the net reduction in Investments (other than
Permitted Investments) made by Vlasic or any of its Restricted
Subsidiaries in any person resulting from the
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redesignation of Unrestricted Subsidiaries as Restricted Subsidiaries
(valued in each case as provided in the definition of "Investment")
not to exceed, in the case of any Unrestricted Subsidiary, the amount
of Investments previously made by Vlasic or any Restricted Subsidiary
in such Unrestricted Subsidiary, that was included in the calculation
of the amount of Restricted Payments; provided, however, that no
amount shall be included under this clause (d) to the extent it is
already included in Consolidated Net Income.
So long as no Default has occurred and is continuing or would be caused
thereby, the preceding provisions will not prohibit:
(1) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration such payment would
have complied with the provisions of the indenture;
(2) the redemption, repurchase, retirement, defeasance or other acquisition
of any subordinated Indebtedness of Vlasic or of any Equity Interests
of Vlasic in exchange for, or out of the net cash proceeds of the
substantially concurrent sale or issuance (other than to a Restricted
Subsidiary of Vlasic) of, Equity Interests of Vlasic (other than
Disqualified Stock); provided that the amount of any such net cash
proceeds that are utilized for any such redemption, repurchase,
retirement, defeasance or other acquisition shall be excluded from
clause (3) (b) of the preceding paragraph;
(3) the defeasance, redemption, repurchase or other acquisition of
subordinated Indebtedness of Vlasic with the net cash proceeds from an
incurrence of Permitted Refinancing Indebtedness;
(4) the payment of any dividend by a Restricted Subsidiary of Vlasic to the
holders of its common Equity Interests on a pro rata basis;
(5) the repurchase, redemption or other acquisition or retirement for value
of any Equity Interests of Vlasic or any Restricted Subsidiary of
Vlasic held by any member or former member of Vlasic's (or any of its
Restricted Subsidiaries') management pursuant to any management equity
subscription agreement or stock option agreement in effect as of the
date of the indenture; provided that the aggregate price paid for all
such repurchased, redeemed, acquired or retired Equity Interests shall
not exceed $250,000 in any twelve-month period;
(6) payments, not to exceed $200,000 in the aggregate since the date of the
indenture, to enable Vlasic to make cash payments to holders of its
Equity Interests in lieu of the issuance of fractional shares of its
Equity Interests; and
(7) other Restricted Payments in an aggregate amount not to exceed $7.5
million.
The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued to or by Vlasic or such Restricted
Subsidiary, as the case may be, pursuant to the Restricted Payment.
INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK
Vlasic will not, and will not permit any of its subsidiaries to, directly
or indirectly, create, incur, issue, assume, guarantee or otherwise become
directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (including Acquired Debt), and Vlasic
will not issue any Disqualified Stock and will not permit any of its
subsidiaries to issue any shares of Preferred Stock; provided, however, that
Vlasic may incur Indebtedness (including Acquired Debt) or issue Disqualified
Stock if the Fixed Charge Coverage Ratio for Vlasic's most recently ended four
full fiscal quarters for which internal financial statements are available
immediately preceding the date on which such additional Indebtedness is
incurred, or such Disqualified Stock or Preferred Stock is issued would have
been at least 2.0 to 1, determined on a pro forma basis (including a pro forma
application of the net proceeds therefrom), as if the additional Indebtedness
had been incurred or the Preferred Stock or Disqualified Stock had been issued,
as the case may be, at the beginning of such four-quarter period.
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The first paragraph of this covenant will not prohibit the incurrence of
any of the following items of Indebtedness (collectively, "Permitted Debt"):
(1) the incurrence by Vlasic of Indebtedness and letters of credit under
credit facilities in an aggregate principal amount at any one time
outstanding under this clause (1) (with letters of credit being deemed
to have a principal amount equal to the maximum potential liability of
Vlasic thereunder) not to exceed an amount equal to $460.0 million
less (a) the aggregate amount of Net Proceeds received in connection
with the Argentine Asset Sale and (b) the amount of Indebtedness, if
any, of Receivables Subsidiaries outstanding under clause (14) of this
paragraph;
(2) the incurrence by Vlasic and its Restricted Subsidiaries of the
Existing Indebtedness;
(3) the incurrence by Vlasic of Indebtedness represented by the notes to
be issued on the date of the indenture and represented by the exchange
notes to be issued pursuant to the exchange and registration rights
agreement;
(4) the incurrence by Vlasic or any of its Restricted Subsidiaries of
Permitted Refinancing Indebtedness in exchange for, or the net
proceeds of which are used to refund, refinance or replace
Indebtedness (other than intercompany Indebtedness) that was permitted
by the indenture to be incurred under the first paragraph of this
covenant or clauses (2), (3), (4), (10), (12) or (16) of this
paragraph;
(5) the incurrence by Vlasic or any of its Restricted Subsidiaries of
intercompany Indebtedness between or among Vlasic and any of its
Restricted Subsidiaries; provided, however, that:
(a) if Vlasic is the obligor on such Indebtedness, such Indebtedness
must be expressly subordinated to the prior payment in full in cash
of all Obligations with respect to the notes; and
(b) (i) any subsequent issuance or transfer of Equity Interests that
results in any such Indebtedness being held by a person other than
Vlasic or a Restricted Subsidiary thereof and (ii) any sale or other
transfer of any such Indebtedness to a Person that is not either
Vlasic or a Restricted Subsidiary thereof shall be deemed, in each
case, to constitute an incurrence of such Indebtedness by Vlasic or
such Restricted Subsidiary, as the case may be, that was not
permitted by this clause (5);
(6) the incurrence by Vlasic of Hedging Obligations that are incurred for
the purpose of fixing or hedging: (i) interest rate risk with respect
to any Indebtedness that is permitted by the terms of this indenture
to be outstanding; (ii) exchange rate risk with respect to any
agreement or Indebtedness of such person payable in a currency other
than U.S. dollars; or (iii) commodities risk relating to commodities
agreements, entered into in the ordinary course of business, for the
purchase of raw material used by Vlasic and its Restricted
Subsidiaries; provided, however, that each of the foregoing is
incurred in the ordinary course of business and not for speculative
purposes;
(7) the Guarantee by Vlasic or any of its Restricted Subsidiaries of
Indebtedness of Vlasic or Indebtedness of a Restricted Subsidiary of
Vlasic that was permitted to be incurred by another provision of this
covenant;
(8) the accrual of interest, the accretion or amortization of original
issue discount, the payment of interest on any Indebtedness in the
form of additional Indebtedness with the same terms, and the payment
of dividends on Disqualified Stock in the form of additional shares of
the same class of Disqualified Stock will not be deemed to be an
incurrence of Indebtedness or an issuance of Disqualified Stock for
purposes of this covenant; provided, in each such case, that the
amount thereof is included in Fixed Charges of Vlasic as accrued;
(9) the incurrence by Vlasic's Unrestricted Subsidiaries of Non-Recourse
Debt, provided, however, that if any such Indebtedness ceases to be
Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be
deemed to constitute an incurrence of Indebtedness by a Restricted
Subsidiary of Vlasic that was not permitted by this clause (9);
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(10) the incurrence by Vlasic or any of its Restricted Subsidiaries of
Indebtedness represented by Capital Lease Obligations, mortgage
financings or purchase money obligations, including all Permitted
Refinancing Indebtedness incurred to refund, refinance or replace any
Indebtedness incurred pursuant to this clause (10), in each case
incurred for the purpose of financing all or any part of the purchase
price or cost of construction or improvement of property, plant or
equipment used in the business of Vlasic or such Restricted Subsidiary
(whether through the direct purchase of assets or the Equity Interests
of any person owning such assets) or constituting Attributable Debt in
respect of sale and leaseback transactions, in an aggregate principal
amount or accreted value, as applicable, not to exceed $10.0 million
at any time outstanding;
(11) the issuance of shares of Preferred Stock by a Restricted Subsidiary
of Vlasic to another Restricted Subsidiary of Vlasic; provided,
however, that (a) any subsequent issuance or transfer of Equity
Interests that results in any such Preferred Stock being held by a
person other than Vlasic or a Restricted Subsidiary thereof and (b)
any sale or other transfer of any such Preferred Stock to a person
that is not either Vlasic or a Restricted Subsidiary thereof shall be
deemed, in each case, to constitute an issuance of such Preferred
Stock by Vlasic or such Restricted Subsidiary, as the case may be,
that was not permitted by this clause (11);
(12) the incurrence by Vlasic's Foreign Restricted Subsidiaries of
Indebtedness, including all Permitted Refinancing Indebtedness
incurred to refund, refinance or replace any Indebtedness incurred
pursuant to this clause (12), in an aggregate principal amount not to
exceed the amount of the Borrowing Base as of the date of such
incurrence;
(13) obligations in respect of performance and surety bonds and completion
guarantees provided by Vlasic or any Restricted Subsidiary in the
ordinary course of business;
(14) the incurrence by a Receivables Subsidiary of Indebtedness in a
Qualified Receivables Transaction that is without recourse to Vlasic
or to any other Subsidiary of Vlasic or their assets (other than such
Receivables Subsidiary and its assets and, as to Vlasic or any
subsidiary of Vlasic, other than pursuant to representations,
warranties, covenants (including repurchase obligations) and
indemnities customary for such transactions);
(15) the execution by Swift-Armour of a loan agreement in connection with
the Argentine Asset Sale, so long as (a) no Indebtedness is
outstanding thereunder until the closing of such sale, and (b) after
such closing, such Indebtedness would satisfy clause (1) of the
definition of Non-Recourse Debt; and
(16) the incurrence by Vlasic or its Restricted Subsidiaries of additional
Indebtedness in an aggregate principal amount (or accreted value, as
applicable) at any time outstanding, including all Permitted
Refinancing Indebtedness incurred to refund, refinance or replace any
Indebtedness incurred pursuant to this clause (16), not to exceed
$20.0 million.
For purposes of determining compliance with this "Incurrence of
Indebtedness and Issuance of Preferred Stock" covenant, in the event that an
item of proposed Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (1) through (16) above, or is
entitled to be incurred pursuant to the first paragraph of this covenant, Vlasic
will be permitted to classify such item of Indebtedness on the date of its
incurrence, or reclassify all or a portion of such item of Indebtedness after
the date of its incurrence, in any manner that complies with this covenant, and
such item of Indebtedness will be treated as having been incurred pursuant to
only one of such clauses or pursuant to the first paragraph of this covenant.
Indebtedness under credit facilities outstanding on the date on which notes are
first issued and authenticated under the Indenture shall be deemed to have been
incurred on such date in reliance on the exception provided by either clause (1)
or clause (16) of the definition of Permitted Debt and may not later be
reclassified unless actually extended, refinanced, renewed, replaced, defeased
or refunded with Indebtedness incurred pursuant to the first paragraph of this
"-- Incurrence of Indebtedness and Issuance of Preferred Stock" covenant.
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LIENS
Vlasic will not, and will not permit any of its Restricted Subsidiaries to,
create, incur, assume or otherwise cause or suffer to exist or become effective
any Lien of any kind securing trade payables or Indebtedness that does not
constitute Senior Debt (other than Permitted Liens) upon any of their property
or assets, now owned or hereafter acquired unless (i) in the case of Liens
securing Indebtedness that is expressly subordinated or junior in right of
payment to the notes, the notes are secured on a senior basis to the obligations
so secured until such time as such obligations are no longer secured by a Lien
and (ii) in all other cases, the notes are secured on an equal and ratable basis
with the obligations so secured until such time as such obligations are no
longer secured by a Lien.
DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES
Vlasic will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, create or permit to exist or become effective any
consensual encumbrance or restriction on the ability of any Restricted
Subsidiary to:
(1) pay dividends or make any other distributions on its Capital Stock to
Vlasic or any of its Restricted Subsidiaries, or with respect to any
other interest or participation in, or measured by, its profits, or
pay any indebtedness owed to Vlasic or any of its Restricted
Subsidiaries;
(2) make loans or advances to Vlasic or any of its Restricted
Subsidiaries; or
(3) transfer any of its properties or assets to Vlasic or any of its
Restricted Subsidiaries.
However, the preceding restrictions will not apply to encumbrances or
restrictions existing under or by reason of:
(1) Existing Indebtedness and Credit Facilities as in effect on the date
of the indenture and any amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacements or
refinancings thereof, provided that such amendments, modifications,
restatements, renewals, increases, supplements, refundings,
replacement or refinancings are no more restrictive in any material
respect (as determined in the good faith judgment of Vlasic's Board of
Directors), taken as a whole, with respect to such dividend and other
payment restrictions than those contained in such Existing
Indebtedness and Credit Facilities, as in effect on the date of the
indenture;
(2) the indenture and the notes;
(3) any applicable law, rule, regulation or order;
(4) any agreement or other instrument of a person acquired by Vlasic or
any of its Restricted Subsidiaries as in effect at the time of such
acquisition (except to the extent incurred in connection with or in
contemplation of such acquisition), which encumbrance or restriction
is not applicable to any person, or the properties or assets of any
person, other than the person, or the property or assets of the
person, so acquired, provided that, in the case of Indebtedness, such
Indebtedness was permitted by the terms of the indenture to be
incurred;
(5) in the case of clause (3) of the first paragraph of this covenant, any
encumbrance or restriction (a) that restricts in a customary manner
the subletting, assignment or transfer of any property or asset that
is subject to a lease, license, or similar contract, (b) by virtue of
any transfer of, agreement to transfer, option or right with respect
to, or Lien on, any property or assets of Vlasic or any subsidiary not
otherwise prohibited by the indenture, or (c) contained in security
agreements securing Indebtedness of a subsidiary to the extent such
encumbrance or restrictions restrict the transfer of the property
subject to such security agreements;
(6) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions on the property so
acquired of the nature described in clause (3) of the first paragraph
of this covenant;
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(7) any agreement for the sale or other disposition of all or
substantially all the assets or Capital Stock of a Restricted
Subsidiary that restricts distributions by that Restricted Subsidiary
pending such sale or other disposition;
(8) Permitted Refinancing Indebtedness, provided that the restrictions
contained in the agreements governing such Permitted Refinancing
Indebtedness are no more restrictive in any material respect (as
determined in the good faith judgment of Vlasic's Board of Directors),
taken as a whole, to the holders of the notes than those contained in
the agreements governing the Indebtedness being refinanced;
(9) Liens securing Indebtedness that limit the right of the debtor to
dispose of the assets subject to such Lien;
(10) provisions with respect to the disposition or distribution of assets
or property in joint venture agreements, assets sale agreements, stock
sale agreements and other similar agreements;
(11) restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of
business;
(12) Indebtedness or other contractual requirements incurred or entered
into in connection with a Qualified Receivables Transaction, provided
that such restrictions apply only to a Receivables Subsidiary and any
properties or assets sold or otherwise transferred to such Receivables
Subsidiary; and
(13) other Indebtedness or Disqualified Stock of Restricted Subsidiaries
permitted to be incurred pursuant to the provisions of the covenant
described under "-- Incurrence of Indebtedness and Issuance of
Preferred Stock" subsequent to the original issuance date of the
notes.
MERGER, CONSOLIDATION, OR SALE OF ASSETS
Vlasic may not, directly or indirectly: (1) consolidate or merge with or
into another person (whether or not Vlasic is the surviving corporation); or (2)
sell, assign, transfer, convey or otherwise dispose of all or substantially all
of the properties or assets of Vlasic and its Restricted Subsidiaries taken as a
whole, in one or more related transactions, to another person; unless:
(1) either: (a) Vlasic is the surviving corporation; or (b) the person
formed by or surviving any such consolidation or merger (if other than
Vlasic) or to which such sale, assignment, transfer, conveyance or
other disposition shall have been made is a corporation organized or
existing under the laws of the United States, any state thereof or the
District of Columbia;
(2) the person formed by or surviving any such consolidation or merger (if
other than Vlasic) or the person to which such sale, assignment,
transfer, conveyance or other disposition shall have been made assumes
all the obligations of Vlasic under the notes, the indenture and the
exchange and registration rights agreement pursuant to agreements
reasonably satisfactory to the trustee;
(3) immediately after such transaction no Default or Event of Default
exists; and
(4) except in the case of a merger of Vlasic with or into a Wholly Owned
Restricted Subsidiary of Vlasic, Vlasic or the person formed by or
surviving any such consolidation or merger (if other than Vlasic), or
to which such sale, assignment, transfer, conveyance or other
disposition shall have been made (a) will, on the date of such
transaction after giving pro forma effect thereto and any related
financing transactions as if the same had occurred at the beginning of
the applicable four-quarter period, be permitted to incur at least
$1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage
Ratio test set forth in the first paragraph of the covenant described
above under the caption "-- Incurrence of Indebtedness and Issuance of
Preferred Stock" or (b) would (together with its Restricted
Subsidiaries) have a higher Fixed Charge Coverage Ratio immediately
after such transaction (after giving pro forma effect to such
transaction and any related financing transactions as if the same had
occurred at the beginning of the applicable four-quarter period) than
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the Fixed Charge Coverage Ratio of Vlasic and its Restricted
Subsidiaries immediately prior to the transaction.
In addition, Vlasic may not, directly or indirectly, lease all or
substantially all of its assets, in one or more related transactions, to another
person. This "Merger, Consolidation, or Sale of Assets" covenant will not apply
to a sale, assignment, transfer, conveyance or other disposition of assets
between or among Vlasic and any of its Wholly Owned Restricted Subsidiaries or a
merger by Vlasic with an Affiliate incorporated solely for the purpose of
reincorporating in another jurisdiction.
As of the date of the indenture, the Designated Businesses would not be
deemed to constitute all or substantially all of the properties or assets of
Vlasic and its Restricted Subsidiaries taken as a whole.
DESIGNATION OF RESTRICTED AND UNRESTRICTED SUBSIDIARIES
The board of directors may designate any Restricted Subsidiary or a newly
acquired or newly formed subsidiary to be an Unrestricted Subsidiary if that
designation would not cause a Default. If a Restricted Subsidiary is designated
as an Unrestricted Subsidiary, the aggregate fair market value of all
outstanding Investments owned by Vlasic and its Restricted Subsidiaries in the
subsidiary so designated will be deemed to be an Investment made as of the time
of such designation and will either reduce the amount available for Restricted
Payments under the second clause (3) of the first paragraph of the covenant
described above under the caption "-- Restricted Payments" or reduce the amount
available for future Investments under one or more clauses of the definition of
Permitted Investments, as Vlasic shall determine. That designation will only be
permitted if such Investment would be permitted at that time and if such
Restricted Subsidiary otherwise meets the definition of an Unrestricted
Subsidiary. The board of directors may redesignate any Unrestricted Subsidiary
to be a Restricted Subsidiary if the redesignation would not cause a Default.
TRANSACTIONS WITH AFFILIATES
Vlasic will not, and will not permit any of its Restricted Subsidiaries to,
make any payment to, or sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any property or assets from, or enter into
or make or amend any transaction, contract, agreement, understanding, loan,
advance or guarantee with, or for the benefit of, any affiliate of Vlasic (each,
an "Affiliate Transaction"), unless:
(1) such Affiliate Transaction is on terms that are no less favorable to
Vlasic or the relevant Restricted Subsidiary than those that could have
been obtained in a comparable transaction by Vlasic or such Restricted
Subsidiary with an unrelated person; and
(2) Vlasic delivers to the trustee:
(a) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess
of $5.0 million, a resolution of the board of directors set forth in
an Officers' Certificate certifying that such Affiliate Transaction
complies with clause (1) above and that such Affiliate Transaction
has been approved by a majority of the Disinterested Directors; and
(b) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess
of $15.0 million, an opinion as to the fairness of such Affiliate
Transaction in all material respects, taken as a whole, to the
holders from a financial point of view issued by an accounting,
appraisal or investment banking firm of national standing.
Notwithstanding the foregoing, Vlasic will not be required to comply with
the requirements of paragraph 2(a) or 2(b) above with respect to any transaction
between Vlasic and/or its subsidiaries and Campbell Soup Company and/or its
subsidiaries in the ordinary course of business.
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The following items shall not be deemed to be Affiliate Transactions and,
therefore, will not be subject to the provisions of the prior paragraph:
(1) any employment agreement, collective bargaining agreement, employee
benefit plan, related trust agreement or any similar arrangement,
payment of compensation and fees to, and indemnity provided on behalf
of, employees, retirees, officers, directors or consultants,
maintenance of benefit programs or arrangements for employees,
retirees, officers or directors, including vacation plans, health and
life insurance plans, deferred compensation plans, and retirement or
savings plan and similar plans, and loans and advances to employees,
officers, directors and shareholders, in each case entered into by
Vlasic or any of its Restricted Subsidiaries in the ordinary course of
business;
(2) transactions between or among Vlasic and/or its Restricted
Subsidiaries;
(3) transactions with a person that is an affiliate of Vlasic solely
because Vlasic owns an Equity Interest in such person;
(4) payment of customary directors fees;
(5) transactions between a Receivables Subsidiary and any person in which
the Receivables Subsidiary has an Investment;
(6) Restricted Payments that are permitted by, and Permitted Investments
that are not prohibited by, the provisions of the indenture described
above under the caption "-- Restricted Payments;" and
(7) an Argentine Asset Sale to an investor group which includes a member or
members of management, as of the date of the indenture, of Swift-Armour
SA Argentina.
PAYMENTS FOR CONSENT
Vlasic will not, and will not permit any of its subsidiaries to, directly
or indirectly, pay or cause to be paid any consideration to or for the benefit
of any holder of notes for or as an inducement to any consent, waiver or
amendment of any of the terms or provisions of the indenture or the notes unless
such consideration is offered to be paid and is paid to all holders of the notes
that consent, waive or agree to amend in the time frame set forth in the
solicitation documents relating to such consent, waiver or agreement.
ANTI-LAYERING
Vlasic will not incur, create, issue, assume, guarantee or otherwise become
liable for any Indebtedness that is both (a) subordinate or junior in right of
payment to any Senior Debt of Vlasic and (b) senior in any respect in right of
payment to the notes.
LIMITATIONS ON ISSUANCES OF FUTURE SUBSIDIARY GUARANTEES
Vlasic will not permit any of its Restricted Subsidiaries, directly or
indirectly, to Guarantee any other Indebtedness of Vlasic (other than Senior
Debt) unless such Restricted Subsidiary simultaneously executes and delivers a
supplemental indenture providing for the Guarantee of the payment of the notes
by such Restricted Subsidiary, which Guarantee shall be senior to or pari passu
with such Restricted Subsidiary's Guarantee of such other Indebtedness.
REPORTS
Whether or not required by the SEC, so long as any notes are outstanding,
Vlasic will furnish to the holders of notes, within the time periods specified
in the SEC's rules and regulations:
(1) all quarterly and annual financial information that would be required
to be contained in a filing with the SEC on Forms 10-Q and 10-K if
Vlasic were required to file such Forms, including a "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" and, with respect to the annual information only, a report
on the annual financial statements by Vlasic's certified independent
accountants; and
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(2) all current reports that would be required to be filed with the SEC on
Form 8-K if Vlasic were required to file such reports.
In addition, following the consummation of the exchange offer, whether or
not required by the SEC, Vlasic will file a copy of all information and reports
referred to in clauses (1) and (2) above with the SEC for public availability
within the time periods specified in the SEC's rules and regulations (unless the
SEC will not accept such a filing) and make such information available to
securities analysts and prospective investors upon request.
EVENTS OF DEFAULT AND REMEDIES
Each of the following is an Event of Default:
(1) default for 30 days in the payment when due of interest (including
Special Interest) on the notes whether or not prohibited by the
subordination provisions of the indenture;
(2) default in payment when due of the principal of, or premium, if any, on
the notes, whether or not prohibited by the subordination provisions of
the indenture;
(3) failure by Vlasic to comply with the provisions described under the
caption "-- Certain Covenants -- Merger, Consolidation or Sale of
Assets;"
(4) failure by Vlasic for 30 days after notice from the trustee or the
holders of at least 25% in principal amount of the notes then
outstanding to comply with the provisions described under the caption
"-- Repurchase at the Option of Holders -- Change of Control",
"-- Repurchase at the Option of Holders -- Asset Sales" or under any of
the covenants described under "Certain Covenants" other than
"-- Certain Covenants -- Merger, Consolidation or Sale of Assets;"
(5) failure by Vlasic or any of its subsidiaries for 60 days after notice
from the trustee or the holders of at least 25% in principal amount of
the notes then outstanding to comply with any of the other agreements
in the indenture;
(6) default under any mortgage, indenture or instrument under which there
may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by Vlasic or any of its Restricted
Subsidiaries (or the payment of which is guaranteed by Vlasic or any of
its Restricted Subsidiaries) whether such Indebtedness or guarantee now
exists, or is created after the date of the indenture, if that default:
(a) is caused by a failure to pay principal of, or interest or premium,
if any, on such Indebtedness upon the expiration of the grace period
provided in such Indebtedness on the date of such default (a
"Payment Default"); or
(b) results in the acceleration of such Indebtedness prior to its
express maturity,
and, in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness under
which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates $10.0 million or more;
(7) failure by Vlasic or any of its Restricted Subsidiaries to pay final
judgments (not subject to appeal) aggregating in excess of $10.0
million, which judgments are not paid, discharged or stayed for a
period of 60 days; and
(8) certain events of bankruptcy or insolvency with respect to Vlasic or
any of its Restricted Subsidiaries.
In the case of an Event of Default arising from certain events of
bankruptcy or insolvency with respect to Vlasic, any Restricted Subsidiary that
is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken
together, would constitute a Significant Subsidiary, all outstanding notes will
become due and payable immediately without further action or notice. If any
other Event of Default occurs and is continuing, the trustee or the holders of
at least 25% in principal amount of the then outstanding notes may declare all
the notes to be due and payable immediately.
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If payment of the notes is accelerated because of an Event of Default,
Vlasic or the trustee shall promptly notify the Representative of each issue of
Designated Senior Debt of the acceleration; provided that any such acceleration
for the notes shall not be effective until the earlier of an acceleration of the
Designated Senior Debt or five Business Days after such notice is received.
Holders of the notes may not enforce the indenture or the notes except as
provided in the indenture. Subject to certain limitations, holders of a majority
in principal amount of the then outstanding notes may direct the trustee in its
exercise of any trust or power. The trustee may withhold from holders of the
notes notice of any continuing Default or Event of Default (except a Default or
Event of Default relating to the payment of principal or interest (or Special
Interest)) if it determines that withholding notice is in their interest.
The holders of a majority in aggregate principal amount of the notes then
outstanding by notice to the trustee may on behalf of the holders of all of the
notes waive any existing Default or Event of Default and its consequences under
the indenture except a continuing Default or Event of Default in the payment of
interest (or Special Interest) on, or the principal of, the notes.
In the case of any Event of Default occurring by reason of any willful
action or inaction taken or not taken by or on behalf of Vlasic with the
intention of avoiding payment of the premium that Vlasic would have had to pay
if Vlasic then had elected to redeem the notes pursuant to the optional
redemption provisions of the indenture, an equivalent premium shall also become
and be immediately due and payable to the extent permitted by law upon the
acceleration of the notes. If an Event of Default occurs prior to July 1, 2004
by reason of any willful action (or inaction) taken (or not taken) by or on
behalf of Vlasic with the intention of avoiding the prohibition on redemption of
the notes prior to July 1, 2004 then the premium specified in the indenture
shall also become immediately due and payable to the extent permitted by law
upon the acceleration of the notes.
Vlasic is required to deliver to the trustee annually a statement regarding
compliance with the indenture. Upon becoming aware of any Default or Event of
Default, Vlasic is required to deliver to the trustee a statement specifying
such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of Vlasic, as
such, shall have any liability for any obligations of Vlasic under the notes,
the indenture, or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each holder of notes by accepting a note waives
and releases all such liability. The waiver and release are part of the
consideration for issuance of the notes. The waiver may not be effective to
waive liabilities under the federal securities laws and it is the view of the
SEC that such a waiver is against public policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Vlasic may, at its option and at any time, elect to have all of its
obligations discharged with respect to the outstanding notes ("Legal
Defeasance") except for:
(1) the rights of holders of outstanding notes to receive payments in
respect of the principal of, and interest (including Special Interest),
if any, on such notes when such payments are due from the trust
referred to below;
(2) Vlasic's obligations with respect to the notes concerning issuing
temporary notes, registration of notes, mutilated, destroyed, lost or
stolen notes and the maintenance of an office or agency for payment and
money for security payments held in trust;
(3) the rights, powers, trusts, duties and immunities of the trustee, and
Vlasic's obligations in connection therewith; and
(4) the Legal Defeasance provisions of the indenture.
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In addition, Vlasic may, at its option and at any time, elect to have the
obligations of Vlasic released with respect to certain covenants that are
described in the indenture ("Covenant Defeasance") and thereafter any omission
to comply with those covenants shall not constitute a Default or Event of
Default with respect to the notes. In the event Covenant Defeasance occurs,
certain events (not including non-payment, bankruptcy, receivership,
rehabilitation and insolvency events) described under "Events of Default" will
no longer constitute an Event of Default with respect to the notes.
In order to exercise either Legal Defeasance or Covenant Defeasance:
(1) Vlasic must irrevocably deposit with the trustee, in trust, for the
benefit of the holders of the notes, cash in U.S. dollars, non-callable
Government Securities, or a combination thereof, in such amounts as
will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, and interest
(including Special Interest) and premium, if any, on the outstanding
notes on the stated maturity or on the applicable redemption date, as
the case may be, and Vlasic must specify whether the notes are being
defeased to maturity or to a particular redemption date;
(2) in the case of Legal Defeasance, Vlasic shall have delivered to the
trustee an Opinion of Counsel reasonably acceptable to the trustee
confirming that (a) Vlasic has received from, or there has been
published by, the Internal Revenue Service a ruling or (b) since the
date of the indenture, there has been a change in the applicable
federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, subject to
customary assumptions and exclusions, the holders of the outstanding
notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Legal Defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Legal Defeasance had not
occurred;
(3) in the case of Covenant Defeasance, Vlasic shall have delivered to the
trustee an Opinion of Counsel reasonably acceptable to the trustee
confirming that, subject to customary assumptions and exclusions, the
holders of the outstanding notes will not recognize income, gain or
loss for federal income tax purposes as a result of such Covenant
Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been
the case if such Covenant Defeasance had not occurred;
(4) no Default or Event of Default shall have occurred and be continuing
either: (a) on the date of such deposit (other than a Default or Event
of Default resulting from the borrowing of funds to be applied to such
deposit); or (b) or insofar as Events of Default from bankruptcy or
insolvency events are concerned, at any time in the period ending on
the 91st day after the date of deposit;
(5) such Legal Defeasance or Covenant Defeasance will not result in a
breach or violation of, or constitute a default under, any material
agreement or instrument (other than the indenture) to which Vlasic or
any of its subsidiaries is a party or by which Vlasic or any of its
subsidiaries is bound;
(6) Vlasic must have delivered to the trustee an Opinion of Counsel to the
effect that, assuming no intervening bankruptcy of Vlasic between the
date of deposit and the 91st day following the deposit and assuming
that no holder is an "insider" of Vlasic under applicable bankruptcy
law, after the 91st day following the deposit, the trust funds will not
be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally;
(7) Vlasic must deliver to the trustee an Officers' Certificate stating
that the deposit was not made by Vlasic with the intent of preferring
the holders of notes over the other creditors of Vlasic with the intent
of defeating, hindering, delaying or defrauding creditors of Vlasic or
others; and
(8) Vlasic must deliver to the trustee an Officers' Certificate and an
Opinion of Counsel (which opinion may be subject to customary
assumptions and exclusions), each stating that all conditions precedent
relating to the Legal Defeasance or the Covenant Defeasance have been
complied with.
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AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, the indenture or
the notes may be amended or supplemented with the consent of the holders of at
least a majority in principal amount of the notes then outstanding (including,
without limitation, consents obtained in connection with a purchase of, or
tender offer or exchange offer for, notes), and any existing default or
compliance with any provision of the indenture or the notes may be waived with
the consent of the holders of a majority in principal amount of the then
outstanding notes (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for, notes).
Without the consent of each holder affected, an amendment or waiver may not
(with respect to any notes held by a non-consenting holder):
(1) reduce the principal amount of notes whose holders must consent to an
amendment, supplement or waiver;
(2) reduce the principal of or change the fixed maturity of any note or
alter the provisions with respect to the redemption of the notes (other
than provisions relating to the covenants described above under the
caption "-- Repurchase at the Option of Holders");
(3) reduce the rate of or change the time for payment of interest on any
note;
(4) waive a Default or Event of Default in the payment of principal of, or
interest (or Special Interest) or premium, if any, on the notes (except
a rescission of acceleration of the notes by the holders of at least a
majority in aggregate principal amount of the notes and a waiver of the
payment default that resulted from such acceleration);
(5) make any note payable in money other than that stated in the notes;
(6) make any change in the provisions of the indenture relating to waivers
of past Defaults or the rights of holders of notes to receive payments
of principal of, or interest (or Special Interest) or premium, if any,
on the notes;
(7) waive a redemption payment with respect to any note (other than a
payment required by one of the covenants described above under the
caption "-- Repurchase at the Option of Holders"); or
(8) make any change in the preceding amendment and waiver provisions.
In addition, any amendment to, or waiver of, the provisions of the
indenture relating to subordination that adversely affects the rights of the
holders of the notes will require the consent of the holders of at least 75% in
aggregate principal amount of notes then outstanding.
Notwithstanding the preceding, without the consent of any holder of notes,
Vlasic and the trustee may amend or supplement the indenture or the notes:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated notes in addition to or in place of
certificated notes;
(3) to provide for the assumption of Vlasic's obligations to holders of
notes in the case of a merger or consolidation or sale of all or
substantially all of Vlasic's assets;
(4) to make any change that would provide any additional rights or benefits
to the holders of notes or that does not adversely affect the legal
rights under the indenture of any such holder; or
(5) to comply with requirements of the SEC in order to effect or maintain
the qualification of the indenture under the Trust Indenture Act.
The consent of the holders is not necessary under the indenture to approve
the particular form of any proposed amendment. It is sufficient if such consent
approves the substance of the proposed amendment.
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After an amendment under the indenture becomes effective, Vlasic is
required to mail to the holders a notice briefly describing such amendment.
However, the failure to give such notice to all the holders, or any defect
therein, will not impair or affect the validity of the amendment.
CONCERNING THE TRUSTEE
If the trustee becomes a creditor of Vlasic, the indenture limits its right
to obtain payment of claims in certain cases, or to realize on certain property
received in respect of any such claim as security or otherwise. The trustee will
be permitted to engage in other transactions; however, if it acquires any
conflicting interest it must eliminate such conflict within 90 days, apply to
the SEC for permission to continue or resign.
The holders of a majority in principal amount of the then outstanding notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the trustee, subject to
certain exceptions. The indenture provides that in case an Event of Default
shall occur and be continuing, the trustee will be required, in the exercise of
its power, to use the degree of care of a prudent man in the conduct of his own
affairs. Subject to such provisions, the trustee will be under no obligation to
exercise any of its rights or powers under the indenture at the request of any
holder of notes, unless such holder shall have offered to the trustee security
and indemnity satisfactory to it against any loss, liability or expense.
BOOK-ENTRY, DELIVERY AND FORM
The certificates representing the notes to be issued in the exchange offer
will be issued in fully registered form. Except as described below, the notes to
be issued in the exchange offer initially will be represented by one or more
global notes, in definitive, fully registered form without interest coupons. The
global notes will be deposited with the trustee as custodian for DTC and
registered in the name of Cede & Co. or another nominee as DTC may designate.
DTC has advised us as follows:
(1) DTC is a limited purpose trust company organized under the laws of
the State of New York, a "banking organization" within the meaning of the
New York Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the Uniform Commercial Code and a
"clearing agency" registered pursuant to the provision of Section 17A of
the Exchange Act.
(2) DTC was created to hold securities for its participants and to
facilitate the clearance and settlement of securities transactions between
participants through electronic book-entry changes in accounts of its
participants, thereby eliminating the need for physical movement of
certificates. Participants include securities brokers and dealers, banks,
trust companies and clearing corporations and other organizations. Indirect
access to the DTC system is available to others, including banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly.
(3) Upon the issuance of the global notes, DTC or its custodian will
credit, on its internal system, the respective principal amounts of the
notes to be issued in the exchange offer represented by the global notes to
the accounts of persons who have accounts with DTC. Ownership of beneficial
interests in the global notes will be limited to persons who have accounts
with DTC or persons who hold interests through the persons who have
accounts with DTC. Persons who have accounts with DTC are referred to as
"participants." Ownership of beneficial interests in the global notes will
be shown on, and the transfer of that ownership will be effected only
through, records maintained by DTC or its nominee, with respect to
interests of participants, and the records of participants, with respect to
interests of persons other than participants.
So long as DTC or its nominee is the registered owner or holder of the
global notes, DTC or the nominee, as the case may be, will be considered the
sole record owner or holder of the notes to be issued in the exchange offer
represented by the global notes for all purposes under the indenture and the
notes to be issued in the exchange offer. No beneficial owners of an interest in
the global notes will be able to transfer that
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interest except according to DTC's applicable procedures, in addition to those
provided for under the indenture. Owners of beneficial interests in the global
notes will not:
(1) be entitled to have the notes to be issued in the exchange offer
represented by the global notes registered in their names,
(2) receive or be entitled to receive physical delivery of certificated
notes in definitive form, and
(3) be considered to be the owners or holders of any notes to be issued
in the exchange offer under the global notes.
Accordingly, each person owning a beneficial interest in the global notes
must rely on the procedures of DTC and, if a person is not a participant, on the
procedures of the participant through which that person owns its interests, to
exercise any right of a holder of notes to be issued in the exchange offer under
the global notes. We understand that under existing industry practice, in the
event an owner of a beneficial interest in the global notes desires to take any
action that DTC, as the holder of the global notes, is entitled to take, DTC
would authorize the participants to take that action, and that the participants
would authorize beneficial owners owning through the participants to take that
action or would otherwise act upon the instructions of beneficial owners owning
through them.
Payments of the principal of, premium, if any, and interest on the notes to
be issued in the exchange offer represented by the global notes will be made to
DTC or its nominee, as the case may be, as the registered owner of the global
notes. Neither we, the trustee, nor any paying agent will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the global notes
or for maintaining, supervising or reviewing any records relating to the
beneficial ownership interests.
We expect that DTC or its nominee, upon receipt of any payment of principal
of, premium, if any, or interest on the global notes will credit participants'
accounts with payments in amounts proportionate to their respective beneficial
ownership interests in the principal amount of the global notes, as shown on the
records of DTC or its nominee. We also expect that payments by participants to
owners of beneficial interests in the global notes held through these
participants will be governed by standing instructions and customary practices,
as is now the case with securities held for the accounts of customers registered
in the names of nominees for these customers. These payments will be the
responsibility of these participants.
Transfer between participants in DTC will be effected in the ordinary way
in accordance with DTC rules. If a holder requires physical delivery of notes in
certificated form for any reason, including to sell notes to persons in states
which require the delivery of the notes or to pledge the notes, a holder must
transfer its interest in the global notes in accordance with the normal
procedures of DTC and the procedures set forth in the indenture.
Unless and until they are exchanged in whole or in part for certificated
notes to be issued in the exchange offer in definitive form, the global notes
may not be transferred except as a whole by DTC to a nominee of DTC or by a
nominee of DTC to DTC or another nominee of DTC.
Beneficial owners of notes to be issued in the exchange offer registered in
the name of DTC or its nominee will be entitled to be issued, upon request,
notes to be issued in the exchange offer in definitive certificated form.
DTC has advised us that DTC will take any action permitted to be taken by a
holder of notes, including the presentation of notes for exchange as described
below, only at the direction of one or more participants to whose account the
DTC interests in the global notes are credited. Further, DTC will take any
action permitted to be taken by a holder of notes only in respect of that
portion of the aggregate principal amount of notes as to which the participant
or participants has or have given that direction.
Although DTC has agreed to these procedures in order to facilitate
transfers of interests in the global notes among participants of DTC, it is
under no obligation to perform these procedures, and may discontinue them at any
time. Neither we nor the trustee will have any responsibility for the
performance by DTC or its
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participants or indirect participants of their respective obligations under the
rules and procedures governing their operations.
Subject to specified conditions, any person having a beneficial interest in
the global notes may, upon request to the trustee, exchange the beneficial
interest for notes to be issued in the exchange offer in the form of
certificated notes. Upon any issuance of certified notes, the trustee is
required to register the certificated notes in the name of, and cause the same
to be delivered to, the person or persons, or the nominee of these persons. In
addition, if DTC is at any time unwilling or unable to continue as a depositary
for the global notes, and a successor depositary is not appointed by us within
90 days, we will issue certificated notes in exchange for the global notes.
EXCHANGE OFFER; REGISTRATION RIGHTS
The following description is a summary of the material provisions of the
exchange and registration rights agreement. It does not restate that agreement
in its entirety. We urge you to read the exchange and registration rights
agreement in its entirety because it, and not this description, defines your
registration rights as holders of the notes. See "-- Additional Information."
Vlasic and the initial purchasers entered into the exchange and
registration rights agreement on June 29, 1999. Pursuant to the exchange and
registration rights agreement, Vlasic has agreed to file with the SEC the
exchange offer registration statement on the appropriate form under the
Securities Act with respect to the notes to be issued in the exchange offer.
Upon the effectiveness of the exchange offer registration statement, Vlasic will
offer to the holders of transfer restricted securities pursuant to the exchange
offer who are able to make certain representations the opportunity to exchange
their transfer restricted securities for notes to be issued in the exchange
offer.
If:
(1) Vlasic is not
(a) required to file the exchange offer registration statement; or
(b) permitted to consummate the exchange offer because the exchange
offer is not permitted by applicable law or SEC policy; or
(2) any holder of transfer restricted securities notifies the SEC prior
to the 20th day following consummation of the exchange offer that:
(a) it is prohibited by law or SEC policy from participating in the
exchange offer; or
(b) that it may not resell the notes acquired by it in the exchange
offer to the public without delivering a prospectus and the prospectus
contained in the exchange offer registration statement is not
appropriate or available for such resales; or
(c) that it is a broker-dealer and owns notes acquired directly from
Vlasic or an affiliate of Vlasic,
Vlasic will file with the SEC a shelf registration statement to cover resales of
the notes by the holders thereof who satisfy certain conditions relating to the
provision of information in connection with the shelf registration statement.
Vlasic will use all commercially reasonable efforts to cause the applicable
registration statement to be declared effective as promptly as possible by the
SEC.
For purposes of the preceding, "Transfer Restricted Securities" means each
note until:
(1) the date on which such note has been exchanged by a person other
than a broker-dealer for a note to be issued in the exchange offer;
(2) following the exchange by a broker-dealer in the exchange offer of
an outstanding note for a note to be issued in the exchange offer, the date
on which such note to be issued in the exchange offer is
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sold to a purchaser who receives from such broker-dealer on or prior to the
date of such sale a copy of the prospectus contained in the exchange offer
registration statement;
(3) the date on which such note has been effectively registered under
the Securities Act and disposed of in accordance with the shelf
registration statement; or
(4) the date on which such note is distributed to the public pursuant to
Rule 144 under the Securities Act.
The exchange and registration rights agreement provides:
(1) Vlasic will file an exchange offer registration statement with the
SEC on or prior to 90 days after the closing of the offering of the
outstanding notes;
(2) Vlasic will use all commercially reasonable efforts to have the
exchange offer registration statement declared effective by the SEC on or
prior to 180 days after the closing of the offering of the outstanding
notes;
(3) unless the exchange offer would not be permitted by applicable law
or SEC policy, Vlasic will
(a) commence the exchange offer; and
(b) use all commercially reasonable efforts to issue on or prior to
45 business days, or longer, if required by the federal securities laws,
after the date on which the exchange offer registration statement was
declared effective by the SEC, notes to be issued in the exchange offer
in exchange for all notes tendered prior thereto in the exchange offer;
and
(4) if obligated to file the shelf registration statement, Vlasic will
use all commercially reasonable efforts to file the shelf registration
statement with the SEC on or prior to 30 days after such filing obligation
arises and to cause the shelf registration to be declared effective by the
SEC on or prior to 90 days after such obligation arises.
If:
(1) Vlasic fails to file any of the registration statements required by
the exchange and registration rights agreement on or before the date
specified for such filing; or
(2) any of such registration statements is not declared effective by the
SEC on or prior to the date specified for such effectiveness (the
"effectiveness target date"); or
(3) Vlasic fails to consummate the exchange offer within 45 business
days of the initial effective date of the exchange offer registration
statement (if the exchange offer is then required to be made); or
(4) the shelf registration statement or the exchange offer registration
statement is declared effective but thereafter shall either be withdrawn by
Vlasic or shall become subject to an effective stop order issued pursuant
to Section 8(d) of the Securities Act suspending the effectiveness of such
registration statement (except as specifically permitted in the exchange
and registration rights agreement) without being succeeded immediately by
an additional registration statement filed and declared effective (each
such event referred to in clauses (1) through (4) above, a "registration
default"),
then Vlasic will pay special interest to each holder of notes, with respect to
the first 90-day period immediately following the occurrence of the first
registration default in an amount equal to $.05 per week per $1,000 principal
amount of notes held by such holder.
The amount of special interest will increase by an additional $.05 per week
per $1,000 principal amount of notes with respect to each subsequent 90-day
period until all registration defaults have been cured, up to a maximum amount
of special interest for all registration defaults of $.20 per week per $1,000
principal amount of notes.
All accrued special interest will be paid by Vlasic on each damages payment
date to the global note holder by wire transfer of immediately available funds
or by federal funds check and to holders of certificated
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notes by wire transfer to the accounts specified by them or by mailing checks to
their registered addresses if no such accounts have been specified.
Following the cure of all registration defaults, the accrual of special
interest will cease.
Holders of notes will be required to make certain representations to Vlasic
(as described in the exchange and registration rights agreement) in order to
participate in the exchange offer and will be required to deliver certain
information to be used in connection with the shelf registration statement and
to provide comments on the shelf registration statement within the time periods
set forth in the exchange and registration rights agreement in order to have
their notes included in the shelf registration statement and benefit from the
provisions regarding special interest set forth above. By acquiring transfer
restricted securities, a holder will be deemed to have agreed to indemnify
Vlasic against certain losses arising out of information furnished by such
holder in writing for inclusion in any shelf registration statement. Holders of
notes will also be required to suspend their use of the prospectus included in
the shelf registration statement under certain circumstances upon receipt of
written notice to that effect from Vlasic.
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CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the indenture. Reference
is made to the indenture for a full disclosure of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.
"Acquired Debt" means, with respect to any specified person:
(1) Indebtedness of any other person existing at the time such other person
is merged with or into or became a subsidiary of such specified person,
whether or not such Indebtedness is incurred in connection with, or in
contemplation of, such other person merging with or into, or becoming a
subsidiary of, such specified person; and
(2) Indebtedness secured by a Lien encumbering any asset acquired by such
specified person.
"Affiliate" of any specified person means any other person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified person. For purposes of this definition, "control,"
as used with respect to any person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such person, whether through the ownership of voting securities, by
agreement or otherwise; provided that beneficial ownership of 10% or more of the
Voting Stock of a person shall be deemed to be control. For purposes of this
definition, the terms "controlling," "controlled by" and "under common control
with" shall have correlative meanings. No person (other than Vlasic or any
subsidiary of Vlasic) in whom a Receivables Subsidiary makes an Investment in
connection with a Qualified Receivables Transaction will be deemed to be an
affiliate of Vlasic or any of its subsidiaries solely by reason of such
Investment.
"Argentine Asset Sale" means either the sale of the Argentine Assets or the
sale of the Capital Stock of any subsidiary of Vlasic that owns the Argentine
Assets, in each case to a person other than Vlasic or a subsidiary of Vlasic.
"Argentine Assets" means the assets of the Swift-Armour Argentine beef
business.
"Asset Sale" means:
(1) the sale, lease, conveyance or other disposition (a "Disposition") of
any assets or rights, other than sales of inventory in the ordinary
course of business; provided that the sale, lease, conveyance or other
disposition of all or substantially all of the assets of Vlasic and its
Restricted Subsidiaries taken as a whole will be governed by the
provisions of the indenture described above under the caption
"-- Repurchase at the Option of Holders -- Change of Control" and/or
the provisions described above under the caption "-- Certain
Covenants -- Merger, Consolidation or Sale of Assets" and not by the
provisions of the Asset Sale covenant; and
(2) the issuance of Equity Interests in any of Vlasic's Restricted
Subsidiaries or the sale of Equity Interests in any of its
subsidiaries.
Notwithstanding the preceding, the following items shall not be deemed to
be Asset Sales:
(1) any single transaction or series of related transactions that involves
assets having a fair market value of less than $5.0 million;
(2) the sale or lease of equipment, inventory, accounts receivable or
other assets in the ordinary course of business;
(3) the sale or other disposition of cash or Cash Equivalents;
(4) a disposition of assets by Vlasic to a Restricted Subsidiary or by a
Restricted Subsidiary to Vlasic or to another Restricted Subsidiary;
(5) an issuance of Equity Interests by a Restricted Subsidiary to Vlasic
or to another Restricted Subsidiary;
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(6) a Restricted Payment that is permitted by the covenant described above
under the caption "-- Certain Covenants -- Restricted Payments";
(7) the sale and leaseback of any assets within 90 days of the acquisition
thereof;
(8) any exchange of property pursuant to Section 1031 of the Internal
Revenue Code of 1986, as amended, for use in a Permitted Business;
(9) the licensing of intellectual property in the ordinary course of
business;
(10) sales of accounts receivable and related assets of the type specified
in the definition of "Qualified Receivables Transaction" to a
Receivables Subsidiary for the fair market value thereof, including
cash, in an amount at least equal to 75% of the book value thereof as
determined in accordance with GAAP, it being understood that, for the
purposes of this clause (10), notes received in exchange for the
transfer of accounts receivable and related assets will be deemed to
be cash if the Receivables Subsidiary or other payor is required to
repay said notes as soon as practicable from available cash
collections less amounts required to be established as reserves
pursuant to contractual agreements with entities that are not
affiliates of Vlasic entered into as part of a Qualified Receivables
Transaction;
(11) transfers of accounts receivable and related assets of the type
specified in the definition of "Qualified Receivables Transaction" (or
a fractional undivided interest therein) by a Receivables Subsidiary
in a Qualified Receivables Transaction; and
(12) transactions that are subject to the provisions of the covenant
described above under the caption "-- Certain Covenants -- Merger,
Consolidation or Sale of Assets".
"Attributable Debt" in respect of a sale and leaseback transaction means,
at the time of determination, the present value of the obligation of the lessee
for net rental payments during the remaining term of the lease included in such
sale and leaseback transaction including any period for which such lease has
been extended or may, at the option of the lessor, be extended. Such present
value shall be calculated using a discount rate equal to the rate of interest
implicit in such transaction, determined in accordance with GAAP.
"Beneficial Owner" has the meaning assigned to such term in Rule 13d-3 and
Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular "person" (as that term is used in Section 13(d)(3)
of the Exchange Act), such "person" shall be deemed to have beneficial ownership
of all securities that such "person" has the right to acquire by conversion or
exercise of other securities, whether such right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition. The terms
"Beneficially Owns" and "Beneficially Owned" shall have a corresponding meaning.
"Board of Directors" means:
(1) with respect to a corporation, the board of directors of the
corporation;
(2) with respect to a partnership, the board of directors of the general
partner of the partnership; and
(3) with respect to any other person, the board or committee of such person
serving a similar function.
"Borrowing Base" means:
(1) 75% of the face amount of all accounts receivable owned by Vlasic's
Foreign Restricted Subsidiaries as of the end of the most recent fiscal
quarter preceding such date that were not more than 90 days past due;
provided, however, that any accounts receivable owned by a Receivables
Subsidiary, or which Vlasic or any of its Restricted Subsidiaries has
agreed to transfer to a Receivables Subsidiary, shall be excluded for
purposes of determining such amount; plus
(2) 50% of the book value of all inventory owned by Vlasic's Foreign
Restricted Subsidiaries as of the end of the most recent fiscal quarter
preceding such date; minus
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(3) the aggregate amount of accounts payable of Vlasic Foreign Restricted
Subsidiaries outstanding as of the end of the most recent fiscal
quarter preceding such date, all calculated on a consolidated basis and
in accordance with GAAP.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at that time be required to be capitalized on a balance sheet in accordance with
GAAP.
"Capital Stock" means:
(1) in the case of a corporation, corporate stock;
(2) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however
designated) of corporate stock;
(3) in the case of a partnership or limited liability company, partnership
or membership interests (whether general or limited); and
(4) any other interest or participation that confers on a person the right
to receive a share of the profits and losses of, or distributions of
assets of, the issuing person.
"Cash Equivalents" means:
(1) United States dollars;
(2) securities issued or directly and fully guaranteed or insured by the
United States government or any agency or instrumentality thereof
(provided that the full faith and credit of the United States is
pledged in support thereof) having maturities of not more than six
months from the date of acquisition;
(3) certificates of deposit and eurodollar time deposits with maturities of
six months or less from the date of acquisition, bankers' acceptances
with maturities not exceeding six months and overnight bank deposits,
in each case, with any lender party to the Credit Agreement or with any
domestic commercial bank having capital and surplus in excess of $500.0
million and a Thomson Bank Watch Rating of "B" or better;
(4) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (2) and (3)
above entered into with any financial institution meeting the
qualifications specified in clause (3) above;
(5) commercial paper having the highest rating obtainable from Moody's
Investors Service, Inc. or Standard & Poor's Rating Services and in
each case maturing within six months after the date of acquisition; and
(6) money market funds at least 95% of the assets of which constitute Cash
Equivalents of the kinds described in clauses (1) through (5) of this
definition.
"Change of Control" means the occurrence of any of the following:
(1) the direct or indirect sale, transfer, conveyance or other disposition
(other than by way of merger or consolidation), in one or a series of
related transactions, of all or substantially all of the properties or
assets of Vlasic and its Restricted Subsidiaries taken as a whole to
another "person" (as that term is used in Section 13(d)(3) of the
Exchange Act) other than a Principal or a Related Party of a Principal;
provided, that, as of the date of the Indenture, the Designated
Businesses would not be deemed to constitute all or substantially all
of the properties or assets of Vlasic and its Restricted Subsidiaries
taken as a whole;
(2) the adoption of a plan relating to the liquidation or dissolution of
Vlasic;
(3) the consummation of any transaction (including, without limitation, any
merger or consolidation) the result of which is that any "person" (as
defined above), other than the Principals and their
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Related Parties, becomes the Beneficial Owner, directly or indirectly,
of more than 50% of the Voting Stock of Vlasic, measured by voting
power rather than number of shares; or
(4) the first day on which a majority of the members of the board of
directors of Vlasic are not Continuing Directors.
"Consolidated Cash Flow" means, with respect to any specified person for
any period, the Consolidated Net Income of such Person for such period plus:
(1) provision for taxes based on earnings of such person and its Restricted
Subsidiaries for such period, to the extent that such provision for
taxes on earnings was deducted in computing such Consolidated Net
Income; plus
(2) consolidated interest expense of such person and its Restricted
Subsidiaries for such period, whether paid or accrued and whether or
not capitalized (including, without limitation, amortization of debt
issuance costs and original issue discount, non-cash interest payments,
the interest component of any deferred payment obligations, the
interest component of all payments associated with Capital Lease
Obligations, imputed interest with respect to Attributable Debt,
commissions, discounts and other fees and charges incurred in respect
of letter of credit or bankers' acceptance financings, and the effect
of all payments made or received pursuant to Hedging Obligations of the
kind referred to in clauses (1) and (2) of the definition of Hedging
Obligations), to the extent that any such expense was deducted in
computing such Consolidated Net Income; plus
(3) all unusual or nonrecurring charges occurring prior to the first
anniversary of the date of the indenture of the kind referred to in the
footnote to Adjusted EBITDA appearing in the Summary Financial
Information in the prospectus; plus
(4) depreciation, amortization (including amortization of goodwill and
other intangibles but excluding amortization of prepaid cash expenses
that were paid in a prior period) and other non-cash expenses
(excluding any such non-cash expense to the extent that it represents
an accrual of or reserve for cash expenses in any future period or
amortization of a prepaid cash expense that was paid in a prior period)
of such Person and its Restricted Subsidiaries for such period to the
extent that such depreciation, amortization and other non-cash expenses
were deducted in computing such Consolidated Net Income; minus
(5) non-cash items increasing such Consolidated Net Income for such period,
other than the accrual of revenue in the ordinary course of business;
in each case, on a consolidated basis and determined in accordance with GAAP.
"Consolidated Net Income" means, with respect to any specified person for
any period, the aggregate of the Net Income of such person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that:
(1) the (a) Net Income (but not loss) of any person that is not a
subsidiary or that is accounted for by the equity method of accounting
shall be included only to the extent of the amount of dividends or
distributions paid in cash to the specified person or a Wholly Owned
Restricted Subsidiary thereof and (b) the Net Income (but not loss) of
any Unrestricted Subsidiary shall be excluded, whether or not
distributed to the specified person or one of its subsidiaries;
(2) the Net Income of any Restricted Subsidiary shall be excluded to the
extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that Net Income is not
at the date of determination permitted without any prior governmental
approval (that has not been obtained) or, directly or indirectly, by
operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation
applicable to that subsidiary or its stockholders;
(3) the Net Income of any person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition shall
be excluded; and
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(4) the cumulative effect of a change in accounting principles shall be
excluded.
"Consolidated Net Tangible Assets" means, as of any date, the total
consolidated assets of Vlasic and its Restricted Subsidiaries, less the total
intangible assets of Vlasic and its Restricted Subsidiaries, as shown on the
most recent internal consolidated balance sheet of Vlasic that was prepared in
accordance with GAAP.
"Continuing Directors" means, as of any date of determination, any member
of the board of directors of Vlasic who:
(1) was a member of such board of directors on the date of the indenture;
or
(2) was nominated for election or elected to such board of directors with
the approval of a majority of the Continuing Directors who were members
of such board at the time of such nomination or election.
"Credit Facilities" means, one or more debt facilities (including, without
limitation, the senior credit facility) or commercial paper facilities, in each
case with banks or other institutional lenders providing for revolving credit
loans, term loans, receivables financing (including through the sale of
receivables to such lenders or to special purpose entities formed to borrow from
such lenders against such receivables) or letters of credit, in each case, as
amended, restated, modified, renewed, refunded, replaced or refinanced in whole
or in part from time to time.
"Default" means any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.
"Designated Businesses" means all of Vlasic's businesses other than its
United States pickle and pickled products businesses and its United States
frozen foods businesses.
"Designated Senior Debt" means (i) any Indebtedness outstanding under the
senior credit facility and (ii) any other Senior Debt permitted under the
indenture, the principal amount of which is $25.0 million or more, and that has
been designated by Vlasic as "Designated Senior Debt."
"Disinterested Director" means, as used with reference to the covenant
entitled "-- Certain Covenants -- Transactions with Affiliates," a member of the
board of directors who does not have any material direct or indirect financial
interest (other than an interest arising solely from the beneficial ownership of
Capital Stock of Vlasic) in or with respect to the particular transaction or
series of transactions, if any, that is subject to approval by a majority of the
Disinterested Directors pursuant to such covenant.
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the holder
thereof, in whole or in part, on or prior to the date that is 91 days after the
date on which the notes mature. Notwithstanding the preceding sentence, any
Capital Stock that would constitute Disqualified Stock solely because the
holders thereof have the right to require Vlasic to repurchase such Capital
Stock upon the occurrence of a change of control or an asset sale shall not
constitute Disqualified Stock if the terms of such Capital Stock provide that
Vlasic may not repurchase or redeem any such Capital Stock pursuant to such
provisions unless such repurchase or redemption complies with the covenant
described above under the caption "-- Certain Covenants -- Restricted Payments."
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Existing Employment Arrangements" means the Director Compensation Plan,
Deferred Compensation Plan, Supplemental Employees' Retirement Plan, Mid-Career
Hire Pension Agreement with Robert F. Bernstock, Special Severance Protection
Program, Severance Protection Agreement with Robert F. Bernstock, Retiree
Medical Plan for Union Employees, Retiree Medical Plan for Non-Union Hourly
Employees and Retiree Medical Plan for Salaried Employees, as the same are in
effect on the date of the indenture, and as thereafter amended in the ordinary
course of business.
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"Existing Indebtedness" means Indebtedness of Vlasic and its subsidiaries
(other than Indebtedness under a Credit Facility) in existence on the date of
the indenture, until such amounts are repaid or refinanced with Permitted
Refinancing Indebtedness.
"Financial Officer" means the chief financial officer, chief accounting
officer or treasurer of Vlasic.
"Fixed Charges" means, with respect to any specified person or any of its
Restricted Subsidiaries for any period, the sum, without duplication, of:
(1) the consolidated interest expense of such person and its Restricted
Subsidiaries for such period, whether paid or accrued, including,
without limitation, amortization of debt issuance costs and original
issue discount, non-cash interest payments, the interest component of
any deferred payment obligations, the interest component of all
payments associated with Capital Lease Obligations, imputed interest
with respect to Attributable Debt, commissions, discounts and other
fees and charges incurred in respect of letter of credit or bankers'
acceptance financings, and net of the effect of all payments made or
received pursuant to Hedging Obligations; plus
(2) the consolidated interest of such person and its Restricted
Subsidiaries that was capitalized during such period; plus
(3) any interest expense on Indebtedness of another person that is
Guaranteed by such person or one of its Restricted Subsidiaries or
secured by a Lien on assets of such person or one of its Restricted
Subsidiaries, whether or not such Guarantee or Lien is called upon;
plus
(4) the product of (a) all dividends, whether paid or accrued, whether or
not in cash, on any series of Preferred Stock of such person or any of
its Restricted Subsidiaries, other than dividends on Equity Interests
payable solely in Equity Interests of Vlasic (other than Disqualified
Stock) or to Vlasic or a Restricted Subsidiary of Vlasic, times (b) a
fraction, the numerator of which is one and the denominator of which is
one minus the then current combined federal, state and local statutory
tax rate of such person, expressed as a decimal,
in each case, on a consolidated basis and in accordance with GAAP.
"Fixed Charge Coverage Ratio" means with respect to any specified person
and its Restricted Subsidiaries for any period, the ratio of the Consolidated
Cash Flow of such person and its Restricted Subsidiaries for such period to the
Fixed Charges of such person and its Restricted Subsidiaries for such period. In
the event that the specified person or any of its Restricted Subsidiaries
incurs, assumes, Guarantees, repays, repurchases or redeems any Indebtedness
(other than ordinary working capital borrowings) or issues, repurchases or
redeems Preferred Stock subsequent to the commencement of the period for which
the Fixed Charge Coverage Ratio is being calculated and on or prior to the date
on which the event for which the calculation of the Fixed Charge Coverage Ratio
is made (the "Calculation Date"), then the Fixed Charge Coverage Ratio shall be
calculated giving pro forma effect to such incurrence, assumption, Guarantee,
repayment, repurchase or redemption of Indebtedness, or such issuance,
repurchase or redemption of Preferred Stock, and the use of the proceeds
therefrom, as if the same had occurred at the beginning of the applicable
four-quarter reference period.
In addition, for purposes of calculating the Fixed Charge Coverage Ratio:
(1) acquisitions that have been made by the specified person or any of its
Restricted Subsidiaries, including through mergers or consolidations
and including any related financing transactions, during the
four-quarter reference period or subsequent to such reference period
and on or prior to the Calculation Date shall be given pro forma effect
as if they had occurred on the first day of the four-quarter reference
period and Consolidated Cash Flow for such reference period shall be
calculated (a) to include the Consolidated Cash Flow of the acquired
entities on a pro forma basis (including the incurrence of any
Indebtedness and including pro forma expense and cost reductions) and
(b) to give effect to any cost savings realized by Vlasic within six
months of such acquisition as if they had been realized at the
beginning of the four-quarter reference period, and (c) without giving
effect to clause (3) of the proviso set forth in the definition of
Consolidated Net Income;
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(2) the Consolidated Cash Flow attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, shall be excluded; and
(3) the Fixed Charges attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, shall be excluded, but only
to the extent that the obligations giving rise to such Fixed Charges
will not be obligations of the specified person or any of its
subsidiaries following the Calculation Date.
For purposes of this definition, whenever pro forma effect is to be given to an
acquisition the amount of income or earnings relating thereto and the amount of
consolidated interest expense associated with any Indebtedness incurred in
connection therewith, the pro forma calculations shall be determined in good
faith by a responsible financial or accounting officer of Vlasic.
"Foreign Restricted Subsidiary" means any Restricted Subsidiary that is
incorporated in a jurisdiction outside of the United States or the District of
Columbia.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the date of the indenture.
"Guarantee" means a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof, of all or any part of any Indebtedness.
"Hedging Obligations" means, with respect to any specified person, the
obligations of such person under:
(1) interest rate swap agreements, interest rate cap agreements and
interest rate collar agreements;
(2) other agreements or arrangements designed to protect such person
against fluctuations in interest rates;
(3) agreements or arrangements designed to protect such person against
exchange rate risk with respect to any agreement or indebtedness of
such person payable in a currency other than U.S. dollars; and
(4) agreements or arrangements designed to protect such person against
commodities risk relating to commodities agreements, entered into in
the ordinary course of business, for the purchase of raw material used
by Vlasic and its Restricted Subsidiaries.
"Indebtedness" means, with respect to any specified person, any
indebtedness of such person, whether or not contingent, in respect of:
(1) borrowed money;
(2) evidenced by bonds, notes, debentures or similar instruments or letters
of credit (or reimbursement agreements in respect thereof);
(3) banker's acceptances;
(4) representing Capital Lease Obligations;
(5) the balance deferred and unpaid of the purchase price of any property,
except any such balance that constitutes an accrued expense or trade
payable; or
(6) representing any Hedging Obligations,
if and to the extent any of the preceding items (other than letters of credit
and Hedging Obligations) would appear as a liability upon a balance sheet of the
specified person prepared in accordance with GAAP. In addition, the term
"Indebtedness" includes all Indebtedness of others secured by a Lien on any
asset of the
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specified person (whether or not such Indebtedness is assumed by the specified
person) and, to the extent not otherwise included, the Guarantee by the
specified person of any indebtedness of any other person.
The amount of any Indebtedness outstanding as of any date shall be:
(1) the accreted value thereof, in the case of any Indebtedness issued with
original issue discount; and
(2) the principal amount thereof, together with any interest thereon that
is more than 30 days past due, in the case of any other Indebtedness;
and
(3) for purposes of calculating the amount of Indebtedness of any
Receivables Subsidiaries, the Receivables Financing Amount relating
thereto.
"Investments" means, with respect to any person, all investments by such
person in other persons (including Affiliates) in the forms of direct or
indirect loans (including Guarantees or other obligations), advances or capital
contributions (excluding commission, payroll, travel, employee transfer
assistance loans and similar loans and advances to directors, officers,
employees, consultants and stockholders made in the ordinary course of business
and excluding loans, advances, prepayments or other credits to co-packers,
growers, suppliers and customers in the ordinary course of business), purchases
or other acquisitions for consideration of Indebtedness, Equity Interests or
other securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP. If Vlasic or
any Restricted Subsidiary of Vlasic sells or otherwise disposes of any Equity
Interests of any direct or indirect Restricted Subsidiary of Vlasic such that,
after giving effect to any such sale or disposition, such person is no longer a
Restricted Subsidiary of Vlasic, Vlasic shall be deemed to have made an
Investment on the date of any such sale or disposition equal to the fair market
value of the Equity Interests of such Restricted Subsidiary not sold or disposed
of in an amount determined as provided in the final paragraph of the covenant
described above under the caption "-- Certain Covenants -- Restricted Payments."
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law,
including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and, except in connection with any Qualified Receivables
Transaction, any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.
"Net Income" means, with respect to any specified person, the net earnings
(loss) of such person, determined in accordance with GAAP and before any
reduction in respect of Preferred Stock dividends, excluding, however:
(1) any gain or loss, together with any related provision for taxes on such
gain or loss, realized in connection with: (a) any Asset Sale
(including, without limitation, dispositions pursuant to sale and
leaseback transactions); or (b) the disposition of any securities by
such person or any of its subsidiaries or the extinguishment of any
Indebtedness of such person or any of its Restricted Subsidiaries;
(2) any extraordinary gain or loss, together with any related provision for
taxes on such extraordinary gain or loss;
(3) any exchange or translation losses on foreign currencies; and
(4) any non-capitalized transaction costs incurred in connection with
actual or proposed financings, acquisitions or divestitures.
"Net Proceeds" means the aggregate cash proceeds received by Vlasic or any
of its Restricted Subsidiaries in respect of any Asset Sale (including, without
limitation, any cash received upon the sale or other disposition of any non-cash
consideration received in any Asset Sale), net of the direct costs relating to
such Asset Sale, including, without limitation, legal, accounting and investment
banking fees, and sales commissions, and any relocation expenses incurred as a
result thereof, taxes paid or payable as a result thereof, in each case, after
taking into account any available tax credits or deductions and any tax sharing
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arrangements, and amounts required to be applied to the repayment of
Indebtedness, other than Senior Debt secured by a Lien on the asset or assets
that were the subject of such Asset Sale, or applied to the payment of
post-closing adjustments.
"Non-Recourse Debt" means Indebtedness:
(1) as to which neither Vlasic nor any of its Restricted Subsidiaries (a)
provides credit support of any kind (including any undertaking,
agreement or instrument that would constitute Indebtedness), (b) is
directly or indirectly liable as a guarantor or otherwise, or (c)
constitutes the lender;
(2) no default with respect to which (including any rights that the holders
thereof may have to take enforcement action against an Unrestricted
Subsidiary) would permit upon notice, lapse of time or both any holder
of any other Indebtedness (other than the notes) of Vlasic or any of
its Restricted Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable
prior to its stated maturity; and
(3) as to which the lenders have been notified in writing that they will
not have any recourse to the stock or assets of Vlasic or any of its
Restricted Subsidiaries.
"Obligations" means any principal (and premium, if any), interest,
penalties, fees, indemnifications, reimbursements, damages and other liabilities
payable under the documentation governing any Indebtedness.
"Permitted Business" means any food or consumer products business or such
other business activities which are incidental or related thereto.
"Permitted Investment" means:
(1) any Investment in Vlasic or in a Restricted Subsidiary of Vlasic that
is not a Receivables Subsidiary;
(2) any Investment in Cash Equivalents;
(3) any Investment by Vlasic or any subsidiary of Vlasic in a person, if
as a result of such Investment:
(a) such person becomes a Restricted Subsidiary of Vlasic; or
(b) such person is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or is
liquidated into, Vlasic or a Wholly Owned Restricted Subsidiary of
Vlasic;
(4) any Investment made as a result of the receipt of non-cash
consideration from an Asset Sale that was made pursuant to and in
compliance with the covenant described above under the caption
"-- Repurchase at the Option of Holders -- Asset Sales";
(5) any acquisition of assets solely in exchange for the issuance of
Equity Interests (other than Disqualified Stock) of Vlasic;
(6) Hedging Obligations;
(7) receivables owing to Vlasic or any of its Restricted Subsidiaries, if
created or acquired in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms;
(8) loans or advances to officers, directors or employees for purposes of
purchasing Vlasic common stock in an aggregate amount outstanding at
any one time not to exceed $5 million and other loans and advances to
officers, directors or employees made in the ordinary course of
business of Vlasic or such Restricted Subsidiary;
(9) stock, obligations or securities received in settlement of debts
created in the ordinary course of business and owing to Vlasic or any
of its Restricted Subsidiaries or in satisfaction of judgments or
claims;
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(10) Investments in connection with pledges, deposits, payments or
performance bonds made or given in the ordinary course of business in
connection with or to secure statutory, regulatory or similar
obligations, including obligations under health, safety or
environmental obligations;
(11) the acquisition by a Receivables Subsidiary in connection with a
Qualified Receivables Transaction of Equity Interests of a trust or
other person established by such Receivables Subsidiary to effect such
Qualified Receivables Transaction; and any other Investment by Vlasic
or a Restricted Subsidiary of Vlasic in a Receivables Subsidiary or
any Investment by a Receivables Subsidiary in any other person in
connection with a Qualified Receivables Transaction, provided that
such other Investment is in the form of a note or other instrument
that the Receivables Subsidiary or other person is required to repay
as soon as practicable from available cash collections less amounts
required to be established as reserves pursuant to contractual
agreements with entities that are not Affiliates of Vlasic entered
into as part of a Qualified Receivables Transaction;
(12) contributions to trusts to fund payments required by the terms of the
Existing Employment Arrangements; and
(13) other Investments in any person having an aggregate fair market value
(measured on the date each such Investment was made and without giving
effect to subsequent changes in value), when taken together with all
other Investments made pursuant to this clause (13) since the date of
the indenture, not to exceed the greater of (a) $10.0 million; and (b)
2.0% of Consolidated Net Tangible Assets.
"Permitted Liens" means:
(1) Liens securing Senior Debt that was permitted by the terms of the
indenture to be incurred;
(2) Liens in favor of Vlasic or any Restricted Subsidiary;
(3) Liens on property of a person existing at the time such person is
merged with or into or consolidated with Vlasic or any subsidiary of
Vlasic; provided that such Liens were in existence prior to the
contemplation of such merger or consolidation and do not extend to any
assets other than those of the person merged into or consolidated with
Vlasic or the subsidiary;
(4) Liens on property existing at the time of acquisition thereof by
Vlasic or any subsidiary of Vlasic, provided that such Liens were in
existence prior to the contemplation of such acquisition;
(5) Liens on property of a person existing at the time such person becomes
a subsidiary of Vlasic, provided that such Liens were in existence
prior to the contemplation of such event;
(6) Liens to secure the performance of statutory obligations, surety or
appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business;
(7) Liens securing Indebtedness of subsidiaries that was permitted by the
terms of the indenture to be incurred;
(8) Liens existing on the date of the indenture;
(9) Liens for taxes, assessments or governmental charges or claims that
are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded,
provided that any reserve or other appropriate provision as shall be
required in conformity with GAAP shall have been made therefor;
(10) Liens on assets of Unrestricted Subsidiaries that secure Non-Recourse
Debt of Unrestricted Subsidiaries;
(11) Liens encumbering deposits made to secure obligations arising from
statutory, regulatory, contractual or warranty requirements of Vlasic
or any of its Restricted Subsidiaries, including rights of offset and
set-off;
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(12) Liens securing Hedging Obligations which Hedging Obligations relate to
Indebtedness that is otherwise permitted under the indenture;
(13) Liens of Vlasic or any subsidiary of Vlasic with respect to
obligations that do not exceed $5.0 million at any one time
outstanding;
(14) Liens securing Permitted Refinancing Indebtedness incurred to extend,
refinance, renew, replace, defease or refund secured Indebtedness
where the Liens securing the Indebtedness being refinanced were
permitted under the indenture;
(15) any interest or title of a lessor under any Capital Lease Obligation;
(16) Liens securing reimbursement obligations with respect to commercial
letters of credit which encumber documents and other property relating
to such letters of credit and products and proceeds thereof;
(17) Liens in favor of customs and revenue authorities arising as a matter
of law to secure payment of customer duties in connection with the
importation of goods;
(18) Liens on assets of Vlasic or a Receivables Subsidiary incurred in
connection with a Qualified Receivables Transaction; and
(19) Liens arising out of the refinancing, extension, renewal or refunding
of any Indebtedness permitted by this indenture that is secured by any
Lien permitted by (1) through (18) above.
"Permitted Refinancing Indebtedness" means any Indebtedness of Vlasic or
any of its Restricted Subsidiaries issued in exchange for, or the net proceeds
of which are used to extend, refinance, renew, replace, defease or refund other
Indebtedness of Vlasic or any of its Restricted Subsidiaries (other than
intercompany Indebtedness); provided that:
(1) the principal amount (or accreted value, if applicable) of such
Permitted Refinancing Indebtedness does not exceed the principal amount
(or accreted value, if applicable), of the Indebtedness so extended,
refinanced, renewed, replaced, defeased or refunded (plus all accrued
interest thereon and the amount of all customary expenses and premiums
incurred in connection therewith);
(2) such Permitted Refinancing Indebtedness has a final maturity date that
is the same as or later than the final maturity date of, and has a
Weighted Average Life to Maturity equal to or greater than the Weighted
Average Life to Maturity of, the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded;
(3) if the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded is subordinated in right of payment to the notes,
such Permitted Refinancing Indebtedness has a final maturity date that
is the same as or later than the final maturity date of, and is
subordinated in right of payment to, the notes on terms at least as
favorable taken as a whole (as determined in the good faith judgment of
Vlasic's board of directors) to the holders of notes as those contained
in the documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; and
(4) such Indebtedness is incurred either by Vlasic or by the Restricted
Subsidiary who is the obligor on the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Preferred Stock" means any Equity Interest with preferential rights of
payment with respect to dividends or upon liquidation, dissolution or winding
up.
"Principals" means (1) Bennett Dorrance, the grandson of Dr. John T.
Dorrance, (2) Mary Alice Malone, the granddaughter of Dr. John T. Dorrance, (3)
the Major Stockholders' Voting Trust, formed on
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June 2, 1990 by certain descendants, spouses, fiduciaries and a related
foundation of Dr. John T. Dorrance, and (4) any and all members of the Major
Stockholders' Voting Trust, whether the trust be in effect or following its
termination, including, but not limited to, the Dorrance H. Hamilton Trust, Hope
H. van Beuren and John A. van Beuren Trust.
"Public Equity Offering" means any issuance of common stock by Vlasic that
is registered pursuant to the Securities Act, other than issuances registered on
Form S-8 and other issuances of common stock pursuant to employee benefit plans
of Vlasic.
"Qualified Receivables Transaction" means any transaction or series of
transactions entered into by Vlasic or any of its subsidiaries pursuant to which
Vlasic or any of its subsidiaries sells, conveys or otherwise transfers to (i) a
Receivables Subsidiary (in the case of a transfer by Vlasic or any of its
subsidiaries) and (ii) any other person (in the case of a transfer by a
Receivables Subsidiary), or grants a security interest in, any accounts
receivable (whether now existing or arising in the future) of Vlasic or any of
its subsidiaries, and any assets related thereto including, without limitation,
all collateral securing such accounts receivable, all contracts and all
guarantees or other obligations in respect of such accounts receivable, proceeds
of such accounts receivable and other assets which are customarily transferred
or in respect of which security interests are customarily granted in connection
with asset securitization transactions involving accounts receivable.
"Receivables Financing Amount" means at any date, with respect to any
Qualified Receivables Transaction, the sum on such date of (a) the aggregate
uncollected balances of accounts receivable transferred ("Transferred
Receivables") in such Qualified Receivables Transaction plus (b) the aggregate
amount of all collections of Transferred Receivables theretofore received by the
person to whom accounts receivable were transferred in such Qualified
Receivables Transaction that have not yet been remitted to Vlasic, net of all
reserves and holdbacks retained by or for the benefit of such transferee and net
of any interest retained by Vlasic and reasonable costs and expenses (including
fees and commissions and taxes other than income taxes) incurred by Vlasic in
connection therewith and not payable to any Affiliate of Vlasic.
"Receivables Subsidiary" means a subsidiary of Vlasic which engages in no
activities other than in connection with the financing or sale of accounts
receivable and which is designated by the board of directors of Vlasic (as
provided below) as a Receivables Subsidiary (a) no portion of the Indebtedness
or any other Obligations (contingent or otherwise) of which (i) is guaranteed by
Vlasic or any subsidiary of Vlasic (excluding guarantees of Obligations (other
than the principal of, and interest on, Indebtedness) pursuant to
representations, warranties, covenants (including repurchase obligations) and
indemnities entered into in the ordinary course of business in connection with a
Qualified Receivables Transaction), (ii) is recourse to or obligates Vlasic or
any subsidiary of Vlasic in any way other than pursuant to representations,
warranties, covenants (including repurchase obligations) and indemnities entered
into in the ordinary course of business in connection with a Qualified
Receivables Transaction or (iii) subjects any property or asset of Vlasic or any
subsidiary of Vlasic (other than accounts receivable and related assets as
provided in the definition of "Qualified Receivables Transaction"), directly or
indirectly, contingently or otherwise, to the satisfaction thereof, other than
pursuant to representations, warranties, covenants (including repurchase
obligations) and indemnities entered into in the ordinary course of business in
connection with a Qualified Receivables Transaction, (b) with which neither
Vlasic nor any subsidiary of Vlasic has any material contract, agreement,
arrangement or understanding other than on terms no less favorable to Vlasic or
such subsidiary than those that might be obtained at the time from persons who
are not affiliates of Vlasic, other than fees payable in the ordinary course of
business in connection with servicing accounts receivable and related assets and
(c) with which neither Vlasic nor any subsidiary of Vlasic has any obligation to
maintain or preserve such subsidiary's financial condition or cause such
subsidiary to achieve certain levels of operating results. Any such designation
by the board of directors of Vlasic will be evidenced to the trustee by filing
with the trustee a certified copy of the resolution of the board of directors of
Vlasic giving effect to such designation and an Officers' Certificate certifying
that such designation complied with the foregoing conditions.
"Related Party" means:
(1) any controlling stockholder, 80% (or more) owned subsidiary, or
immediate family member (in the case of an individual) of any
Principal; or
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(2) any trust, corporation, partnership or other entity, the beneficiaries,
stockholders, partners, owners or persons beneficially holding an 80%
or more controlling interest of which consist of any one or more
Principals and/or such other persons referred to in the immediately
preceding clause (1).
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a person means any subsidiary of the referent
person that is not an Unrestricted Subsidiary.
"Senior Credit Facility" means that certain Amended and Restated Credit
Agreement, dated as of September 30, 1998, by and among Vlasic, the banks party
thereto, The Chase Manhattan Bank and Morgan Guaranty Trust Company of New York,
as amended by Amendment No. 1 to Amended and Restated Credit Agreement, dated as
of June 9, 1999, by and among Vlasic, the banks party thereto, The Chase
Manhattan Bank and Morgan Guaranty Trust Company of New York, providing for term
loans and revolving credit borrowings, including any related notes, guarantees,
collateral documents, instruments and agreements executed in connection
therewith, and in each case as amended, modified, renewed, refunded, replaced or
refinanced from time to time.
"Senior Debt" means:
(1) all Indebtedness of Vlasic outstanding under Credit Facilities and all
Hedging Obligations with respect thereto;
(2) any other Indebtedness of Vlasic permitted to be incurred under the
terms of the indenture, unless the instrument under which such
Indebtedness is incurred expressly provides that it is on a parity with
or subordinated in right of payment to the Notes; and
(3) all Obligations with respect to the items listed in the preceding
clauses (1) and (2).
Notwithstanding anything to the contrary in the preceding, Senior Debt will
not include:
(1) any liability for federal, state, local or other taxes owed or owing by
Vlasic;
(2) any Indebtedness of Vlasic to any of its subsidiaries or other
Affiliates;
(3) any trade payables; or
(4) the portion of any Indebtedness that is incurred in violation of the
Indenture; provided that in no event will Indebtedness under Credit
Facilities cease to be Senior Debt as a result of this clause (4) if an
officer of Vlasic certifies at the time of borrowing under Credit
Facilities that such borrowing is permitted by the terms of the
indenture.
"Significant Subsidiary" means any subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Act, as such Regulation is in effect on the date hereof.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any specified person:
(1) any corporation, association or other entity of which more than 50% of
the total voting power of shares of Capital Stock entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by such person or one or more of
the other subsidiaries of that person (or a combination thereof); and
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(2) any partnership (a) the sole general partner or the managing general
partner of which is such person or a subsidiary of such person or (b)
the only general partners of which are such person or one or more
subsidiaries of such person (or any combination thereof).
"Swift-Armour" means Swift-Armour SA Argentina.
"Unrestricted Subsidiary" means any subsidiary of Vlasic that is designated
by the board of directors as an Unrestricted Subsidiary pursuant to a Board
Resolution, but only to the extent that such subsidiary:
(1) has no Indebtedness other than Non-Recourse Debt;
(2) is not party to any agreement, contract, arrangement or understanding
with Vlasic or any Restricted Subsidiary of Vlasic unless the terms of
any such agreement, contract, arrangement or understanding are no less
favorable to Vlasic or such Restricted Subsidiary than those that might
be obtained at the time from persons who are not Affiliates of Vlasic;
(3) is a person with respect to which neither Vlasic nor any of its
Restricted Subsidiaries has any direct or indirect obligation (a) to
subscribe for additional Equity Interests or (b) to maintain or
preserve such person's financial condition or to cause such person to
achieve any specified levels of operating results;
(4) has not guaranteed or otherwise directly or indirectly provided credit
support for any Indebtedness of Vlasic or any of its Restricted
Subsidiaries; and
(5) has at least one director on its board of directors that is not a
director or executive officer of Vlasic or any of its Restricted
Subsidiaries and has at least one executive officer that is not a
director or executive officer of Vlasic or any of its Restricted
Subsidiaries.
Any designation of a subsidiary of Vlasic as an Unrestricted Subsidiary
shall be evidenced to the trustee by filing with the trustee a certified copy of
the Board Resolution giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the preceding
conditions and was permitted by the covenant described above under the caption
"-- Certain Covenants -- Restricted Payments." If, at any time, any Unrestricted
Subsidiary would fail to meet the preceding requirements as an Unrestricted
Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for
purposes of the indenture and any Indebtedness of such subsidiary shall be
deemed to be incurred by a Restricted Subsidiary of Vlasic as of such date and,
if such Indebtedness is not permitted to be incurred as of such date under the
covenant described under the caption "-- Certain Covenants -- Incurrence of
Indebtedness and Issuance of Preferred Stock," Vlasic shall be in default of
such covenant. The board of directors of Vlasic may at any time designate any
Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such
designation shall be deemed to be an incurrence of Indebtedness by a Restricted
Subsidiary of Vlasic of any outstanding Indebtedness of such Unrestricted
Subsidiary and such designation shall only be permitted if (1) such Indebtedness
is permitted under the covenant described under the caption "-- Certain
Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock,"
calculated on a pro forma basis as if such designation had occurred at the
beginning of the four-quarter reference period; and (2) no Default or Event of
Default would be in existence following such designation.
"Voting Stock" of any person as of any date means the Capital Stock of such
person that is at the time entitled to vote in the election of the board of
directors of such person.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing:
(1) the sum of the products obtained by multiplying (a) the amount of each
then remaining installment, sinking fund, serial maturity or other
required payments of principal, including payment at final maturity, in
respect thereof, by (b) the number of years (calculated to the nearest
one-twelfth) that will elapse between such date and the making of such
payment; by
(2) the then outstanding principal amount of such Indebtedness.
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"Wholly Owned Restricted Subsidiary" of any specified person means a
Restricted Subsidiary of such person all of the outstanding Capital Stock or
other ownership interests of which (other than directors' qualifying shares)
shall at the time be owned by such person or by one or more Wholly Owned
Restricted Subsidiaries of such person.
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MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following is a summary of the material U.S. federal income tax
consequences associated with the exchange of outstanding notes for notes to be
issued in the exchange offer and the ownership and disposition of those notes
applicable to you if you acquired the outstanding notes in the initial offering
and, for U.S. federal income tax purposes, you are not a "United States person"
as defined below (a "Non-U.S. Holder"), except as discussed below under the
caption "Exchange Offer, " which discusses the U.S. federal income tax treatment
to all holders of outstanding notes. This summary is based upon current U.S.
federal income tax laws, regulations, rulings, and judicial decisions, all of
which are subject to change, possibly retroactively. This summary does not
discuss all aspects of U.S. federal income taxation which may be important to
you in light of your individual investment circumstances, for example, if you
are an investor subject to special tax rules (e.g., if you are a bank, thrift,
real estate investment trust, regulated investment company, insurance company,
dealer in securities or currencies, expatriate or tax-exempt investor) or if you
will hold notes as a position in a "straddle," as part of a "synthetic security"
or "hedge," as part of a "conversion transaction" or other integrated
investment, or as other than a capital asset. In addition, this summary does not
address any aspect of state, local or foreign taxation.
YOU ARE URGED TO CONSULT YOUR OWN TAX ADVISOR REGARDING THE PARTICULAR TAX
CONSEQUENCES TO YOU OF ACQUIRING, OWNING, AND DISPOSING OF THE NOTES IN LIGHT OF
YOUR PARTICULAR TAX AND INVESTMENT SITUATION AND THE PARTICULAR STATE, LOCAL AND
FOREIGN INCOME AND OTHER TAX LAWS.
For purposes of this summary, a "United States person" means a beneficial
owner of a note that is for U.S. federal income tax purposes:
- an individual who is a citizen or resident of the United States for U.S.
federal income tax purposes;
- a corporation, partnership or other entity created or organized in the
United States or under the laws of the United States or any state thereof
(including the District of Columbia);
- an estate the income of which is includible in gross income for U.S.
federal income tax purposes regardless of its source; or
- a trust if a court within the United States is able to exercise primary
supervision over the administration of such trust and one or more United
States persons have the authority to control all substantial decisions of
such trust.
A "Non-U.S. Holder" means a holder of a note that is not a U.S. holder.
EXCHANGE OFFER
The exchange of outstanding notes for the notes issued in the exchange
offer will not be treated as an "exchange" for United States federal income tax
purposes because the notes issued in the exchange offer will not differ
materially in kind or extent from the outstanding notes. Rather, the notes
received by you in the exchange offer will be treated as a continuation of the
outstanding notes owned by you. As a result, there will be no federal income tax
consequences to you. In addition, you will have the same adjusted tax basis and
holding period in the notes issued in the exchange offer as you had in the
outstanding notes immediately prior to the exchange.
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PAYMENTS OF INTEREST TO NON-U.S. HOLDERS
Subject to the discussion of backup withholding below, payments of interest
on a note to you generally will not be subject to U.S. federal income or
withholding tax, provided that
(1) you
- do not actually or constructively own 10% or more of the total
combined voting power of all classes of stock of Vlasic entitled to
vote, and
- are not a controlled foreign corporation that is related to Vlasic
actually or constructively through stock ownership for United States
federal income tax purposes;
(2) such interest payments are not effectively connected with the conduct
by you of a trade or business within the United States; and
(3) we or our paying agent receives
- from you, a properly completed Form W-8 (or substitute Form W-8)
signed under penalties of perjury which provides your name and address
and certifies that you are a non-U.S. holder, or
- from a security clearing organization, bank or other financial
institution that holds the Notes in the ordinary course of its trade
or business (a "financial institution") on behalf of you,
certification signed under penalties of perjury that such Form W-8 (or
substitute Form W-8) has been received by it, or by another such
financial institution, from you, and a copy of the Form W-8 (or
substitute Form W-8) is furnished to us or our paying agent.
If you do not qualify for an exemption from withholding under the preceding
paragraph, you generally will be subject to withholding of U.S. federal income
tax at the rate of 30% (or a lower rate if a treaty applies) when you receive
interest on the notes.
If you are engaged in a trade or business in the United States and interest
on the notes is effectively connected with the conduct of such trade or
business, you will not be subject to a withholding tax (assuming a proper
certification is provided) but will be subject to U.S. federal income tax on
such interest on a net income basis in the same manner as if you were a U.S.
person. In addition, if you are a foreign corporation, you may be subject to a
branch profits tax at a 30% rate (or, if applicable, a lower rate specified by a
treaty).
SALE, EXCHANGE OR REDEMPTION OF NOTES BY NON-U.S. HOLDERS
Subject to the discussion concerning backup withholding, any gain realized
by you on the sale, exchange, retirement or other disposition of a note
generally will not be subject to a U.S. federal income tax, unless (i) such gain
is effectively connected with the conduct by you of a trade of business within
the United States, or (ii) you are an individual who is present in the United
States for 183 days or more in the taxable year of the disposition and certain
other conditions are satisfied. Any such gain that is effectively connected with
the conduct of a United States trade or business by you will be subject to
United States federal income tax on a net income basis in the same manner as if
you were a United States person and, if you are a corporation, such gain may
also be subject to the 30% United States branch profits tax described above.
FEDERAL ESTATE TAXES WITH RESPECT TO NON-U.S. HOLDERS
If you are an individual who at the time of death is not a citizen or
resident of the United States, the note held by you at the time of your death
will not be subject to United States federal estate tax, provided that (i) you
do not actually or constructively own 10% or more of the total combined voting
power of all classes of stock of Vlasic entitled to vote and (ii) the interest
accrued on the note was not effectively connected with your conduct of a United
States trade or business.
119
<PAGE> 123
BACKUP WITHHOLDING AND INFORMATION REPORTING FOR NON-U.S. HOLDERS
Backup withholding and information reporting generally will not apply to
payments made to you if you provide the certification described under "Payments
of Interest" or otherwise establishes an exemption from backup withholding.
Payments by a United States office of a broker of the proceeds of a disposition
of the notes generally will be subject to backup withholding at a rate of 31%
unless you certify that you are a non-U.S. holder under penalties of perjury or
otherwise establish an exemption. Payments of the proceeds of a disposition of
the notes by or through a foreign office of a United States broker or foreign
broker with certain relationships to the United States generally will be subject
to information reporting, but not backup withholding.
Any amount withheld from a payment to you under the backup withholding
rules is allowable as a credit against your U.S. federal income tax liability,
or if withholding results in an overpayment of taxes, a refund may be obtained,
provided that the required information is furnished to the IRS. Certain holders
(including, among others, corporations and foreign individuals who comply with
certain certification requirements) are not subject to backup withholding.
NEW WITHHOLDING REGULATIONS
The U.S. Treasury Department issued final Treasury Regulations ("New
Withholding Regulations") governing information reporting and the certification
procedures regarding withholding and backup withholding on certain amounts paid
to non-U.S. holders after December 31, 2000. The New Withholding Regulations
generally would not alter the treatment of non-U.S. holders described above. The
New Withholding Regulations would alter the procedures for claiming the benefits
of an income tax treaty and may change the certification procedures relating to
the receipt by intermediaries of payments on behalf of a beneficial owner of a
note. You should consult your tax advisors concerning the effect, if any, of
such New Withholding Regulations on an investment in the notes.
PLAN OF DISTRIBUTION
Each broker-dealer that receives notes for its own account in the exchange
offer must acknowledge that it will deliver a prospectus in connection with any
resale of those notes. This prospectus, as it may be amended or supplemented
from time to time, may be used by a broker-dealer in connection with resales of
notes received in the exchange offer where the outstanding notes were acquired
as a result of market-making activities or other trading activities. We have
agreed that, for a period of 120 days after the consummation of the exchange
offer, we will make this prospectus, as amended and supplemented, available to
any broker-dealer for use in connection with any such resale.
We will not receive any proceeds from any sale of notes issued in the
exchange offer by broker-dealers. Notes issued in the exchange offer received by
broker-dealers for their own account under the exchange offer may be sold from
time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the notes or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or at negotiated
prices. Any such resale may be made directly to purchasers to or through brokers
or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer or the purchasers of any such notes. Any
broker-dealer that resells notes that were received by it for its own account in
the exchange offer and any broker or dealer that participates in a distribution
of such notes may be deemed to be an "underwriter" within the meaning of the
Securities Act, and profit on any such resale of notes issued in the exchange
and any commission or concessions received by any such persons may be deemed to
be underwriting compensation under the Securities Act. The letter of transmittal
states that, by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period of 120 days after the consummation of the exchange offer, we
will promptly send additional copies of this prospectus and any amendment or
supplement to this prospectus to any broker-dealer that
120
<PAGE> 124
requests such documents in the letter of transmittal. We have agreed to pay all
expenses incident to the exchange offer, including the expenses of one counsel
for the holders of the outstanding notes, other than the commissions or
concessions of any broker-dealers, and will indemnify the holders of the
outstanding notes, including any broker-dealers, against certain liabilities,
including liabilities under the Securities Act. We note, however, that, in the
opinion of the SEC, indemnification against liabilities arising under federal
securities laws is against public policy and may be unenforceable.
LEGAL MATTERS
Certain legal matters with respect to the validity of the issuance of the
notes to be issued in the exchange offer will be passed upon for Vlasic by Norma
B. Carter, Vice President, General Counsel and Corporate Secretary of Vlasic.
Ms. Carter will rely on the opinion of Skadden, Arps, Slate, Meagher & Flom LLP,
New York, New York, with respect to matters of New York law.
EXPERTS
The financial statements as of August 2, 1998 and August 3, 1997 and for
each of the three years in the period ended August 2, 1998 included in this
prospectus have been so included in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
121
<PAGE> 125
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
ANNUAL FINANCIAL STATEMENTS
Report of Independent Accountants......................... F-2
Consolidated Statements of Earnings for the fiscal years
ended August 2, 1998, August 3, 1997 and July 28, 1996.... F-3
Consolidated Balance Sheets as of August 2, 1998 and
August 3, 1998............................................ F-4
Consolidated Statements of Cash Flows for the fiscal years
ended August 2, 1998, August 3, 1997 and July 28, 1996.... F-5
Consolidated Statements of Shareowners' Equity for the
fiscal years ended August 2, 1998, August 3, 1997 and July
28, 1996.................................................. F-6
Notes to Consolidated Financial Statements................ F-7
INTERIM FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Statements of Earnings (unaudited) for the
three and nine month periods ended May 2, 1999 and May 3,
1998...................................................... F-23
Consolidated Balance Sheets as of May 2, 1999 (unaudited)
and August 2, 1998 (audited).............................. F-24
Consolidated Statements of Cash Flows (unaudited) for the
nine month periods ended May 2, 1999 and May 3, 1998...... F-25
Consolidated Statements of Shareowners' Equity (Deficit)
(unaudited) for the nine month periods ended May 2, 1999
and May 3, 1998........................................... F-26
Notes to Consolidated Financial Statements (unaudited).... F-27
</TABLE>
F-1
<PAGE> 126
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareowners of Vlasic Foods International Inc.
In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of earnings, shareowners' equity and cash flows
present fairly, in all material respects, the financial position of Vlasic Foods
International Inc. and its subsidiaries at August 2, 1998 and August 3, 1997,
and the results of their operations and their cash flows for each of the three
years in the period ended August 2, 1998, 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.
As discussed in Note 12 to the financial statements, the Company changed
its method of accounting for business process reengineering costs in 1998.
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
September 16, 1998
F-2
<PAGE> 127
VLASIC FOODS INTERNATIONAL
CONSOLIDATED STATEMENTS OF EARNINGS
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1998 1997 1996
52 WEEKS 53 WEEKS 52 WEEKS
-------- -------- --------
<S> <C> <C> <C>
Net sales (including $154,764, $155,563 and $144,902 to
related parties)....................................... $1,357,274 $1,508,285 $1,498,967
---------- ---------- ----------
Costs and expenses
Cost of products sold.................................. 978,025 1,048,433 1,053,348
Marketing and selling expenses......................... 245,119 266,475 256,666
Administrative expenses................................ 64,063 53,050 54,558
Research and development expenses...................... 7,907 8,620 8,064
Other (income) expense................................. (2,927) 2,446 159
Special charges........................................ 42,450 12,634 37,202
---------- ---------- ----------
Total costs and expenses....................... 1,334,637 1,391,658 1,409,997
---------- ---------- ----------
Earnings before interest and taxes....................... 22,637 116,627 88,970
Interest expense....................................... 13,446 1,600 1,071
Interest income........................................ 388 588 329
---------- ---------- ----------
Earnings before taxes.................................... 9,579 115,615 88,228
Taxes on earnings........................................ 15,378 37,475 27,361
---------- ---------- ----------
Earnings (loss) before cumulative effect of accounting
change................................................. (5,799) 78,140 60,867
Cumulative effect of accounting change................... (600) -- --
---------- ---------- ----------
Net earnings (loss)...................................... $ (6,399) $ 78,140 $ 60,867
========== ========== ==========
Per share basic:
Loss before cumulative effect of accounting change..... $ (0.13)
Cumulative effect of accounting change................. (0.01)
----------
Net loss per share..................................... $ (0.14)
----------
Weighted average shares outstanding -- basic........... 45,458
==========
Per share assuming dilution:
Loss before cumulative effect of accounting change..... $ (0.13)
Cumulative effect of accounting change................. (0.01)
----------
Net loss per share..................................... $ (0.14)
----------
Weighted average shares outstanding assuming
dilution............................................ 45,458*
==========
</TABLE>
- ---------------
* Excludes potentially dilutive shares as the result would be antidilutive.
See accompanying Notes to Consolidated Financial Statements.
F-3
<PAGE> 128
VLASIC FOODS INTERNATIONAL
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
AUGUST 2, AUGUST 3,
1998 1997
--------- ---------
<S> <C> <C>
Current assets
Cash and cash equivalents................................. $ 16,333 $ 9,409
Accounts receivable....................................... 127,644 109,676
Inventories............................................... 183,763 163,852
Other current assets...................................... 25,200 12,339
-------- --------
Total current assets.............................. 352,940 295,276
-------- --------
Plant assets, net......................................... 520,075 515,646
Other assets, principally intangible assets, net.......... 86,258 84,186
-------- --------
Total assets................................................ $959,273 $895,108
======== ========
Current liabilities
Notes payable............................................. $ 12,535 $ 191
Payable to suppliers and others........................... 121,210 123,101
Accrued liabilities....................................... 93,330 88,914
-------- --------
Total current liabilities......................... 227,075 212,206
-------- --------
Long-term debt.............................................. 558,873 2,252
Deferred income taxes....................................... 19,673 36,815
Other liabilities........................................... 47,048 11,537
-------- --------
Total liabilities................................. 852,669 262,810
-------- --------
Shareowners' equity
Preferred stock, no par value; authorized 4,000 shares;
none issued............................................ -- --
Common stock, no par value; authorized 56,000 shares;
issued shares 45,488................................... 137,473 --
Campbell net investment................................... -- 633,168
Accumulated deficit....................................... (25,115) --
Cumulative translation adjustments........................ (5,754) (870)
-------- --------
Total shareowners' equity......................... 106,604 632,298
-------- --------
Total liabilities and shareowners' equity................... $959,273 $895,108
======== ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
F-4
<PAGE> 129
VLASIC FOODS INTERNATIONAL
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings............................................ $ (6,399) $ 78,140 $ 60,867
Non-cash charges to net earnings
Cumulative effect of accounting change............... 600 -- --
Restructuring charges................................ 28,050 12,634 37,202
Impairment loss...................................... 14,400 -- --
Depreciation and amortization........................ 45,125 44,808 45,585
Deferred income taxes................................ (7,701) 9,199 (12,730)
Other, net........................................... (1,737) 1,515 1,220
Changes in working capital
Accounts receivable.................................. (17,213) 11,016 19,540
Inventories.......................................... (19,263) 16,858 (1,422)
Other current assets and liabilities................. (28,514) 4,269 1,905
-------- --------- --------
Net cash provided by operating activities.......... 7,348 178,439 152,167
-------- --------- --------
Cash flows from investing activities:
Purchases of plant assets............................... (62,273) (79,301) (59,053)
Sales of plant assets................................... 6,424 8,431 4,318
Business acquired....................................... (6,350) -- --
Other, net.............................................. (1,101) 846 2,631
-------- --------- --------
Net cash used in investing activities.............. (63,300) (70,024) (52,104)
-------- --------- --------
Cash flows from financing activities:
Long-term borrowings.................................... 98,542 -- --
Repayment of long-term borrowings....................... (42,000) (427) (425)
Short-term borrowings (repayments)...................... 12,335 (17) (1,431)
Issuance of common stock................................ 519 -- --
Transactions with Campbell.............................. (6,500) (104,029) (94,555)
-------- --------- --------
Net cash (used in) provided by financing
activities...................................... 62,896 (104,473) (96,411)
-------- --------- --------
Effect of exchange rate changes on cash................. (20) (86) 59
-------- --------- --------
Net change in cash and cash equivalents............ 6,924 3,856 3,711
Cash and cash equivalents -- beginning of period.......... 9,409 5,553 1,842
-------- --------- --------
Cash and cash equivalents -- end of period................ $ 16,333 $ 9,409 $ 5,553
======== ========= ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
F-5
<PAGE> 130
VLASIC FOODS INTERNATIONAL
CONSOLIDATED STATEMENTS OF SHAREOWNERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
ISSUED
COMMON STOCK CAMPBELL CUMULATIVE TOTAL
------------ ACCUMULATED NET TRANSLATION SHAREOWNERS'
SHARES AMOUNT DEFICIT INVESTMENT ADJUSTMENT EQUITY
------ ------ ----------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance at July 30, 1995.... $ 692,745 $ 991 $ 693,736
1996 Net earnings........... 60,867 60,867
Translation adjustment...... (182) (182)
Net transactions with
Campbell.................. (94,555) (94,555)
--------- ------- ---------
Balance at July 28, 1996.... 659,057 809 659,866
--------- ------- ---------
1997 Net earnings........... 78,140 78,140
Translation adjustment...... (1,679) (1,679)
Net transactions with
Campbell.................. (104,029) (104,029)
--------- ------- ---------
Balance at August 3, 1997... 633,168 (870) 632,298
--------- ------- ---------
Net earnings prior to
spin-off.................. 18,716 18,716
Net transactions with
Campbell as of the
spin-off date:
Assumption of debt,
pension and
postretirement
obligations and net
deferred tax
liabilities............ (514,930) (514,930)
Contribution to capital of
remaining Campbell net
investment............. $136,954 (136,954) --
Issuance of shares of common
stock, no par value, in
connection with the
spin-off.................. 45,455
Issuance of shares of common
stock as a result of
exercised stock options... 33 519 519
Net loss after the
spin-off.................. $(25,115) (25,115)
Translation adjustments..... (4,884) (4,884)
------ -------- -------- --------- ------- ---------
Balance at August 2, 1998... 45,488 $137,473 $(25,115) $ -- $(5,754) $ 106,604
====== ======== ======== ========= ======= =========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
F-6
<PAGE> 131
VLASIC FOODS INTERNATIONAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
1. VLASIC FOODS INTERNATIONAL SPIN-OFF FROM CAMPBELL SOUP COMPANY
On March 30, 1998, one share of Vlasic Foods International Inc. (the
Company or Vlasic), no par value common stock, was distributed to shareowners of
Campbell Soup Company (Campbell) for every ten shares of Campbell capital stock
held by such shareowners at the record date in a tax-free distribution. At the
time of distribution, the Company began operations as a separate independent
publicly-owned company.
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 that would have existed had Vlasic been a separate,
independent company. The historical consolidated balance sheet of the Company as
of August 2, 1998 reflects the effects of the spin-off.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION. The consolidated financial statements include the accounts
of the Company and its majority-owned subsidiaries. Significant intercompany
transactions are eliminated in consolidation.
FISCAL YEAR. Vlasic's fiscal year ends on the Sunday nearest July 31.
There were 52 weeks in Fiscal 1998 and 1996 and 53 weeks in fiscal 1997.
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.
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 flow.
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 $16,297 in 1998,
$21,125 in 1997 and $19,303 in 1996. At August 2, 1998 and August 3, 1997, there
were no amounts of advertising included in assets in the balance sheets.
INCOME TAX. Deferred taxes are provided in accordance with Statement of
Financial Accounting Standards (SFAS) No. 109.
F-7
<PAGE> 132
VLASIC FOODS INTERNATIONAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
EARNINGS PER SHARE. Earnings per share have been calculated in accordance
with Statement of Financial Accounting Standards No. 128, "Earnings per Share."
Weighted average shares outstanding assuming dilution reflects outstanding stock
option grants. For fiscal 1998, weighted average shares outstanding assuming
dilution excludes 513 shares relating to outstanding stock option grants as the
result would be antidilutive. Historical earnings per share prior to fiscal 1998
are not presented since Vlasic common stock was not part of the capital
structure of Campbell for the periods presented.
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.
3. RELATED PARTY TRANSACTIONS SUBSEQUENT TO THE SPIN-OFF
Vlasic sells to Campbell beef and mushrooms for use as ingredients in
Campbell's finished products and frozen foodservice finished product from its
agriculture products segment. Vlasic purchases from Campbell retail frozen food
finished products in Canada. These transactions are at negotiated prices.
Included in the Consolidated Statements of Earnings are sales to Campbell of
$154,764 in 1998, $155,563 in 1997, and $144,902 in 1996. Included in Costs of
product sold are purchases from Campbell of $24,696 in 1998, $26,255 in 1997,
and $27,310 in 1996.
Campbell and Vlasic entered 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.
Vlasic entered into an agreement with Campbell for transitional services
such as administrative and support services for a period not to exceed twelve
months from the date of the spin-off. The transitional service agreement
provides that Vlasic pay a fee intended to approximate Campbell's cost to
provide such services. These fees amounted to $9,078 in 1998 for the four months
following the spin-off.
4. RELATED PARTY TRANSACTIONS PRIOR TO THE SPIN-OFF
Certain Vlasic businesses participated in Campbell's centralized cash
management system to finance operations. Cash deposits from Vlasic were
transferred to Campbell on a daily basis and Campbell funded Vlasic disbursement
bank accounts as required. Unpaid balances of checks were included in accounts
payable. No interest was 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 $33,601 in the
first eight months of 1998 prior to the spin-off, $51,288 in 1997 and $43,878 in
1996 and are included in the appropriate lines of the Consolidated 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.
Subsequent to the spin-off, Vlasic manages these functions.
Vlasic was included in the combined federal and certain state income tax
returns of Campbell prior to spin-off. Income tax expense was calculated as if
Vlasic had filed separate income tax returns for the entire fiscal year.
5. ADJUSTMENT OF ASSETS HELD FOR SALE TO FAIR VALUE
During the fourth quarter of fiscal 1998, management designed and began to
implement a program to pursue asset reduction and cost improvement
opportunities. As part of that plan, the Company decided to sell
F-8
<PAGE> 133
VLASIC FOODS INTERNATIONAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
its Kattus gourmet foods distribution business in Germany and began to actively
seek buyers. The Company expects to complete the sale of the business during
fiscal 1999. The carrying value of the assets held for sale was reduced to fair
value based on estimates of selling values less costs to sell. Fourth quarter
1998 earnings include the $14.4 million charge against Special charges within
the Statements of Earnings to reduce assets held for sale to fair value of which
approximately $10 million represents a charge for goodwill impairment with the
balance of the charge recorded against the other long lived assets. Net sales
for the business to be disposed of approximated $70,034, $83,635 and $105,499 in
1998, 1997 and 1996, respectively. Earnings (loss) before interest and taxes
excluding restructuring charges and the impairment loss approximated ($6,725),
($2,657) and $5,575 in 1998, 1997 and 1996, respectively.
6. RESTRUCTURING CHARGES
<TABLE>
<CAPTION>
LOSS ON
ASSET SEVERANCE
DISPOSITION AND BENEFITS OTHER TOTAL
----------- ------------ ----- -----
<S> <C> <C> <C> <C>
Restructuring accrual.......................... $ 15,125 $13,354 $ 8,723 $ 37,202
1996 activity.................................. (782) (4,202) (2,674) (7,658)
-------- ------- ------- --------
Balance at July 28, 1996....................... 14,343 9,152 6,049 29,544
Restructuring accrual.......................... 7,991 3,253 1,390 12,634
1997 activity.................................. (16,810) (9,485) (6,049) (32,344)
-------- ------- ------- --------
Balance at August 3, 1997...................... 5,524 2,920 1,390 9,834
Restructuring accrual.......................... 16,500 8,200 3,350 28,050
1998 Activity.................................. (7,345) (4,169) (1,636) (13,150)
-------- ------- ------- --------
Balance at August 2, 1998...................... $ 14,679 $ 6,951 $ 3,104 $ 24,734
======== ======= ======= ========
</TABLE>
A special charge of $28,050 ($21,815 after tax) was recorded in the third
quarter of 1998 to cover the costs of a restructuring program. The restructuring
program was designed to improve operational efficiency by closing certain U.S.
and European administrative offices and production facilities and is expected to
be completed during the third quarter of 1999. The worldwide workforce will be
reduced by approximately 425 administrative and operational positions. The
restructuring charge included approximately $11.6 million primarily related to
severance and employee benefit costs which will be paid in cash. The balance of
the restructuring charge, amounting to $16.5 million, related to non-cash
charges for losses on the disposition of plant assets.
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. The 1997 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, related to non-cash charges for losses on the disposition of plant
assets. The program was completed during the first quarter of fiscal 1998. 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. 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.
F-9
<PAGE> 134
VLASIC FOODS INTERNATIONAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
7. 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 and Rowats
pickles, canned beans and vegetables in the U.K., Kattus gourmet 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 product
for Campbell's Foodservice in the U.S. Corporate expenses and assets have been
allocated to the segments.
SEGMENT INFORMATION
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Net Sales
Frozen Foods......................................... $ 541,436 $ 614,467 $ 583,384
Grocery Products..................................... 477,395 538,684 561,154
Agricultural Products................................ 347,872 366,113 369,088
Eliminations......................................... (9,429) (10,979) (14,659)
---------- ---------- ----------
Total........................................ $1,357,274 $1,508,285 $1,498,967
========== ========== ==========
Earnings Before Interest and Taxes
Frozen Foods......................................... $ 31,469 $ 56,268 $ 15,885
Grocery Products..................................... (2,517) 49,513 53,748
Agricultural Products................................ (6,315) 10,846 19,337
---------- ---------- ----------
Total........................................ $ 22,637 $ 116,627 $ 88,970
========== ========== ==========
Total Assets
Frozen Foods......................................... $ 286,197 $ 259,132 $ 258,320
Grocery Products..................................... 374,178 369,922 373,793
Agricultural Products................................ 298,898 266,054 291,218
---------- ---------- ----------
Total........................................ $ 959,273 $ 895,108 $ 923,331
========== ========== ==========
Depreciation and Amortization
Frozen Foods......................................... $ 14,896 $ 13,614 $ 14,017
Grocery Products..................................... 14,636 16,061 16,255
Agricultural Products................................ 15,593 15,133 15,313
---------- ---------- ----------
Total........................................ $ 45,125 $ 44,808 $ 45,585
========== ========== ==========
Capital Expenditures
Frozen Foods......................................... $ 20,349 $ 35,576 $ 25,494
Grocery Products..................................... 19,356 29,399 16,381
Agricultural Products................................ 22,568 14,326 17,178
---------- ---------- ----------
Total........................................ $ 62,273 $ 79,301 $ 59,053
========== ========== ==========
</TABLE>
F-10
<PAGE> 135
VLASIC FOODS INTERNATIONAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following presents information about operations in different geographic
areas:
GEOGRAPHIC INFORMATION
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Net Sales
United States........................................ $ 883,288 $ 991,523 $ 963,896
Europe............................................... 276,679 306,210 305,274
South America........................................ 206,736 221,531 244,456
Eliminations......................................... (9,429) (10,979) (14,659)
---------- ---------- ----------
Total........................................ $1,357,274 $1,508,285 $1,498,967
========== ========== ==========
Earnings Before Interest and Taxes
United States........................................ $ 62,436 $ 85,965 $ 48,979
Europe............................................... (36,803) 10,424 15,568
South America........................................ (2,996) 20,238 24,423
---------- ---------- ----------
Total........................................ $ 22,637 $ 116,627 $ 88,970
========== ========== ==========
Total Assets
United States........................................ $ 480,983 $ 453,935 $ 448,080
Europe............................................... 216,794 205,496 212,961
South America........................................ 261,496 235,677 262,290
---------- ---------- ----------
Total........................................ $ 959,273 $ 895,108 $ 923,331
========== ========== ==========
</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.
Contributions to earnings before interest and taxes include the impact of
special charges: the impairment loss on assets held for sale of $14.4 million or
$.32 per share in fiscal 1998 (with no associated tax effect); a restructuring
charge of $28.1 million before tax, $21.8 million after tax or $.48 per share,
in fiscal 1998, and a restructuring charge of $12.6 million before tax, $7.8
million after tax or $.17 per share in fiscal 1997. In fiscal 1996, the
restructuring charge was $37.2 million before tax, $22.8 million after tax. The
impact by segment is as follows:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Frozen Foods................................................ $ 9,700 $ 2,697 $33,202
Grocery Products............................................ 32,350 9,937 4,000
Agricultural Products....................................... 400 -- --
------- ------- -------
Total............................................. $42,450 $12,634 $37,202
======= ======= =======
</TABLE>
8. PENSION PLANS AND RETIREMENT BENEFITS
Pension Plans. Substantially all U.S. employees participate in Vlasic
sponsored noncontributory defined benefit pension plans. Prior to the spin-off,
the participants in the plans were included in plans with similar benefits
sponsored by Campbell. Under an agreement with Campbell, the Company assumed
pension liabilities related to the active Vlasic participants, but not to
retirees from the U.S. Vlasic businesses. Campbell will transfer certain trust
assets, from its funded plans to Vlasic's plans based upon actuarial
determinations consistent with regulatory requirements. Benefits are generally
based on years of service and employees' compensation during the last years of
employment. All plans are funded and contributions are
F-11
<PAGE> 136
VLASIC FOODS INTERNATIONAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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.
Pension expense included the following for the four months beginning March 30,
1998 to August 2, 1998:
<TABLE>
<S> <C>
Benefits earned during the year............................. $ 1,291
Interest cost............................................... 1,666
Net amortization and deferrals.............................. (821)
Return on plan assets....................................... (1,026)
-------
Total............................................. $ 1,110
=======
</TABLE>
Net periodic U.S. pension expense allocated to Vlasic was $2,396 for the
first eight months of fiscal 1998 prior to the spin-off (resulting in total U.S.
pension expense of $3,506 in fiscal year 1998), $2,140 in fiscal year 1997 and
$3,428 in fiscal year 1996.
The funded status of the plans was as follows:
<TABLE>
<CAPTION>
AUGUST 2,
1998
---------
<S> <C>
Actuarial present value of benefit obligations:
Vested...................................................... $(47,780)
Non-vested.................................................. (6,430)
--------
Accumulated benefit obligation.............................. (54,210)
Effect of projected future salary increases................. (22,810)
--------
Projected benefit obligation................................ (77,020)
Plan assets at market value................................. 69,140
--------
Projected benefit obligation in excess of plan assets....... (7,880)
Unrecognized net (gain) or loss............................. 7,193
Unrecognized prior service cost............................. 2,934
Unrecognized net assets at transition....................... (423)
--------
Prepaid pension expense..................................... $ 1,824
========
</TABLE>
Weighted average rates for principal actuarial assumptions were:
<TABLE>
<CAPTION>
AUGUST 2,
1998
---------
<S> <C>
Discount rate............................................... 7.00%
Long-term rate of return on plan assets..................... 9.75%
Weighted-average rate of compensation increase.............. 4.25%
</TABLE>
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. Pension expense for operations outside the U.S. was $4,543 in
1998, $5,089 in 1997 and $5,993 in 1996.
Retiree Benefits. Vlasic provides postretirement benefits, including
health care and life insurance, to substantially all U.S. employees and their
dependents retiring after the spin-off. 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.
F-12
<PAGE> 137
VLASIC FOODS INTERNATIONAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Postretirement benefit expense included the following for the four months
beginning March 30, 1998 to August 2, 1998:
<TABLE>
<S> <C>
Benefits earned during the year............................. $ 727
Interest cost............................................... 481
Net amortization and deferrals.............................. (245)
-----
Total............................................. $ 963
=====
</TABLE>
Postretirement benefit expense allocated to Vlasic was $2,493 for the first
eight months of fiscal 1998 prior to the spin-off (resulting in total expense of
$3,456 in fiscal year 1998), $2,667 in fiscal year 1997 and $8,383 in fiscal
year 1996.
Accrued postretirement benefit liability included the following:
<TABLE>
<CAPTION>
AUGUST 2,
1998
---------
<S> <C>
Accumulated benefit obligation.............................. $(24,786)
Unrecognized net (gain) or loss............................. (7,707)
--------
Accrued postretirement benefit liability.................... $(32,493)
========
</TABLE>
The discount rate used to determine the accumulated postretirement benefit
obligation was 7% in 1998. The assumed healthcare cost trend rate used to
measure the accumulated postretirement benefit obligation was 4%. A
one-percentage-point change in the assumed healthcare cost trend rate would have
changed the 1998 accumulated postretirement benefit obligation by $2,517 and
postretirement benefit expense for the four month period ending August 2, 1998
by $609. Obligations related to non-U.S. postretirement benefit plans are not
significant since these benefits are generally provided through
government-sponsored plans.
Savings Plans. Vlasic U.S. employees participate in Vlasic's savings plans
and formerly in Campbell's savings plans. After one year of continuous service,
Vlasic matches 50% of employee contributions up to five percent of compensation.
In 1998, 1997 and 1996 Campbell increased its contribution to 60% because
earnings goals were achieved. Amounts charged to Vlasic costs and expenses were
$2,382 in 1998, $2,671 in 1997, and $2,168 in 1996.
F-13
<PAGE> 138
VLASIC FOODS INTERNATIONAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
9. TAXES ON EARNINGS
The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Income taxes:
Currently payable
Federal.......................................... $ 16,340 $ 22,229 $ 29,457
State............................................ 4,285 3,521 4,371
Non-U.S. ........................................ 2,454 2,526 6,263
-------- -------- --------
23,079 28,276 40,091
-------- -------- --------
Deferred
Federal.......................................... (5,238) 7,258 (10,086)
State............................................ (2,835) 1,207 (1,677)
Non-U.S. ........................................ 372 734 (967)
-------- -------- --------
(7,701) 9,199 (12,730)
-------- -------- --------
Total.................................... $ 15,378 $ 37,475 $ 27,361
======== ======== ========
Earnings (loss) before income taxes:
United States.................................... $ 41,037 $ 85,965 $ 48,979
Non-U.S. ........................................ (31,458) 29,650 39,249
-------- -------- --------
Total.................................... $ 9,579 $115,615 $ 88,228
======== ======== ========
</TABLE>
The following is a reconciliation of effective income tax rates with the
U.S. Federal statutory income tax rate:
<TABLE>
<CAPTION>
1998(1) 1997 1996
------- ---- ----
<S> <C> <C> <C>
Federal statutory income tax rate........................... 35.0% 35.0% 35.0%
State income taxes (net of federal benefit)................. 1.8% 2.6% 2.0%
Tax effect resulting from other international activities.... 3.9% (1.1)% (1.7)%
Tax loss carryforwards...................................... (0.8)% (1.6)% --
Nontaxable export rebate.................................... -- (2.7)% (4.9)%
Other....................................................... 1.6% 0.2% 0.6%
---- ---- ----
Effective income tax rate................................. 41.5% 32.4% 31.0%
==== ==== ====
</TABLE>
(1) Excludes the impact of the fiscal 1998 restructuring charge and impairment
loss. The effective income tax rate including such items is 160.5%
F-14
<PAGE> 139
VLASIC FOODS INTERNATIONAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Deferred tax liabilities and assets are comprised of the following:
<TABLE>
<CAPTION>
AUGUST 2, AUGUST 3,
1998 1997
--------- ---------
<S> <C> <C>
Depreciation................................................ $ 21,626 $ 30,992
Capitalized interest........................................ 7,637 7,459
Other....................................................... 7,117 5,496
-------- --------
Deferred tax liabilities.................................. 36,380 43,947
-------- --------
Benefits and compensation................................... 16,881 6,353
Restructuring accruals...................................... 5,395 3,717
Tax loss carryforwards...................................... 32,402 13,100
Other....................................................... 3,134 4,409
-------- --------
Deferred tax assets......................................... 57,812 27,579
Valuation allowance......................................... (23,033) (13,100)
-------- --------
Deferred tax assets, net.................................. 34,779 14,479
-------- --------
Net deferred tax liability................................ $ 1,601 $ 29,468
======== ========
</TABLE>
The Company has available net operating loss carryforwards in the United
States of approximately $25 million which expire in 2018. For income tax
purposes, certain non-U.S. subsidiaries of Vlasic have tax loss carryforwards of
approximately $66 million. Of these carryforwards, $41 million expire through
2003 and $25 million may be carried forward indefinitely. The current statutory
tax rates in these countries range from 31% to 57%.
A valuation allowance is recorded as a reduction to Vlasic's estimate of
the deferred tax assets relating to non-U.S. 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, frozen
business in the U.K. and gourmet distribution business in Germany. 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. Finally, the German tax loss
carryforwards are not expected to be utilized prior to the sale of the business.
Income taxes have not been accrued on undistributed earnings for non-U.S.
subsidiaries of $5.3 million. Such amounts 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. OTHER EXPENSES
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Campbell stock price related incentive programs....... $ 3,207 $ 8,628 $ 3,288
Amortization of intangible and other assets........... 2,738 2,764 2,691
Gain on asset sales................................... (3,957) (8,179) (5,496)
Gains on fire insurance settlement.................... (2,814) -- --
Other, net............................................ (2,101) (767) (324)
------- ------- -------
Total....................................... $(2,927) $ 2,446 $ 159
======= ======= =======
</TABLE>
F-15
<PAGE> 140
VLASIC FOODS INTERNATIONAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
11. ACQUISITION
During the second quarter of fiscal 1998, Vlasic acquired the SAFRA
trademark and certain equipment for the 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 -- $5,850 was identified as an intangible asset (trademark) and
$500 was allocated to fixed assets.
12. 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 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.
13. ACCOUNTS RECEIVABLE
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Customers............................................ $ 97,188 $ 99,407
Trade receivables from Campbell...................... 9,058 --
Allowances for cash discounts and
bad debts.......................................... (5,055) (5,241)
--------- ---------
101,191 94,166
Other................................................ 26,453 15,510
--------- ---------
Total...................................... $ 127,644 $ 109,676
========= =========
</TABLE>
14. INVENTORIES
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Raw materials, containers and supplies............... $ 52,074 $ 54,828
Finished goods....................................... 144,044 129,088
--------- ---------
196,118 183,916
Less: Adjustment to LIFO basis....................... (12,355) (20,064)
--------- ---------
Total...................................... $ 183,763 $ 163,852
========= =========
</TABLE>
Inventories for which the LIFO method of determining cost is used
represented approximately 62% of inventories in 1998 and 1997.
F-16
<PAGE> 141
VLASIC FOODS INTERNATIONAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
15. OTHER CURRENT ASSETS
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Prepaid expenses..................................... $ 6,029 $ 4,448
Deferred taxes....................................... 18,058 7,347
Other................................................ 1,113 544
--------- ---------
Total...................................... $ 25,200 $ 12,339
========= =========
</TABLE>
16. PLANT ASSETS
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Land................................................. $ 16,615 $ 19,715
Building............................................. 294,224 291,127
Machinery and equipment.............................. 538,228 510,283
Projects in progress................................. 28,063 43,961
--------- ---------
877,130 865,086
Accumulated depreciation............................. (357,055) (349,440)
--------- ---------
Total...................................... $ 520,075 $ 515,646
========= =========
</TABLE>
Depreciation provided in costs and expenses was $42,387 in 1998, $42,044 in
1997 and $42,894 in 1996. Fiscal 1999 capital expenditures are not expected to
exceed $50 million.
17. OTHER ASSETS, PRINCIPALLY INTANGIBLE ASSETS
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Purchase price in excess of net assets of businesses
acquired (goodwill)................................ $ 41,771 $ 53,977
Trademarks........................................... 19,850 14,000
Other intangibles.................................... 36,920 36,920
--------- ---------
98,541 104,897
Accumulated amortization............................. (21,106) (21,522)
--------- ---------
Total intangible assets.............................. 77,435 83,375
Other assets......................................... 8,823 811
--------- ---------
Total...................................... $ 86,258 $ 84,186
========= =========
</TABLE>
18. PAYABLES TO SUPPLIERS AND OTHERS
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Trade payables.............................................. $ 94,053 $ 95,684
Payable to Campbell, net.................................... 19,287 --
Book overdrafts............................................. 7,870 27,417
-------- --------
Total............................................. $121,210 $123,101
======== ========
</TABLE>
On a temporary transition basis, Campbell pays certain bills for Vlasic and
is subsequently reimbursed by Vlasic. Book overdrafts represent outstanding
checks in excess of funds on deposit.
F-17
<PAGE> 142
VLASIC FOODS INTERNATIONAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
19. ACCRUED LIABILITIES
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Employee compensation and benefits.......................... $21,671 $23,788
Marketing................................................... 16,778 32,105
Restructuring............................................... 24,734 9,834
Interest.................................................... 2,874 --
Other....................................................... 27,273 23,187
------- -------
Total............................................. $93,330 $88,914
======= =======
</TABLE>
20. OTHER LIABILITIES
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Postretirement benefits..................................... $32,493 $ --
Deferred compensation....................................... 7,721 8,137
Postemployment benefits..................................... 6,834 3,400
------- -------
Total............................................. $47,048 $11,537
======= =======
</TABLE>
21. LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
FISCAL YEAR
MATURITY RATE 1998
----------- ---- ----
<S> <C> <C> <C>
Bank borrowings..................................... 2003 6.45% $557,000
Other............................................... 2000 7.72% 1,491
Capital lease obligations........................... Various Various 382
--------
Total..................................... $558,873
========
</TABLE>
As of the spin-off, Vlasic assumed $500 million of borrowings outstanding
under a five-year $750 million unsecured revolving credit facility. At August 2,
1998, $557 million was outstanding under the credit facility. The Company's
policy is to classify borrowings under the revolving credit facility as
long-term debt since the Company has the ability under its credit agreement, and
the intent, to maintain these obligations for longer than one year.
In the 1998 third quarter 10-Q the Company indicated it did not expect to
be in compliance with certain financial ratio requirements as of the fiscal year
ending August 2, 1998 due to higher than anticipated transition charges and
lower than anticipated projected earnings. Prior to August 2, 1998, the Company
received a unanimous waiver from the revolving credit facility bank syndicate
covering the particular financial ratios. The waiver was designed to permit the
Company and the bank syndicate time to reach agreement on an amendment to the
revolving credit facility. The waiver period is effective until November 1,
1998. The waiver required the payment of a fee, an increase in both the interest
rate and facility fee paid to the banks, and limits on the amount of permissible
borrowings under the facility and total borrowings. A covenant for the waiver
period was established for minimum net worth. The Company is in compliance with
the waiver's requirements.
All banks participating in the revolving credit facility have accepted the
amendment's basic term sheet. The amendment term sheet converts $100 million of
the revolving credit facility to a term loan having the same terms and
maturities as the revolving credit facility, and adjusts the financial ratios
creating financial flexibility. The amendment term sheet:
- requires the payment of a fee to the bank group,
- increases both the interest rate and facility fee paid to the banks
effective October 1, 1998,
F-18
<PAGE> 143
VLASIC FOODS INTERNATIONAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
- creates incentives for the Company to issue longer term debt,
- imposes additional covenants, including, but not limited to, the
mandatory repayment of debt and the reduction of the commitment upon the
sale of assets and equity or incurrence of debt,
- limits capital spending and restricts dividends and investments.
The Company is also pledging certain assets to secure the bank
indebtedness, which will be released upon attainment of certain credit rating
criteria. The amendment reduces the total size of the credit facility from $750
million (limited to $625 million during the waiver period) to $650 million, as
the Company does not anticipate requiring the additional liquidity.
22. FINANCIAL INSTRUMENTS
The Company utilizes derivative financial instruments to enhance its
ability to manage risks, including interest rate and foreign currency, which
exist as part of its ongoing business operations. The Company does not enter
into contracts for speculative purposes, nor is it a 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.
The Company finances most its operations through debt instruments primarily
consisting of bank loans. The Company utilizes interest rate swap agreements to
reduce the potential exposure to interest rate movements and to achieve a
desired proportion of variable versus fixed rate debt. The amounts paid or
received on hedges related to debt are recognized as an adjustment to interest
expense. The notional amounts of interest rate swaps were $150 million at August
2, 1998. The cost to settle the swaps was $0.4 million at August 2, 1998.
The Company has a forward starting swap contract with a 10 year maturity
and a notional amount of $50 million which hedges a portion of the interest rate
risk associated with the planned issuance of longer term debt in fiscal 1999.
The amounts paid or received on hedges related to the planned debt issuance will
be recognized as an adjustment to interest expense. The forward starting swap
will start in fiscal 1999 and had a market value of $0.1 million as of August 2,
1998.
The Company utilizes foreign currency exchange contracts, including swap
and forward contracts, to hedge existing foreign currency exposures. Foreign
exchange gains and losses on derivative financial instruments are recognized and
offset foreign exchange gains and losses on the underlying exposures. A mix of
equity and local currency borrowing is used to finance foreign operations. At
August 2, 1998, the Company also had contracts to purchase or sell approximately
$1.4 million in foreign currency. The contracts are primarily for the Company's
German Kattus operation which buys products from various foreign entities. The
contracts all mature in 1999.
The Company is exposed to credit loss in the event of nonperformance by the
counterparties in swap and forward contracts. The Company minimizes its credit
risk on these transactions by only dealing with leading, credit-worthy financial
institutions having long-term credit ratings of "A" or better and, therefore,
does not anticipate non-performance. In addition, the contracts are distributed
among several financial institutions, thus minimizing credit risk concentration.
The carrying values of cash and cash equivalents, accounts and notes
receivable, accounts payable, and short-term and long-term debt approximate fair
value.
23. STOCK OPTIONS AND RESTRICTED STOCK
In connection with the spin-off from Campbell, Vlasic adopted the Vlasic
Foods Long-Term Incentive Plan (the Plan). Vlasic's employees who held vested
Campbell stock options as of the spin-off retained Campbell options to purchase
Campbell's capital 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
F-19
<PAGE> 144
VLASIC FOODS INTERNATIONAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
were adjusted to preserve the inherent economic value of the options taking into
account the spin-off. Stock options held by Vlasic employees which were not
vested were converted into options to purchase Vlasic stock. For each Campbell
option that was converted to a Vlasic option, the number of options and exercise
price were converted based upon a formula that preserved the inherent economic
value and vesting and term provisions of original Campbell options.
Under the Plan restricted stock and stock options may be granted to certain
officers and key employees. The Plan authorizes the issuance of up to 5.8
million shares of Vlasic common stock pursuant to the exercise of nonqualified
stock options. 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 "Accounting for Stock
Issued to Employees" and related interpretations. Accordingly, no compensation
expense has been recognized in the Statements of Earnings because 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 plan been determined based
on the fair value at the grant dates for awards under the plan, consistent with
the alternative method set forth under SFAS 123, Vlasic's net earnings would
have been changed to the pro forma (for the purpose of applying SFAS 123)
amounts set forth below:
<TABLE>
<CAPTION>
1998
----
<S> <C>
Reported net loss........................................... $(6,399)
Pro forma (for the purpose of applying SFAS 123) net loss... $(8,843)
Reported loss per share..................................... $ (0.14)
Pro forma (for the purpose of applying SFAS 123) loss per
share..................................................... $ (0.19)
</TABLE>
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 1998:
<TABLE>
<CAPTION>
1998
----
<S> <C>
Risk-free interest rate..................................... 5.6%
Expected life of option..................................... 6 years
Expected volatility of Vlasic stock......................... 27.0%
Expected dividend yield on Vlasic stock..................... 0%
</TABLE>
The weighted-average fair value of options granted during 1998 is as
follows:
<TABLE>
<CAPTION>
1998
----
<S> <C>
Fair value of each option granted........................... $ 8.72
Number of options granted................................... 1,665
-------
Total fair value of all options granted..................... $14,519
=======
</TABLE>
In accordance with SFAS 123, the weighted-average fair value of stock
options granted is required to be based on a theoretical statistical model in
accord with assumptions noted above. In actuality, because employee stock
options do not trade on a secondary exchange, employees receive no benefit and
derive no value from holding stock options under these plans without an increase
in the market price of Vlasic stock.
F-20
<PAGE> 145
VLASIC FOODS INTERNATIONAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following table summarizes the stock option transactions under the
Vlasic incentive plan:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
EXERCISE
SHARES PRICE
------ --------
<S> <C> <C>
Converted from Campbell as of the spin-off date, March 30,
1998...................................................... 2,287 $15.02
Granted................................................... 1,665 22.66
Exercised................................................. (33) 12.87
----- ------
Outstanding, August 2, 1998................................. 3,919 $18.29
===== ======
</TABLE>
The following table summarizes information for options currently
outstanding at August 2, 1998:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING EXERCISABLE OPTIONS
------------------- -------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
REMAINING EXERCISE EXERCISE
RANGE OF PRICES SHARES LIFE PRICE SHARES PRICE
- --------------- ------ --------- -------- ------ --------
<C> <S> <C> <C> <C> <C> <C>
$ 9.71 - 13.70 ................... 1,488 8 yrs $12.99 680 $12.34
$17.13 - 19.87 ................... 766 9 yrs 19.06 227 19.07
$19.91 - 22.94 ................... 1,665 10 yrs 22.66
----- ------ ------ --- ------
$ 9.71 - 22.94 ................... 3,919 9 yrs $18.29 907 $14.03
===== ====== ====== === ======
</TABLE>
Restricted Stock. In connection with the separation of Vlasic from
Campbell, restricted stock 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 were
canceled.
24. STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Interest paid......................................... $10,572 $ 1,600 $ 1,071
Interest received..................................... $ 388 $ 588 $ 329
Income taxes paid..................................... $23,079 $28,276 $40,091
</TABLE>
25. QUARTERLY DATA (UNAUDITED)
<TABLE>
<CAPTION>
1998
----
FIRST SECOND THIRD FOURTH
----- ------ ----- ------
<S> <C> <C> <C> <C>
Net sales................................... $347,852 $375,317 $320,694 $313,411
Cost of products sold....................... $251,340 $267,884 $231,457 $227,344
Net earnings (loss)......................... $ 16,073 $ 18,238 $(16,598) $(24,112)
Earnings per share basic.................... $ 0.35 $ 0.40 $ (0.37) $ (0.53)
Earnings per share basic assuming
dilution.................................. $ 0.35 $ 0.40 $ (0.37)(1) $ (0.53)(1)
Market price
High...................................... 26 5/8 24 9/16
Low....................................... 21 7/8 16 9/16
</TABLE>
- ---------------
(1) Excludes potentially dilutive shares as the result would be antidilutive.
Net earnings (loss) includes the impact of special charges totaling $42.5
million before taxes or $.80 per share as follows: the impairment loss on assets
held for sale of $14.4 million or $.32 in the fourth quarter and year ended
fiscal 1998 and a restructuring charge of $28.1 million before tax, $21.8
million after tax or $.48 per share, in the third quarter and year ended fiscal
1998.
F-21
<PAGE> 146
VLASIC FOODS INTERNATIONAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<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.
Net earnings per share calculations for each of the quarters are based on
the average shares outstanding for each period; consequently, the sum of the
quarters may not necessarily be equal to the full year net earnings per share
amount.
F-22
<PAGE> 147
VLASIC FOODS INTERNATIONAL
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------ -----------------
MAY 2, MAY 3, MAY 2, MAY 3,
1999 1998 1999 1998
------ ------ ------ ------
<S> <C> <C> <C> <C>
Net sales (including $34,113 and $39,997 in
the third quarters, respectively, and
$117,825 and $123,629 in the nine months
periods, respectively, to related
parties)................................. $ 320,633 $320,694 $1,004,308 $1,043,863
--------- -------- ---------- ----------
Costs and expenses
Cost of products sold.................... 222,175 231,457 707,923 750,681
Marketing and selling expenses........... 61,888 55,947 175,868 170,768
Administrative expenses.................. 11,385 17,315 49,031 46,047
Research and development expenses........ 2,472 1,895 5,920 5,843
Other expenses (income).................. 164 (123) 738 (214)
Special items............................ 139,785 28,050 136,585 28,050
--------- -------- ---------- ----------
Total costs and expenses......... 437,869 334,541 1,076,065 1,001,175
--------- -------- ---------- ----------
Earnings (loss) before interest and
taxes.................................... (117,236) (13,847) (71,757) 42,688
Interest expense......................... 11,016 3,374 32,756 4,285
Interest income.......................... 124 171 554 316
--------- -------- ---------- ----------
Earnings (loss) before taxes............... (128,128) (17,050) (103,959) 38,719
Taxes on earnings.......................... 12,000 (452) 19,700 20,406
--------- -------- ---------- ----------
Earnings (loss) before cumulative effect of
accounting change........................ (140,128) (16,598) (123,659) 18,313
Cumulative effect of accounting change..... -- -- -- (600)
--------- -------- ---------- ----------
Net earnings (loss)........................ $(140,128) $(16,598) $ (123,659) $ 17,713
========= ======== ========== ==========
Earnings (Loss) Per Share
Per share -- basic......................... $ (3.08) $ (0.37) $ (2.72) $ 0.39
Weighted average shares
outstanding -- basic..................... 45,500 45,455 45,497 45,455
Per share -- assuming dilution............. $ (3.08) $ (0.37) $ (2.72) $ 0.39
Weighted average shares
outstanding -- assuming dilution......... 45,500(1) 45,455(1) 45,497(1) 46,001
</TABLE>
- ---------------
(1) Excludes potentially dilutive shares as the result would be antidilutive.
See accompanying Notes to Consolidated Financial Statements.
F-23
<PAGE> 148
VLASIC FOODS INTERNATIONAL
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
MAY 2, AUGUST 2,
1999 1998
------ ---------
(UNAUDITED) (AUDITED)
<S> <C> <C>
Current assets
Cash and cash equivalents................................. $ 26,898 $ 16,333
Accounts receivable....................................... 165,941 127,644
Inventories............................................... 166,092 183,763
Other current assets...................................... 17,950 25,200
--------- --------
Total current assets.............................. 376,881 352,940
--------- --------
Plant assets, net......................................... 367,775 520,075
Other assets, principally intangible assets, net.......... 79,375 86,258
--------- --------
Total assets................................................ $ 824,031 $959,273
========= ========
Current liabilities
Notes payable............................................. $ 7,574 $ 12,535
Payable to suppliers and others........................... 96,116 121,210
Accrued liabilities....................................... 82,406 93,330
--------- --------
Total current liabilities......................... 186,096 227,075
--------- --------
Long-term debt.............................................. 580,663 558,873
Deferred income taxes....................................... 25,865 19,673
Other liabilities........................................... 49,307 47,048
--------- --------
Total liabilities................................. 841,931 852,669
--------- --------
Shareowners' equity (deficit)
Preferred stock, no par value; authorized 4,000 shares;
none issued............................................ -- --
Common stock, no par value; authorized 56,000 shares;
issued 45,502 shares and 45,488 shares at May 2, 1999
and August 2, 1998, respectively....................... 137,758 137,473
Accumulated deficit......................................... (148,774) (25,115)
Accumulated other comprehensive earnings (loss)............. (6,884) (5,754)
--------- --------
Total shareowners' equity (deficit)............... (17,900) 106,604
--------- --------
Total liabilities and shareowners' equity (deficit)......... $ 824,031 $959,273
========= ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
F-24
<PAGE> 149
VLASIC FOODS INTERNATIONAL
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
-----------------
MAY 2, MAY 3,
1999 1998
------ ------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss)....................................... $(123,659) $ 17,713
Non-cash charges to net earnings
Impairment loss........................................ 140,000 --
Gain on business sold.................................. (3,200) --
Restructuring charges, net............................. (215) 28,050
Depreciation and amortization.......................... 34,786 34,701
Deferred income taxes.................................. 12,156 (2,383)
Cumulative effect of accounting change................. -- 600
Other, net............................................. 2,258 1,125
Changes in working capital
Accounts receivable.................................... (60,431) (36,209)
Inventories............................................ 5,870 (7,273)
Other current assets and liabilities................... (6,872) (62,012)
--------- --------
Net cash provided by (used in) operating
activities.......................................... 693 (25,688)
--------- --------
Cash flows from investing activities:
Purchases of plant assets................................. (35,583) (39,489)
Sales of plant assets..................................... 5,880 5,085
Proceeds from business sold............................... 20,675 --
Business acquired......................................... -- (6,350)
Other, net................................................ 175 465
--------- --------
Net cash used in investing activities................ (8,853) (40,289)
--------- --------
Cash flows from financing activities:
Long-term borrowings...................................... 169,085 10,000
Repayment of long-term borrowings......................... (145,800) (25,000)
Short-term borrowings, net................................ (4,736) 16,199
Issuance of common stock.................................. 285 --
Net transactions with Campbell............................ -- 68,938
--------- --------
Net cash provided by financing activities............ 18,834 70,137
--------- --------
Effect of exchange rate changes on cash................... (109) (18)
--------- --------
Net change in cash and cash equivalents.............. 10,565 4,142
Cash and cash equivalents -- beginning of period............ 16,333 9,409
--------- --------
Cash and cash equivalents -- end of period.................. $ 26,898 $ 13,551
========= ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
F-25
<PAGE> 150
VLASIC FOODS INTERNATIONAL
CONSOLIDATED STATEMENTS OF SHAREOWNERS' EQUITY (DEFICIT) (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
ACCUMULATED
ISSUED OTHER TOTAL
COMMON STOCK CAMPBELL COMPREHENSIVE SHAREOWNERS'
------------ ACCUMULATED NET EARNINGS EQUITY
SHARES AMOUNT DEFICIT INVESTMENT (LOSS)(1) (DEFICIT)
------ ------ ----------- ---------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance at August 3, 1997...... $ 633,168 $ (870) $ 632,298
Net earnings prior to
spin-off..................... 18,716 18,716
Net transactions with Campbell
as of the spin-off date:
Assumption of debt, pension
and post-retirement
obligations, and net
deferred tax liabilities... (514,930) (514,930)
Contribution to capital of
remaining Campbell net
investment................. $136,954 (136,954)
Issuance of shares of common
stock, no par value, in
connection with the
spin-off..................... 45,455
Net loss after the spin-off.... $ (1,003) (1,003)
Foreign currency translation
adjustments.................. (2,160) (2,160)
------ -------- --------- --------- ------- ---------
Balance at May 3, 1998......... 45,455 $136,954 $ (1,003) $ -- $(3,030) $ 132,921
====== ======== ========= ========= ======= =========
Balance at August 2, 1998...... 45,488 $137,473 $ (25,115) $(5,754) $ 106,604
Net loss....................... (123,659) (123,659)
Issuance of shares of common
stock as a result of stock
option exercises............. 14 285 285
Foreign currency translation
adjustments.................. (453) (453)
Reclassification adjustment for
business sold................ (677) (677)
------ -------- --------- ------- ---------
Balance at May 2, 1999......... 45,502 $137,758 $(148,774) $(6,884) $ (17,900)
====== ======== ========= ======= =========
</TABLE>
- ---------------
(1) Accumulated other comprehensive earnings (loss) consists of foreign currency
translation adjustments and a reclassification adjustment for business sold.
See accompanying Notes to Consolidated Financial Statements.
F-26
<PAGE> 151
VLASIC FOODS INTERNATIONAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(IN THOUSANDS)
1. VLASIC FOODS INTERNATIONAL SPIN-OFF FROM CAMPBELL SOUP COMPANY
On March 30, 1998, Campbell distributed one share of Vlasic common stock to
shareowners of Campbell for every ten shares of Campbell capital stock held at
the record date in a tax-free distribution (the "spin-off"). At the time of the
spin-off, we began operations as a separate independent publicly-owned company.
In connection with the spin-off, Campbell contributed the following businesses:
Swanson frozen foods in the U.S. and Canada, Vlasic pickles, Open Pit barbecue
sauce, Campbell mushrooms in the U.S., Freshbake and non-branded frozen foods
and SonA and Rowats pickles and beans in the U.K., Swift and non-branded
processed beef in Argentina and Kattus gourmet foods distribution (the "Kattus
business") in Germany. Our historical financial statements at dates and for
periods ended prior to the date of the spin-off present the combined historical
financial position, results of operations and cash flows of these businesses. We
sold the Kattus business in January 1999. During the third quarter of fiscal
1999, we entered into a divestiture agreement to sell our Argentine beef
business, Swift-Armour. Prior to the spin-off, the businesses contributed by
Campbell had been separately managed within multiple Campbell business
divisions.
In connection with the spin-off, we incurred incremental debt of
approximately $560 million under a five-year $750 million unsecured revolving
credit facility, consisting of $500 million of indebtedness assumed from
Campbell and $60 million incurred to repay certain intercompany payables
representing advances from Campbell to subsidiaries of Vlasic. On a historical
basis, we were not allocated any amount of Campbell's debt and our historical
financial statements prior to the spin-off do not reflect the interest expense
associated with the debt incurred in connection with the spin-off. Therefore, we
believe that pro forma earnings reflecting pro forma interest expense as if the
spin-off had occurred at the beginning of fiscal 1998 provide more meaningful
comparisons than our historical financial statements.
For periods prior to the spin-off, our historical financial statements
reflect expenses allocated by Campbell for selling, general and administrative
services (including finance, legal, information systems, research and
development, benefits, facilities and shared sales and distribution support).
Such expenses were allocated based on net sales, utilization or other methods.
The allocated expenses for these services are not necessarily indicative of the
expenses that we would have incurred had we been a separate, independent entity
that managed these functions.
2. INTERIM FINANCIAL INFORMATION
The accompanying unaudited consolidated financial statements for the three
and nine month periods ended May 2, 1999 and May 3, 1998 have been prepared in
accordance with generally accepted accounting principles for interim financial
information. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In our opinion, all adjustments (consisting solely of
normal recurring adjustments) necessary for a fair presentation of the
consolidated financial statements have been included. The results of the interim
periods are not necessarily indicative of the results to be expected for the
full fiscal year. The consolidated financial statements and footnotes should be
read in conjunction with Management's Discussion and Analysis of Results of
Operations and Financial Condition and in our Annual Report and Form 10-K for
the fiscal year ended August 2, 1998.
3. EARNINGS PER SHARE
Earnings per share have been calculated in accordance with Statement of
Financial Accounting Standards (SFAS) No. 128. "Earnings per Share." Pro forma
earnings per share assume common shares outstanding as of the spin-off date were
outstanding for all periods prior to March 30, 1998.
F-27
<PAGE> 152
VLASIC FOODS INTERNATIONAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
4. COMPREHENSIVE EARNINGS (LOSS)
During the first quarter of fiscal 1999, we adopted SFAS No. 130,
"Reporting Comprehensive Income". SFAS 130 established new standards for the
reporting and display of comprehensive earnings and its components; however, the
adoption of SFAS 130 had no impact on our net earnings (loss) or shareowners'
equity (deficit). Comprehensive earnings are defined as the change in
shareowners' equity (deficit) during a period from transactions from
non-shareowner sources. Our comprehensive earnings (loss) consisted of net
earnings (loss) and foreign currency translation adjustments. Prior year
financial statements have been reclassified to conform to the requirements of
SFAS 130.
Comprehensive earnings (loss) for the three and nine month periods ended
May 2, 1999 and May 3, 1998 were as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------ -----------------
MAY 2, MAY 3, MAY 2, MAY 3,
1999 1998 1999 1998
------ ------ ------ ------
<S> <C> <C> <C> <C>
Net earnings (loss)............................ $(140,128) $(16,598) $(123,659) $17,713
Other comprehensive earnings (loss)
Foreign currency translation adjustments..... (2,593) (2,758) (453) (2,160)
--------- -------- --------- -------
Comprehensive earnings (loss).................. $(142,721) $(19,356) $(124,112) $15,553
========= ======== ========= =======
</TABLE>
5. SPECIAL ITEMS
Special items were as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------ -----------------
MAY 2, MAY 3, MAY 2, MAY 3,
1999 1998 1999 1998
------ ------ ------ ------
<S> <C> <C> <C> <C>
Argentina impairment (Note 7)................. $(140,000) $ -- $(140,000) $ --
Dublin mushroom farm restructuring (Note 6)... (3,000) -- (3,000) --
Fiscal 1998 restructuring program
(Note 6).................................... 3,215 (28,050) 3,215 (28,050)
Kattus gain (Note 7).......................... -- -- 3,200 --
--------- -------- --------- --------
Special items............................... $(139,785) $(28,050) $(136,585) $(28,050)
========= ======== ========= ========
</TABLE>
Also, during the third quarter of fiscal 1999, we recorded a special
provision for taxes of $7 million on the repatriation of foreign dividends.
6. RESTRUCTURING CHARGES
<TABLE>
<CAPTION>
LOSS ON
ASSET SEVERANCE
DISPOSITION AND BENEFITS OTHER TOTAL
----------- ------------ ----- -----
<S> <C> <C> <C> <C>
Balance at August 2, 1998....................... $ 14,679 $ 6,951 $ 3,104 $24,734
Restructuring accrual........................... 2,400 400 200 3,000
Fiscal 1999 activity to date.................... (17,079) (6,951) (3,104) (27,134)
-------- ------- ------- -------
Balance at May 2, 1999.......................... $ -- $ 400 $ 200 $ 600
======== ======= ======= =======
</TABLE>
A special charge of $3 million was recorded in the third quarter of fiscal
1999 associated with the closure of the Dublin, Georgia mushroom farm. The farm
was identified for closure due to the high costs of
F-28
<PAGE> 153
VLASIC FOODS INTERNATIONAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
production and mechanical harvesting methodology that prevents it from producing
high quality retail mushrooms. As part of the closure, approximately 70 people
will be severed. The assets were written down to the estimated fair value less
costs to sell. The $3 million cost of the program included $2.4 million of
non-cash charges for losses on the disposition of plant assets and $0.6 million
principally related to severance and employee benefit costs that will be paid in
cash. This restructuring program is expected to be completed by the third
quarter of fiscal 2000.
A special change of $28.1 million ($21.8 million after tax) was recorded in
the third quarter of fiscal 1998 to cover the costs of a restructuring program.
The restructuring program was designed to improve operational efficiency by
exiting certain U.S. and European administrative offices and production
facilities. The restructuring program provided for the reduction of our
worldwide workforce by approximately 425 full-time administrative and
operational positions. In September 1998 we sold our Peterlee frozen foods
facility in the U.K. Additionally, during November 1998, we commenced closing
our seasonal pickle plant in Bridgeport, Michigan. The plant employed
approximately 25 full-time workers and an additional 375 seasonal workers from
May through September. The restructuring charge included approximately $11.6
million primarily related to severance and employee benefit costs that will be
paid in cash. The balance of the restructuring charge, amounting to $16.5
million, related to non-cash charges for losses on the disposition of plant
assets. This program was completed during the third quarter of fiscal 1999.
Third quarter results included a $3.2 million benefit recorded against Special
items within the Statement of Earnings to reverse the remaining unutilized
restructuring charge.
The balance of the restructuring accrual was included in Accrued
Liabilities on the Consolidated Balance Sheets as of May 2, 1999.
7. DIVESTED BUSINESSES
As part of our portfolio reconfiguration program, during the third quarter
of fiscal 1999 we entered into a divestiture agreement to sell our Argentina
beef business, Swift-Armour. The sale is subject to satisfaction of legal and
regulatory items and completion of financing. We received final approval for the
transaction from our Board of Directors on May 24, 1999. The divestiture is
expected to be completed within our fiscal year ending August 1, 1999. For a
complete description of the pending divestiture, see the Stock Purchase
Agreement included as an Exhibit to our Report on Form 8-K, filed on June 8,
1999. The carrying value of the Argentine beef assets held for sale was reduced
to fair value based on the sale price less costs to sell. Third quarter results
included a $140 million charge against Special items within the Statement of
Earnings to reduce the assets held for sale to fair value of which $6.2 million
represented a charge for goodwill impairment with the balance of the charge
recorded against plant assets.
Fourth quarter 1998 earnings included a $14.4 million charge to reduce the
Kattus assets held for sale to fair value. In January 1999, we sold the Kattus
business for a gain on sale of $3.2 million that is recorded on the Special
items line on the Statements of Earnings.
8. SEGMENT AND GEOGRAPHIC AREA INFORMATION
We group our businesses in three operating segments. 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
gourmet foods distribution in Germany (which was sold in January 1999) 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 product for Campbell's Foodservice
in the U.S. These operating segments are managed as strategic units due to their
distinct manufacturing processes, marketing strategies and distribution
channels.
F-29
<PAGE> 154
VLASIC FOODS INTERNATIONAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
Corporate expenses and assets have been allocated to the segments. Intersegment
sales presented below as eliminations represent the sale of beef between
Agricultural Products and Frozen Foods.
SEGMENT INFORMATION
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------ -----------------
MAY 2, MAY 3, MAY 2, MAY 3,
1999 1998 1999 1998
------ ------ ------ ------
<S> <C> <C> <C> <C>
Net Sales
Frozen Foods.............................. $ 137,420 $117,024 $ 421,964 $ 436,617
Grocery Products.......................... 105,730 118,098 329,516 342,381
Agricultural Products..................... 78,907 86,951 258,059 272,431
Eliminations.............................. (1,424) (1,379) (5,231) (7,566)
--------- -------- ---------- ----------
Total............................. $ 320,633 $320,694 $1,004,308 $1,043,863
========= ======== ========== ==========
Earnings (Loss) Before Interest and Taxes
Frozen Foods.............................. $ 13,964 $ (3,887) $ 39,552 $ 34,251
Grocery Products.......................... 13,895 (6,208) 37,327 12,879
Agricultural Products..................... (145,095) (3,752) (148,636) (4,442)
--------- -------- ---------- ----------
Total............................. $(117,236) $(13,847) $ (71,757) $ 42,688
========= ======== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
MAY 2, MAY 2,
1999 1998
------ ------
<S> <C> <C>
Total Assets
Frozen Foods.............................................. $312,620 $286,197
Grocery Products.......................................... 321,793 374,178
Agricultural Products..................................... 189,618 298,898
-------- --------
Total............................................. $824,031 $959,273
======== ========
</TABLE>
F-30
<PAGE> 155
VLASIC FOODS INTERNATIONAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
GEOGRAPHIC INFORMATION
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------ -----------------
MAY 2, MAY 3, MAY 2, MAY 3,
1999 1998(1) 1999(1) 1998(1)
------ ------- ------- -------
<S> <C> <C> <C> <C>
Net Sales
United States............................. $ 239,533 $207,891 $ 682,835 $ 679,990
Europe.................................... 40,731 65,007 183,973 213,285
South America............................. 41,793 49,175 142,731 158,154
Eliminations.............................. (1,424) (1,379) (5,231) (7,566)
--------- -------- ---------- ----------
Total............................. $ 320,633 $320,694 $1,004,308 $1,043,863
========= ======== ========== ==========
Earnings (Loss) Before Interest and Taxes
United States............................. $ 17,239 $ (309) $ 54,293 $ 50,880
Europe.................................... 3,703 (12,256) 11,793 (7,348)
South America............................. (138,178) (1,282) (137,843) (844)
--------- -------- ---------- ----------
Total............................. $(117,236) $(13,847) $ (71,757) $ 42,688
========= ======== ========== ==========
</TABLE>
- ---------------
(1) Prior quarters' amounts have been reclassified to conform with current year
presentation.
9. INVENTORIES
<TABLE>
<CAPTION>
MAY 2, AUGUST 2,
1999 1998
------ ---------
<S> <C> <C>
Raw materials, containers and supplies................. $ 59,849 $ 52,074
Finished goods......................................... 120,386 144,044
-------- --------
180,235 196,118
Less: Adjustment to LIFO basis......................... (14,143) (12,355)
-------- --------
Total........................................ $166,092 $183,763
======== ========
</TABLE>
Inventories determined by the LIFO method represented approximately 61% and
62% of inventories at May 2, 1999 and August 2, 1998, respectively.
10. LONG-TERM DEBT
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
MAY 2, AUGUST 2,
1999 1998
------ ---------
<S> <C> <C>
Bank borrowings........................................ $580,200 $557,000
Capital lease obligations and other.................... 463 1,873
-------- --------
Total........................................ $580,663 $558,873
======== ========
</TABLE>
In connection with the spin-off, we incurred incremental debt of
approximately $560 million under a five-year $750 million unsecured revolving
credit facility, consisting of $500 million indebtedness assumed from Campbell
and $60 million incurred to repay certain intercompany payables representing
advances from Campbell to subsidiaries of Vlasic. We amended the revolving
credit facility on September 30, 1998. As a result of this amendment, $100
million of indebtedness outstanding under the revolving credit facility was
converted to a term loan and the commitment under the revolving credit facility
was reduced to
F-31
<PAGE> 156
VLASIC FOODS INTERNATIONAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
$550 million. The term loan has the same terms and conditions as the amended
revolving credit facility. Borrowings under the amended revolving credit
facility and the term loan bear interest at rates, which at our option, vary
with the prime rate, CD rate, LIBOR or money market rates plus applicable credit
margins. The average interest rate at May 2, 1999 was 7%. In addition, we pay a
facility fee of 0.50%. The applicable credit margin is based on the timing of
the issuance of longer term debt. The amended agreement contains covenants
including, but not limited to: the mandatory repayment of debt; the reduction of
the commitment upon the sale of assets (including the pending sale of
Swift-Armour in Argentina); issuance of equity and the incurrence of additional
debt; restrictions on the issuance of certain new debt; limitations on capital
spending; restrictions on dividend payments; and certain other financial ratio
covenants. During the third quarter of fiscal 1999, we received a waiver from
the bank group permitting the sale of Swift-Armour in Argentina. At May 2, 1999,
$480.2 million was outstanding under the revolving credit facility and $100
million was outstanding under the term loan, with an additional $69.8 million
available to support our capital requirements including working capital needs
and capital expenditures.
In order to gain greater financial flexibility for future plans, we are
amending our existing credit facility whereby certain financial covenants are
being revised. We expect banks with a majority of the revolving credit
commitment to accept the amendment effective as of June 9, 1999, which, among
other things, increases both the interest rate and the facility fee paid to the
bank group. The amendment also requires a payment of a fee to the bank group and
further restricts future capital spending.
11. CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE
In the second quarter of fiscal 1998, we adopted Emerging Issues Task Force
(EITF) Issue 97-13, "Accounting for Costs Incurred In Connection with a
Consulting Contract that Combines Business Process Reengineering and Information
Technology Transformation." The EITF provided that costs of business process
reengineering activities that are part of a systems development project are to
be expensed as incurred. We previously capitalized certain consulting costs
related to business process reengineering. The cumulative effect of this change
in accounting principle was $600 (net of $370 tax), or $(0.01) per diluted share
for the nine months ended May 3, 1998.
F-32
<PAGE> 157
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 14A:3-5 of the New Jersey Business Corporation Act requires a
corporation to indemnify a director, officer or employee for expenses to the
extent that he or she has been successful in any legal proceeding involving that
individual by reason of his or her having served as a "corporate agent" as
defined in the statute. It permits a corporation to indemnify for expenses and
liabilities irrespective of the outcome, as follows: (i) in a civil proceeding,
other than by or in the right of the corporation, if the individual acted in
good faith and in a manner reasonably believed to be in or not opposed to the
best interests of the corporation; and (ii) in a criminal proceeding, if the
individual had no reasonable cause to believe his or her conduct was unlawful.
In civil proceedings, by or in the right of the corporation, the law also
enables a corporation to provide indemnification for expenses if the individual
acted in good faith and in a manner reasonably believed to be in or not opposed
to the best interests of the corporation. If the individual has been found
liable to the corporation for negligence or misconduct, such indemnification may
only be provided if an appropriate court determines that in view of all the
circumstances the individual is fairly and reasonably entitled to indemnity for
expenses.
Article VI of the Registrant's Amended and Restated By-Laws provides as
follows:
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 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
II-1
<PAGE> 158
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 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.
Under a directors' and officers' liability insurance policy, directors and
officers of the Registrant are insured against certain liabilities, including
certain liabilities under the Securities Act, as amended.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
1.1 * Purchase Agreement, dated as of June 22, 1999, among Vlasic
Foods International Inc., Goldman, Sachs & Co., Chase
Securities Inc., Lehman Brothers Inc. and J.P. Morgan & Co.
2.1 Stock Purchase Agreement entered into among Aligar, Inc. and
Cargal, Inc. and Swift Armour Holdings Co. on April 28,
1999, as amended on June 7, 1999. The Stock Purchase
Agreement and the amendment thereto were filed with the SEC
with Vlasic's Forms 8-K dated June 8, 1999 and August 16,
1999, respectively, and are incorporated by reference. The
Supply Agreement exhibits to the Stock Purchase Agreement
are not considered material and, pursuant to paragraph
(b)(2) of Item 601 of Regulation S-K of the Rules and
Regulations under the Securities Act of 1933, are not being
included. Copies of these attachments can be provided to the
Securities and Exchange Commission ("SEC") upon request.
3.1 Vlasic's Amended and Restated Certificate of Incorporation,
as amended through March 30, 1998, was filed as exhibit 3.1
to Vlasic's Form 10 dated March 5, 1998, and is incorporated
herein by reference.
3.2 Vlasic's Amended and Restated By-Laws, effective March 2,
1999, were filed with Vlasic's Form 10-Q dated March 16,
1999 as exhibit 3(ii), and are incorporated herein by
reference.
</TABLE>
II-2
<PAGE> 159
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
4.1 * Indenture, dated as of June 29, 1999, between Vlasic Foods
International Inc. and The Bank of New York, as Trustee.
4.2 * Form of Certificate of Senior Subordinated Note (included as
Exhibit A to Exhibit 4.1)
4.3 * Exchange and Registration Rights Agreement, dated as of June
29, 1999, among Vlasic Foods International Inc., Goldman,
Sachs & Co., Chase Securities Inc., Lehman Brothers Inc. and
J.P. Morgan & Co.
5.1 * Opinion and consent of Norma B. Carter, Esq., Vice
President, General Counsel and Corporate Secretary of
Vlasic, as to validity of the Senior Subordinated Notes to
be issued by Vlasic Foods International Inc.
5.2 * Opinion and consent of Skadden, Arps, Slate, Meagher & Flom
LLP as to validity under New York law of the Senior
Subordinated Notes to be issued by Vlasic Foods
International Inc.
9.1 Major Stockholders' Voting Trust Agreement dated June 2,
1990, as amended, filed as exhibit 9.1 to Vlasic's Form 10
dated March 5, 1998, and is incorporated herein by
reference.
10.1 Transition Services Agreement between Campbell Soup Company
and Vlasic Foods International Inc., effective March 30,
1998, filed as exhibit 10.1 to Vlasic's Form 10 dated March
5, 1998, and is incorporated herein by reference.
10.2 Benefits Sharing Agreement between Campbell Soup Company and
Vlasic Foods International Inc., effective March 30, 1998,
filed as exhibit 10.2 to Vlasic's Form 10 dated March 5,
1998, and is incorporated herein by reference.
10.3 Swanson Trademark License Agreement between Campbell Soup
Company and Vlasic Foods International Inc., effective March
30, 1998, filed as exhibit 10.3 to Vlasic's Form 10 dated
March 5, 1998, and is incorporated herein by reference.
10.4 Technology Sharing Agreement between Campbell Soup Company
and Vlasic Foods International Inc., effective March 30,
1998, filed as exhibit 10.4 to Vlasic's Form 10 dated March
5, 1998, and is incorporated herein by reference.
10.5 Tax Sharing and Indemnification Agreement between Campbell
Soup Company and Vlasic Foods International Inc., effective
March 30, 1998, filed as exhibit 10.5 to Vlasic's Form 10
dated March 5, 1998, and is incorporated herein by
reference.
10.6 Amended and Restated Credit Agreement dated as of September
30, 1998 among Vlasic Foods International Inc., the banks
party hereto, Morgan Guaranty Trust Company of New York and
The Chase Manhattan Bank, as agents. Filed as exhibit 10.6
to the 10-K dated October 20, 1998 and incorporated herein
by reference.
10.7 Personal Choice, a supplemental compensation program for
Vlasic Executives, as amended. Filed as exhibit 10.7 to the
10-K dated October 20, 1998 and incorporated herein by
reference.
10.8 Deferred Compensation Plan effective March 30, 1998. Filed
as exhibit 10.8 to the 10-K dated October 20, 1998 and
incorporated herein by reference.
10.9 1998 Long-Term Incentive Plan effective March 30, 1998.
Filed as exhibit 10.9 to the 10-K dated October 20, 1998 and
incorporated herein by reference.
10.10 Annual Incentive Plan effective March 30, 1998. Filed as
exhibit 10.10 to the 10-K dated October 20, 1998 and
incorporated herein by reference.
10.11 Director Compensation Plan effective March 30, 1998. Filed
as exhibit 10.11 to the 10-K dated October 20, 1998 and
incorporated herein by reference.
10.12 Mid-Career Hire Pension Agreement for Robert F. Bernstock,
President and Chief Executive Officer, dated March 30, 1998
was filed with the SEC with Vlasic's Form 10-Q for the
Quarter ended May 3, 1998, and is incorporated herein by
reference.
</TABLE>
II-3
<PAGE> 160
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
10.13 Severance Protection Agreement dated June 22, 1998, with
Robert F. Bernstock, President and Chief Executive Officer.
Filed as exhibit 10.13 to the 10-K dated October 20, 1998
and incorporated herein by reference.
10.14 Trust Agreement dated April 12, 1999, by and between Vlasic
Foods International Inc. and Wachovia Bank, N.A. providing
for the funding of certain compensation plans and
arrangements under certain circumstances, including a change
of control. Filed as exhibit 10.1 to the 10-Q dated June 8,
1999 and incorporated herein by reference.
10.15 Amendment No. 1 to Amended and Restated Credit Agreement
dated as of June 9, 1999. Filed as exhibit 10.2 to the 10-Q
dated June 8, 1999 and incorporated herein by reference.
12.1 * Statement regarding the computation of ratio of earnings to
fixed charges for Vlasic.
12.2 * Statement regarding the computation of ratio of pro forma
earnings to pro forma fixed charges for Vlasic.
13.1 Pages 13 through 48 of Vlasic's 1998 Annual Report to
Shareowners for the fiscal year ended August 2, 1998. Filed
as exhibit 10.14 to the 10-K dated October 20, 1998 and
incorporated herein by reference.
21.1 * Subsidiaries of Vlasic.
23.1 * Consent of Independent Accountants.
24.1 * Power of Attorney of certain officers and directors of
Vlasic. Included in Part II of the Registration Statement.
25.1 * Statement of Eligibility and Qualification on Form T-1 of
The Bank of New York, as trustee, under the Indenture
relating to the Exchange Notes.
99.1 * Form of Letter of Transmittal.
99.2 * Form of Notice of Guaranteed Delivery.
99.3 * Form of Letter to Clients.
99.4 * Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
99.5 * Form of Exchange Agent Agreement
99.6 * Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
</TABLE>
- ---------------
* Filed with this Registration Statement.
ITEM 22. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
II-4
<PAGE> 161
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933.
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes
in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) For purposes of determining any liability under the Securities Act
of 1933, each filing of the registrant's annual report pursuant to section
13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(b) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(c) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-5
<PAGE> 162
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Camden, state of New
Jersey, on August 18, 1999.
VLASIC FOOD INTERNATIONAL INC.
(Registrant)
By: /s/ NORMA B. CARTER, ESQ.
------------------------------------
NORMA B. CARTER, ESQ.
Vice President, General Counsel
and Corporate Secretary
KNOWN TO ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Norma B. Carter his attorney-in-fact,
with the power of substitution, for him in any and all capacities, to sign any
amendments to this registration statement (including post-effective amendments),
and to file the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that each of said attorney-in-fact, or his substitute or
substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ ROBERT F. BERNSTOCK President; Chief Executive August 18, 1999
- --------------------------------------------------- Officer; Director
Robert F. Bernstock
/s/ MITCHELL P. GOLDSTEIN Vice President and Chief August 18, 1999
- --------------------------------------------------- Financial Officer
Mitchell P. Goldstein
/s/ JOSEPH ADLER Vice President; Controller August 18, 1999
- ---------------------------------------------------
Joseph Adler
/s/ DONALD J. KELLER Director; Chairman of the Board August 18, 1999
- --------------------------------------------------- of Directors
Donald J. Keller
/s/ ROBERT T. BLAKELY Director August 18, 1999
- ---------------------------------------------------
Robert T. Blakely
/s/ MORRIS A. COHEN Director August 18, 1999
- ---------------------------------------------------
Morris A. Cohen
/s/ TRISTRAM C. COLKET, JR. Director August 18, 1999
- ---------------------------------------------------
Tristram C. Colket, Jr.
/s/ LAWRENCE C. KARLSON Director August 18, 1999
- ---------------------------------------------------
Lawrence C. Karlson
/s/ SHAUN F. O'MALLEY Director August 18, 1999
- ---------------------------------------------------
Shaun F. O'Malley
</TABLE>
II-6
<PAGE> 163
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
1.1 * Purchase Agreement, dated as of June 22, 1999, among Vlasic
Foods International Inc., Goldman, Sachs & Co., Chase
Securities Inc., Lehman Brothers Inc. and J.P. Morgan & Co.
2.1 Stock Purchase Agreement entered into among Aligar, Inc. and
Cargal, Inc. and Swift Armour Holdings Co. on April 28,
1999, as amended on June 7, 1999. The Stock Purchase
Agreement and the amendment thereto were filed with the SEC
with Vlasic's Forms 8-K dated June 8, 1999 and August 16,
1999, respectively, and are incorporated by reference. The
Supply Agreement exhibits to the Stock Purchase Agreement
are not considered material and, pursuant to paragraph
(b)(2) of Item 601 of Regulation S-K of the Rules and
Regulations under the Securities Act of 1933, are not being
included. Copies of these attachments can be provided to the
Securities and Exchange Commission ("SEC") upon request.
3.1 Vlasic's Amended and Restated Certificate of Incorporation,
as amended through March 30, 1998, was filed as exhibit 3.1
to Vlasic's Form 10 dated March 5, 1998, and is incorporated
herein by reference.
3.2 Vlasic's Amended and Restated By-Laws, effective March 30,
1998, were filed with Vlasic's Form 10-Q dated March 16,
1999, as exhibit 3(ii), and are incorporated herein by
reference.
4.1 * Indenture, dated as of June 29, 1999, between Vlasic Foods
International Inc. and The Bank of New York, as Trustee.
4.2 * Form of Certificate of Senior Subordinated Note (included as
Exhibit A to Exhibit 4.1)
4.3 * Exchange and Registration Rights Agreement, dated as of June
29, 1999, among Vlasic Foods International Inc., Goldman,
Sachs & Co., Chase Securities Inc., Lehman Brothers Inc. and
J.P. Morgan & Co.
5.1 * Opinion and consent of Norma B. Carter, Esq., Vice
President, General Counsel and Corporate Secretary of
Vlasic, as to validity of the Senior Subordinated Notes to
be issued by Vlasic Foods International Inc.
5.2 * Opinion and consent of Skadden, Arps, Slate, Meagher & Flom
LLP as to validity under New York law of the Senior
Subordinated Notes to be issued by Vlasic Foods
International Inc.
9.1 Major Stockholders' Voting Trust Agreement dated June 2,
1990, as amended, filed as exhibit 9.1 to Vlasic's Form 10
dated March 5, 1998, and is incorporated herein by
reference.
10.1 Transition Services Agreement between Campbell Soup Company
and Vlasic Foods International Inc., effective March 30,
1998, filed as exhibit 10.1 to Vlasic's Form 10 dated March
5, 1998, and is incorporated herein by reference.
10.2 Benefits Sharing Agreement between Campbell Soup Company and
Vlasic Foods International Inc., effective March 30, 1998,
filed as exhibit 10.2 to Vlasic's Form 10 dated March 5,
1998, and is incorporated herein by reference.
10.3 Swanson Trademark License Agreement between Campbell Soup
Company and Vlasic Foods International Inc., effective March
30, 1998, filed as exhibit 10.3 to Vlasic's Form 10 dated
March 5, 1998, and is incorporated herein by reference.
10.4 Technology Sharing Agreement between Campbell Soup Company
and Vlasic Foods International Inc., effective March 30,
1998, filed as exhibit 10.4 to Vlasic's Form 10 dated March
5, 1998, and is incorporated herein by reference.
10.5 Tax Sharing and Indemnification Agreement between Campbell
Soup Company and Vlasic Foods International Inc., effective
March 30, 1998, filed as exhibit 10.5 to Vlasic's Form 10
dated March 5, 1998, and is incorporated herein by
reference.
10.6 Amended and Restated Credit Agreement dated as of September
30, 1998 among Vlasic Foods International Inc., the banks
party hereto, Morgan Guaranty Trust Company of New York and
The Chase Manhattan Bank, as agents. Filed as exhibit 10.6
to the 10-K dated October 20, 1998 and incorporated herein
by reference.
</TABLE>
<PAGE> 164
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
10.7 Personal Choice, a supplemental compensation program for
Vlasic Executives, as amended. Filed as exhibit 10.7 to the
10-K dated October 20, 1998 and incorporated herein by
reference.
10.8 Deferred Compensation Plan effective March 30, 1998. Filed
as exhibit 10.8 to the 10-K dated October 20, 1998 and
incorporated herein by reference.
10.9 1998 Long-Term Incentive Plan effective March 30, 1998.
Filed as exhibit 10.9 to the 10-K dated October 20, 1998 and
incorporated herein by reference.
10.10 Annual Incentive Plan effective March 30, 1998. Filed as
exhibit 10.10 to the 10-K dated October 20, 1998 and
incorporated herein by reference.
10.11 Director Compensation Plan effective March 30, 1998. Filed
as exhibit 10.11 to the 10-K dated October 20, 1998 and
incorporated herein by reference.
10.12 Mid-Career Hire Pension Agreement for Robert F. Bernstock,
President and Chief Executive Officer, dated March 30, 1998
was filed with the SEC with Vlasic's Form 10-Q for the
Quarter ended May 3, 1998, and is incorporated herein by
reference.
10.13 Severance Protection Agreement dated June 22, 1998, with
Robert F. Bernstock, President and Chief Executive Officer.
Filed as exhibit 10.13 to the 10-K dated October 20, 1998
and incorporated herein by reference.
10.14 Trust Agreement dated April 12, 1999, by and between Vlasic
Foods International Inc. and Wachovia Bank, N.A. providing
for the funding of certain compensation plans and
arrangements under certain circumstances, including a change
of control. Filed as exhibit 10.1 to the 10-Q dated June 8,
1999 and incorporated herein by reference.
10.15 Amendment No. 1 to Amended and Restated Credit Agreement
dated as of June 9, 1999. Filed as exhibit 10.2 to the 10-Q
dated June 8, 1999 and incorporated herein by reference.
12.1 * Statement regarding the computation of ratio of earnings to
fixed charges for Vlasic.
12.2 * Statement regarding the computation of ratio of pro forma
earnings to pro forma fixed charges for Vlasic.
13.1 Pages 13 through 48 of Vlasic's 1998 Annual Report to
Shareowners for the fiscal year ended August 2, 1998. Filed
as exhibit 10.14 to the 10-K dated October 20, 1998 and
incorporated herein by reference.
21.1 * Subsidiaries of Vlasic.
23.1 * Consent of Independent Accountants.
24.1 * Power of Attorney of certain officers and directors of
Vlasic. Included in Part II of the Registration Statement.
25.1 * Statement of Eligibility and Qualification on Form T-1 of
The Bank of New York, as trustee, under the Indenture
relating to the Exchange Notes.
99.1 * Form of Letter of Transmittal.
99.2 * Form of Notice of Guaranteed Delivery.
99.3 * Form of Letter to Clients.
99.4 * Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
99.5 * Form of Exchange Agent Agreement
99.6 * Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
</TABLE>
- ---------------
* Filed with this Registration Statement.
<PAGE> 1
EXHIBIT 1.1
VLASIC FOODS INTERNATIONAL INC.
10 1/4% SENIOR SUBORDINATED NOTES DUE 2009
PURCHASE AGREEMENT
June 22, 1999
Goldman, Sachs & Co.
Chase Securities Inc.
Lehman Brothers Inc.
J.P. Morgan Securities Inc.
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Ladies and Gentlemen:
Vlasic Foods International Inc., a New Jersey corporation (the
"COMPANY"), proposes, subject to the terms and conditions stated herein, to
issue and sell to the Purchasers named in Schedule I hereto (the "PURCHASERS")
an aggregate of $200,000,000 principal amount of the Senior Subordinated Notes
of the Company, specified above (the "SECURITIES").
1. The Company represents and warrants to, and agrees with, each of the
Purchasers that:
(a) A preliminary offering circular, dated June 9, 1999 (the
"PRELIMINARY OFFERING CIRCULAR") and an offering circular, dated June
22, 1999 (the "OFFERING CIRCULAR") have been prepared in connection
with the offering of the Securities. Any reference to the Preliminary
Offering Circular or the Offering Circular shall be deemed to refer to
and include any Additional Issuer Information (as defined in Section
5(f)) furnished by the Company prior to the completion of the
distribution of the Securities and any amendments or supplements
thereto did not and will not, as of their respective dates, contain an
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by a Purchaser through
Goldman, Sachs & Co. expressly for use therein;
(b) Neither the Company nor any of its subsidiaries has
sustained since the date of the latest audited financial statements
included in the Offering Circular any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or
governmental action, order or decree which
<PAGE> 2
would have, individually or in the aggregate, a material adverse effect
on the financial position, results of operations or prospects of the
Company and its subsidiaries taken as a whole (a "MATERIAL ADVERSE
EFFECT"), otherwise than as set forth or contemplated in the Offering
Circular; and, since the respective dates as of which information is
given in the Offering Circular, there has not been any material change
in the capital stock or long-term debt of the Company or any of its
subsidiaries or any material adverse change, or any development
involving a prospective material adverse change, in or affecting the
general affairs, management, financial position, shareowners' equity or
results of operations of the Company and its subsidiaries, taken as a
whole, otherwise than as set forth or contemplated in the Offering
Circular;
(c) The Company and its subsidiaries have good and marketable
title in fee simple to all material real property and good and
marketable title to all material personal property owned by them, in
each case free and clear of all liens, encumbrances and defects except
such as are described in the Offering Circular or such as do not
materially affect the value of such property and do not materially
interfere with the use made and proposed to be made of such property by
the Company and its subsidiaries; and any real property and buildings
held under lease by the Company and its subsidiaries are held by them
under valid, subsisting and enforceable leases with such exceptions as
are not material and do not materially interfere with the use made and
proposed to be made of such property and buildings by the Company and
its subsidiaries;
(d) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of New
Jersey, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Offering
Circular, and has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each
other jurisdiction in which it owns or leases properties or conducts
any business so as to require such qualification, except where the
failure to have such power and authority or be so qualified in any such
jurisdiction would not have a Material Adverse Effect; and each
subsidiary of the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, except where the failure to be in good
standing would not have a Material Adverse Effect;
(e) The Company has an authorized capitalization as set forth
in the Offering Circular, and all of the issued shares of capital stock
of the Company have been duly and validly authorized and issued and are
fully paid and non-assessable; and all of the issued shares of capital
stock of each subsidiary of the Company have been duly and validly
authorized and issued, are fully paid and non-assessable and (except
for directors' qualifying shares) are owned directly or indirectly by
the Company, free and clear of all liens, encumbrances, equities or
claims, other than as set forth in the Offering Circular;
(f) The Securities have been duly authorized and, when issued
and delivered pursuant to this Agreement, will have been duly executed,
authenticated, issued and delivered and will constitute valid and
legally binding obligations of the Company entitled to the benefits
2
<PAGE> 3
provided by the indenture to be dated as of June 29, 1999 (the
"INDENTURE") between the Company and The Bank of New York, as Trustee
(the "TRUSTEE"), under which they are to be issued, which will be
substantially in the form previously delivered to you; the Indenture
has been duly authorized and, when executed and delivered by the
Company and the Trustee, the Indenture will constitute a valid and
legally binding instrument, enforceable against the Company in
accordance with its terms, except to the extent that enforcement
thereof may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws now or
hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity); and the Securities and
the Indenture will conform to the descriptions thereof in the Offering
Circular and will be in substantially the form previously delivered to
you;
(g) The exchange and registration rights agreement, to be
dated as of June 29, 1999 (the "REGISTRATION RIGHTS AGREEMENT"),
between the Company and the Purchasers has been duly authorized by the
Company and, when executed and delivered by the Company, the
Registration Rights Agreement will constitute a valid and legally
binding instrument of the Company enforceable against the Company in
accordance with its terms, except to the extent that (a) enforcement
thereof may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws now or
hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity), and (b) the
enforceability of indemnification and contribution provisions pursuant
to the Registration Rights Agreement may be limited by Federal and
state securities laws and the policies underlying such laws. Pursuant
to the Registration Rights Agreement, the Company will agree to file
with the Commission, under the circumstances set forth therein, (i) a
registration statement under the United States Securities Act of 1933,
as amended (the "ACT"), relating to another series of debt securities
of the Company with terms substantially identical to the Securities
(the "EXCHANGE SECURITIES") to be offered in exchange for the
Securities (the "EXCHANGE OFFER"), (ii) to the extent required by the
Registration Rights Agreement, a shelf registration statement pursuant
to Rule 415 of the Act relating to the resale by certain holders of the
Securities and (iii) to the extent required by the Registration Rights
Agreement, a market making registration statement, and in each case, to
use all commercially reasonable efforts to cause such registration
statements to be declared effective. The Exchange Securities have been
duly authorized for issuance by the Company, and when issued and
authenticated in accordance with the terms of the Indenture will be the
valid and legally binding obligations of the Company, entitled to the
benefits provided by the Indenture, enforceable against the Company in
accordance with their terms, except to the extent that enforcement
thereof may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws now or
hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity). The Registration
Rights Agreement will conform, in all material respects, to the
description thereof in the Offering Circular and will be in
substantially the form previously delivered to you;
3
<PAGE> 4
(h) None of the transactions contemplated by this Agreement
(including, without limitation, the use of the proceeds from the sale
of the Securities) will violate or result in a violation of Section 7
of the United States Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), or any regulation promulgated thereunder, including,
without limitation, Regulations T, U, and X of the Board of Governors
of the Federal Reserve System;
(i) Prior to the date hereof, neither of the Company, nor any
of its affiliates, has taken any action which is designed to or which
has constituted or which might have been expected to cause or result in
stabilization or manipulation of the price of any security of the
Company in connection with the offering of the Securities;
(j) The issuance and sale of the Securities by the Company,
the execution and delivery of the Indenture, the Registration Rights
Agreement and the Purchase Agreement by the Company, compliance by the
Company with the terms thereof and the consummation by the Company of
the transactions contemplated thereby, each in accordance with its
terms, will not conflict with or result in a breach or violation of any
of the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries is bound or to
which any of the property or assets of the Company or any of its
subsidiaries is subject, except for any such conflict, breach,
violation or default which would not have a Material Adverse Effect, or
any material adverse effect on the issuance and sale of the Securities
or the consummation of any of the transactions contemplated hereby or
by the Indenture or the Registration Rights Agreement nor will such
action result in any violation of the provisions of (i) the Amended and
Restated Certificate of Incorporation or Amended and Restated By-laws
of the Company or (ii) any statute or any order, rule or regulation of
any court or governmental agency or body having jurisdiction over the
Company or any of its subsidiaries or any of their properties, except
in the case of clause (ii) above, such violation which would not have a
Material Adverse Effect, or any material adverse effect on the issuance
and sale of the Securities or the consummation of any of the
transactions contemplated hereby or by the Indenture or the
Registration Rights Agreement.
(k) No consent, approval, authorization, order, registration
or qualification of or with any such court or governmental agency or
body is required for the issue and sale of the Securities or the
consummation by the Company of the transactions contemplated by this
Agreement or the Indenture, except for the filing of a registration
statement by the Company with the Commission pursuant to the Act
pursuant to the Registration Rights Agreement and such consents,
approvals, authorizations, registrations or qualifications as may be
required under state securities or Blue Sky laws in connection with the
purchase and distribution of the Securities by the Purchasers;
(l) Neither the Company nor any of its subsidiaries is (i) in
violation of its Amended and Restated Certificate of Incorporation or
Amended and Restated By-laws or (ii) in default in the performance or
observance of any material obligation, covenant or condition contained
in any indenture, mortgage, deed of trust, loan agreement, lease or
other agreement or
4
<PAGE> 5
instrument to which it is a party or by which it or any of its
properties may be bound, other than, in the case of clause (ii), any
default which would not have a Material Adverse Effect;
(m) The statements set forth in the Offering Circular under
the caption "Description of Notes", insofar as they purport to
constitute a summary of the terms of the Securities and under the
caption "Underwriting", insofar as they purport to describe provisions
of the agreements, statutes or regulations referred to therein fairly
describe or summarize such provisions in all material respects;
(n) Other than as set forth in the Offering Circular, there
are no legal or governmental proceedings pending to which the Company
or any of its subsidiaries is a party or of which any property of the
Company or any of its subsidiaries is the subject which, if determined
adversely to the Company or any of its subsidiaries, would individually
or in the aggregate have a Material Adverse Effect; and, to the best of
the Company's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others;
(o) When the Securities are issued and delivered pursuant to
this Agreement, the Securities will not be of the same class (within
the meaning of Rule 144A under the Act) as any securities of the
Company which are listed on a national securities exchange registered
under Section 6 of the Exchange Act or quoted in a U.S. automated
inter-dealer quotation system;
(p) The Company is subject to Section 13 or 15(d) of the
Exchange Act;
(q) The Company is not, and after giving effect to the
offering and sale of the Securities, will not be an "investment
company", as such term is defined in the United States Investment
Company Act of 1940, as amended (the "INVESTMENT COMPANY ACT");
(r) None of the Company, or any person acting on its behalf
(other than the Purchasers, with respect to whom the Company makes no
representations or warranties) has offered or sold the Securities by
means of any general solicitation or general advertising within the
meaning of Rule 502(c) under the Act or, with respect to Securities
sold outside the United States to non-U.S. persons (as defined in Rule
902 under the Act), by means of any directed selling efforts within the
meaning of Rule 902 under the Act and the Company, any affiliate of the
Company and any person acting on its behalf (other than the Purchasers,
with respect to whom the Company makes no representations or
warranties) has complied with and will implement the "offering
restriction" within the meaning of such Rule 902;
(s) Within the preceding six months, none of the Company, or
any other person acting on behalf of the Company (other than the
Purchasers with respect to whom the Company makes no representations or
warranties) has offered or sold to any person any Securities, or any
securities of the same or a similar class as the Securities, other than
Securities offered or sold to the Purchasers hereunder. The Company
will take reasonable precautions designed to insure that any offer or
sale, direct or indirect, in the United States or to any U.S. person
(as defined in
5
<PAGE> 6
Rule 902 under the Act) of any Securities, or any substantially similar
security issued by the Company within six months subsequent to the date
on which the distribution of the Securities has been completed (as
notified to the Company by Goldman, Sachs & Co.), is made under
restrictions and other circumstances reasonably designed not to affect
the status of the offer and sale of the Securities in the United States
and to U.S. persons contemplated by this Agreement as transactions
exempt from the registration provisions of the Act;
(t) Neither the Company nor any of its subsidiaries does
business with the government of Cuba or with any person or affiliate
located in Cuba within the meaning of Section 517.075, Florida
Statutes;
(u) PricewaterhouseCoopers LLP, who have certified certain
financial statements of the Company and its subsidiaries, are
independent public accountants as required by the Act and the rules and
regulations of the Commission thereunder; and
(v) The Company has reviewed its operations and that of its
subsidiaries and any third parties with which the Company or any of its
subsidiaries has a material relationship to evaluate the extent to
which the business or operations of the Company or any of its
subsidiaries will be affected by the Year 2000 Problem. As a result of
such review, the Company has no reason to believe, and does not
believe, that the Year 2000 Problem will have a Material Adverse Effect
or result in any material loss or interference with the Company's
business or operations. The "Year 2000 Problem" as used herein means
any significant risk that computer hardware or software used in the
receipt, transmission, processing, manipulation, storage, retrieval,
retransmission or other utilization of data or in the operation of
mechanical or electrical systems of any kind will not, in the case of
dates or time periods occurring after December 31, 1999, function at
least as effectively as in the case of dates or time periods occurring
prior to January 1, 2000.
2. Subject to the terms and conditions herein set forth, the Company
agrees to issue and sell to each of the Purchasers, and each of the Purchasers
agrees, severally and not jointly, to purchase from the Company, at a purchase
price of 95.472% of the principal amount thereof, plus accrued interest, if any,
from June 29, 1999 to the Time of Delivery (as defined in paragraph 4)
hereunder, the principal amount of Securities set forth opposite the name of
such Purchaser in Schedule I hereto.
3. Upon the authorization by you of the release of the Securities, the
several Purchasers propose to offer the Securities for sale upon the terms and
conditions set forth in this Agreement and the Offering Circular and each
Purchaser hereby represents and warrants to, and agrees with the Company that:
(a) It will offer and sell the Securities only to:(i) persons
who it reasonably believes are "qualified institutional buyers"
("QIBS") within the meaning of Rule 144A under the Act in transactions
meeting the requirements of Rule 144A or (ii) upon the terms and
conditions set forth in Annex I to this Agreement;
6
<PAGE> 7
(b) It is an Institutional Accredited Investor within the
meaning of Rule 501 under the Act; and
(c) It will not offer or sell the Securities by any form of
general solicitation or general advertising, including but not limited
to the methods described in Rule 502(c) under the Act.
4. (a) The Securities to be purchased by each Purchaser hereunder will
be represented by one or more definitive global Securities in
book-entry form which will be deposited by or on behalf of the Company
with The Depository Trust Company ("DTC") or its designated custodian.
The Company will deliver the Securities to Goldman, Sachs & Co., for
the account of each Purchaser, against payment by or on behalf of such
Purchaser of the purchase price therefor by wire transfer of Federal
(same day) funds to the account specified by the Company at least 10
hours in advance of the closing of the offering of the Securities, by
causing DTC to credit the Securities to the account of Goldman, Sachs &
Co. at DTC. The Company will cause the certificates representing the
Securities to be made available to Goldman, Sachs & Co. for checking at
least twenty-four hours prior to the Time of Delivery (as defined
below) at the office of DTC or its designated custodian (the
"DESIGNATED OFFICE"). The time and date of such delivery and payment
shall be 9:30 a.m., New York City time, on June 29, 1999 or such other
time and date as Goldman, Sachs & Co. and the Company may agree upon in
writing. Such time and date are herein called the "TIME OF DELIVERY".
(b) The documents to be delivered at the Time of Delivery by
or on behalf of the parties hereto pursuant to Section 7 hereof,
including the cross-receipt for the Securities and any additional
documents requested by the Purchasers pursuant to Section 7(h) hereof,
will be delivered at such time and date at the offices of Latham &
Watkins, 885 Third Avenue, Suite 1000, New York, NY 10022 (the "CLOSING
LOCATION"), and the Securities will be delivered at the Designated
Office, all at the Time of Delivery. A meeting will be held at the
Closing Location at 1:00 p.m., New York City time, on June 25, 1999, at
which meeting the final drafts of the documents to be delivered
pursuant to the preceding sentence will be available for review by the
parties hereto. For the purposes of this Section 4, "NEW YORK BUSINESS
DAY" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in New York are
generally authorized or obligated by law or executive order to close.
5. The Company agrees with each of the Purchasers:
(a) To prepare the Offering Circular in a form acceptable to
you; to make no amendment or any supplement to the Offering Circular
which shall be disapproved by you promptly after reasonable notice
thereof; and to furnish you with as many copies thereof as you shall
reasonably request;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Securities for offering and sale
under the securities laws of such jurisdictions as you
7
<PAGE> 8
may reasonably request and to comply with such laws so as to permit the
continuance of sales and dealings therein in such jurisdictions for as
long as may be necessary to complete the distribution of the
Securities, provided that in connection therewith the Company shall not
be required to qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction;
(c) To furnish the Purchasers with copies of the Offering
Circular and each amendment or supplement thereto signed by an
authorized officer of the Company with the independent accountants'
report(s) in the Offering Circular, and any amendment or supplement
containing amendments to the financial statements covered by such
report(s), signed by the accountants, and additional copies thereof in
such quantities as you may from time to time reasonably request, and
if, at any time prior to the expiration of nine months after the date
of the Offering Circular, any event shall have occurred as a result of
which the Offering Circular as then amended or supplemented would
include an untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made when such
Offering Circular is delivered, not misleading, or, if for any other
reason it shall be necessary or desirable during such same period to
amend or supplement the Offering Circular, to notify you and upon your
request to prepare and furnish without charge to each Purchaser and to
any dealer in securities as many copies as you may from time to time
reasonably request of an amended Offering Circular or a supplement to
the Offering Circular which will correct such statement or omission or
effect such compliance;
(d) During the period beginning from the date hereof and
continuing until the date six months after the Time of Delivery, not to
offer, sell, contract to sell or otherwise dispose of, except as
provided hereunder any securities of the Company that are substantially
similar to the Securities;
(e) Not to be or become, at any time prior to the expiration
of three years after the Time of Delivery, an open-end investment
company, unit investment trust, closed-end investment company or
face-amount certificate company that is or is required to be registered
under Section 8 of the Investment Company Act;
(f) At any time when the Company is not subject to Section 13
or 15(d) of the Exchange Act, for the benefit of holders from time to
time of Securities, to furnish at its expense, upon request, to holders
of Securities and prospective purchasers of securities information (the
"ADDITIONAL ISSUER INFORMATION") satisfying the requirements of
subsection (d)(4)(i) of Rule 144A under the Act;
(g) If requested by you, to use its reasonable best efforts to
cause the Securities to be eligible for the PORTAL trading system of
the National Association of Securities Dealers, Inc.;
(h) To make generally available to the holders of the
Securities as soon as practicable after the end of each fiscal year an
annual report (including a balance sheet and
8
<PAGE> 9
statements of income, shareowners' equity and cash flows of the Company
and its consolidated subsidiaries certified by independent public
accountants) and, as soon as practicable after the end of each of the
first three quarters of each fiscal year (beginning with the fiscal
quarter ending after the date of the Offering Circular), to make
generally available to its shareowners consolidated summary financial
information of the Company and its subsidiaries for such quarter in
reasonable detail;
(i) During a period of three years from the date of the
Offering Circular, to furnish to you copies of all reports or other
communications (financial or other) furnished to shareowners of the
Company, and to deliver to you (i) as soon as they are available,
copies of any reports and financial statements furnished to or filed
with the Commission or any securities exchange on which the Securities
or any class of securities of the Company is listed; and (ii) such
additional information concerning the business and financial condition
of the Company as you may from time to time reasonably request (such
financial statements to be on a consolidated basis to the extent the
accounts of the Company and its subsidiaries are consolidated in
reports furnished to its shareowners generally or to the Commission);
(j) During the period of two years after the Time of Delivery,
the Company will not, and will not permit any of its "affiliates" (as
defined in Rule 144 under the Act) to, resell any of the Securities
which constitute "restricted securities" under Rule 144 that have been
reacquired by any of them;
(k) The Company shall file and use all commercially reasonable
efforts to cause to be declared or become effective under the Act, on
or prior to 180 days after the Time of Delivery, a registration
statement on Form S-4 providing for the registration of the Exchange
Securities, and the exchange of the Securities for the Exchange
Securities, all in a manner which will permit persons who acquire the
Exchange Securities to resell the Exchange Securities pursuant to
Section 4(1) of the Act;
(l) To use the net proceeds received by it from the sale of
the Securities pursuant to this Agreement in the manner specified in
the Offering Circular under the caption "Use of Proceeds".
6. The Company covenants and agrees with the several Purchasers that
the Company will pay or cause to be paid the following: (i) the fees,
disbursements and expenses of the Company's counsel and accountants in
connection with the issue of the Securities and all other expenses in connection
with the preparation, printing and filing of the Preliminary Offering Circular
and the Offering Circular and any amendments and supplements thereto and the
mailing and delivering of copies thereof to the Purchasers and dealers; (ii) the
cost of printing or producing any Agreement among Purchasers, this Agreement,
the Indenture, the Registration Rights Agreement, the Blue Sky and Legal
Investment Memoranda, closing documents (including any compilations thereof) and
any other documents in connection with the offering, purchase, sale and delivery
of the Securities; (iii) all expenses in connection with the qualification of
the Securities and the Exchange Securities for offering and sale under state
securities laws as provided in Section 5(b) hereof, including the fees and
9
<PAGE> 10
disbursements of counsel for the Purchasers in connection with such
qualification and in connection with the Blue Sky and legal investment surveys;
(iv) any fees charged by securities rating services for rating the Securities
and the Exchange Securities; (v) the cost of preparing the Securities and
Exchange Securities; (vi) the fees and expenses of the Trustee and any agent of
the Trustee and the fees and disbursements of counsel for the Trustee in
connection with the Indenture, the Securities and the Exchange Securities; (vii)
any cost incurred in connection with the designation of the Securities for
trading in PORTAL and (viii) all other costs and expenses incident to the
performance of its obligations hereunder which are not otherwise specifically
provided for in this Section. It is understood, however, that, except as
provided in this Section, and Sections 8 and 11 hereof, the Purchasers will pay
all of their own costs and expenses, including the fees of their counsel,
transfer taxes on resale of any of the Securities by them, and any advertising
expenses connected with any offers they may make.
7. The obligations of the Purchasers hereunder shall be subject, in
their discretion, to the condition that all representations and warranties and
other statements of the Company herein are, at and as of the Time of Delivery,
true and correct, the condition that the Company shall have performed all of its
obligations hereunder therefore to be performed, and the following additional
conditions:
(a) Latham & Watkins, counsel for the Purchasers, shall have
furnished to you such opinion or opinions, dated the Time of Delivery,
as you may reasonably request, and such counsel shall have received
such papers and information as they may reasonably request to enable
them to pass upon such matters;
(b) Skadden, Arps, Slate, Meagher & Flom LLP, special counsel
for the Company, shall have furnished to the Purchasers their written
opinion, dated the Time of Delivery, in form and substance reasonably
satisfactory to the Purchasers, to the effect that:
(i) Insofar as execution and delivery are matters
governed by the laws of the State of New York, this Agreement
has been duly executed and delivered by the Company;
(ii) The Securities, when issued by the Company and
duly executed and authenticated in accordance with the terms
of the Indenture, and when issued and delivered to and paid
for by the Purchasers pursuant to this Agreement, will be
valid and legally binding obligations of the Company entitled
to the benefits of the Indenture, enforceable against the
Company in accordance with their terms, except to the extent
that enforcement thereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance
or other similar laws now or hereafter in effect relating to
or affecting creditors' rights generally and (ii) general
principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity);
(iii) Insofar as execution and delivery are matters
governed by the laws of the State of New York, the Indenture
has been duly executed and delivered by the Company and is a
valid and legally binding agreement of the Company,
enforceable against the
10
<PAGE> 11
Company in accordance with its terms, except to the extent
that enforcement thereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance
or other similar laws now or hereafter in effect relating to
or affecting creditors' rights generally and (ii) general
principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity);
(iv) Insofar as execution and delivery are matters
governed by the laws of the State of New York, the
Registration Rights Agreement has been duly executed and
delivered by the Company and is a valid and legally binding
obligation of the Company, enforceable against the Company in
accordance with its terms, except to the extent that (a)
enforcement thereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance
or other similar laws now or hereafter in effect relating to
or affecting creditors' rights generally and (ii) general
principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity), and (b) the
enforceability of indemnification and contribution provisions
may be limited by Federal and state securities laws and the
policies underlying such laws;
(v) The issuance and sale of the Securities by the
Company, the execution and delivery of the Indenture, the
Registration Rights Agreement and this Agreement by the
Company, compliance by the Company with the terms thereof and
the consummation by the Company of the transactions
contemplated thereby, each in accordance with its terms, will
not (i) constitute a violation of or a default under the terms
of any Applicable Contract (except that such counsel does not
express any opinion as to any covenant, restriction or
provision of any such agreement or instrument with respect to
financial covenants, ratios or tests or any aspect of the
financial condition or results of operations of the Company or
any of its subsidiaries) or (ii) result in any contravention
of any Applicable Law or any Applicable Order. As used herein,
(a) the term "Applicable Contract" means those agreements
which have been identified to us by the Company to be all the
agreements which are material to the Company and its
subsidiaries, taken as a whole, and which are listed on
Schedule I to our opinion, (b) the term "Applicable Law" means
those laws, rules and regulations of the State of New York and
the federal laws of the United States of America, in each case
which, in our experience, are normally applicable to
transactions of the type contemplated by the Purchase
Agreement (other than the United States federal securities
laws, state securities or Blue Sky laws, antifraud laws and
the rules and regulations of the National Association of
Securities Dealers, Inc.), but without such counsel having
made any special investigation with respect to any other laws,
rules or regulations, (c) the term "Applicable Orders" means
those judgments, orders or decrees of any Governmental
Authorities specifically identified to us by the Company to be
applicable to the Company or any of its subsidiaries, as
identified on Schedule II to such counsel's opinion, and (d)
the term "Governmental Authorities" means any court,
regulatory body, administrative agency, or governmental body
of the State of New York or the United States of America
having jurisdiction over the Company or any of its
subsidiaries under Applicable Laws;
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<PAGE> 12
(vi) No consent, approval, authorization, order,
registration or qualification of or with any federal or New
York governmental agency or body or any federal or New York
court is required for the issue and sale by the Company of the
Securities and Exchange Securities and the compliance by the
Company with all the provisions of this Agreement, the
Indenture and the Registration Rights Agreement, except for
the filing of a registration statement by the Company with the
Commission under the Act pursuant to the Registration Rights
Agreement and the related qualification of the Indenture under
the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"), in connection with the registration of the
Securities or Exchange Securities and such other consents,
approvals, authorizations, registrations or qualifications as
may be required under state securities or Blue Sky laws or the
rules of the National Association of Securities Dealers, Inc.;
(vii) The statements set forth in the Offering
Circular under the caption "Description of Notes", insofar as
they purport to constitute a summary of the terms of the
documents described therein, fairly summarize the provisions
of such documents purported to be described therein in all
material respects;
(viii) Assuming (i) the accuracy of the
representations and warranties of the Company set forth in
Section 1 of this Agreement (except for clause (k) of Section
1) and of the representations, warranties and agreements of
the Purchasers set forth in Section 3 of this Agreement, (ii)
the due performance by the Company of the covenants and
agreements set forth in Section 5 of this Agreement, and (iii)
the compliance by the Company and the Purchasers with the
offering and transfer procedures and restrictions described in
the Offering Circular, the offer, sale and delivery of the
Securities to the Purchasers in the manner contemplated by
this Agreement and the Offering Circular, and the initial
resale of the Securities by the Purchasers in the manner
contemplated in the Offering Circular and this Purchase
Agreement, do not require registration under the Act, and the
Indenture does not require qualification under the Trust
Indenture Act, it being understood that such counsel does not
express any opinion as to any subsequent resale of any
Security; and
(ix) The Company is not subject to registration or
regulation as an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
Such counsel has participated in conferences with officers and
other representatives of the Company, internal counsel for the
Company, representatives of the independent accountants for
the Company, and the Purchasers and counsel for the Purchasers
at which the contents of the Offering Circular and related
matters were discussed and, although such counsel is not
passing upon, and does not assume any responsibility for, the
accuracy, completeness or fairness of the statements contained
in the Offering Circular and have made no independent check or
verification thereof (except to the extent referred to in
paragraph (vii) above), on the basis of the foregoing, no
facts have come
12
<PAGE> 13
to such counsel's attention that have led such counsel to
believe that the Offering Circular, as of its date or as of
the date of such counsel's opinion, contained or contains an
untrue statement of a material fact or omitted or omits to
state a material fact necessary in order to make the
statements therein, in light of the circumstances under which
they were made, not misleading, except that such counsel does
not express any opinion or belief with respect to the
financial statements and related notes and other financial
data included therein or excluded therefrom.
(c) Norma B. Carter, Esq., General Counsel for the Company,
shall have furnished to the Purchasers her written opinion and any
opinion on which she has relied, dated the Time of Delivery, in form
and substance reasonably satisfactory to the Purchasers, to the effect
that:
(i) This Agreement has been duly authorized, executed
and delivered by the Company;
(ii) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of New Jersey, with power and authority (corporate and
other) to own its properties and conduct its business as
described in the Offering Circular;
(iii) The Company has an authorized share
capitalization as set forth under the heading "Capitalization"
in the Offering Circular, and all of the issued shares of
capital stock of the Company have been duly and validly
authorized and issued and are fully paid and non-assessable;
(iv) The Company and each of its subsidiaries has
been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws
of each other jurisdiction in which it owns or leases
properties or conducts any business so as to require such
qualification, except where the failure to have such power and
authority or be so qualified in any such jurisdiction would
not have a Material Adverse Effect (such counsel being
entitled to rely in respect of the opinion in this clause upon
opinions of local counsel and in respect of matters of fact
upon certificates of officers of the Company, provided that
such counsel shall state that she believes that both she and
the Purchasers are justified in relying upon such opinions and
certificates);
(v) Each subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation,
except where the failure to be in good standing would not have
a Material Adverse Effect; and all of the issued shares of
capital stock of each such subsidiary have been duly and
validly authorized and issued, are fully paid and
non-assessable, and (except for directors' qualifying shares)
are owned directly or indirectly by the Company, free and
clear of all liens, encumbrances, equities or claims, other
than as set forth in the Offering Circular (such counsel being
entitled to rely in respect of the opinion in this clause upon
opinions of local counsel and in respect of matters of fact
13
<PAGE> 14
upon certificates of officers of the Company or its
subsidiaries, provided that such counsel shall state that she
believes that both she and the Purchasers are justified in
relying upon such opinions and certificates);
(vi) The issuance and sale of the Securities have
been duly authorized by the Company, and the Securities, when
issued by the Company and duly executed and authenticated in
accordance with the terms of the Indenture, and when issued
and delivered to and paid for by you pursuant to the Purchase
Agreement, will be valid and legally binding obligations of
the Company entitled to the benefits of the Indenture,
enforceable against the Company in accordance with their
terms, except to the extent that enforcement thereof may be
limited by (i) bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws now or
hereafter in effect relating to or affecting creditors' rights
generally and (ii) general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or
in equity);
(vii) The Indenture has been duly authorized,
executed and delivered by the Company and is a valid and
legally binding agreement of the Company, enforceable against
the Company in accordance with its terms, except to the extent
that enforcement thereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance
or other similar laws now or hereafter in effect relating to
or affecting creditors' rights generally and (ii) general
principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity);
(viii) The Registration Rights Agreement has been
duly authorized, executed and delivered by the Company and is
a valid and legally binding obligation of the Company,
enforceable against the Company in accordance with its terms,
except to the extent that (a) enforcement thereof may be
limited by (i) bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws now or
hereafter in effect relating to or affecting creditors' rights
generally and (ii) general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or
in equity), and (b) the enforceability of indemnification and
contribution provisions may be limited by Federal and state
securities laws and the policies underlying such laws;
(ix) Other than as set forth in the Offering
Circular, there are no legal or governmental proceedings
pending to which the Company or any of its subsidiaries is a
party or of which any property of the Company or any of its
subsidiaries is the subject which, if determined adversely to
the Company or any of its subsidiaries, would individually or
in the aggregate, have a Material Adverse Effect, and, to such
counsel's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by
others;
(x) The Exchange Securities have been duly authorized
by the Company;
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<PAGE> 15
(xi) The issuance and sale of the Securities by the
Company, the execution and delivery of the Indenture, the
Registration Rights Agreement and the Purchase Agreement by
the Company, compliance by the Company with the terms thereof
and the consummation by the Company of the transactions
contemplated thereby, each in accordance with its terms, will
not, to such counsel's knowledge, conflict with or result in a
breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument known
to such counsel to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or
assets of the Company or any of its subsidiaries is subject,
except for any such conflict, breach, violation or default
which would not have a Material Adverse Effect, or any
material adverse effect on the issuance and sale of the
Securities or the consummation of any of the transactions
contemplated hereby or by the Indenture or the Registration
Rights Agreement nor will such action result in any violation
of the provisions of (i) the Amended and Restated Certificate
of Incorporation or the Amended and Restated By-Laws of the
Company or (ii) any statute or any order, rule or regulation
of any court or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or
any of their properties, except in the case of clause (ii)
above, such violation which would not have a Material Adverse
Effect, or any material adverse effect on the issuance and
sale of the Securities or the consummation of any of the
transactions contemplated hereby or by the Indenture or the
Registration Rights Agreement; and
(xii) No consent, approval, authorization, order,
registration or qualification of or with any such court or
governmental agency or body is required for the issue and sale
of the Securities or the consummation by the Company of the
transactions contemplated by this Agreement, the Registration
Rights Agreement or the Indenture, except for the filing of a
registration statement by the Company with the Commission
under the Securities Act pursuant to the Registration Rights
Agreement and the related qualification of the Indenture under
the Trust Indenture Act in connection with the registration of
the Securities and Exchange Securities and such other
consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or
Blue Sky laws or the rules of the National Association of
Securities Dealers, Inc.
Such counsel has participated in conferences with officers and
other representatives of the Company, special counsel to the
Company, representatives of the independent accountants for
the Company, and the Purchasers and counsel for the Purchasers
at which the contents of the Offering Circular and related
matters were discussed, and, although such counsel is not
passing upon, and does not assume any responsibility for, the
accuracy, completeness or fairness of the statements contained
in the Offering Circular and have made no independent check or
verification thereof, on the basis of the foregoing, no facts
have come to such counsel's attention that have led such
counsel to believe that the Offering Circular, as of its date
or as of the date of such counsel's
15
<PAGE> 16
opinion, contained or contains an untrue statement of a
material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading,
except that such counsel need express no opinion or belief
with respect to the financial statements and related notes and
other financial data included therein or excluded therefrom.
(d) On the date of the Offering Circular prior to the
execution of this Agreement and also at the Time of Delivery,
PricewaterhouseCoopers LLP shall have furnished to you a letter or
letters, dated the respective dates of delivery thereof, in form and
substance reasonably satisfactory to you, substantially to the effect
set forth in Annex II hereto;
(e) (i) Neither the Company nor any of its subsidiaries shall
have sustained since the date of the latest audited financial
statements included in the Offering Circular any loss or interference
with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court
or governmental action, order or decree, otherwise than as set forth or
contemplated in the Offering Circular, and (ii) since the respective
dates as of which information is given in the Offering Circular there
shall not have been any change in the capital stock or long-term debt
of the Company or any of its subsidiaries or any change, or any
development involving a prospective change, in or affecting the general
affairs, management, financial position, shareowners' equity or results
of operations of the Company and its subsidiaries, otherwise than as
set forth or contemplated in the Offering Circular, the effect of
which, in any such case described in clause (i) or (ii), is in the
judgment of the Purchasers so material and adverse as to make it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Securities on the terms and in the manner contemplated
in this Agreement and in the Offering Circular;
(f) On or after the date hereof (i) no downgrading shall have
occurred in the rating accorded the Company's debt securities by any
"nationally recognized statistical rating organization", as that term
is defined by the Commission for purposes of Rule 436(g)(2) under the
Act, and (ii) no such organization shall have publicly announced that
it has under surveillance or review, with possible negative
implications, its rating of any of the Company's debt securities, other
than the negative outlook with respect to the Company assigned by
Standard & Poor's Ratings Group on June 9, 1999 and Moody's Investors
Service, Inc. on June 15, 1999;
(g) On or after the date hereof there shall not have occurred
any of the following: (i) a suspension or material limitation in
trading in securities generally on the New York Stock Exchange; (ii) a
suspension or material limitation in trading in the Company's
securities on the New York Stock Exchange; (iii) a general moratorium
on commercial banking activities declared by either Federal or New York
State authorities; (iv) the outbreak or escalation of hostilities
involving the United States or the declaration by the United States of
a national emergency or war, if the effect of any such event specified
in this clause (iv) in the judgment of the Purchasers makes it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Securities on the terms and in the manner contemplated
in the Offering Circular;
16
<PAGE> 17
or (v) the occurrence of any material adverse change in the existing
financial, political or economic conditions in the United States or
elsewhere which, in the judgment of the Purchasers, would materially
and adversely affect the financial markets or the markets for the
Securities and other debt securities;
(h) The Securities shall have been designated for trading on
PORTAL; and
(i) The Company shall have furnished or caused to be furnished
to you at the Time of Delivery certificates of officers of the Company
reasonably satisfactory to you as to the accuracy of the
representations and warranties of the Company herein at and as of such
Time of Delivery, as to the performance by the Company of all of its
obligations hereunder to be performed at or prior to such Time of
Delivery, as to the matters set forth in subsections (a) and (e) of
this Section and as to such other matters as you may reasonably
request.
8. (a) The Company will indemnify and hold harmless each Purchaser
against any losses, claims, damages or liabilities, joint or several,
to which such Purchaser may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in any
Preliminary Offering Circular or the Offering Circular, or any
amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact necessary
to make the statements therein not misleading, and will reimburse each
Purchaser for any legal or other expenses reasonably incurred by such
Purchaser in connection with investigating or defending any such action
or claim as such expenses are incurred. The Company shall not be
required to indemnify a Purchaser for any amount paid or payable by
such Purchaser in the settlement of any action, proceeding or
investigation, without the written consent of the Company, which
consent shall not be unreasonably withheld or delayed; provided,
however, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or
is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in any Preliminary Offering Circular
or the Offering Circular or any such amendment or supplement in
reliance upon and in conformity with written information furnished to
the Company by any Purchaser through Goldman, Sachs & Co. expressly for
use therein.
(b) Each Purchaser will indemnify and hold harmless the
Company against any losses, claims, damages or liabilities to which the
Company may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Offering
Circular or the Offering Circular, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact necessary to make the
statements therein not misleading, in each case to the extent, but only
to the extent, that such untrue statement or alleged untrue statement
or omission or alleged omission was made in any Preliminary Offering
Circular or the Offering Circular or any such amendment or supplement
in reliance upon and in conformity with written
17
<PAGE> 18
information furnished to the Company by such Purchaser through Goldman,
Sachs & Co. expressly for use therein; and will reimburse the Company
for any legal or other expenses reasonably incurred by the Company in
connection with investigating or defending any such action or claim as
such expenses are incurred and documented.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is
to be made against the indemnifying party under such subsection, notify
the indemnifying party in writing of the commencement thereof; but the
omission so to notify the indemnifying party shall not relieve it from
any liability which it may have to any indemnified party otherwise than
under such subsection. In case any such action shall be brought against
any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with
any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall
not, except with the consent of the indemnified party be counsel to the
indemnifying party), and, after notice from the indemnifying party to
such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such indemnified
party under such subsection for any legal expenses of other counsel or
any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall, without
the written consent of the indemnified party, effect the settlement or
compromise of, or consent to the entry of any judgment with respect to,
any pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder (whether or not
the indemnified party is an actual or potential party to such action or
claim) unless such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability
arising out of such action or claim and (ii) does not include a
statement as to, or an admission of, fault, culpability or a failure to
act, by or on behalf of any indemnified party.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party
under subsection (a) or (b) above in respect of any losses, claims,
damages or liabilities (or actions in respect thereof) referred to
therein, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Purchasers on the other from the
offering of the Securities. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law or if
the indemnified party failed to give the notice required under
subsection (c) above, then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits
but also the relative fault of the Company on the one hand and the
Purchasers on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company on the
one hand and the Purchasers on the other
18
<PAGE> 19
shall be deemed to be in the same proportion as the total net proceeds
from the offering (before deducting expenses) received by the Company
bear to the total underwriting discounts and commissions received by
the Purchasers, in each case as set forth in the Offering Circular. The
relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to
information supplied by the Company on the one hand or the Purchasers
on the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The Company and the Purchasers agree that it would not be
just and equitable if contribution pursuant to this subsection (d) were
determined by pro rata allocation (even if the Purchasers were treated
as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to
above in this subsection (d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in this
subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding
the provisions of this subsection (d), no Purchaser shall be required
to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to
investors were offered to investors exceeds the amount of any damages
which such Purchaser has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent
misrepresentation. The Purchasers' obligations in this subsection (d)
to contribute are several in proportion to their respective
underwriting obligations and not joint.
(e) The obligations of the Company under this Section 8 shall
be in addition to any liability which the Company may otherwise have
and shall extend, upon the same terms and conditions, to each person,
if any, who controls any Purchaser within the meaning of the Act; and
the obligations of the Purchasers under this Section 8 shall be in
addition to any liability which the respective Purchasers may otherwise
have and shall extend, upon the same terms and conditions, to each
officer and director of the Company and to each person, if any, who
controls the Company within the meaning of the Act.
9. (a) If any Purchaser shall default in its obligation to purchase the
Securities which it has agreed to purchase hereunder, you may in your
discretion arrange for you or another party or other parties to
purchase such Securities on the terms contained herein. If within
thirty-six hours after such default by any Purchaser you do not arrange
for the purchase of such Securities, then the Company shall be entitled
to a further period of thirty-six hours within which to procure another
party or other parties satisfactory to you to purchase such Securities
on such terms. In the event that, within the respective prescribed
periods, you notify the Company that you have so arranged for the
purchase of such Securities, or the Company notifies you that it has so
arranged for the purchase of such Securities, you or the Company shall
have the right to postpone the Time of Delivery for a period of not
more than seven days, in order to effect whatever changes may thereby
be made necessary in the Offering Circular, or
19
<PAGE> 20
in any other documents or arrangements, and the Company agrees to
prepare promptly any amendments to the Offering Circular which in your
opinion may thereby be made necessary. The term "PURCHASER" as used in
this Agreement shall include any person substituted under this Section
with like effect as if such person had originally been a party to this
Agreement with respect to such Securities.
(b) If, after giving effect to any arrangements for the
purchase of the Securities of a defaulting Purchaser or Purchasers by
you and the Company as provided in subsection (a) above, the aggregate
principal amount of such Securities which remains unpurchased does not
exceed one-eleventh of the aggregate principal amount of all the
Securities, then the Company shall have the right to require each
non-defaulting Purchaser to purchase the principal amount of Securities
which such Purchaser agreed to purchase hereunder and, in addition, to
require each non-defaulting Purchaser to purchase its pro rata share
(based on the principal amount of Securities which such Purchaser
agreed to purchase hereunder) of the Securities of such defaulting
Purchaser or Purchasers for which such arrangements have not been made;
but nothing herein shall relieve a defaulting Purchaser from liability
for its default.
(c) If, after giving effect to any arrangements for the
purchase of the Securities of a defaulting Purchaser or Purchasers by
you and the Company as provided in subsection (a) above, the aggregate
principal amount of Securities which remains unpurchased exceeds
one-eleventh of the aggregate principal amount of all the Securities,
or if the Company shall not exercise the right described in subsection
(b) above to require non-defaulting Purchasers to purchase Securities
of a defaulting Purchaser or Purchasers, then this Agreement shall
thereupon terminate, without liability on the part of any
non-defaulting Purchaser or the Company, except for the expenses to be
borne by the Company and the Purchasers as provided in Section 6 hereof
and the indemnity and contribution agreements in Section 8 hereof; but
nothing herein shall relieve a defaulting Purchaser from liability for
its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company and the several Purchasers, as set forth in
this Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Purchaser or any controlling person of any Purchaser, or the Company, or
any officer or director or controlling person of the Company, and shall survive
delivery of and payment for the Securities.
11. If this Agreement shall be terminated pursuant to Section 9 hereof,
the Company shall not then be under any liability to any Purchaser except as
provided in Sections 6 and 8 hereof; but, if for any other reason, the
Securities are not delivered by or on behalf of the Company as provided herein,
the Company will reimburse the Purchasers through you for all out-of-pocket
expenses approved in writing by you, including reasonable fees and disbursements
of counsel, reasonably incurred by the Purchasers in making preparations for the
purchase, sale and delivery of the Securities, but the Company shall then be
under no further liability to any Purchaser except as provided in Sections 6 and
8 hereof.
20
<PAGE> 21
12. In all dealings hereunder, you shall act on behalf of each of the
Purchasers, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Purchaser made or given
by you.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Purchasers shall be delivered or sent by mail, telex or
facsimile transmission to you as the representatives at 32 Old Slip, 21st Floor,
New York, New York 10005, Attention: Registration Department; and if to the
Company shall be delivered or sent by mail, telex or facsimile transmission to
the address of the Company set forth in the Offering Circular, Attention:
Corporate Secretary; provided, however, that any notice to a Purchaser pursuant
to Section 8(c) hereof shall be delivered or sent by mail, telex or facsimile
transmission to such Purchaser at its address set forth in its Purchasers'
Questionnaire, or telex constituting such Questionnaire, which address will be
supplied to the Company by you upon request. Any such statements, requests,
notices or agreements shall take effect upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the
benefit of, the Purchasers, the Company and to the extent provided in Sections 8
and 10 hereof, the officers and directors of the Company and each person who
controls the Company or any Purchaser, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. No purchaser of any of the
Securities from any Purchaser shall be deemed a successor or assign by reason
merely of such purchase.
14. Time shall be of the essence of this Agreement.
15. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such respective counterparts shall together constitute one and
the same instrument.
If the foregoing is in accordance with your understanding, please sign
and return to us four counterparts hereof, and upon the acceptance hereof by
you, on behalf of each of the Purchasers, this letter and such acceptance hereof
shall constitute a binding agreement between each of the Purchasers and the
Company. It is understood that your acceptance of this letter on behalf of each
of the Purchasers is pursuant to the authority set forth in a form of Agreement
among Purchasers, the form of which shall be submitted to the Company for
examination upon request, but without warranty on your part as to the authority
of the signers thereof.
21
<PAGE> 22
Very truly yours,
Vlasic Foods International Inc.
By: /s/ Mitchell P. Goldstein
------------------------------
Name: Mitchell P. Goldstein
Title: Vice President and Chief
Financial Officer
Accepted as of the date hereof:
Goldman, Sachs & Co.
Chase Securities Inc.
Lehman Brothers Inc.
J.P. Morgan Securities Inc.
By: /s/ Goldman, Sachs & Co.
--------------------------------
(Goldman, Sachs & Co.)
On behalf of each of the Purchasers
<PAGE> 23
SCHEDULE I
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF
SECURITIES
TO BE
PURCHASER PURCHASED
- --------- ---------
<S> <C>
Goldman, Sachs & Co. ........................................ $100,000,000.00
Chase Securities Inc. ....................................... 60,000,000.00
Lehman Brothers Inc..........................................
J.P. Morgan Securities Inc................................... 20,000,000.00
--------------
Total............................................... $200,000,000
==============
</TABLE>
<PAGE> 24
ANNEX I
(1) The Securities have not been and will not be registered under
the Act and may not be offered or sold within the United States or to, or for
the account or benefit of, U.S. persons except in accordance with Regulation S
under the Act or pursuant to an exemption from the registration requirements of
the Act. Each Purchaser represents that it has offered and sold the Securities,
and will offer and sell the Securities (i) as part of its distribution at any
time and (ii) otherwise until 40 days after the later of the commencement of the
offering and the Time of Delivery, only in accordance with Rule 903 of
Regulation S, Rule 144A or pursuant to Paragraph 2 of this Annex I under the
Act. Accordingly, each Purchaser agrees that neither it, its affiliates nor any
persons acting on its or their behalf has engaged or will engage in any directed
selling efforts with respect to the Securities, and it and they have complied
and will comply with the offering restrictions requirement of Regulation S. Each
Purchaser agrees that, at or prior to confirmation of sale of Securities (other
than a sale pursuant to Rule 144A) or pursuant to Paragraph 2 of this Annex I,
it will have sent to each distributor, dealer or person receiving a selling
concession, fee or other remuneration that purchases Securities from it during
the restricted period a confirmation or notice to substantially the following
effect:
"The Securities covered hereby have not been registered under
the U.S. Securities Act of 1933 (the "Securities Act") and may not be
offered and sold within the United States or to, or for the account or
benefit of, U.S. persons (i) as part of their distribution at any time
or (ii) otherwise until 40 days after the later of the commencement of
the offering and the closing date, except in either case in accordance
with Regulation S (or Rule 144A if available) under the Securities Act.
Terms used above have the meaning given to them by Regulation S."
Terms used in this paragraph have the meanings given to them by Regulation S.
Each Purchaser further agrees that it has not entered and will not
enter into any contractual arrangement with respect to the distribution or
delivery of the Securities, except with its affiliates or with the prior written
consent of the Company.
In addition,
(A) except to the extent permitted under U.S. Treas. Reg.
Section 1.163-5(c)(2)(i)(D) (the "D Rules"), (i) each Purchaser agrees
that it has not offered or sold, and during the restricted period will
not offer or sell, Securities in bearer form to a person who is within
the United States or its possessions or to a U.S. person, and (ii) it
has not delivered and will not deliver within the United States or its
possessions definitive Securities in bearer form that are sold during
the restricted period;
(B) each Purchaser represents and agrees that it has, and
throughout the restricted period will have, in effect procedures
reasonably designed to ensure that its employees or agents who are
directly engaged in selling Securities in bearer form are aware that
such Securities may not be offered or sold during the restricted period
to a person who is within the
1
<PAGE> 25
United States or its possessions or to a United States person, except
as permitted by the D Rules;
(C) if it is a United States person, each such Purchaser
represents that it is acquiring the Securities in bearer form for
purposes of resale in connection with their original issuance and if it
retains Securities in bearer form for its own account, it will only do
so in accordance with the requirements of U.S. Treas. Reg. Section
1.163-5(c)(2)(i)(D)(6); and
(D) with respect to each affiliate that acquires from it
Securities in bearer form for the purpose of offering or selling such
Securities during the restricted period, such Purchaser either (i)
repeats and confirms the representations and agreements contained in
clauses (A), (B) and (C) on its behalf or (ii) agrees that it will
obtain from such affiliate for the Company's benefit the
representations and agreements contained in clauses (A), (B) and (C).
Terms used in this paragraph have the meanings given to them by the United
States Internal Revenue Code and regulations thereunder, including the D Rules.
(2) Notwithstanding the foregoing, Securities in registered form
may be offered, sold and delivered by the Purchasers in the United States and to
U.S. persons pursuant to Section 3 of this Agreement without delivery of the
written statement required by paragraph (1) above.
(3) Each Purchaser further represents and agrees that (i) it has
not offered or sold and prior to the date six months after the date of issue of
the Securities will not offer or sell any Securities to persons in the United
Kingdom except to persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances which have not
resulted and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations 1995, (b) it
has complied, and will comply, with all applicable provisions of the Financial
Services Act of 1986 of Great Britain with respect to anything done by it in
relation to the Securities in, from or otherwise involving the United Kingdom,
and (c) it has only issued or passed on and will only issue or pass on in the
United Kingdom any document received by it in connection with the issuance of
the Securities to a person who is of a kind described in Article 11(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996
of Great Britain or is a person to whom the document may otherwise lawfully be
issued or passed on.
(4) Each Purchaser agrees that it will not offer, sell or deliver
any of the Securities in any jurisdiction outside the United States except under
circumstances that will result in compliance with the applicable laws thereof,
and that it will take at its own expense whatever action is required to permit
its purchase and resale of the Securities in such jurisdictions. Each Purchaser
understands that no action has been taken to permit a public offering in any
jurisdiction outside the United States where action would be required for such
purpose. Each Purchaser agrees not to cause any advertisement of the Securities
to be published in any newspaper or periodical or posted in any public place and
not to issue any circular relating to the Securities, except in any such case
with the Company's and Goldman, Sachs & Co.'s express written consent and then
only at such Purchaser's own risk and expense.
2
<PAGE> 26
ANNEX II
Pursuant to Section 7(e) of the Purchase Agreement, the accountants
shall furnish a letter to the Purchasers in the form attached hereto.
[see attached].
<PAGE> 1
EXHIBIT 4.1
VLASIC FOODS INTERNATIONAL INC.
SERIES A AND SERIES B
10 1/4% SENIOR SUBORDINATED NOTES DUE 2009
INDENTURE
Dated as of June 29, 1999
The Bank of New York
Trustee
.
<PAGE> 2
<TABLE>
<CAPTION>
CROSS-REFERENCE TABLE*
Trust Indenture
Act Section Indenture Section
<S> <C>
310 (a)(1)............................................................. 7.10
(a)(2)............................................................. 7.10
(a)(3)............................................................. N.A.
(a)(4)............................................................. N.A.
(a)(5)............................................................. 7.10
(b)................................................................ 7.10
(c)................................................................ N.A.
311 (a)................................................................ 7.11
(b)................................................................ 7.11
(c)................................................................ N.A.
312 (a)................................................................ 2.05
(b)................................................................ 11.03
(c)................................................................ 11.03
313 (a)................................................................ 7.06
(b)(2)............................................................. 7.07
(c)................................................................ 7.06;11.02
(d)................................................................ 7.06
314 (a)................................................................ 4.03;11.02
(c)(1)............................................................. 11.04
(c)(2)............................................................. 11.04
(c)(3)............................................................. N.A.
(e)................................................................ 11.05
(f)................................................................ N.A.
315 (a)................................................................ 7.01
(b)................................................................ 7.05;11.02
(c)................................................................ 7.01
(d)................................................................ 7.01
(e)................................................................ 6.11
316 (a) (last sentence)................................................ 2.09
(a)(1)(A).......................................................... 6.05
(a)(1)(B).......................................................... 6.04
(a)(2)............................................................. N.A.
(b)................................................................ 6.07
(c)................................................................ 2.12
317 (a)(1)............................................................. 6.08
(a)(2)............................................................. 6.09
(b)................................................................ 2.04
318 (a)................................................................ 11.01
(b)................................................................ N.A.
(c)................................................................ 11.01
</TABLE>
N.A. means not applicable.
* This Cross Reference Table is not part of the Indenture.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE
<S> <C> <C>
Section 1.01. Definitions ..................................................................................................... 1
Section 1.02. Other Definitions ............................................................................................... 21
Section 1.03. Incorporation by Reference of Trust Indenture Act ............................................................... 22
Section 1.04. Rules of Construction ........................................................................................... 22
ARTICLE 2 THE NOTES
Section 2.01. Form and Dating ................................................................................................. 22
Section 2.02. Execution and Authentication .................................................................................... 23
Section 2.03. Registrar and Paying Agent ...................................................................................... 24
Section 2.04. Paying Agent to Hold Money in Trust ............................................................................. 24
Section 2.05. Holder Lists .................................................................................................... 24
Section 2.06. Transfer and Exchange ........................................................................................... 25
Section 2.07. Replacement Notes ............................................................................................... 36
Section 2.08. Outstanding Notes ............................................................................................... 36
Section 2.09. Treasury Notes .................................................................................................. 37
Section 2.10. Temporary Notes ................................................................................................. 37
Section 2.11. Cancellation .................................................................................................... 37
Section 2.12. Defaulted Interest .............................................................................................. 37
Section 2.13. CUSIP Numbers ................................................................................................... 38
ARTICLE 3 REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee .............................................................................................. 38
Section 3.02. Selection of Notes to Be Redeemed ............................................................................... 38
Section 3.03. Notice of Redemption ............................................................................................ 38
Section 3.04. Effect of Notice of Redemption .................................................................................. 39
Section 3.05. Deposit of Redemption Price ..................................................................................... 39
Section 3.06. Notes Redeemed in Part .......................................................................................... 40
Section 3.07. Optional Redemption ............................................................................................. 40
Section 3.08. Mandatory Redemption ............................................................................................ 40
Section 3.09. Offer to Purchase by Application of Excess Proceeds ............................................................. 41
ARTICLE 4 COVENANTS
Section 4.01. Payment of Notes ................................................................................................ 43
Section 4.02. Maintenance of Office or Agency ................................................................................. 43
Section 4.03. Reports ......................................................................................................... 43
Section 4.04. Compliance Certificate .......................................................................................... 44
Section 4.05. Taxes ........................................................................................................... 45
Section 4.06. Stay, Extension and Usury Laws .................................................................................. 45
Section 4.07. Restricted Payments ............................................................................................. 45
Section 4.08. Dividend and Other Payment Restrictions Affecting Subsidiaries .................................................. 47
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock ...................................................... 49
Section 4.10. Asset Sales ..................................................................................................... 52
Section 4.11. Transactions with Affiliates .................................................................................... 53
Section 4.12. Liens ........................................................................................................... 54
Section 4.13. Corporate Existence ............................................................................................. 54
</TABLE>
i
<PAGE> 4
<TABLE>
<CAPTION>
<S> <C>
Section 4.14. Offer to Repurchase Upon Change of Control ...................................................................... 55
Section 4.15. Anti-layering ................................................................................................... 56
Section 4.16. Limitations on Issuances of Future Subsidiary Guarantees ........................................................ 56
Section 4.17. Payments for Consent ............................................................................................ 56
Section 4.18. Designation of Restricted and Unrestricted Subsidiaries ......................................................... 57
ARTICLE 5 SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale of Assets ........................................................................ 57
Section 5.02. Successor Corporation Substituted ............................................................................... 58
ARTICLE 6 DEFAULTS AND REMEDIES
Section 6.01. Events of Default ............................................................................................... 58
Section 6.02. Acceleration .................................................................................................... 60
Section 6.03 Other Remedies .................................................................................................. 61
Section 6.04. Waiver of Past Defaults ......................................................................................... 61
Section 6.05. Control by Majority ............................................................................................. 61
Section 6.06. Limitation on Suits ............................................................................................. 61
Section 6.07. Rights of Holders of Notes to Receive Payment ................................................................... 62
Section 6.08. Collection Suit by Trustee ...................................................................................... 62
Section 6.09. Trustee May File Proofs of Claim ................................................................................ 62
Section 6.10. Priorities ...................................................................................................... 63
Section 6.11. Undertaking for Costs ........................................................................................... 63
ARTICLE 7 TRUSTEE
Section 7.01. Duties of Trustee ............................................................................................... 64
Section 7.02. Rights of Trustee ............................................................................................... 65
Section 7.03. Individual Rights of Trustee .................................................................................... 65
Section 7.04. Trustee's Disclaimer ............................................................................................ 66
Section 7.05. Notice of Defaults .............................................................................................. 66
Section 7.06. Reports by Trustee to Holders of the Notes ...................................................................... 66
Section 7.07. Compensation and Indemnity ...................................................................................... 66
Section 7.08. Replacement of Trustee .......................................................................................... 67
Section 7.09. Successor Trustee by Merger, etc ................................................................................ 68
Section 7.10 Eligibility; Disqualification ................................................................................... 68
Section 7.11. Preferential Collection of Claims Against Company ............................................................... 69
ARTICLE 8 LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance ........................................................ 69
Section 8.02. Legal Defeasance and Discharge .................................................................................. 69
Section 8.03. Covenant Defeasance ............................................................................................. 69
Section 8.04. Conditions to Legal or Covenant Defeasance ...................................................................... 70
Section 8.05. Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions ................... 71
Section 8.06. Repayment to Company ............................................................................................ 72
Section 8.07. Reinstatement ................................................................................................... 72
ARTICLE 9 AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Notes ............................................................................. 72
Section 9.02. With Consent of Holders of Notes ................................................................................ 73
</TABLE>
ii
<PAGE> 5
<TABLE>
<CAPTION>
<S> <C>
Section 9.03. Compliance with Trust Indenture Act ............................................................................. 74
Section 9.04. Revocation and Effect of Consents ............................................................................... 75
Section 9.05. Notation on or Exchange of Notes ................................................................................ 75
Section 9.06. Trustee to Sign Amendments, etc ................................................................................. 75
ARTICLE 10 SUBORDINATION
Section 10.01. Agreement to Subordinate ....................................................................................... 75
Section 10.02. Certain Definitions ............................................................................................ 76
Section 10.03. Liquidation; Dissolution; Bankruptcy ........................................................................... 76
Section 10.04. Default on Designated Senior Debt .............................................................................. 76
Section 10.05. Acceleration of Notes .......................................................................................... 77
Section 10.06. When Distribution Must Be Paid Over ............................................................................ 77
Section 10.07. Notice by Company .............................................................................................. 78
Section 10.08. Subrogation .................................................................................................... 78
Section 10.09. Relative Rights ................................................................................................ 78
Section 10.10. Subordination May Not Be Impaired by Company ................................................................... 79
Section 10.11. Distribution or Notice to Representative ....................................................................... 79
Section 10.12. Rights of Trustee and Paying Agent ............................................................................. 79
Section 10.13. Authorization to Effect Subordination .......................................................................... 79
Section 10.14. Amendments ..................................................................................................... 80
ARTICLE 11 MISCELLANEOUS
Section 11.01. Trust Indenture Act Controls ................................................................................... 80
Section 11.02. Notices ........................................................................................................ 80
Section 11.03. Communication by Holders of Notes with Other Holders of Notes .................................................. 81
Section 11.04. Certificate and Opinion as to Conditions Precedent ............................................................. 81
Section 11.05. Statements Required in Certificate or Opinion .................................................................. 82
Section 11.06. Rules by Trustee and Agents .................................................................................... 82
Section 11.07. No Personal Liability of Directors, Officers, Employees and Stockholders ....................................... 82
Section 11.08. Governing Law .................................................................................................. 82
Section 11.09. No Adverse Interpretation of Other Agreements .................................................................. 82
Section 11.10. Successors ..................................................................................................... 83
Section 11.11. Severability ................................................................................................... 83
Section 11.12. Counterpart Originals .......................................................................................... 83
Section 11.13. Table of Contents, Headings, etc ............................................................................... 83
</TABLE>
EXHIBITS
<TABLE>
<S> <C>
Exhibit A FORM OF NOTE
Exhibit B FORM OF CERTIFICATE OF TRANSFER
Exhibit C FORM OF CERTIFICATE OF EXCHANGE
Exhibit D FORM OF CERTIFICATE OF ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
</TABLE>
iii
<PAGE> 6
INDENTURE dated as of June 29, 1999 between Vlasic Foods International
Inc., a New Jersey corporation (the "Company"), and The Bank of New York, a New
York banking corporation, as trustee (the "Trustee").
The Company and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the Holders of the 10-1/4% Series
A Senior Subordinated Notes due 2009 (the "Series A Notes") and the 10-1/4%
Series B Senior Subordinated Notes due 2009 (the "Series B Notes" and, together
with the Series A Notes, the "Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions.
"144A Global Note" means a global note substantially in the form of
Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend
and deposited with or on behalf of, and registered in the name of, the
Depositary or its nominee that will be issued in a denomination equal to the
outstanding principal amount of the Notes sold in reliance on Rule 144A.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, whether or
not such Indebtedness is incurred in connection with, or in contemplation of,
such other Person merging with or into, or becoming a Subsidiary of, such
specified Person and (ii) Indebtedness secured by a Lien encumbering any asset
acquired by such specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control,"
as used with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise; provided that beneficial ownership of 10% or more of the
Voting Stock of a Person shall be deemed to be control. For purposes of this
definition, the terms "controlling," "controlled by" and "under common control
with" shall have correlative meanings. No Person (other than the Company or any
Subsidiary of the Company) in whom a Receivables Subsidiary makes an Investment
in connection with a Qualified Receivables Transaction will be deemed to be an
Affiliate of the Company or any of its Subsidiaries solely by reason of such
Investment.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Applicable Procedures" means, with respect to any transfer or exchange
of or for beneficial interests in any Global Note, the rules and procedures of
the Depositary, Euroclear and Cedel that apply to such transfer or exchange.
"Argentine Asset Sale" means either the sale of the Argentine Assets or
the sale of the Capital Stock of any Subsidiary of the Company that owns the
Argentine Assets, in each case to a Person other than the Company or a
Subsidiary of the Company.
1
<PAGE> 7
"Argentine Assets" means the assets of the Swift-Armour Argentine beef
business.
"Attributable Debt" in respect of a sale and leaseback transaction
means, at the time of determination, the present value of the obligation of the
lessee for net rental payments during the remaining term of the lease included
in such sale and leaseback transaction including any period for which such lease
has been extended or may, at the option of the lessor, be extended. Such present
value shall be calculated using a discount rate equal to the rate of interest
implicit in such transaction, determined in accordance with GAAP.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"Beneficial Owner" has the meaning assigned to such term in Rule 13d-3
and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular "person" (as that term is used in Section 13(d)(3)
of the Exchange Act), such "person" shall be deemed to have beneficial ownership
of all securities that such "person" has the right to acquire by conversion or
exercise of other securities, whether such right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition. The terms
"Beneficially Owns" and "Beneficially Owned" shall have a corresponding meaning.
"Board of Directors" means:
(a) with respect to a corporation, the board of directors of the
corporation;
(b) with respect to a partnership, the Board of Directors of the
general partner of the partnership; and
(c) with respect to any other Person, the board or committee of such
Person serving a similar function.
"Borrowing Base" means:
(a) 75% of the face amount of all accounts receivable owned by the
Company's Foreign Restricted Subsidiaries as of the end of the most recent
fiscal quarter preceding such date that were not more than 90 days past due;
provided, however, that any accounts receivable owned by a Receivables
Subsidiary, or which the Company or any of its Restricted Subsidiaries has
agreed to transfer to a Receivables Subsidiary, shall be excluded for purposes
of determining such amount; plus
(b) 50% of the book value of all inventory owned by the Company's
Foreign Restricted Subsidiaries as of the end of the most recent fiscal quarter
preceding such date; minus
(c) the aggregate amount of accounts payable of the Company's Foreign
Restricted Subsidiaries outstanding as of the end of the most recent fiscal
quarter preceding such date, all calculated on a consolidated basis and in
accordance with GAAP.
"Broker-Dealer" has the meaning set forth in the Registration Rights
Agreement.
"Business Day" means any day other than a Legal Holiday.
2
<PAGE> 8
"Capital Lease Obligation" means, at the time any determination thereof
is to be made, the amount of the liability in respect of a capital lease that
would at that time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means:
(a) in the case of a corporation, corporate stock;
(b) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock;
(c) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited); and
(d) any other interest or participation that confers on a Person the
right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof (provided that the full
faith and credit of the United States is pledged in support thereof) having
maturities of not more than six months from the date of acquisition, (iii)
certificates of deposit and eurodollar time deposits with maturities of six
months or less from the date of acquisition, bankers' acceptances with
maturities not exceeding six months and overnight bank deposits, in each case
with any lender party to the Credit Facilities or with any domestic commercial
bank having capital and surplus in excess of $500,000,000 and a Thomson Bank
Watch Rating of "B" or better, (iv) repurchase obligations with a term of not
more than seven days for underlying securities of the types described in clauses
(ii) and (iii) above entered into with any financial institution meeting the
qualifications specified in clause (iii) above, (v) commercial paper having the
highest rating obtainable from either Moody's Investors Service, Inc. or
Standard & Poor's Rating Services and, in each case, maturing within six months
after the date of acquisition, and (vi) money market funds at least 95% of the
assets of which constitute Cash Equivalents of the kinds described in clauses
(i) through (v) of this definition.
"Cedel" means Cedel Bank, SA.
"Change of Control" means the occurrence of any of the following:
(a) the direct or indirect sale, transfer, conveyance or other
disposition (other than by way of merger or consolidation), in one or a series
of related transactions, of all or substantially all of the properties or assets
of the Company and its Restricted Subsidiaries taken as a whole to another
"person" (as that term is used in Section 13(d)(3) of the Exchange Act) other
than a Principal or a Related Party of a Principal; provided, that, as of the
date of this Indenture, the Designated Businesses would not be deemed to
constitute all or substantially all of the properties or assets of the Company
and its Restricted Subsidiaries taken as a whole;
(b) the adoption of a plan relating to the liquidation or dissolution
of the Company;
(c) the consummation of any transaction (including, without limitation,
any merger or consolidation) the result of which is that any "person" (as
defined above), other than the Principals and
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<PAGE> 9
their Related Parties, becomes the Beneficial Owner, directly or indirectly, of
more than 50% of the Voting Stock of the Company, measured by voting power
rather than number of shares; or
(d) the first day on which a majority of the members of the Board of
Directors of the Company are not Continuing Directors.
"Company" means Vlasic Foods International Inc., and any and all
successors thereto.
"Consolidated Cash Flow" means, with respect to any specified Person
for any period, the Consolidated Net Income of such Person for such period plus:
(a) provision for taxes based on earnings of such Person and its
Restricted Subsidiaries for such period, to the extent that such provision for
taxes on earnings was deducted in computing such Consolidated Net Income; plus
(b) consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued and whether or not
capitalized (including, without limitation, amortization of debt issuance costs
and original issue discount, non-cash interest payments, the interest component
of any deferred payment obligations, the interest component of all payments
associated with Capital Lease Obligations, imputed interest with respect to
Attributable Debt, commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers' acceptance financings, and the effect of
all payments made or received pursuant to Hedging Obligations of the kind
referred to in clauses (a) and (b) of the definition of Hedging Obligations), to
the extent that any such expense was deducted in computing such Consolidated Net
Income; plus
(c) all unusual or nonrecurring charges occurring prior to the first
anniversary of the date of this Indenture of the kind referred to in the
footnote to Adjusted EBITDA appearing in the Summary Financial Information in
the Offering Circular; plus
(d) depreciation, amortization (including amortization of goodwill and
other intangibles but excluding amortization of prepaid cash expenses that were
paid in a prior period) and other non-cash expenses (excluding any such non-cash
expense to the extent that it represents an accrual of or reserve for cash
expenses in any future period or amortization of a prepaid cash expense that was
paid in a prior period) of such Person and its Restricted Subsidiaries for such
period to the extent that such depreciation, amortization and other non-cash
expenses were deducted in computing such Consolidated Net Income; minus
(e) non-cash items increasing such Consolidated Net Income for such
period, other than the accrual of revenue in the ordinary course of business;
in each case, on a consolidated basis and determined in accordance with
GAAP.
"Consolidated Net Income" means, with respect to any specified Person
for any period, the aggregate of the Net Income of such Person and its
Restricted Subsidiaries for such period, on a consolidated basis, determined in
accordance with GAAP; provided that:
(a) the (i) Net Income (but not loss) of any Person that is not a
Subsidiary or that is accounted for by the equity method of accounting shall be
included only to the extent of the amount of dividends or
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<PAGE> 10
distributions paid in cash to the specified Person or a Wholly Owned Restricted
Subsidiary thereof and (ii) the Net Income (but not loss) of any Unrestricted
Subsidiary shall be excluded, whether or not distributed to the specified Person
or one of its Subsidiaries;
(b) the Net Income of any Restricted Subsidiary shall be excluded to
the extent that the declaration or payment of dividends or similar distributions
by that Restricted Subsidiary of that Net Income is not at the date of
determination permitted without any prior governmental approval (that has not
been obtained) or, directly or indirectly, by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Subsidiary or its stockholders;
(c) the Net Income of any Person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition shall be
excluded; and
(d) the cumulative effect of a change in accounting principles shall be
excluded.
"Consolidated Net Tangible Assets" means, as of any date, the total
consolidated assets of the Company and its Restricted Subsidiaries, less the
total intangible assets of the Company and its Restricted Subsidiaries, as shown
on the most recent internal consolidated balance sheet of the Company that was
prepared in accordance with GAAP.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Company who (i) was a member of such
Board of Directors on the date of this Indenture or (ii) was nominated for
election or elected to such Board of Directors with the approval of a majority
of the Continuing Directors who were members of such Board at the time of such
nomination or election.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 11.02 hereof or such other address as to which the
Trustee may give notice to the Company.
"Credit Facilities" means, one or more debt facilities (including,
without limitation, the Senior Credit Facility) or commercial paper facilities,
in each case with banks or other institutional lenders providing for revolving
credit loans, term loans, receivables financing (including through the sale of
receivables to such lenders or to special purpose entities formed to borrow from
such lenders against such receivables) or letters of credit, in each case, as
amended, restated, modified, renewed, refunded, replaced or refinanced in whole
or in part from time to time.
"Custodian" means the Trustee, as custodian with respect to the Notes
in global form, or any successor entity thereto.
"Default" means any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.
"Definitive Note" means a certificated Note registered in the name of
the Holder thereof and issued in accordance with Section 2.06 hereof,
substantially in the form of Exhibit A hereto except that such Note shall not
bear the Global Note Legend and shall not have the "Schedule of Exchanges of
Interests in the Global Note" attached thereto.
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<PAGE> 11
"Depositary" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.03 hereof as
the Depositary with respect to the Notes, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.
"Designated Businesses" means all of the Company's businesses other
than its United States pickle and pickled products businesses and its United
States frozen foods businesses.
"Disinterested Director" means, as used with reference to Section 4.11,
a member of the Board of Directors who does not have any material direct or
indirect financial interest (other than an interest arising solely from the
beneficial ownership of Capital Stock of the Company) in or with respect to the
particular transaction or series of transactions, if any, that is subject to
approval by a majority of the Disinterested Directors pursuant to such covenant.
"Disqualified Stock" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the holder
thereof, in whole or in part, on or prior to the date that is 91 days after the
date on which the Notes mature. Notwithstanding the preceding sentence, any
Capital Stock that would constitute Disqualified Stock solely because the
holders thereof have the right to require the Company to repurchase such Capital
Stock upon the occurrence of a change of control or an asset sale shall not
constitute Disqualified Stock if the terms of such Capital Stock provide that
the Company may not repurchase or redeem any such Capital Stock pursuant to such
provisions unless such repurchase or redemption complies with Section 4.07 of
this Indenture.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear system.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Notes" means the Notes issued in the Exchange Offer pursuant
to Section 2.06(f) hereof.
"Exchange Offer" has the meaning set forth in the Registration Rights
Agreement.
"Exchange Offer Registration Statement" has the meaning set forth in
the Registration Rights Agreement.
"Existing Employment Arrangements" means the Director Compensation
Plan, Deferred Compensation Plan, Supplemental Employees' Retirement Plan,
Mid-Career Hire Pension Agreement with Robert F. Bernstock, Special Severance
Protection Program, Severance Protection Agreement with Robert F. Bernstock,
Retiree Medical Plan for Union Employees, Retiree Medical Plan for Non-Union
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<PAGE> 12
Hourly Employees and Retiree Medical Plan for Salaried Employees, as the same
are in effect on the date of this Indenture, and as thereafter amended in the
ordinary course of business.
"Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries (other than Indebtedness under a Credit Facility) in existence on
the date of this Indenture, until such amounts are repaid or refinanced with
Permitted Refinancing Indebtedness.
"Financial Officer" means the chief financial officer, chief accounting
officer or treasurer of the Company.
"Fixed Charges" means, with respect to any specified Person or any of
its Restricted Subsidiaries for any period, the sum, without duplication, of:
(a) the consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued, including, without
limitation, amortization of debt issuance costs and original issue discount,
non-cash interest payments, the interest component of any deferred payment
obligations, the interest component of all payments associated with Capital
Lease Obligations, imputed interest with respect to Attributable Debt,
commissions, discounts and other fees and charges incurred in respect of letter
of credit or bankers' acceptance financings, and net of the effect of all
payments made or received pursuant to Hedging Obligations; plus
(b) the consolidated interest of such Person and its Restricted
Subsidiaries that was capitalized during such period; plus
(c) any interest expense on Indebtedness of another Person that is
Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a
Lien on assets of such Person or one of its Restricted Subsidiaries, whether or
not such Guarantee or Lien is called upon; plus
(d) the product of (i) all dividends, whether paid or accrued, whether
or not in cash, on any series of Preferred Stock of such Person or any of its
Restricted Subsidiaries, other than dividends on Equity Interests payable solely
in Equity Interests of the Company (other than Disqualified Stock) or to the
Company or a Restricted Subsidiary of the Company, times (ii) a fraction, the
numerator of which is one and the denominator of which is one minus the then
current combined federal, state and local statutory tax rate of such Person,
expressed as a decimal,
in each case, on a consolidated basis and in accordance with GAAP.
"Fixed Charge Coverage Ratio" means with respect to any specified
Person and its Restricted Subsidiaries for any period, the ratio of the
Consolidated Cash Flow of such Person and its Restricted Subsidiaries for such
period to the Fixed Charges of such Person and its Restricted Subsidiaries for
such period. In the event that the specified Person or any of its Restricted
Subsidiaries incurs, assumes, Guarantees, repays, repurchases or redeems any
Indebtedness (other than ordinary working capital borrowings) or issues,
repurchases or redeems Preferred Stock subsequent to the commencement of the
period for which the Fixed Charge Coverage Ratio is being calculated and on or
prior to the date on which the event for which the calculation of the Fixed
Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge
Coverage Ratio shall be calculated giving pro forma effect to such incurrence,
assumption, Guarantee, repayment, repurchase or redemption of Indebtedness, or
such
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<PAGE> 13
issuance, repurchase or redemption of Preferred Stock, and the use of the
proceeds therefrom, as if the same had occurred at the beginning of the
applicable four-quarter reference period.
In addition, for purposes of calculating the Fixed Charge Coverage
Ratio:
(a) acquisitions that have been made by the specified Person or any of
its Restricted Subsidiaries, including through mergers or consolidations and
including any related financing transactions, during the four-quarter reference
period or subsequent to such reference period and on or prior to the Calculation
Date shall be given pro forma effect as if they had occurred on the first day of
the four-quarter reference period and Consolidated Cash Flow for such reference
period shall be calculated (i) to include the Consolidated Cash Flow of the
acquired entities on a pro forma basis (including the incurrence of any
Indebtedness and including pro forma expense and cost reductions) and (ii) to
give effect to any cost savings realized by the Company within six months of
such acquisition as if they had been realized at the beginning of the
four-quarter reference period, and (iii) without giving effect to clause (c) of
the proviso set forth in the definition of Consolidated Net Income;
(b) the Consolidated Cash Flow attributable to discontinued operations,
as determined in accordance with GAAP, and operations or businesses disposed of
prior to the Calculation Date, shall be excluded; and
(c) the Fixed Charges attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses disposed of
prior to the Calculation Date, shall be excluded, but only to the extent that
the obligations giving rise to such Fixed Charges will not be obligations of the
specified Person or any of its Subsidiaries following the Calculation Date.
For purposes of this definition, whenever pro forma effect is to be given to an
acquisition, the amount of income or earnings relating thereto and the amount of
consolidated interest expense associated with any Indebtedness incurred in
connection therewith, the pro forma calculations shall be determined in good
faith by a responsible financial or accounting officer of the Company.
"Foreign Restricted Subsidiary" means any Restricted Subsidiary that is
incorporated in a jurisdiction outside of the United States or the District of
Columbia.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the date of this Indenture.
"Global Notes" means, individually and collectively, each of the
Restricted Global Notes and the Unrestricted Global Notes, substantially in the
form of Exhibit A hereto issued in accordance with Section 2.01, 2.06(b)(iv),
2.06(d)(ii) or 2.06(f) hereof.
"Global Note Legend" means the legend set forth in Section 2.06(g)(ii),
which is required to be placed on all Global Notes issued under this Indenture.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America, and the payment for which the
United States pledges its full faith and credit.
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<PAGE> 14
"Guarantee" means a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof, of all or any part of any Indebtedness.
"Hedging Obligations" means, with respect to any specified Person, the
obligations of such Person under:
(a) interest rate swap agreements, interest rate cap agreements and
interest rate collar agreements;
(b) other agreements or arrangements designed to protect such Person
against fluctuations in interest rates;
(c) agreements or arrangements designed to protect such person against
exchange rate risk with respect to any agreement or indebtedness of such Person
payable in a currency other than U.S. dollars; and
(d) agreements or arrangements designed to protect such person against
commodities risk relating to commodities agreements, entered into in the
ordinary course of business, for the purchase of raw material used by the
Company and its Restricted Subsidiaries.
"Holder" means a Person in whose name a Note is registered.
"Indebtedness" means, with respect to any specified Person, any
indebtedness of such Person, whether or not contingent, in respect of:
(a) borrowed money;
(b) evidenced by bonds, notes, debentures or similar instruments or
letters of credit (or reimbursement agreements in respect thereof);
(c) banker's acceptances;
(d) representing Capital Lease Obligations;
(e) the balance deferred and unpaid of the purchase price of any
property, except any such balance that constitutes an accrued expense or trade
payable; or
(f) representing any Hedging Obligations,
if and to the extent any of the preceding items (other than letters of credit
and Hedging Obligations) would appear as a liability upon a balance sheet of the
specified Person prepared in accordance with GAAP. In addition, the term
"Indebtedness" includes all Indebtedness of others secured by a Lien on any
asset of the specified Person (whether or not such Indebtedness is assumed by
the specified Person) and, to the extent not otherwise included, the Guarantee
by the specified Person of any indebtedness of any other Person.
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<PAGE> 15
The amount of any Indebtedness outstanding as of any date shall be:
(a) the accreted value thereof, in the case of any Indebtedness issued
with original issue discount; and
(b) the principal amount thereof, together with any interest thereon
that is more than 30 days past due, in the case of any other Indebtedness; and
(c) for purposes of calculating the amount of Indebtedness of any
Receivables Subsidiaries, the Receivables Financing Amount relating thereto.
"Indenture" means this Indenture, as amended or supplemented from time
to time.
"Indirect Participant" means a Person who holds a beneficial interest
in a Global Note through a Participant.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, who are not also QIBs.
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including Guarantees or other obligations), advances or capital
contributions (excluding commission, payroll, travel, employee transfer
assistance loans and similar loans and advances to directors, officers,
employees, consultants and stockholders made in the ordinary course of business
and excluding loans, advances, prepayments or other credits to co-packers,
growers, suppliers and customers in the ordinary course of business), purchases
or other acquisitions for consideration of Indebtedness, Equity Interests or
other securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP. If the Company
or any Restricted Subsidiary of the Company sells or otherwise disposes of any
Equity Interests of any direct or indirect Restricted Subsidiary of the Company
such that, after giving effect to any such sale or disposition, such Person is
no longer a Restricted Subsidiary of the Company, the Company shall be deemed to
have made an Investment on the date of any such sale or disposition equal to the
fair market value of the Equity Interests of such Restricted Subsidiary not sold
or disposed of in an amount determined as provided in the final paragraph of
Section 4.07.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York, the State of New Jersey or at a place of
payment are authorized by law, regulation or executive order to remain closed.
If a payment date is a Legal Holiday at a place of payment, payment may be made
at that place on the next succeeding day that is not a Legal Holiday, and no
interest shall accrue on such payment for the intervening period.
"Letter of Transmittal" means the letter of transmittal to be prepared
by the Company and sent to all Holders of the Notes for use by such Holders in
connection with the Exchange Offer.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law,
including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and, except
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in connection with any Qualified Receivables Transaction, any filing of or
agreement to give any financing statement under the Uniform Commercial Code (or
equivalent statutes) of any jurisdiction.
"Net Income" means, with respect to any specified Person, the net
earnings (loss) of such Person, determined in accordance with GAAP and before
any reduction in respect of Preferred Stock dividends, excluding, however:
(a) any gain or loss, together with any related provision for taxes on
such gain or loss, realized in connection with: (i) any Asset Sale (including,
without limitation, dispositions pursuant to sale and leaseback transactions);
or (ii) the disposition of any securities by such Person or any of its
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries;
(b) any extraordinary gain or loss, together with any related provision
for taxes on such extraordinary gain or loss;
(c) any exchange or translation losses on foreign currencies; and
(d) any non-capitalized transaction costs incurred in connection with
actual or proposed financings, acquisitions or divestitures.
"Net Proceeds" means the aggregate cash proceeds received by the
Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
the direct costs relating to such Asset Sale, including, without limitation,
legal, accounting and investment banking fees, and sales commissions, and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof, in each case, after taking into account any available tax
credits or deductions and any tax sharing arrangements, and amounts required to
be applied to the repayment of Indebtedness, other than Senior Debt secured by a
Lien on the asset or assets that were the subject of such Asset Sale, or applied
to the payment of post-closing adjustments.
"Non-Recourse Debt" means Indebtedness:
(a) as to which neither the Company nor any of its Restricted
Subsidiaries (i) provides credit support of any kind (including any undertaking,
agreement or instrument that would constitute Indebtedness), (ii) is directly or
indirectly liable as a guarantor or otherwise, or (iii) constitutes the lender;
(b) no default with respect to which (including any rights that the
holders thereof may have to take enforcement action against an Unrestricted
Subsidiary) would permit upon notice, lapse of time or both any holder of any
other Indebtedness (other than the Notes) of the Company or any of its
Restricted Subsidiaries to declare a default on such other Indebtedness or cause
the payment thereof to be accelerated or payable prior to its stated maturity;
and
(c) as to which the lenders have been notified in writing that they
will not have any recourse to the stock or assets of the Company or any of its
Restricted Subsidiaries.
"Non-U.S. Person" means a Person who is not a U.S. Person.
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<PAGE> 17
"Notes" has the meaning assigned to it in the preamble to this
Indenture.
"Obligations" means any principal, (and premium, if any), interest,
penalties, fees, indemnifications, reimbursements, damages and other liabilities
payable under the documentation governing any Indebtedness.
"Offering" means the offering of the Notes by the Company.
"Offering Circular" means the final offering circular dated June 22,
1999 relating to the Offering.
"Officer" means, with respect to any Person, the Chairman of the Board,
the Chief Executive Officer, the President, the Chief Operating Officer, the
Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller,
the Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the principal accounting
officer or the principal legal officer of the Company, that meets the
requirements of Section 11.05 hereof.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
11.05 hereof. The counsel may be an employee of or counsel to the Company, any
Subsidiary of the Company or the Trustee.
"Participant" means, with respect to the Depositary, Euroclear or
Cedel, a Person who has an account with the Depositary, Euroclear or Cedel,
respectively (and, with respect to DTC, shall include Euroclear and Cedel).
"Permitted Business" means any food or consumer products business or
such other business activities which are incidental or related thereto.
"Permitted Investment" means:
(a) any Investment in the Company or in a Restricted Subsidiary of the
Company that is not a Receivables Subsidiary;
(b) any Investment in Cash Equivalents;
(c) any Investment by the Company or any Subsidiary of the Company in a
Person, if as a result of such Investment:
(i) such Person becomes a Restricted Subsidiary of the
Company; or
(ii) such Person is merged, consolidated or amalgamated with
or into, or transfers or conveys substantially all of its assets to, or
is liquidated into, the Company or a Wholly Owned Restricted Subsidiary
of the Company;
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<PAGE> 18
(d) any Investment made as a result of the receipt of non-cash
consideration from an Asset Sale that was made pursuant to and in compliance
with Section 4.10 of this Indenture;
(e) any acquisition of assets solely in exchange for the issuance of
Equity Interests (other than Disqualified Stock) of the Company;
(f) Hedging Obligations;
(g) receivables owing to the Company or any of its Restricted
Subsidiaries, if created or acquired in the ordinary course of business and
payable or dischargeable in accordance with customary trade terms;
(h) loans or advances to officers, directors or employees for purposes
of purchasing the Company's common stock in an aggregate amount outstanding at
any one time not to exceed $5 million and other loans and advances to officers,
directors or employees made in the ordinary course of business of the Company or
such Restricted Subsidiary;
(i) stock, obligations or securities received in settlement of debts
created in the ordinary course of business and owing to the Company or any of
its Restricted Subsidiaries or in satisfaction of judgments or claims;
(j) Investments in connection with pledges, deposits, payments or
performance bonds made or given in the ordinary course of business in connection
with or to secure statutory, regulatory or similar obligations, including
obligations under health, safety or environmental obligations;
(k) the acquisition by a Receivables Subsidiary in connection with a
Qualified Receivables Transaction of Equity Interests of a trust or other Person
established by such Receivables Subsidiary to effect such Qualified Receivables
Transaction; and any other Investment by the Company or a Restricted Subsidiary
of the Company in a Receivables Subsidiary or any Investment by a Receivables
Subsidiary in any other Person in connection with a Qualified Receivables
Transaction, provided that such other Investment is in the form of a note or
other instrument that the Receivables Subsidiary or other Person is required to
repay as soon as practicable from available cash collections less amounts
required to be established as reserves pursuant to contractual agreements with
entities that are not Affiliates of the Company entered into as part of a
Qualified Receivables Transaction;
(l) contributions to trusts to fund payments required by the terms of
the Existing Employment Arrangements; and
(m) other Investments in any Person having an aggregate fair market
value (measured on the date each such Investment was made and without giving
effect to subsequent changes in value), when taken together with all other
Investments made pursuant to this clause (m) since the date of this Indenture,
not to exceed the greater of (i) $10.0 million; and (ii) 2.0% of Consolidated
Net Tangible Assets.
"Permitted Liens" means:
(a) Liens securing Senior Debt that was permitted by the terms of this
Indenture to be incurred;
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(b) Liens in favor of the Company or any Restricted Subsidiary;
(c) Liens on property of a Person existing at the time such Person is
merged with or into or consolidated with the Company or any Subsidiary of the
Company; provided that such Liens were in existence prior to the contemplation
of such merger or consolidation and do not extend to any assets other than those
of the Person merged into or consolidated with the Company or the Subsidiary;
(d) Liens on property existing at the time of acquisition thereof by
the Company or any Subsidiary of the Company, provided that such Liens were in
existence prior to the contemplation of such acquisition;
(e) Liens on property of a Person existing at the time such Person
becomes a Subsidiary of the Company, provided that such Liens were in existence
prior to the contemplation of such event;
(f) Liens to secure the performance of statutory obligations, surety or
appeal bonds, performance bonds or other obligations of a like nature incurred
in the ordinary course of business;
(g) Liens securing Indebtedness of Subsidiaries that was permitted by
the terms of this Indenture to be incurred;
(h) Liens existing on the date of this Indenture;
(i) Liens for taxes, assessments or governmental charges or claims that
are not yet delinquent or that are being contested in good faith by appropriate
proceedings promptly instituted and diligently concluded, provided that any
reserve or other appropriate provision as shall be required in conformity with
GAAP shall have been made therefor;
(j) Liens on assets of Unrestricted Subsidiaries that secure
Non-Recourse Debt of Unrestricted Subsidiaries;
(k) Liens encumbering deposits made to secure obligations arising from
statutory, regulatory, contractual or warranty requirements of the Company or
any of its Restricted Subsidiaries, including rights of offset and set-off;
(l) Liens securing Hedging Obligations which Hedging Obligations relate
to Indebtedness that is otherwise permitted under this Indenture;
(m) Liens of the Company or any Subsidiary of the Company with respect
to obligations that do not exceed $5.0 million at any one time outstanding;
(n) Liens securing Permitted Refinancing Indebtedness incurred to
extend, refinance, renew, replace, defease or refund secured Indebtedness where
the Liens securing the Indebtedness being refinanced were permitted under this
Indenture;
(o) any interest or title of a lessor under any Capital Lease
Obligation;
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<PAGE> 20
(p) Liens securing reimbursement obligations with respect to commercial
letters of credit which encumber documents and other property relating to such
letters of credit and products and proceeds thereof;
(q) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customer duties in connection with the
importation of goods;
(r) Liens on assets of the Company or a Receivables Subsidiary incurred
in connection with a Qualified Receivables Transaction; and
(s) Liens arising out of the refinancing, extension, renewal or
refunding of any Indebtedness permitted by this Indenture that is secured by any
Lien permitted by (a) through (r) above.
"Permitted Refinancing Indebtedness" means any Indebtedness of the
Company or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries
(other than intercompany Indebtedness); provided that:
(a) the principal amount (or accreted value, if applicable) of such
Permitted Refinancing Indebtedness does not exceed the principal amount (or
accreted value, if applicable), of the Indebtedness so extended, refinanced,
renewed, replaced, defeased or refunded (plus all accrued interest thereon and
the amount of all customary expenses and premiums incurred in connection
therewith);
(b) such Permitted Refinancing Indebtedness has a final maturity date
that is the same as or later than the final maturity date of, and has a Weighted
Average Life to Maturity equal to or greater than the Weighted Average Life to
Maturity of, the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded;
(c) if the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded is subordinated in right of payment to the Notes, such
Permitted Refinancing Indebtedness has a final maturity date that is the same as
or later than the final maturity date of, and is subordinated in right of
payment to, the Notes on terms at least as favorable taken as a whole (as
determined in the good faith judgment of the Company's Board of Directors) to
the Holders of Notes as those contained in the documentation governing the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; and
(d) such Indebtedness is incurred either by the Company or by the
Restricted Subsidiary who is the obligor on the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization, government or agency or political subdivision
thereof or any other entity.
"Preferred Stock" means any Equity Interest with preferential rights of
payment with respect to dividends or upon liquidation, dissolution or winding
up.
"Principals" means (a) Bennett Dorrance, the grandson of Dr. John T.
Dorrance, (b) Mary Alice Malone, the granddaughter of Dr. John T. Dorrance, (c)
the Major Stockholders' Voting Trust,
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<PAGE> 21
formed on June 2, 1990 by certain descendants, spouses, fiduciaries and a
related foundation of Dr. John T. Dorrance, and (d) any and all members of the
Major Stockholders' Voting Trust, whether the trust be in effect or following
its termination, including, but not limited to, the Dorrance H. Hamilton Trust,
Hope H. van Beuren and John A. van Beuren Trust.
"Private Placement Legend" means the legend set forth in Section
2.06(g)(i) to be placed on all Notes issued under this Indenture except where
otherwise permitted by the provisions of this Indenture.
"Public Equity Offering" means any issuance of common stock by the
Company that is registered pursuant to the Securities Act, other than issuances
registered on Form S-8 and other issuances of common stock pursuant to employee
benefit plans of the Company.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Qualified Receivables Transaction" means any transaction or series of
transactions entered into by the Company or any of its Subsidiaries pursuant to
which the Company or any of its Subsidiaries sells, conveys or otherwise
transfers to (a) a Receivables Subsidiary (in the case of a transfer by the
Company or any of its Subsidiaries) and (b) any other Person (in the case of a
transfer by a Receivables Subsidiary), or grants a security interest in, any
accounts receivable (whether now existing or arising in the future) of the
Company or any of its Subsidiaries, and any assets related thereto including,
without limitation, all collateral securing such accounts receivable, all
contracts and all guarantees or other obligations in respect of such accounts
receivable, proceeds of such accounts receivable and other assets which are
customarily transferred or in respect of which security interests are
customarily granted in connection with asset securitization transactions
involving accounts receivable.
"Receivables Financing Amount" means at any date, with respect to any
Qualified Receivables Transaction, the sum on such date of (a) the aggregate
uncollected balances of accounts receivable transferred ("Transferred
Receivables") in such Qualified Receivables Transaction plus (b) the aggregate
amount of all collections of Transferred Receivables theretofore received by the
Person to whom accounts receivable were transferred in such Qualified
Receivables Transaction that have not yet been remitted to the Company, net of
all reserves and holdbacks retained by or for the benefit of such transferee and
net of any interest retained by the Company and reasonable costs and expenses
(including fees and commissions and taxes other than income taxes) incurred by
the Company in connection therewith and not payable to any Affiliate of the
Company.
"Receivables Subsidiary" means a Subsidiary of the Company which
engages in no activities other than in connection with the financing or sale of
accounts receivable and which is designated by the Board of Directors of the
Company (as provided below) as a Receivables Subsidiary (a) no portion of the
Indebtedness or any other Obligations (contingent or otherwise) of which (i) is
guaranteed by the Company or any Subsidiary of the Company (excluding guarantees
of Obligations (other than the principal of, and interest on, Indebtedness)
pursuant to representations, warranties, covenants (including repurchase
obligations) and indemnities entered into in the ordinary course of business in
connection with a Qualified Receivables Transaction), (ii) is recourse to or
obligates the Company or any Subsidiary of the Company in any way other than
pursuant to representations, warranties, covenants (including repurchase
obligations) and indemnities entered into in the ordinary course of business in
connection with a Qualified Receivables Transaction or (iii) subjects any
property or asset of the Company or any Subsidiary of the Company (other than
accounts receivable and related assets as provided in the
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<PAGE> 22
definition of "Qualified Receivables Transaction"), directly or indirectly,
contingently or otherwise, to the satisfaction thereof, other than pursuant to
representations, warranties, covenants (including repurchase obligations) and
indemnities entered into in the ordinary course of business in connection with a
Qualified Receivables Transaction, (b) with which neither the Company nor any
Subsidiary of the Company has any material contract, agreement, arrangement or
understanding other than on terms no less favorable to the Company or such
Subsidiary than those that might be obtained at the time from Persons who are
not Affiliates of the Company, other than fees payable in the ordinary course of
business in connection with servicing accounts receivable and related assets and
(c) with which neither the Company nor any Subsidiary of the Company has any
obligation to maintain or preserve such Subsidiary's financial condition or
cause such Subsidiary to achieve certain levels of operating results. Any such
designation by the Board of Directors of the Company will be evidenced to the
Trustee by filing with the Trustee a certified copy of the resolution of the
Board of Directors of the Company giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
foregoing conditions.
"Registration Rights Agreement" means the Exchange and Registration
Rights Agreement, dated as of June 29, 1999, by and among the Company and the
other parties named on the signature pages thereof, as such agreement may be
amended, modified or supplemented from time to time.
"Regulation S" means Regulation S promulgated under the Securities Act.
"Regulation S Global Note" means a global note substantially in the
form of Exhibit A hereto bearing the Global Note Legend and the Private
Placement Legend and deposited with or on behalf of, and registered in the name
of, the Depositary or its nominee that will be issued in a denomination equal to
the outstanding principal amount of the Notes sold in reliance on Rule 903 of
Regulation S.
"Related Party" means:
(a) any controlling stockholder, 80% (or more) owned Subsidiary, or
immediate family member (in the case of an individual) of any Principal; or
(b) any trust, corporation, partnership or other entity, the
beneficiaries, stockholders, partners, owners or Persons beneficially holding an
80% or more controlling interest of which consist of any one or more Principals
and/or such other Persons referred to in the immediately preceding clause (a).
"Responsible Officer," when used with respect to the Trustee, means any
officer within the corporate trust department of the Trustee (or any successor
group of the Trustee) including any vice president, assistant vice president,
assistant secretary, assistant treasurer, trust officer or any other officer of
the Trustee customarily performing functions similar to those performed by any
of the above designated officers and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of his knowledge of and familiarity with the particular subject and who
shall have direct responsibility for the administration of this Indenture.
"Restricted Definitive Note" means a Definitive Note bearing the
Private Placement Legend.
"Restricted Global Note" means a Global Note bearing the Private
Placement Legend.
"Restricted Investment" means any Investment other than a Permitted
Investment.
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<PAGE> 23
"Restricted Period" means the 40-day restricted period as defined in
Regulation S.
"Restricted Subsidiary" of a Person means any Subsidiary of the
referent Person that is not an Unrestricted Subsidiary.
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 903" means Rule 903 promulgated under the Securities Act.
"Rule 904" means Rule 904 promulgated the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Credit Facility" means that certain Amended and Restated Credit
Agreement, dated as of September 30, 1998, by and among the Company, the banks
party thereto, The Chase Manhattan Bank and Morgan Guaranty Trust Company of New
York, as amended by Amendment No. 1 to Amended and Restated Credit Agreement,
dated as of June 9, 1999, by and among the Company, the banks party thereto, The
Chase Manhattan Bank and Morgan Guaranty Trust Company of New York, providing
for term loans and revolving credit borrowings, including any related notes,
guarantees, collateral documents, instruments and agreements executed in
connection therewith, and in each case as amended, modified, renewed, refunded,
replaced or refinanced from time to time.
"Shelf Registration Statement" means the Shelf Registration Statement
as defined in the Registration Rights Agreement.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1 - 02 of Regulation S -
X, promulgated pursuant to the Securities Act, as such Regulation is in effect
on the date of this Indenture.
"Special Interest" means all special interest then owing pursuant to
Section 2 of the Registration Rights Agreement.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any specified Person:
(a) any corporation, association or other entity of which more than 50%
of the total voting power of shares of Capital Stock entitled (without regard to
the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
18
<PAGE> 24
indirectly, by such Person or one or more of the other Subsidiaries of that
Person (or a combination thereof); and
(b) any partnership (i) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (ii)
the only general partners of which are such Person or one or more Subsidiaries
of such Person (or any combination thereof).
"Swift-Armour" means Swift-Armour SA Argentina, a wholly owned
Subsidiary of the Company.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA, except as provided in Section 9.03 hereof.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"Unrestricted Definitive Note" means one or more Definitive Notes that
do not bear and are not required to bear the Private Placement Legend.
"Unrestricted Global Note" means a permanent global Note substantially
in the form of Exhibit A attached hereto that bears the Global Note Legend and
that has the "Schedule of Exchanges of Interests in the Global Note" attached
thereto, and that is deposited with or on behalf of and registered in the name
of the Depositary, representing a series of Notes that do not bear the Private
Placement Legend.
"Unrestricted Subsidiary" means any Subsidiary of the Company that is
designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a
Board Resolution, but only to the extent that such Subsidiary:
(a) has no Indebtedness other than Non-Recourse Debt;
(b) is not party to any agreement, contract, arrangement or
understanding with the Company or any Restricted Subsidiary of the Company
unless the terms of any such agreement, contract, arrangement or understanding
are no less favorable to the Company or such Restricted Subsidiary than those
that might be obtained at the time from Persons who are not Affiliates of the
Company;
(c) is a Person with respect to which neither the Company nor any of
its Restricted Subsidiaries has any direct or indirect obligation (i) to
subscribe for additional Equity Interests or (ii) to maintain or preserve such
Person's financial condition or to cause such Person to achieve any specified
levels of operating results;
(d) has not guaranteed or otherwise directly or indirectly provided
credit support for any Indebtedness of the Company or any of its Restricted
Subsidiaries; and
(e) has at least one director on its Board of Directors that is not a
director or executive officer of the Company or any of its Restricted
Subsidiaries and has at least one executive officer that is not a director or
executive officer of the Company or any of its Restricted Subsidiaries.
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<PAGE> 25
Any designation of a Subsidiary of the Company as an Unrestricted
Subsidiary shall be evidenced to the Trustee by filing with the Trustee a
certified copy of the Board Resolution giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
preceding conditions and was permitted by Section 4.07. If, at any time, any
Unrestricted Subsidiary would fail to meet the preceding requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of the Indenture and any Indebtedness of such Subsidiary
shall be deemed to be incurred by a Restricted Subsidiary of the Company as of
such date and, if such Indebtedness is not permitted to be incurred as of such
date under Section 4.09, the Company shall be in default of such covenant. The
Board of Directors of the Company may at any time designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; provided that such designation shall
be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the
Company of any outstanding Indebtedness of such Unrestricted Subsidiary and such
designation shall only be permitted if (a) such Indebtedness is permitted under
Section 4.09, calculated on a pro forma basis as if such designation had
occurred at the beginning of the four-quarter reference period; and (b) no
Default or Event of Default would be in existence following such designation.
"U.S. Person" means a U.S. person as defined in Rule 902(o) under the
Securities Act.
"Voting Stock" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the sum
of the products obtained by multiplying (x) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (y) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (b) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any specified Person means a
Restricted Subsidiary of such Person all of the outstanding Capital Stock or
other ownership interests of which (other than directors' qualifying shares)
shall at the time be owned by such Person or by one or more Wholly Owned
Restricted Subsidiaries of such Person.
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Section 1.02. Other Definitions.
<TABLE>
<CAPTION>
Defined in
Term Section
---- -------
<S> <C>
"Affiliate Transaction" ...................................... 4.11
"Asset Sale" ................................................. 4.10
"Asset Sale Offer" ........................................... 3.09
"Authentication Order" ....................................... 2.02
"Bankruptcy Law" ............................................. 4.01
"Change of Control Offer" .................................... 4.14
"Change of Control Payment" .................................. 4.14
"Change of Control Payment Date" ............................. 4.14
"Covenant Defeasance" ........................................ 8.03
"Designated Senior Debt" ..................................... 10.02
"Event of Default" ........................................... 6.01
"Excess Proceeds" ............................................ 4.10
"incur" ...................................................... 4.09
"Legal Defeasance" ........................................... 8.02
"Offer Amount" ............................................... 3.09
"Offer Period" ............................................... 3.09
"Paying Agent" ............................................... 2.03
"Permitted Debt" ............................................. 4.09
"Purchase Date" .............................................. 3.09
"Registrar" .................................................. 2.03
"Representative" ............................................. 10.02
"Restricted Payments" ........................................ 4.07
"Senior Debt" ................................................ 10.02
"Unit Legend" ................................................ 2.06
</TABLE>
Section 1.03. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the Notes means the Company and any successor obligor upon
the Notes.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
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Section 1.04. Rules of Construction.
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(c) "or" is not exclusive;
(d) words in the singular include the plural, and in the plural include
the singular;
(e) provisions apply to successive events and transactions; and
(f) references to sections of or rules under the Securities Act shall
be deemed to include substitute, replacement of successor sections or rules
adopted by the SEC from time to time.
ARTICLE 2
THE NOTES
Section 2.01. Form and Dating.
(a) General. The Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto. The Notes may have
notations, legends or endorsements required by law, stock exchange rule or
usage. Each Note shall be dated the date of its authentication. The Notes shall
be in denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall constitute, and
are hereby expressly made, a part of this Indenture and the Company and the
Trustee, by their execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby. However, to the extent any
provision of any Note conflicts with the express provisions of this Indenture,
the provisions of this Indenture shall govern and be controlling.
(b) Global Notes. Notes issued in global form shall be substantially in
the form of Exhibit A attached hereto (including the Global Note Legend thereon
and the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Notes issued in definitive form shall be substantially in the form of
Exhibit A attached hereto (but without the Global Note Legend thereon and
without the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Each Global Note shall represent such of the outstanding Notes as
shall be specified therein and each shall provide that it shall represent the
aggregate principal amount of outstanding Notes from time to time endorsed
thereon and that the aggregate principal amount of outstanding Notes represented
thereby may from time to time be reduced or increased, as appropriate, to
reflect exchanges and redemptions. Any endorsement of a Global Note to reflect
the amount of any increase or decrease in the aggregate principal amount of
outstanding Notes represented thereby shall be made by the Trustee or the
Custodian, at the direction of the Trustee, in accordance with instructions
given by the Holder thereof as required by Section 2.06 hereof.
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(c) Euroclear and Cedel Procedures Applicable. The provisions of the
"Operating Procedures of the Euroclear System" and "Terms and Conditions
Governing Use of Euroclear" and the "General Terms and Conditions of Cedel Bank"
and "Customer Handbook" of Cedel Bank shall be applicable to transfers of
beneficial interests in the Regulation S Global Notes that are held by
Participants through Euroclear or Cedel Bank.
Section 2.02. Execution and Authentication.
One Officer shall sign the Notes for the Company by manual or facsimile
signature. The Company's seal may be reproduced on the Notes and may be in
facsimile form.
If an Officer whose signature is on a Note no longer holds that office
at the time a Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature
of the Trustee. The signature shall be conclusive evidence that the Note has
been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by two
Officers (an "Authentication Order"), authenticate Notes for original issue up
to the aggregate principal amount stated in paragraph 4 of the Notes. The
aggregate principal amount of Notes outstanding at any time may not exceed such
amount except as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. An authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Holders or an
Affiliate of the Company.
Section 2.03. Registrar and Paying Agent.
The Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Company may appoint one or more co-registrars and one or more additional
paying agents. The term "Registrar" includes any co-registrar and the term
"Paying Agent" includes any additional paying agent. The Company may change any
Paying Agent or Registrar without notice to any Holder. The Company shall notify
the Trustee in writing of the name and address of any Agent not a party to this
Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company or any of
its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC") to
act as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Custodian with respect to the Global Notes.
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<PAGE> 29
Section 2.04. Paying Agent to Hold Money in Trust.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Special Interest, if any, or interest on the Notes, and
will notify the Trustee of any default by the Company in making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the Holders all money held by it as Paying Agent. Upon
any bankruptcy or reorganization proceedings relating to the Company, the
Trustee shall serve as Paying Agent for the Notes.
Section 2.05. Holder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA Section 312(a). If the Trustee
is not the Registrar, the Company shall furnish to the Trustee at least seven
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of the Holders of
Notes and the Company shall otherwise comply with TIA Section 312(a).
Section 2.06. Transfer and Exchange.
(a) Transfer and Exchange of Global Notes. A Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary,
by a nominee of the Depositary to the Depositary or to another nominee of the
Depositary, or by the Depositary or any such nominee to a successor Depositary
or a nominee of such successor Depositary. All Global Notes will be exchanged by
the Company for Definitive Notes if (i) the Company delivers to the Trustee
notice from the Depositary that it is unwilling or unable to continue to act as
Depositary or that it is no longer a clearing agency registered under the
Exchange Act and, in either case, a successor Depositary is not appointed by the
Company within 120 days after the date of such notice from the Depositary or
(ii) the Company in its sole discretion determines that the Global Notes (in
whole but not in part) should be exchanged for Definitive Notes and delivers a
written notice to such effect to the Trustee. Upon the occurrence of either of
the preceding events in (i) or (ii) above, Definitive Notes shall be issued in
such names as the Depositary shall instruct the Trustee. Global Notes also may
be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and
2.10 hereof. Every Note authenticated and delivered in exchange for, or in lieu
of, a Global Note or any portion thereof, pursuant to this Section 2.06 or
Section 2.07 or 2.10 hereof, shall be authenticated and delivered in the form
of, and shall be, a Global Note. A Global Note may not be exchanged for another
Note other than as provided in this Section 2.06(a), however, beneficial
interests in a Global Note may be transferred and exchanged as provided in
Section 2.06(b), (c) or (f) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global Notes.
The transfer and exchange of beneficial interests in the Global Notes shall be
effected through the Depositary, in accordance with the provisions of this
Indenture and the Applicable Procedures. Beneficial interests in the Restricted
Global Notes shall be subject to restrictions on transfer comparable to those
set forth
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herein to the extent required by the Securities Act. Transfers of beneficial
interests in the Global Notes also shall require compliance with either
subparagraph (i) or (ii) below, as applicable, as well as one or more of the
other following subparagraphs, as applicable:
(i) Transfer of Beneficial Interests in the Same Global Note.
Beneficial interests in any Restricted Global Note may be transferred
to Persons who take delivery thereof in the form of a beneficial
interest in the same Restricted Global Note in accordance with the
transfer restrictions set forth in the Private Placement Legend;
provided, however, that prior to the expiration of the Restricted
Period, transfers of beneficial interests in the Regulation S Global
Note may not be made to a U.S. Person or for the account or benefit of
a U.S. Person (other than an Initial Purchaser). Beneficial interests
in any Unrestricted Global Note may be transferred to Persons who take
delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note. No written orders or instructions shall be
required to be delivered to the Registrar to effect the transfers
described in this Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests
in Global Notes. In connection with all transfers and exchanges of
beneficial interests that are not subject to Section 2.06(b)(i) above,
the transferor of such beneficial interest must deliver to the
Registrar either (A) (1) a written order from a Participant or an
Indirect Participant given to the Depositary in accordance with the
Applicable Procedures directing the Depositary to credit or cause to be
credited a beneficial interest in another Global Note in an amount
equal to the beneficial interest to be transferred or exchanged and (2)
instructions given in accordance with the Applicable Procedures
containing information regarding the Participant account to be credited
with such increase or (B) (1) a written order from a Participant or an
Indirect Participant given to the Depositary in accordance with the
Applicable Procedures directing the Depositary to cause to be issued a
Definitive Note in an amount equal to the beneficial interest to be
transferred or exchanged and (2) instructions given by the Depositary
to the Registrar containing information regarding the Person in whose
name such Definitive Note shall be registered to effect the transfer or
exchange referred to in (1) above. Upon consummation of the Exchange
Offer by the Company in accordance with Section 2.06(f) hereof, the
requirements of this Section 2.06(b)(ii) shall be deemed to have been
satisfied upon receipt by the Registrar of the instructions contained
in the Letter of Transmittal delivered by the Holder of such beneficial
interests in the Restricted Global Notes. Upon satisfaction of all of
the requirements for transfer or exchange of beneficial interests in
Global Notes contained in this Indenture and the Notes or otherwise
applicable under the Securities Act, the Trustee shall adjust the
principal amount of the relevant Global Note(s) pursuant to Section
2.06(h) hereof.
(iii)Transfer of Beneficial Interests to Another Restricted
Global Note. A beneficial interest in any Restricted Global Note may be
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in another Restricted Global Note if the transfer
complies with the requirements of Section 2.06(b)(ii) above and the
Registrar receives the following:
(A) if the transferee will take delivery in the form
of a beneficial interest in the 144A Global Note, then the
transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications in item (1) thereof;
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(B) if the transferee will take delivery in the form
of a beneficial interest in the Regulation S Global Note, then
the transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications in item (2)
thereof; and
(C) if the transferee will take delivery in the form
of a beneficial interest in the IAI Global Note, then the
transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications and certificates and
Opinion of Counsel required by item (3) thereof, if
applicable.
(iv) Transfer and Exchange of Beneficial Interests in a Restricted
Global Note for Beneficial Interests in the Unrestricted Global Note. A
beneficial interest in any Restricted Global Note may be exchanged by any holder
thereof for a beneficial interest in an Unrestricted Global Note or transferred
to a Person who takes delivery thereof in the form of a beneficial interest in
an Unrestricted Global Note if the exchange or transfer complies with the
requirements of Section 2.06(b)(ii) above and:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement and
the holder of the beneficial interest to be transferred, in the case of
an exchange, or the transferee, in the case of a transfer, certifies in
the applicable Letter of Transmittal that it is not (1) a
broker-dealer, (2) a Person participating in the distribution of the
Exchange Notes or (3) a Person who is an affiliate (as defined in Rule
144) of the Company; or
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement; or
(C) such transfer is effected by a Broker-Dealer pursuant to
the Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for a beneficial interest in an Unrestricted Global
Note, a certificate from such holder in the form of Exhibit C
hereto, including the certifications in item (1)(a) thereof;
or
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial
interest to a Person who shall take delivery thereof in the
form of a beneficial interest in an Unrestricted Global Note,
a certificate from such holder in the form of Exhibit B
hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the Registrar so
requests or if the Applicable Procedures so require, an Opinion of Counsel in
form reasonably acceptable to the Registrar to the effect that such exchange or
transfer is in compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are no longer
required in order to maintain compliance with the Securities Act.
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If any such transfer is effected pursuant to subparagraph (B) or (D)
above at a time when an Unrestricted Global Note has not yet been issued, the
Company shall issue and, upon receipt of an Authentication Order in accordance
with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
aggregate principal amount of beneficial interests transferred pursuant to
subparagraph (B) or (D) above.
Beneficial interests in an Unrestricted Global Note cannot be exchanged
for, or transferred to Persons who take delivery thereof in the form of, a
beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive Notes.
(i) Beneficial Interests in Restricted Global Notes to Restricted
Definitive Notes. If any holder of a beneficial interest in a Restricted Global
Note proposes to exchange such beneficial interest for a Restricted Definitive
Note or to transfer such beneficial interest to a Person who takes delivery
thereof in the form of a Restricted Definitive Note, then, upon receipt by the
Registrar of the following documentation:
(A) if the holder of such beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a
Restricted Definitive Note, a certificate from such holder in the form
of Exhibit C hereto, including the certifications in item (2)(a)
thereof;
(B) if such beneficial interest is being transferred to a QIB
in accordance with Rule 144A under the Securities Act, a certificate to
the effect set forth in Exhibit B hereto, including the certifications
in item (1) thereof;
(C) if such beneficial interest is being transferred to a
Non-U.S. Person in an offshore transaction in accordance with Rule 903
or Rule 904 under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (2)
thereof;
(D) if such beneficial interest is being transferred pursuant
to an exemption from the registration requirements of the Securities
Act in accordance with Rule 144 under the Securities Act, a certificate
to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(a) thereof;
(E) if such beneficial interest is being transferred to an
Institutional Accredited Investor in reliance on an exemption from the
registration requirements of the Securities Act other than those listed
in subparagraphs (B) through (D) above, a certificate to the effect set
forth in Exhibit B hereto, including the certifications, certificates
and Opinion of Counsel required by item (3) thereof, if applicable;
(F) if such beneficial interest is being transferred to the
Company or any of its Subsidiaries, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (3)(b)
thereof; or
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<PAGE> 33
(G) if such beneficial interest is being transferred pursuant
to an effective registration statement under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of the applicable Global
Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the
Company shall execute and the Trustee shall authenticate and deliver to the
Person designated in the instructions a Definitive Note in the appropriate
principal amount. Any Definitive Note issued in exchange for a beneficial
interest in a Restricted Global Note pursuant to this Section 2.06(c) shall be
registered in such name or names and in such authorized denomination or
denominations as the holder of such beneficial interest shall instruct the
Registrar through instructions from the Depositary and the Participant or
Indirect Participant. The Trustee shall deliver such Definitive Notes to the
Persons in whose names such Notes are so registered. Any Definitive Note issued
in exchange for a beneficial interest in a Restricted Global Note pursuant to
this Section 2.06(c)(i) shall bear the Private Placement Legend and shall be
subject to all restrictions on transfer contained therein.
(ii) Beneficial Interests in Restricted Global Notes to Unrestricted
Definitive Notes. A holder of a beneficial interest in a Restricted Global Note
may exchange such beneficial interest for an Unrestricted Definitive Note or may
transfer such beneficial interest to a Person who takes delivery thereof in the
form of an Unrestricted Definitive Note only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement and
the holder of such beneficial interest, in the case of an exchange, or
the transferee, in the case of a transfer, certifies in the applicable
Letter of Transmittal that it is not (1) a broker-dealer, (2) a Person
participating in the distribution of the Exchange Notes or (3) a Person
who is an affiliate (as defined in Rule 144) of the Company; or
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement; or
(C) such transfer is effected by a Broker-Dealer pursuant to
the Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for a Definitive Note that does not bear the Private
Placement Legend, a certificate from such holder in the form
of Exhibit C hereto, including the certifications in item
(1)(b) thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial
interest to a Person who shall take delivery thereof in the
form of a Definitive Note that does not bear the Private
Placement Legend, a certificate from such holder in the form
of Exhibit B hereto, including the certifications in item (4)
thereof;
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<PAGE> 34
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to
the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein
and in the Private Placement Legend are no longer required in order
to maintain compliance with the Securities Act.
(iii)Beneficial Interests in Unrestricted Global Notes to
Unrestricted Definitive Notes. If any holder of a beneficial interest in
an Unrestricted Global Note proposes to exchange such beneficial interest
for a Definitive Note or to transfer such beneficial interest to a Person
who takes delivery thereof in the form of a Definitive Note, then, upon
satisfaction of the conditions set forth in Section 2.06(b)(ii) hereof,
the Trustee shall cause the aggregate principal amount of the applicable
Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof,
and the Company shall execute and the Trustee shall authenticate and
deliver to the Person designated in the instructions a Definitive Note in
the appropriate principal amount. Any Definitive Note issued in exchange
for a beneficial interest pursuant to this Section 2.06(c)(iii) shall be
registered in such name or names and in such authorized denomination or
denominations as the holder of such beneficial interest shall instruct the
Registrar through instructions from the Depositary and the Participant or
Indirect Participant. The Trustee shall deliver such Definitive Notes to
the Persons in whose names such Notes are so registered. Any Definitive
Note issued in exchange for a beneficial interest pursuant to this Section
2.06(c)(iii) shall not bear the Private Placement Legend.
(d) Transfer and Exchange of Definitive Notes for Beneficial Interests.
(i) Restricted Definitive Notes to Beneficial Interests in
Restricted Global Notes. If any Holder of a Restricted Definitive Note proposes
to exchange such Note for a beneficial interest in a Restricted Global Note or
to transfer such Restricted Definitive Notes to a Person who takes delivery
thereof in the form of a beneficial interest in a Restricted Global Note, then,
upon receipt by the Registrar of the following documentation:
(A) if the Holder of such Restricted Definitive Note proposes
to exchange such Note for a beneficial interest in a Restricted Global
Note, a certificate from such Holder in the form of Exhibit C hereto,
including the certifications in item (2)(b) thereof; or
(B) if such Restricted Definitive Note is being transferred to
a QIB in accordance with Rule 144A under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (1) thereof; or
(C) if such Restricted Definitive Note is being transferred to
a Non-U.S. Person in an offshore transaction in accordance with Rule
903 or Rule 904 under the Securities Act, a certificate to the effect
set forth in Exhibit B hereto, including the certifications in item (2)
thereof; or
(D) if such Restricted Definitive Note is being transferred
pursuant to an exemption from the registration requirements of the
Securities Act in accordance with Rule 144 under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(a) thereof; or
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<PAGE> 35
(E) if such Restricted Definitive Note is being transferred to
an Institutional Accredited Investor in reliance on an exemption from
the registration requirements of the Securities Act other than those
listed in subparagraphs (B) through (D) above, a certificate to the
effect set forth in Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item (3) thereof, if
applicable; or
(F) if such Restricted Definitive Note is being transferred to
the Company or any of its Subsidiaries, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (3)(b)
thereof; or
(G) if such Restricted Definitive Note is being transferred
pursuant to an effective registration statement under the Securities
Act, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(c) thereof,
the Trustee shall cancel the Restricted Definitive Note, increase or cause to be
increased the aggregate principal amount of, in the case of clause (A) above,
the appropriate Restricted Global Note, in the case of clause (B) above, the
144A Global Note, in the case of clause (C) above, the Regulation S Global Note,
and in all other cases, the IAI Global Note.
(ii) Restricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of a Restricted Definitive Note may exchange
such Note for a beneficial interest in an Unrestricted Global Note or transfer
such Restricted Definitive Note to a Person who takes delivery thereof in the
form of a beneficial interest in an Unrestricted Global Note only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement and
the Holder, in the case of an exchange, or the transferee, in the case
of a transfer, certifies in the applicable Letter of Transmittal that
it is not (1) a broker-dealer, (2) a Person participating in the
distribution of the Exchange Notes or (3) a Person who is an affiliate
(as defined in Rule 144) of the Company; or
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement; or
(C) such transfer is effected by a Broker-Dealer pursuant to
the Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Definitive Notes proposes
to exchange such Notes for a beneficial interest in the
Unrestricted Global Note, a certificate from such Holder in
the form of Exhibit C hereto, including the certifications in
item (1)(c) thereof; or
(2) if the Holder of such Definitive Notes proposes
to transfer such Notes to a Person who shall take delivery
thereof in the form of a beneficial interest in the
Unrestricted Global Note, a certificate from such Holder in
the form of Exhibit B hereto, including the certifications in
item (4) thereof;
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<PAGE> 36
and, in each such case set forth in this subparagraph (D), if
the Registrar so requests or if the Applicable Procedures so
require, an Opinion of Counsel in form reasonably acceptable
to the Registrar to the effect that such exchange or transfer
is in compliance with the Securities Act and that the
restrictions on transfer contained herein and in the Private
Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
Upon satisfaction of the conditions of any of the
subparagraphs in this Section 2.06(d)(ii), the Trustee shall cancel the
Definitive Notes and increase or cause to be increased the aggregate
principal amount of the Unrestricted Global Note.
(iii)Unrestricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note
may exchange such Note for a beneficial interest in an Unrestricted
Global Note or transfer such Definitive Notes to a Person who takes
delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note at any time. Upon receipt of a request for
such an exchange or transfer, the Trustee shall cancel the applicable
Unrestricted Definitive Note and increase or cause to be increased the
aggregate principal amount of one of the Unrestricted Global Notes.
If any such exchange or transfer from a Definitive Note to a
beneficial interest is effected pursuant to subparagraphs (ii)(B),
(ii)(D) or (iii) above at a time when an Unrestricted Global Note has
not yet been issued, the Company shall issue and, upon receipt of an
Authentication Order in accordance with Section 2.02 hereof, the
Trustee shall authenticate one or more Unrestricted Global Notes in an
aggregate principal amount equal to the principal amount of Definitive
Notes so transferred.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes.
Upon request by a Holder of Definitive Notes and such Holder's compliance with
the provisions of this Section 2.06(e), the Registrar shall register the
transfer or exchange of Definitive Notes. Prior to such registration of transfer
or exchange, the requesting Holder shall present or surrender to the Registrar
the Definitive Notes duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such Holder or
by its attorney, duly authorized in writing. In addition, the requesting Holder
shall provide any additional certifications, documents and information, as
applicable, required pursuant to the following provisions of this Section
2.06(e).
(i) Restricted Definitive Notes to Restricted Definitive
Notes. Any Restricted Definitive Note may be transferred to and
registered in the name of Persons who take delivery thereof in the form
of a Restricted Definitive Note if the Registrar receives the
following:
(A) if the transfer will be made pursuant to Rule
144A under the Securities Act, then the transferor must
deliver a certificate in the form of Exhibit B hereto,
including the certifications in item (1) thereof;
(B) if the transfer will be made pursuant to Rule 903
or Rule 904, then the transferor must deliver a certificate in
the form of Exhibit B hereto, including the certifications in
item (2) thereof; and
(C) if the transfer will be made pursuant to any
other exemption from the registration requirements of the
Securities Act, then the transferor must deliver a certificate
in
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the form of Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item (3)
thereof, if applicable.
(ii) Restricted Definitive Notes to Unrestricted Definitive
Notes. Any Restricted Definitive Note may be exchanged by the Holder
thereof for an Unrestricted Definitive Note or transferred to a Person or
Persons who take delivery thereof in the form of an Unrestricted
Definitive Note if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the Holder, in the case of an exchange, or the transferee, in the
case of a transfer, certifies in the applicable Letter of Transmittal
that it is not (1) a broker-dealer, (2) a Person participating in the
distribution of the Exchange Notes or (3) a Person who is an
affiliate (as defined in Rule 144) of the Company; or
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement; or
(C) any such transfer is effected by a Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance
with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Restricted Definitive
Notes proposes to exchange such Notes for an Unrestricted
Definitive Note, a certificate from such Holder in the form of
Exhibit C hereto, including the certifications in item (1)(d)
thereof; or
(2) if the Holder of such Restricted Definitive
Notes proposes to transfer such Notes to a Person who shall
take delivery thereof in the form of an Unrestricted Definitive
Note, a certificate from such Holder in the form of Exhibit B
hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests, an Opinion of Counsel in form reasonably
acceptable to the Company to the effect that such exchange or
transfer is in compliance with the Securities Act and that the
restrictions on transfer contained herein and in the Private
Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
(iii)Unrestricted Definitive Notes to Unrestricted Definitive
Notes. A Holder of Unrestricted Definitive Notes may transfer such
Notes to a Person who takes delivery thereof in the form of an
Unrestricted Definitive Note. Upon receipt of a request to register
such a transfer, the Registrar shall register the Unrestricted
Definitive Notes pursuant to the instructions from the Holder thereof.
(f) Exchange Offer. Upon the occurrence of the Exchange Offer in
accordance with the Registration Rights Agreement, the Company shall issue and,
upon receipt of an Authentication Order in accordance with Section 2.02, the
Trustee shall authenticate (i) one or more Unrestricted Global Notes in an
aggregate principal amount equal to the principal amount of the beneficial
interests in the Restricted Global Notes tendered for acceptance by Persons that
certify in the applicable Letters of Transmittal that
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<PAGE> 38
(x) they are not broker-dealers, (y) they are not participating in a
distribution of the Exchange Notes and (z) they are not affiliates (as defined
in Rule 144) of the Company, and accepted for exchange in the Exchange Offer and
(ii) Definitive Notes in an aggregate principal amount equal to the principal
amount of the Restricted Definitive Notes accepted for exchange in the Exchange
Offer. Concurrently with the issuance of such Notes, the Trustee shall cause the
aggregate principal amount of the applicable Restricted Global Notes to be
reduced accordingly, and the Company shall execute and the Trustee shall
authenticate and deliver to the Persons designated by the Holders of Definitive
Notes so accepted Definitive Notes in the appropriate principal amount.
(g) Legends. The following legends shall appear on the face of all
Global Notes and Definitive Notes issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B) below, each Global
Note and each Definitive Note (and all Notes issued in exchange
therefor or substitution thereof) shall bear the legend in
substantially the following form:
"THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND MAY NOT
BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) TO A
PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL
BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 903 OR RULE
904 OF REGULATION S UNDER THE SECURITIES ACT, (3) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE
144 THEREUNDER (IF AVAILABLE) AND (4) TO AN INSTITUTIONAL ACCREDITED
INVESTOR IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT, IN EACH CASE, IN ACCORDANCE WITH ALL APPLICABLE
SECURITIES LAWS OF THE STATES OF THE UNITED STATES."
(B) Notwithstanding the foregoing, any Global Note or
Definitive Note issued pursuant to subparagraphs (b)(iv), (c)(ii),
(c)(iii), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to this Section
2.06 (and all Notes issued in exchange therefor or substitution
thereof) shall not bear the Private Placement Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend in
substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE
BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY
PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE
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<PAGE> 39
MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION
2.06 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE
BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III)
THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION
PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY
BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT
OF VLASIC FOODS INTERNATIONAL INC."
(h) Cancellation and/or Adjustment of Global Notes. At such time as all
beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
canceled in whole and not in part, each such Global Note shall be returned to or
retained and canceled by the Trustee in accordance with Section 2.11 hereof. At
any time prior to such cancellation, if any beneficial interest in a Global Note
is exchanged for or transferred to a Person who will take delivery thereof in
the form of a beneficial interest in another Global Note or for Definitive
Notes, the principal amount of Notes represented by such Global Note shall be
reduced accordingly and an endorsement shall be made on such Global Note by the
Trustee or by the Depositary at the direction of the Trustee to reflect such
reduction; and if the beneficial interest is being exchanged for or transferred
to a Person who will take delivery thereof in the form of a beneficial interest
in another Global Note, such other Global Note shall be increased accordingly
and an endorsement shall be made on such Global Note by the Trustee or by the
Depositary at the direction of the Trustee to reflect such increase.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Global Notes
and Definitive Notes upon the Company's order or at the Registrar's
request.
(ii) No service charge shall be made to a holder of a
beneficial interest in a Global Note or to a Holder of a Definitive
Note for any registration of transfer or exchange, but the Company may
require payment of a sum sufficient to cover any transfer tax or
similar governmental charge payable in connection therewith (other than
any such transfer taxes or similar governmental charge payable upon
exchange or transfer pursuant to Sections 2.10, 3.06, 3.09, 4.10, 4.14
and 9.05 hereof).
(iii)The Registrar shall not be required to register the
transfer of or exchange any Note selected for redemption in whole or in
part, except the unredeemed portion of any Note being redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or Definitive
Notes shall be the valid obligations of the Company, evidencing the
same debt, and entitled to the same benefits under this Indenture, as
the Global Notes or Definitive Notes surrendered upon such registration
of transfer or exchange.
(v) The Company shall not be required (A) to issue, to
register the transfer of or to exchange any Notes during a period
beginning at the opening of business 15 days before the mailing of a
notice of Notes for redemption under Section 3.02 hereof and ending at
the close of business on the day of such mailing, (B) to register the
transfer of or to exchange any Note so selected for redemption in whole
or in part, except the unredeemed portion of any Note being redeemed in
part
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<PAGE> 40
or (C) to register the transfer of or to exchange a Note between a
record date and the next succeeding Interest Payment Date.
(vi) Prior to due presentment for the registration of a
transfer of any Note, the Trustee, any Agent and the Company may deem
and treat the Person in whose name any Note is registered as the
absolute owner of such Note for the purpose of receiving payment of
principal of and interest on such Notes and for all other purposes, and
none of the Trustee, any Agent or the Company shall be affected by
notice to the contrary.
(vii)The Trustee shall authenticate Global Notes and
Definitive Notes in accordance with the provisions of Section 2.02
hereof.
(viii) All certifications, certificates and Opinions of
Counsel required to be submitted to the Registrar pursuant to this
Section 2.06 to effect a registration of transfer or exchange may be
submitted by facsimile.
(ix) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer
imposed under this Indenture or under applicable law with respect to
any transfer of any interest in any Note (including any transfers
between or among Depositary Participants or beneficial owners of
interests in any Global Note) other than to require delivery of such
certificates and other documentation or evidence as are expressly
required by, and to do so if and when expressly required by the terms
of, this Indenture, and to examine the same to determine substantial
compliance as to form with the express requirements hereof.
Section 2.07. Replacement Notes.
If any mutilated Note is surrendered to the Trustee or the Company and
the Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Note, the Company shall issue and the Trustee, upon receipt of an
Authentication Order, shall authenticate a replacement Note if the Trustee's
requirements are met. An indemnity bond must be supplied by the Holder that is
sufficient in the judgment of the Trustee and the Company to protect the
Company, the Trustee, any Agent and any authenticating agent from any loss that
any of them may suffer if a Note is replaced. The Company may charge for its
expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
Section 2.08. Outstanding Notes.
The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those canceled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note; however, Notes held by the Company or a Subsidiary of
the Company shall not be deemed to be outstanding for purposes of Section
3.07(b) hereof.
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If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless a Responsible Officer of the Trustee receives proof
satisfactory to it that the replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section
4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
Section 2.09. Treasury Notes.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, or by any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company, shall be considered as
though not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes that a Responsible Officer of the Trustee knows are so owned shall be
so disregarded.
Section 2.10. Temporary Notes.
Until certificates representing Notes are ready for delivery, the
Company may prepare and the Trustee, upon receipt of an Authentication Order,
shall authenticate temporary Notes. Temporary Notes shall be substantially in
the form of certificated Notes but may have variations that the Company
considers appropriate for temporary Notes and as shall be reasonably acceptable
to the Trustee. Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate definitive Notes in exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits of
this Indenture.
Section 2.11. Cancellation.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall dispose of
the Notes in accordance with its customary procedures (subject to the record
retention requirement of the Exchange Act). Certification of the destruction of
all canceled Notes shall be delivered to the Company. The Company may not issue
new Notes to replace Notes that it has paid or that have been delivered to the
Trustee for cancellation.
Section 2.12. Defaulted Interest.
If the Company defaults in a payment of interest on the Notes, it shall
pay the defaulted interest in any lawful manner plus, to the extent lawful,
interest payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, in each case at the rate provided in the
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<PAGE> 42
Notes and in Section 4.01 hereof. The Company shall notify the Trustee in
writing of the amount of defaulted interest proposed to be paid on each Note and
the date of the proposed payment. The Company shall fix or cause to be fixed
each such special record date and payment date, provided that no such special
record date shall be less than 10 days prior to the related payment date for
such defaulted interest. At least 15 days before the special record date, the
Company (or, upon the written request of the Company, the Trustee in the name
and at the expense of the Company) shall mail or cause to be mailed to Holders a
notice that states the special record date, the related payment date and the
amount of such interest to be paid.
Section 2.13. CUSIP Numbers.
The Company in issuing the Notes may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices
of redemption as a convenience to Holders; provided that any such notice may
state that no representation is made as to the correctness of such numbers
either as printed on the Notes or as contained in any notice of a redemption and
that reliance may be placed only on the other identification numbers printed on
the Notes, and any such redemption shall not be affected by any defect in or
omission of such numbers. The Company will promptly notify the Trustee of any
change in the "CUSIP" numbers.
ARTICLE 3
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee.
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 45 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth (i) the clause of this Indenture pursuant to
which the redemption shall occur, (ii) the redemption date, (iii) the principal
amount of Notes to be redeemed and (iv) the redemption price.
Section 3.02. Selection of Notes to Be Redeemed.
If less than all of the Notes are to be redeemed or purchased in an
offer to purchase at any time, the Trustee shall select the Notes to be redeemed
or purchased among the Holders of the Notes in compliance with the requirements
of the principal national securities exchange, if any, on which the Notes are
listed or, if the Notes are not so listed, on a pro rata basis, by lot or in
accordance with any other method the Trustee considers fair and appropriate. In
the event of partial redemption by lot, the particular Notes to be redeemed
shall be selected, unless otherwise provided herein, not less than 30 nor more
than 60 days prior to the redemption date by the Trustee from the outstanding
Notes not previously called for redemption.
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000;
except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of
$1,000, shall be redeemed. Except as provided in the preceding
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sentence, provisions of this Indenture that apply to Notes called for redemption
also apply to portions of Notes called for redemption.
Section 3.03. Notice of Redemption.
Subject to the provisions of Section 3.09 hereof, at least 30 days but
not more than 60 days before a redemption date, the Company shall mail or cause
to be mailed, by first class mail, a notice of redemption to each Holder whose
Notes are to be redeemed at its registered address.
The notice shall identify the Notes (including CUSIP numbers) to be
redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the principal
amount of such Note to be redeemed and that, after the redemption date upon
surrender of such Note, a new Note or Notes in principal amount equal to the
unredeemed portion shall be issued upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption
payment, interest on Notes called for redemption ceases to accrue on and after
the redemption date;
(g) the paragraph of the Notes and/or Section of this Indenture
pursuant to which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy of
the CUSIP number, if any, listed in such notice or printed on the Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph.
Section 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price. A notice of redemption may not be
conditional.
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Section 3.05. Deposit of Redemption Price.
One Business Day prior to the redemption date, the Company shall
deposit with the Trustee or with the Paying Agent money sufficient to pay the
redemption price of and accrued interest on all Notes to be redeemed on that
date. The Trustee or the Paying Agent shall promptly return to the Company any
money deposited with the Trustee or the Paying Agent by the Company in excess of
the amounts necessary to pay the redemption price of, and accrued interest on,
all Notes to be redeemed.
If the Company complies with the provisions of the preceding paragraph,
on and after the redemption date, interest shall cease to accrue on the Notes or
the portions of Notes called for redemption. If a Note is redeemed on or after
an interest record date but on or prior to the related interest payment date,
then any accrued and unpaid interest shall be paid to the Person in whose name
such Note was registered at the close of business on such record date. If any
Note called for redemption shall not be so paid upon surrender for redemption
because of the failure of the Company to comply with the preceding paragraph,
interest shall be paid on the unpaid principal, from the redemption date until
such principal is paid, and to the extent lawful on any interest not paid on
such unpaid principal, in each case at the rate provided in the Notes and in
Section 4.01 hereof.
Section 3.06. Notes Redeemed in Part.
Upon surrender of a Note that is redeemed in part, the Company shall
issue and, upon the Company's written request, the Trustee shall authenticate
for the Holder at the expense of the Company a new Note equal in principal
amount to the unredeemed portion of the Note surrendered.
Section 3.07. Optional Redemption.
(a) Except as set forth in clause (b) of this Section 3.07, the Company
shall not have the option to redeem the Notes pursuant to this Section 3.07
prior to July 1, 2004. Thereafter, the Company shall have the option to redeem
the Notes, in whole or in part, at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid
interest and Special Interest thereon, if any, to the applicable redemption
date, if redeemed during the twelve-month period beginning on July 1 of the
years indicated below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2004........................................................................... 105.125%
2005........................................................................... 103.417%
2006........................................................................... 101.708%
2007 and thereafter............................................................ 100.000%
</TABLE>
(b) Notwithstanding the provisions of clause (a) of this Section 3.07,
at any time prior to July 1, 2002, the Company may on any one or more occasions
redeem up to 35% of the aggregate principal amount of the Notes originally
issued under this Indenture at a redemption price equal to 110.25% of the
aggregate principal amount thereof plus accrued and unpaid interest, including
Special Interest thereon, to the redemption date with the net cash proceeds of
one or more Public Equity Offerings; provided that at least 65% of the aggregate
principal amount of the Notes originally issued under this Indenture remains
outstanding immediately after the occurrence of such redemption (excluding Notes
held by the Company and its Subsidiaries) and that such redemption occurs within
90 days of the date of the closing of such Public Equity Offering.
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<PAGE> 45
(c) Any redemption pursuant to this Section 3.07 shall be made pursuant
to the provisions of Section 3.01 through 3.06 hereof.
Section 3.08. Mandatory Redemption.
The Company shall not be required to make mandatory redemption payments
with respect to the Notes.
Section 3.09. Offer to Purchase by Application of Excess Proceeds.
In the event that, pursuant to Section 4.10 hereof, the Company shall
be required to commence an offer (an "Asset Sale Offer") to all Holders and all
holders of other Indebtedness that is pari passu with the Notes containing
provisions similar to those set forth in this Indenture with respect to offers
to purchase or redeem with the proceeds of sales of assets, it shall follow the
procedures specified below.
The Asset Sale Offer shall remain open for a period of 20 Business Days
following its commencement and no longer, except to the extent that a longer
period is required by applicable law (the "Offer Period"). No later than five
Business Days after the termination of the Offer Period (the "Purchase Date"),
the Company shall purchase the principal amount of Notes and such other pari
passu Indebtedness required to be purchased pursuant to Section 4.10 hereof (the
"Offer Amount") or, if less than the Offer Amount has been tendered, all Notes
and such other pari passu Indebtedness tendered in response to the Asset Sale
Offer. Payment for any Notes so purchased shall be made in the same manner as
interest payments are made.
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest shall
be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company shall send,
by first class mail, a notice to the Trustee and each of the Holders and all
holders of other Indebtedness that is pari passu with the Notes containing
provisions similar to those set forth in this Indenture with respect to offers
to purchase or redeem with the proceeds of sales of assets, with a copy to the
Trustee. The notice shall contain all instructions and materials necessary to
enable such Holders and all holders of such pari passu Indebtedness to tender
Notes or such pari passu Indebtedness, as applicable, pursuant to the Asset Sale
Offer. The Asset Sale Offer shall be made to all Holders and all holders of such
pari passu Indebtedness. The notice, which shall govern the terms of the Asset
Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this Section
3.09 and Section 4.10 hereof and the length of time the Asset Sale Offer shall
remain open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall continue
to accrete or accrue interest;
(d) that, unless the Company defaults in making such payment, any Note
accepted for payment pursuant to the Asset Sale Offer shall cease to accrete or
accrue interest after the Purchase Date;
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<PAGE> 46
(e) that Holders electing to have a Note purchased pursuant to an
Asset Sale Offer may elect to have Notes purchased in integral multiples of
$1,000 only;
(f) that Holders electing to have a Note purchased pursuant to any
Asset Sale Offer shall be required to surrender the Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Note completed, or
transfer by book-entry transfer, to the Company, a depositary, if appointed by
the Company, or a Paying Agent at the address specified in the notice at least
three days before the Purchase Date;
(g) that Holders shall be entitled to withdraw their election if the
Company, the depositary or the Paying Agent, as the case may be, receives, not
later than the expiration of the Offer Period, a facsimile transmission or
letter setting forth the name of the Holder, the principal amount of the Note
the Holder delivered for purchase and a statement that such Holder is
withdrawing his election to have such Note purchased;
(h) that, if the aggregate principal amount of Notes and pari passu
Indebtedness tendered into such Asset Sale Offer exceeds the Offer Amount, the
Trustee shall select the Notes and such other pari passu Indebtedness to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Trustee so that only Notes in denominations of $1,000, or
integral multiples thereof, shall be purchased); and
(i) that Holders whose Notes were purchased only in part shall be
issued new Notes equal in principal amount to the unpurchased portion of the
Notes surrendered (or transferred by book-entry transfer).
The notice of Asset Sale Offer shall contain similar provisions with
respect to holders of other pari passu Indebtedness that is the subject of such
Asset Sale Offer.
On or before the Purchase Date, the Company shall, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary, the
Offer Amount of Notes and such other pari passu Indebtedness or portions thereof
tendered pursuant to the Asset Sale Offer, or if less than the Offer Amount has
been tendered, all Notes and such other pari passu Indebtedness tendered, and
shall deliver to the Trustee an Officers' Certificate stating that such Notes
and such other pari passu Indebtedness or portions thereof were accepted for
payment by the Company in accordance with the terms of this Section 3.09. The
Company, the Depositary or the Paying Agent, as the case may be, shall promptly
(but in any case not later than five days after the Purchase Date) mail or
deliver to each tendering Holder and each tendering holder of such pari passu
Indebtedness an amount equal to the purchase price of the Notes and such other
pari passu Indebtedness tendered into such Asset Sale Offer and accepted by the
Company for purchase, and the Company shall promptly issue a new Note, and the
Trustee, upon written request from the Company shall authenticate and mail or
deliver such new Note to such Holder, in a principal amount equal to any
unpurchased portion of the Note surrendered. Any Note not so accepted shall be
promptly mailed or delivered by the Company to the Holder thereof. The Company
shall publicly announce the results of the Asset Sale Offer on the Purchase
Date.
Other than as specifically provided in this Section 3.09, any
purchase pursuant to this Section 3.09 shall be made pursuant to the provisions
of Sections 3.01 through 3.06 hereof. To the extent that the provisions of any
securities laws or regulations conflict with Sections 3.01 through 3.06, Section
3.09 or
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Section 4.10 hereof, the Company will comply with the applicable securities laws
and regulations and will not be deemed to have breached its obligations under
such Sections by virtue of such conflict.
ARTICLE 4
COVENANTS
Section 4.01. Payment of Notes.
The Company shall pay or cause to be paid the principal of, premium,
if any, and interest on the Notes on the dates and in the manner provided in the
Notes. Principal, premium, if any, and interest shall be considered paid on the
date due if the Paying Agent, if other than the Company or a Subsidiary thereof,
holds as of 10:00 a.m. Eastern Time on the due date money deposited by the
Company in immediately available funds and designated for and sufficient to pay
all principal, premium, if any, and interest then due. The Company shall pay all
Special Interest, if any, in the same manner on the dates and in the amounts set
forth in the Registration Rights Agreement.
The Company shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal at the then
applicable interest rate on the Notes to the extent lawful; it shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest and Special Interest
(without regard to any applicable grace period) at the same rate to the extent
lawful.
Section 4.02. Maintenance of Office or Agency.
The Company shall maintain in the Borough of Manhattan, the City of
New York, an office or agency (which may be an office of the Trustee or an
affiliate of the Trustee, Registrar or co-registrar) where Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served. The Company shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York for such purposes. The Company shall give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.03.
Section 4.03. Reports.
(a) Whether or not required by the rules and regulations of the SEC,
so long as any Notes are outstanding, the Company shall furnish to the Holders
of Notes (i) all quarterly and annual financial
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<PAGE> 48
information that would be required to be contained in a filing with the SEC on
Forms 10-Q and 10-K if the Company were required to file such forms, including a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and, with respect to the annual information only, a report on the
annual financial statements by the Company's certified independent accountants
and (ii) all current reports that would be required to be filed with the SEC on
Form 8-K if the Company were required to file such reports, in each case, within
the time periods specified in the SEC's rules and regulations. In addition,
following consummation of the Exchange Offer, whether or not required by the
rules and regulations of the SEC, the Company shall file a copy of all such
information and reports referred to in clauses (i) and (ii) above with the SEC
for public availability within the time periods specified in the SEC's rules and
regulations (unless the SEC will not accept such a filing) and make such
information available to securities analysts and prospective investors upon
request. The Company shall at all times comply with TIA Section 314(a).
(b) For so long as any Notes remain outstanding, the Company shall
furnish to the Holders and to securities analysts and prospective investors,
upon their request, the information required to be delivered pursuant to Rule
144A(d)(4) under the Securities Act.
(c) Delivery of such reports, information and documents to the
Trustee is for informational purposes only and the Trustee's receipt of such
shall not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
Section 4.04. Compliance Certificate.
(a) The Company shall deliver to the Trustee, within 90 days after
the end of each fiscal year, an Officers' Certificate stating that a review of
the activities of the Company and its Subsidiaries during the preceding fiscal
year has been made under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed and fulfilled its
obligations under this Indenture, and further stating, as to each such Officer
signing such certificate, that to the best of his or her knowledge the Company
has kept, observed, performed and fulfilled each and every covenant contained in
this Indenture and is not in default in the performance or observance of any of
the terms, provisions and conditions of this Indenture (or, if a Default or
Event of Default shall have occurred, describing all such Defaults or Events of
Default of which he or she may have knowledge and what action the Company is
taking or proposes to take with respect thereto) and that to the best of his or
her knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Notes is
prohibited or if such event has occurred, a description of the event and what
action the Company is taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of
the American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article 4 or Article 5 hereof or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that
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<PAGE> 49
such accountants shall not be liable directly or indirectly to any Person for
any failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, as soon as possible, and in any event within five days
forthwith upon any Officer becoming aware of any Default or Event of Default, an
Officers' Certificate specifying such Default or Event of Default and what
action the Company is taking or proposes to take with respect thereto.
Section 4.05. Taxes.
The Company shall pay, and shall cause each of its Subsidiaries to
pay, prior to delinquency, all material taxes, assessments, and governmental
levies except such as are contested in good faith and by appropriate proceedings
or where the failure to effect such payment is not adverse in any material
respect to the Holders of the Notes.
Section 4.06. Stay, Extension and Usury Laws.
The Company covenants (to the extent that it may lawfully do so) that
it shall not at any time insist upon, plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, that may affect the covenants or
the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it shall not, by resort to any such law, hinder, delay
or impede the execution of any power herein granted to the Trustee, but shall
suffer and permit the execution of every such power as though no such law has
been enacted.
Section 4.07. Restricted Payments.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly:
(a) declare or pay any dividend or make any other payment or
distribution on account of the Company's or any of its Restricted Subsidiaries'
Equity Interests (including, without limitation, any payment in connection with
any merger or consolidation involving the Company or any of its Restricted
Subsidiaries) or to the direct or indirect holders of the Company's or any of
its Restricted Subsidiaries' Equity Interests in their capacity as such (other
than dividends or distributions payable in Equity Interests (other than
Disqualified Stock) of the Company or dividends or distributions payable to the
Company or a Restricted Subsidiary of the Company);
(b) purchase, redeem or otherwise acquire or retire for value
(including, without limitation, in connection with any merger or consolidation
involving the Company) any Equity Interests of the Company or any direct or
indirect parent of the Company;
(c) make any payment on or with respect to, or purchase, redeem,
defease or otherwise acquire or retire for value, any Indebtedness that is
subordinated to the Notes, except (i) scheduled payments of interest or
principal at the Stated Maturity of such Indebtedness and (ii) the purchase,
repurchase or other acquisition of subordinated Indebtedness in anticipation of
satisfying a sinking fund obligation, principal installment or final maturity,
in each case due within one year of the date of purchase, repurchase or
acquisition; or
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<PAGE> 50
(d) make any Restricted Investment;
(all such payments and other actions set forth in clauses (a) through
(d) above being collectively referred to as "Restricted Payments"), unless, at
the time of and after giving effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
(b) the Company would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment had been
made at the beginning of the applicable four-quarter period, have been permitted
to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in the first paragraph of Section 4.09; and
(c) such Restricted Payment, together with the aggregate amount of
all other Restricted Payments made by the Company and its Restricted
Subsidiaries after the date of this Indenture (excluding Restricted Payments
permitted by clauses (b), (c) and (d) of the next succeeding paragraph) is less
than the sum, without duplication, of:
(i) 50% of the Consolidated Net Income of the Company for
the period (taken as one accounting period) from the beginning of the
first full fiscal quarter commencing after the date of this Indenture
to the end of the Company's most recently ended fiscal quarter for
which internal financial statements are available at the time of such
Restricted Payment (or, if such Consolidated Net Income for such
period is a deficit, less 100% of such deficit); plus
(ii) 100% of the aggregate net cash proceeds received by
the Company since the date of this Indenture as a contribution to its
common equity capital or received by the Company from the issue or
sale since the date of this Indenture of Equity Interests of the
Company (other than Disqualified Stock) or from the issue or sale of
convertible or exchangeable Disqualified Stock or convertible or
exchangeable debt securities of the Company that have been converted
into or exchanged for such Equity Interests (other than Equity
Interests (or Disqualified Stock or debt securities) sold to a
Subsidiary of the Company); plus
(iii) to the extent that any Restricted Investment that
was made after the date of this Indenture is sold for cash or
otherwise liquidated or repaid for cash, the lesser of (A) the cash
return of capital with respect to such Restricted Investment (less
the cost of disposition, if any) and (B) the initial amount of such
Restricted Investment; plus
(iv) the amount equal to the net reduction in Investments
(other than Permitted Investments) made by the Company or any of its
Restricted Subsidiaries in any Person resulting from the
redesignation of Unrestricted Subsidiaries as Restricted Subsidiaries
(valued in each case as provided in the definition of "Investment")
not to exceed, in the case of any Unrestricted Subsidiary, the amount
of Investments previously made by the Company or any Restricted
Subsidiary in such Unrestricted Subsidiary, that was included in the
calculation of the amount of Restricted Payments; provided, however,
that no amount shall be included under this clause (iv) to the extent
it is already included in Consolidated Net Income.
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<PAGE> 51
So long as no Default has occurred and is continuing or would be
caused thereby, the preceding provisions shall not prohibit:
(a) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration such payment would have
complied with the provisions of this Indenture;
(b) the redemption, repurchase, retirement, defeasance or other
acquisition of any subordinated Indebtedness of the Company or of any Equity
Interests of the Company in exchange for, or out of the net cash proceeds of the
substantially concurrent sale or issuance (other than to a Restricted Subsidiary
of the Company) of, Equity Interests of the Company (other than Disqualified
Stock); provided that the amount of any such net cash proceeds that are utilized
for any such redemption, repurchase, retirement, defeasance or other acquisition
shall be excluded from clause (c)(ii) of the preceding paragraph;
(c) the defeasance, redemption, repurchase or other acquisition of
subordinated Indebtedness of the Company with the net cash proceeds from an
incurrence of Permitted Refinancing Indebtedness;
(d) the payment of any dividend by a Restricted Subsidiary of the
Company to the holders of its common Equity Interests on a pro rata basis;
(e) the repurchase, redemption or other acquisition or retirement for
value of any Equity Interests of the Company or any Restricted Subsidiary of the
Company held by any member or former member of the Company's (or any of its
Restricted Subsidiaries') management pursuant to any management equity
subscription agreement or stock option agreement in effect as of the date of
this Indenture; provided that the aggregate price paid for all such repurchased,
redeemed, acquired or retired Equity Interests shall not exceed $250,000 in any
twelve-month period;
(f) payments, not to exceed $200,000 in the aggregate since the date
of this Indenture, to enable the Company to make cash payments to holders of its
Equity Interests in lieu of the issuance of fractional shares of its Equity
Interests; and
(g) other Restricted Payments in an aggregate amount not to exceed
$7.5 million.
The amount of all Restricted Payments (other than cash) shall be the
fair market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued to or by the Company or such
Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.
Section 4.08. Dividend and Other Payment Restrictions Affecting Subsidiaries.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or permit to exist or become
effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary to:
(a) pay dividends or make any other distributions on its Capital
Stock to the Company or any of its Restricted Subsidiaries, or with respect to
any other interest or participation in, or measured by, its profits, or pay any
indebtedness owed to the Company or any of its Restricted Subsidiaries;
(b) make loans or advances to the Company or any of its Restricted
Subsidiaries; or
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(c) transfer any of its properties or assets to the Company or any of
its Restricted Subsidiaries.
However, the preceding restrictions will not apply to encumbrances or
restrictions existing under or by reason of:
(a) Existing Indebtedness and Credit Facilities as in effect on the
date of this Indenture and any amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacements or refinancings
thereof, provided that such amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacement or refinancings are no more
restrictive in any material respect (as determined in the good faith judgment of
the Company's Board of Directors), taken as a whole, with respect to such
dividend and other payment restrictions than those contained in such Existing
Indebtedness and Credit Facilities, as in effect on the date of this Indenture;
(b) this Indenture and the Notes;
(c) any applicable law, rule, regulation or order;
(d) any agreement or other instrument of a Person acquired by the
Company or any of its Restricted Subsidiaries as in effect at the time of such
acquisition (except to the extent incurred in connection with or in
contemplation of such acquisition), which encumbrance or restriction is not
applicable to any Person, or the properties or assets of any Person, other than
the Person, or the property or assets of the Person, so acquired, provided that,
in the case of Indebtedness, such Indebtedness was permitted by the terms of
this Indenture to be incurred;
(e) in the case of clause (c) of the first paragraph of this Section
4.08, any encumbrance or restriction (i) that restricts in a customary manner
the subletting, assignment or transfer of any property or asset that is subject
to a lease, license, or similar contract, (ii) by virtue of any transfer of,
agreement to transfer, option or right with respect to, or Lien on, any property
or assets of the Company or any Subsidiary not otherwise prohibited by this
Indenture, or (iii) contained in security agreements securing Indebtedness of a
Subsidiary to the extent such encumbrance or restrictions restrict the transfer
of the property subject to such security agreements;
(f) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions on the property so acquired of the
nature described in clause (c) of the first paragraph of this Section 4.08;
(g) any agreement for the sale or other disposition of all or
substantially all the assets or Capital Stock of a Restricted Subsidiary that
restricts distributions by that Restricted Subsidiary pending such sale or other
disposition;
(h) Permitted Refinancing Indebtedness, provided that the
restrictions contained in the agreements governing such Permitted Refinancing
Indebtedness are no more restrictive in any material respect (as determined in
the good faith judgment of the Company's Board of Directors), taken as a whole,
to the Holders of the Notes than those contained in the agreements governing the
Indebtedness being refinanced;
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(i) Liens securing Indebtedness that limit the right of the debtor to
dispose of the assets subject to such Lien;
(j) provisions with respect to the disposition or distribution of
assets or property in joint venture agreements, assets sale agreements, stock
sale agreements and other similar agreements;
(k) restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of business;
(l) Indebtedness or other contractual requirements incurred or
entered into in connection with a Qualified Receivables Transaction, provided
that such restrictions apply only to a Receivables Subsidiary and any properties
or assets sold or otherwise transferred to such Receivables Subsidiary; and
(m) other Indebtedness or Disqualified Stock of Restricted
Subsidiaries permitted to be incurred pursuant to the provisions of Section 4.09
subsequent to the original issuance date of the Notes.
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (including Acquired Debt) and the
Company shall not issue any Disqualified Stock and shall not permit any of its
Subsidiaries to issue any shares of Preferred Stock; provided, however, that the
Company may incur Indebtedness (including Acquired Debt) or issue shares of
Disqualified Stock if the Fixed Charge Coverage Ratio for the Company's most
recently ended four full fiscal quarters for which internal financial statements
are available immediately preceding the date on which such additional
Indebtedness is incurred or such Disqualified Stock is issued would have been at
least 2.0 to 1, determined on a pro forma basis (including a pro forma
application of the net proceeds therefrom), as if the additional Indebtedness
had been incurred, or the Disqualified Stock had been issued, as the case may
be, at the beginning of such four-quarter period.
The provisions of the first paragraph of this Section 4.09 shall not
apply to the incurrence of any of the following items of Indebtedness
(collectively, "Permitted Debt"):
(a) the incurrence by the Company of Indebtedness and letters of
credit under Credit Facilities in an aggregate principal amount at any one time
outstanding under this clause (a) (with letters of credit being deemed to have a
principal amount equal to the maximum potential liability of the Company
thereunder) not to exceed an amount equal to $460.0 million less (i) the
aggregate amount of Net Proceeds received in connection with the Argentine Asset
Sale and (ii) the amount of Indebtedness, if any, of Receivables Subsidiaries
outstanding under clause (n) of this paragraph;
(b) the incurrence by the Company and its Restricted Subsidiaries of
the Existing Indebtedness;
(c) the incurrence by the Company of Indebtedness represented by the
Notes to be issued on the date of this Indenture and represented by the Exchange
Notes to be issued pursuant to the Registration Rights Agreement;
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(d) the incurrence by the Company or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net
proceeds of which are used to refund, refinance or replace Indebtedness (other
than intercompany Indebtedness) that was permitted by this Indenture to be
incurred under the first paragraph of this Section 4.09 or clauses (b), (c),
(d), (j), (l) or (p) of this paragraph;
(e) the incurrence by the Company or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among the Company and any
of its Restricted Subsidiaries; provided, however, that:
(i) if the Company is the obligor on such Indebtedness, such
Indebtedness must be expressly subordinated to the prior payment in full
in cash of all Obligations with respect to the Notes; and
(ii) (A) any subsequent issuance or transfer of Equity
Interests that results in any such Indebtedness being held by a Person
other than the Company or a Restricted Subsidiary thereof and (B) any sale
or other transfer of any such Indebtedness to a Person that is not either
the Company or a Restricted Subsidiary thereof shall be deemed, in each
case, to constitute an incurrence of such Indebtedness by the Company or
such Restricted Subsidiary, as the case may be, that was not permitted by
this clause (e);
(f) the incurrence by the Company of Hedging Obligations that are
incurred for the purpose of fixing or hedging: (i) interest rate risk with
respect to any Indebtedness that is permitted by the terms of this Indenture to
be outstanding; (ii) exchange rate risk with respect to any agreement or
Indebtedness of such Person payable in a currency other than U.S. dollars; or
(iii) commodities risk relating to commodities agreements, entered into in the
ordinary course of business, for the purchase of raw material used by the
Company and its Restricted Subsidiaries; provided, however, that each of the
foregoing is incurred in the ordinary course of business and not for speculative
purposes;
(g) the Guarantee by the Company or any of its Restricted
Subsidiaries of Indebtedness of the Company or Indebtedness of a Restricted
Subsidiary of the Company that was permitted to be incurred by another provision
of this Section 4.09;
(h) the accrual of interest, the accretion or amortization of
original issue discount, the payment of interest on any Indebtedness in the form
of additional Indebtedness with the same terms, and the payment of dividends on
Disqualified Stock in the form of additional shares of the same class of
Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an
issuance of Disqualified Stock for purposes of this Section 4.09; provided, in
each such case, that the amount thereof is included in Fixed Charges of the
Company as accrued;
(i) the incurrence by the Company's Unrestricted Subsidiaries of
Non-Recourse Debt, provided, however, that if any such Indebtedness ceases to be
Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be deemed to
constitute an incurrence of Indebtedness by a Restricted Subsidiary of the
Company that was not permitted by this clause (i);
(j) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage
financings or purchase money obligations, including all Permitted Refinancing
Indebtedness incurred to refund, refinance or replace any Indebtedness
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incurred pursuant to this clause (j), in each case incurred for the purpose of
financing all or any part of the purchase price or cost of construction or
improvement of property, plant or equipment used in the business of the Company
or such Restricted Subsidiary (whether through the direct purchase of assets or
the Equity Interests of any Person owning such assets) or constituting
Attributable Debt in respect of sale and leaseback transactions, in an aggregate
principal amount or accreted value, as applicable, not to exceed $10.0 million
at any time outstanding;
(k) the issuance of shares of Preferred Stock by a Restricted
Subsidiary of the Company to another Restricted Subsidiary of the Company;
provided, however, that (i) any subsequent issuance or transfer of Equity
Interests that results in any such Preferred Stock being held by a Person other
than the Company or a Restricted Subsidiary thereof and (ii) any sale or other
transfer of any such Preferred Stock to a Person that is not either the Company
or a Restricted Subsidiary thereof shall be deemed, in each case, to constitute
an issuance of such Preferred Stock by the Company or such Restricted
Subsidiary, as the case may be, that was not permitted by this clause (k);
(l) the incurrence by the Company's Foreign Restricted Subsidiaries
of Indebtedness, including all Permitted Refinancing Indebtedness incurred to
refund, refinance or replace any Indebtedness incurred pursuant to this clause
(l), in an aggregate principal amount not to exceed the amount of the Borrowing
Base as of the date of such incurrence;
(m) obligations in respect of performance and surety bonds and
completion guarantees provided by the Company or any Restricted Subsidiary in
the ordinary course of business;
(n) the incurrence by a Receivables Subsidiary of Indebtedness in a
Qualified Receivables Transaction that is without recourse to the Company or to
any other Subsidiary of the Company or their assets (other than such Receivables
Subsidiary and its assets and, as to the Company or any Subsidiary of the
Company, other than pursuant to representations, warranties, covenants
(including repurchase obligations) and indemnities customary for such
transactions);
(o) the execution by Swift-Armour of a loan agreement in connection
with the Argentine Asset Sale, so long as (i) no Indebtedness is outstanding
thereunder until the closing of such sale, and (ii) after such closing, such
Indebtedness would satisfy clause (a) of the definition of Non-Recourse Debt;
and
(p) the incurrence by the Company or its Restricted Subsidiaries of
additional Indebtedness in an aggregate principal amount (or accreted value, as
applicable) at any time outstanding, including all Permitted Refinancing
Indebtedness incurred to refund, refinance or replace any Indebtedness incurred
pursuant to this clause (p), not to exceed $20.0 million.
For purposes of determining compliance with this Section 4.09, in the
event that an item of proposed Indebtedness meets the criteria of more than one
of the categories of Permitted Debt described in clauses (a) through (p) above,
or is entitled to be incurred pursuant to the first paragraph of this Section
4.09, the Company shall, in its sole discretion, classify such item of
Indebtedness in any manner that complies with this Section 4.09 and such item of
Indebtedness shall be treated as having been incurred pursuant to only one of
such clauses or pursuant to the first paragraph of this Section 4.09.
Indebtedness under Credit Facilities outstanding on the date on which Notes are
first issued and authenticated under this Indenture shall be deemed to have been
incurred on such date in reliance on the exception provided by either clause (a)
or clause (p) of the definition of Permitted Debt and may not later
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be reclassified unless actually extended, refinanced, renewed, replaced,
defeased or refunded with Indebtedness incurred pursuant to the first paragraph
of this Section 4.09.
Section 4.10. Asset Sales.
The Company shall not, and shall not permit any of its Subsidiaries
to: (i) sell, lease, convey or otherwise dispose of any assets or rights, other
than sales or leases of inventory, in the ordinary course of business (provided
that the sale, lease, conveyance or other disposition of all or substantially
all of the assets of the Company and its Restricted Subsidiaries taken as a
whole shall be governed by the provisions of Sections 4.14 and 5.01 hereof and
not by this section 4.10), or (ii) issue Equity Interests in any of its
Restricted Subsidiaries, or sell Equity Interests in any of its Subsidiaries,
unless (x) the Company (or the Restricted Subsidiary, as the case may be)
receives, in the opinion of a Financial Officer of the Company, consideration at
the time of such Asset Sale at least equal to the fair market value of the
assets or Equity Interests issued or sold or otherwise disposed of and (y) at
least 75% of the consideration therefor received by the Company or such
Restricted Subsidiary is in the form of cash or Cash Equivalents. For purposes
of this covenant, each of the following shall be deemed to be cash: (A) any
liabilities (as shown on the Company's or such Restricted Subsidiary's most
recent balance sheet or in the notes thereto), of the Company or any Restricted
Subsidiary (other than liabilities that are by their terms subordinated to the
Notes) that are assumed by the transferee of any such assets pursuant to a
customary novation agreement that releases the Company or such Restricted
Subsidiary from further liability; and (B) any securities, notes or other
obligations received by the Company or any such Restricted Subsidiary from such
transferee that are converted by the Company or such Restricted Subsidiary into
cash or Cash Equivalents within 90 days of the consummation of such Asset Sale
(to the extent of the cash or Cash Equivalents received in that conversion).
Notwithstanding the preceding, the following will not be deemed to be
Asset Sales: (a) any single transaction or series of related transactions that
involves assets having a fair market value of less than $5.0 million; (b) the
sale or lease of equipment, inventory, accounts receivable or other assets in
the ordinary course of business; (c) sales or other dispositions of cash or Cash
Equivalents; (d) dispositions of assets by the Company to a Restricted
Subsidiary or by a Restricted Subsidiary to the Company or to another Restricted
Subsidiary; (e) issuances of Equity Interests by a Restricted Subsidiary to the
Company or to another Restricted Subsidiary; (f) Restricted Payments that are
permitted by Section 4.07; (g) the sale and leaseback of any assets within 90
days of the acquisition thereof; (h) exchanges of property pursuant to Section
1031 of the Internal Revenue Code of 1986, as amended, for use in a Permitted
Business; (i) the licensing of intellectual property in the ordinary course of
business; (j) sales of accounts receivable and related assets of the type
specified in the definition of "Qualified Receivables Transaction" to a
Receivables Subsidiary for the fair market value thereof, including cash, in an
amount at least equal to 75% of the book value thereof as determined in
accordance with GAAP, it being understood that, for the purposes of this clause
(j), notes received in exchange for the transfer of accounts receivable and
related assets will be deemed to be cash if the Receivables Subsidiary or other
payor is required to repay said notes as soon as practicable from available cash
collections less amounts required to be established as reserves pursuant to
contractual agreements with entities that are not Affiliates of the Company
entered into as part of a Qualified Receivables Transaction; (k) transfers of
accounts receivable and related assets of the type specified in the definition
of "Qualified Receivables Transaction" (or a fractional undivided interest
therein) by a Receivables Subsidiary in a Qualified Receivables Transaction; and
(l) transactions that are subject to the provisions of Section 5.01 of this
Indenture.
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Within 365 days after the receipt of proceeds from an Asset Sale, the
Company may apply the Net Proceeds from such Asset Sale, at its option, either
(a) to prepay, repay or purchase Obligations relating to Senior Debt; (b) to
acquire all or substantially all of the assets of, or a majority of the Voting
Stock of, another Permitted Business; (c) to make a capital expenditure; (d) to
repair or replace (or to reimburse the Company or its Restricted Subsidiary for
amounts previously spent to repair or replace) the asset or assets sold in such
Asset Sale; (e) to acquire other long-term assets that are used or useful in a
Permitted Business; or (f) if required by the terms of any Indebtedness of a
Restricted Subsidiary, to prepay, repay or purchase such Indebtedness. Pending
the final application of any such Net Proceeds, the Company may temporarily
reduce revolving credit borrowings or otherwise invest such Net Proceeds in any
manner that is not prohibited by this Indenture. Any Net Proceeds from such
Asset Sale that are not finally applied or invested as provided in the first
sentence of this paragraph will be deemed to constitute "Excess Proceeds."
Within five days of each date on which the aggregate amount of Excess Proceeds
exceeds $10.0 million, the Company shall commence an Asset Sale Offer pursuant
to Section 3.09 hereof to all Holders of Notes and all holders of other
Indebtedness that is pari passu with the Notes containing provisions similar to
those set forth in this Indenture with respect to offers to purchase or redeem
with the proceeds of sales of assets to purchase the maximum principal amount of
Notes and such other pari passu Indebtedness that may be purchased out of the
Excess Proceeds. The offer price in any Asset Sale Offer will be equal to 100%
of the principal amount thereof plus accrued and unpaid interest and Special
Interest thereon, if any, to the date fixed for the closing of such offer in
accordance with the procedures set forth in Section 3.09 hereof. To the extent
that the aggregate amount of Notes and pari passu Indebtedness tendered pursuant
to an Asset Sale Offer is less than the Excess Proceeds, the Company (or such
Restricted Subsidiary) may use such deficiency for any purpose not otherwise
prohibited by this Indenture. If the aggregate principal amount of Notes and
such other pari passu indebtedness tendered into such Asset Sale Offer exceeds
the amount of Excess Proceeds, the Trustee shall select the Notes and such other
pari passu Indebtedness to be purchased on a pro rata basis based on the
principal amount of Notes and such other pari passu Indebtedness tendered. Upon
completion of each Asset Sale Offer, the amount of Excess Proceeds will be reset
at zero.
Section 4.11. Transactions with Affiliates.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless
(a) such Affiliate Transaction is on terms that are no less favorable to the
Company or the relevant Restricted Subsidiary than those that could have been
obtained in a comparable transaction by the Company or such Restricted
Subsidiary with an unrelated Person and (b) the Company delivers to the Trustee
(i) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $5.0 million, a
resolution of the Board of Directors set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with clause (a) above and
that such Affiliate Transaction has been approved by a majority of the
Disinterested Directors and (ii) with respect to any Affiliate Transaction or
series of related Affiliate Transactions involving aggregate consideration in
excess of $15.0 million, an opinion as to the fairness of such Affiliate
Transaction in all material respects, taken as a whole, to the Holders from a
financial point of view issued by an accounting, appraisal or investment banking
firm of national standing; provided, however, that the Company shall not be
required to comply with the requirements of clause (b)(i) or (b)(ii) of this
paragraph with respect to any transactions between the Company and/or its
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Subsidiaries and Campbell Soup Company and/or its subsidiaries in the ordinary
course of business; and provided, further, that the following items shall not be
deemed to be Affiliate Transactions and therefor not subject to the foregoing
provisions of this paragraph: (1) any employment agreement, collective
bargaining agreement, employee benefit plan, related trust agreement or any
similar arrangement, payment of compensation and fees to, and indemnity provided
on behalf of, employees, retirees, officers, directors or consultants,
maintenance of benefit programs or arrangements for employees, retirees,
officers or directors, including vacation plans, health and life insurance
plans, deferred compensation plans, and retirement or savings plan and similar
plans, and loans and advances to employees, officers, directors and
shareholders, in each case entered into by the Company or any of its Restricted
Subsidiaries in the ordinary course of business; (2) transactions between or
among the Company and/or its Restricted Subsidiaries; (3) transactions with a
Person that is an Affiliate of the Company solely because the Company owns an
Equity Interest in such Person; (4) payment of customary directors fees; (5)
transactions between a Receivables Subsidiary and any Person in which the
Receivables Subsidiary has an Investment (6) Restricted Payments that are
permitted by, and Permitted Investments that are not prohibited by, Section 4.07
this Indenture; and (7) an Argentine Asset Sale to an investor group which
includes a member or members of management, as of the date of this Indenture, of
Swift-Armour SA Argentina.
Section 4.12. Liens.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, create, incur, assume or otherwise cause or suffer to exist or
become effective any Lien of any kind securing trade payables or Indebtedness
that does not constitute Senior Debt (other than Permitted Liens) upon any of
their property or assets, now owned or hereafter acquired unless (i) in the case
of Liens securing Indebtedness that is expressly subordinated or junior in right
of payment to the Notes, the Notes are secured on a senior basis to the
obligations so secured until such time as such obligations are no longer secured
by a Lien and (ii) in all other cases, the Notes are secured on an equal and
ratable basis with the obligations so secured until such time as such
obligations are no longer secured by a Lien.
Section 4.13. Corporate Existence.
Subject to Article 5 hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect (i) its
corporate existence, and the corporate, partnership or other existence of each
of its Restricted Subsidiaries, in accordance with the respective organizational
documents (as the same may be amended from time to time) of the Company or any
such Restricted Subsidiary and (ii) the rights (charter and statutory), licenses
and franchises of the Company and its Restricted Subsidiaries; provided,
however, that the Company shall not be required to preserve any such right,
license or franchise, or the corporate, partnership or other existence of any of
its Restricted Subsidiaries, if the Board of Directors shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and its Restricted Subsidiaries, taken as a whole, and that the loss
thereof is not adverse in any material respect to the Holders of the Notes.
Section 4.14. Offer to Repurchase Upon Change of Control.
(a) Upon the occurrence of a Change of Control, the Company shall
make an offer (a "Change of Control Offer") to each Holder to repurchase all or
any part (equal to $1,000 or an integral multiple thereof) of each Holder's
Notes at a purchase price equal to 101% of the aggregate principal amount
thereof plus accrued and unpaid interest and Special Interest thereon, if any,
to the date of
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purchase (the "Change of Control Payment"). The Change of Control Offer shall
remain open for the Offer Period. Within 30 days following any Change of
Control, the Company shall mail, by first class mail, a notice to each Holder,
with a copy to the Trustee, stating: (i) that the Change of Control Offer is
being made pursuant to this Section 4.14 and that all Notes tendered will be
accepted for payment; (ii) the purchase price and the purchase date, which shall
be no earlier than 30 days and no later than 60 business days from the date such
notice is mailed (the "Change of Control Payment Date"); (iii) that any Note not
tendered will continue to accrue interest; (iv) that, unless the Company
defaults in the payment of the Change of Control Payment, all Notes accepted for
payment pursuant to the Change of Control Offer shall cease to accrue interest
after the Change of Control Payment Date; (v) that Holders electing to have any
Notes purchased pursuant to a Change of Control Offer will be required to
surrender the Notes, with the form entitled "Option of Holder to Elect Purchase"
on the reverse of the Notes completed, to the Paying Agent at the address
specified in the notice prior to the close of business on the third Business Day
preceding the Change of Control Payment Date; (vi) that Holders will be entitled
to withdraw their election if the Paying Agent receives, not later than the
close of business on the second Business Day preceding the Change of Control
Payment Date, a facsimile transmission or letter setting forth the name of the
Holder, the principal amount of Notes delivered for purchase, and a statement
that such Holder is withdrawing his election to have the Notes purchased; and
(vii) that Holders whose Notes are being purchased only in part will be issued
new Notes equal in principal amount to the unpurchased portion of the Notes
surrendered, which unpurchased portion must be equal to $1,000 in principal
amount or an integral multiple thereof. The notice shall contain all
instructions and materials necessary to enable such Holder to tender Notes
pursuant to the Change of Control Offer. Prior to complying with any of the
provisions of this Section 4.14, but in any event within 90 days following a
Change of Control, the Company will either repay all outstanding Senior Debt or
obtain the requisite consents, if any, under all agreements governing
outstanding Senior Debt to permit the repurchase of Notes required by this
Section 4.14. The Company shall comply with the requirements of Rule 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes in connection with a Change of Control. To the extent that
the provisions of any securities laws or regulations conflict with this Section
4.14, the Company will comply with the applicable securities laws and
regulations and will not be deemed to have breached its obligations under this
Section 4.14 by virtue of said conflict.
(b) On the Change of Control Payment Date, the Company shall, to the
extent lawful, (i) accept for payment all Notes or portions thereof properly
tendered pursuant to the Change of Control Offer, (ii) deposit with the Paying
Agent an amount equal to the Change of Control Payment in respect of all Notes
or portions thereof so tendered and (iii) deliver or cause to be delivered to
the Trustee the Notes so accepted together with an Officers' Certificate stating
the aggregate principal amount of Notes or portions thereof being purchased by
the Company. The Paying Agent shall promptly mail to each Holder of Notes so
tendered payment in an amount equal to the purchase price for the Notes, and the
Trustee shall promptly authenticate and mail (or cause to be transferred by book
entry) to each Holder a new Note equal in principal amount to any unpurchased
portion of the Notes surrendered by such Holder, if any; provided, that each
such new Note shall be in a principal amount of $1,000 or an integral multiple
thereof. Payment for any Notes purchased pursuant to this Section 4.14 shall be
made in the same manner as interest payments are made. The Company shall
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.
(c) Notwithstanding anything to the contrary in this Section 4.14,
the Company shall not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change
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of Control Offer in the manner, at the times and otherwise in compliance with
the requirements set forth in this Section 4.14 and all other provisions of this
Indenture applicable to a Change of Control Offer made by the Company and
purchases all Notes validly tendered and not withdrawn under such Change of
Control Offer.
Section 4.15. Anti-layering.
Notwithstanding the provisions of Section 4.09 hereof, the Company
shall not incur, create, issue, assume, guarantee or otherwise become liable for
any Indebtedness that is both (a) subordinate or junior in right of payment to
any Senior Debt of the Company and (b) senior in any respect in right of payment
to the Notes.
Section 4.16. Limitations on Issuances of Future Subsidiary Guarantees.
The Company shall not permit any of its Restricted Subsidiaries,
directly or indirectly, to Guarantee any other Indebtedness of the Company
(other than Senior Debt) unless such Restricted Subsidiary simultaneously
executes and delivers a supplemental indenture providing for the Guarantee of
the payment of the Notes by such Restricted Subsidiary, which Guarantee shall be
senior to or pari passu with such Restricted Subsidiary's Guarantee of such
other Indebtedness.
Section 4.17. Payments for Consent.
Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Notes for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions of this
Indenture or the Notes unless such consideration is offered to be paid or is
paid to all Holders of the Notes that consent, waive or agree to amend in the
time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
Section 4.18. Designation of Restricted and Unrestricted Subsidiaries
The Board of Directors may designate any Restricted Subsidiary or a
newly acquired or newly formed Subsidiary to be an Unrestricted Subsidiary if
that designation would not cause a Default. If a Restricted Subsidiary is
designated as an Unrestricted Subsidiary, the aggregate fair market value of all
outstanding Investments owned by the Company and its Restricted Subsidiaries in
the Subsidiary so designated will be deemed to be an Investment made as of the
time of such designation and will either reduce the amount available for
Restricted Payments under the second clause (c) of the first paragraph of
Section 4.07 or reduce the amount available for future Investments under one or
more clauses of the definition of Permitted Investments, as the Company shall
determine. That designation will only be permitted if such Investment would be
permitted at that time and if such Restricted Subsidiary otherwise meets the
definition of an Unrestricted Subsidiary. The Board of Directors may redesignate
any Unrestricted Subsidiary to be a Restricted Subsidiary if the redesignation
would not cause a Default.
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ARTICLE 5
SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale of Assets.
The Company shall not, directly or indirectly, consolidate or merge
with or into (whether or not the Company is the surviving corporation), or sell,
assign, transfer, convey or otherwise dispose of all or substantially all of its
and its Restricted Subsidiaries' properties or assets, taken as a whole, in one
or more related transactions to, another Person unless (i) either: (a) the
Company is the surviving corporation; or (b) the Person formed by or surviving
any such consolidation or merger (if other than the Company) or to which such
sale, assignment, transfer, conveyance or other disposition shall have been made
is a corporation organized or existing under the laws of the United States, any
state thereof or the District of Columbia; (ii) the Person formed by or
surviving any such consolidation or merger (if other than the Company) or the
Person to which such sale, assignment, transfer, conveyance or other disposition
shall have been made assumes all the obligations of the Company under the
Registration Rights Agreement, the Notes and this Indenture pursuant to
agreements reasonably satisfactory to the Trustee; (iii) immediately after such
transaction, no Default or Event of Default exists; and (iv) except in the case
of a merger of the Company with or into a Wholly Owned Restricted Subsidiary of
the Company, the Company or the Person formed by or surviving any such
consolidation or merger (if other than the Company), or to which such sale,
assignment, transfer, conveyance or other disposition shall have been made (a)
shall, on the date of such transaction after giving pro forma effect thereto and
any related financing transactions as if the same had occurred at the beginning
of the applicable four-quarter period, be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set
forth in the first paragraph of Section 4.09 hereof or (b) would (together with
its Restricted Subsidiaries) have a higher Fixed Charge Coverage Ratio
immediately after such transaction (after giving pro forma effect to such
transaction and any related financing transactions as if the same had occurred
at the beginning of the applicable four-quarter period) than the Fixed Charge
Coverage Ratio of the Company and its Restricted Subsidiaries immediately prior
to the transaction. In addition, the Company shall not, directly or indirectly,
lease all or substantially all of its properties or assets, in one or more
related transactions, to another Person. The provisions of this Section 5.01
shall not be applicable to a sale, assignment, transfer, conveyance or other
disposition of assets between or among the Company and any of its Wholly Owned
Restricted Subsidiaries or a merger by the Company with an Affiliate
incorporated solely for the purpose of reincorporating in another jurisdiction.
As of the date of this Indenture, the Designated Businesses are not
deemed to constitute all or substantially all of the properties or assets of the
Company and its Restricted Subsidiaries taken as a whole.
Section 5.02. Successor Corporation Substituted.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company in accordance with Section 5.01 hereof, the successor corporation
formed by such consolidation or into or with which the Company is merged or to
which such sale, assignment, transfer, lease, conveyance or other disposition is
made shall succeed to, and be substituted for (so that from and after the date
of such consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to the "Company" shall refer instead to
the successor corporation and not to the Company), and may exercise every right
and
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power of the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein; provided, however, that
the predecessor Company shall not be relieved from the obligation to pay the
principal of and interest on the Notes except in the case of a sale of all or
substantially all of the properties or assets of the Company and its Restricted
Subsidiaries that meets the requirements of Section 5.01 hereof.
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.
An "Event of Default" occurs if:
(a) the Company defaults in the payment when due of interest on, or
Special Interest with respect to, the Notes, whether or not prohibited by the
subordination provisions hereof; and such default continues for a period of 30
days;
(b) the Company defaults in the payment when due of principal of or
premium, if any, on the Notes when the same becomes due and payable at maturity,
upon redemption (including in connection with an offer to purchase) or
otherwise, whether or not prohibited by the subordination provisions hereof;
(c) the Company fails to comply with the provisions of Section 5.01
hereof;
(d) the Company fails for 30 days after notice from the Trustee or
the Holders of at least 25% in aggregate principal amount of the Notes then
outstanding to comply with any of the provisions of Section 4.03, 4.07, 4.08,
4.09, 4.10, 4.11, 4.12, 4.14, 4.15, 4.16, 4.17, or 4.18 hereof;
(e) the Company or any of its Subsidiaries fails to observe or
perform any other covenant, representation, warranty or other agreement in this
Indenture or the Notes for 60 days after notice to the Company by the Trustee or
the Holders of at least 25% in aggregate principal amount of the Notes then
outstanding voting as a single class;
(f) a default occurs under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or evidenced
any Indebtedness for money borrowed by the Company or any of its Restricted
Subsidiaries (or the payment of which is guaranteed by the Company or any of its
Restricted Subsidiaries), whether such Indebtedness or guarantee now exists, or
is created after the date of this Indenture, which default (1) is caused by a
failure to pay principal of, or interest or premium, if any, on such
Indebtedness upon the expiration of the grace period provided in such
Indebtedness on the date of such default (a "Payment Default"), or (2) results
in the acceleration of such Indebtedness prior to its express maturity and, in
each case, the principal amount of such Indebtedness, together with the
principal amount of any other such Indebtedness the maturity of which has been
so accelerated, aggregates $10.0 million or more;
(g) a final judgment or final judgments (not subject to appeal) for
the payment of money are entered by a court or courts of competent jurisdiction
against the Company or any of its Restricted Subsidiaries and such judgment or
judgments are not paid, discharged or stayed for a period of 60 days,
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provided that the aggregate of all such unpaid, undischarged or unstayed
judgments exceeds $10.0 million;
(h) the Company or any of its Restricted Subsidiaries that is a
Significant Subsidiary or any group of Restricted Subsidiaries that, taken
together, would constitute a Significant Subsidiary, pursuant to or within the
meaning of Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it in
an involuntary case,
(iii) consents to the appointment of a custodian of it or for
all or substantially all of its property,
(iv) makes a general assignment for the benefit of its
creditors, or
(v) generally admits in writing its inability to pay its debts
as they become due; or
(i) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(i) is for relief against the Company or any of its Restricted
Subsidiaries that is a Significant Subsidiary or any group of Restricted
Subsidiaries that, taken together, would constitute a Significant
Subsidiary, in an involuntary case;
(ii) appoints a custodian of the Company or any of its
Restricted Subsidiaries that is a Significant Subsidiary or any group of
Restricted Subsidiaries that, taken together, would constitute a
Significant Subsidiary, or for all or substantially all of the property of
the Company or any of such Restricted Subsidiaries that is a Significant
Subsidiary or any group of Restricted Subsidiaries that, taken together,
would constitute a Significant Subsidiary; or
(iii)orders the liquidation of the Company or any of its
Restricted Subsidiaries that is a Significant Subsidiary or any group of
Restricted Subsidiaries that, taken together, would constitute a
Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60 consecutive days.
Section 6.02. Acceleration.
If any Event of Default (other than an Event of Default specified in
clause (h) or (i) of Section 6.01 hereof with respect to the Company, any
Restricted Subsidiary that is a Significant Subsidiary or any group of
Restricted Subsidiaries that, taken together, would constitute a Significant
Subsidiary) occurs and is continuing, the Trustee or the Holders of at least 25%
in principal amount of the then outstanding Notes may declare all the Notes to
be due and payable immediately. If payment on the Notes is accelerated because
of an Event of Default, the Company or the Trustee shall promptly notify the
Representative of each issue of Designated Senior Debt of the acceleration;
provided that so long as any Designated Senior Debt shall be outstanding, such
acceleration for the Notes shall not be effective until the earlier of (i) an
acceleration of the Designated Senior Debt or (ii) five Business Days after such
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notice is received. Subject to the foregoing, upon any such declaration the
Notes shall become due and payable immediately. Notwithstanding the foregoing,
if an Event of Default specified in clause (h) or (i) of Section 6.01 hereof
occurs with respect to the Company, any of its Restricted Subsidiaries that is a
Significant Subsidiary or any group of Restricted Subsidiaries that, taken
together, would constitute a Significant Subsidiary, all outstanding Notes shall
be due and payable immediately without further action or notice. The Holders of
a majority in aggregate principal amount of the then outstanding Notes by
written notice to the Trustee may on behalf of all of the Holders rescind an
acceleration and its consequences if the rescission would not conflict with any
judgment or decree and if all existing Events of Default (except nonpayment of
principal, interest (or Special Interest) or premium that has become due solely
because of the acceleration) have been cured or waived.
If an Event of Default occurs on or after July 1, 2004 by reason of
any willful action (or inaction) taken (or not taken) by or on behalf of the
Company with the intention of avoiding payment of the premium that the Company
would have had to pay if the Company then had elected to redeem the Notes
pursuant to Section 3.07 hereof, then, upon acceleration of the Notes, an
equivalent premium shall also become and be immediately due and payable, to the
extent permitted by law, notwithstanding anything in this Indenture or in the
Notes to the contrary. If an Event of Default occurs prior to July 1, 2004 by
reason of any willful action (or inaction) taken (or not taken) by or on behalf
of the Company with the intention of avoiding the prohibition on redemption of
the Notes prior to such date, then, upon acceleration of the Notes, an
additional premium shall also become and be immediately due and payable in an
amount, for each of the years beginning on July 1 of the years set forth below,
as set forth below (expressed as a percentage of the principal amount of the
Notes on the date of payment that would otherwise be due but for the provisions
of this sentence):
YEAR PERCENTAGE
- ---- ----------
1999.............................................. 110.250%
2000.............................................. 109.295%
2001.............................................. 108.200%
2002.............................................. 107.175%
2003.............................................. 106.150%
Section 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal, premium, if
any, and interest on the Notes or to enforce the performance of any provision of
the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
Section 6.04. Waiver of Past Defaults.
Holders of not less than a majority in aggregate principal amount of
the then outstanding Notes by notice to the Trustee may on behalf of the Holders
of all of the Notes waive an existing Default or Event of Default and its
consequences hereunder, except a continuing Default or Event of Default in the
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payment of the principal of, premium and Special Interest, if any, or interest
on, the Notes (including in connection with an offer to purchase) (provided,
however, that the Holders of a majority in aggregate principal amount of the
then outstanding Notes may rescind an acceleration and its consequences,
including any related payment default that resulted from such acceleration).
Upon any such waiver, such Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereon.
Section 6.05. Control by Majority.
Holders of a majority in principal amount of the then outstanding
Notes may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture that the Trustee determines may be unduly
prejudicial to the rights of other Holders of Notes or that may involve the
Trustee in personal liability.
Section 6.06. Limitation on Suits.
A Holder of a Note may pursue a remedy with respect to this Indenture
or the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if
requested, provide to the Trustee indemnity satisfactory to the Trustee against
any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the rights
of another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.
Section 6.07. Rights of Holders of Notes to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Note to receive payment of principal, premium and Special
Interest, if any, and interest on the Note, on or after the respective due dates
expressed in the Note (including in connection with an offer to purchase), or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.
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Section 6.08. Collection Suit by Trustee.
If an Event of Default specified in Section 6.01(a) or (b) occurs and
is continuing, the Trustee is authorized to recover judgment in its own name and
as trustee of an express trust against the Company for the whole amount of
principal of, premium and Special Interest, if any, and interest remaining
unpaid on the Notes and interest on overdue principal and, to the extent lawful,
interest and such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
Section 6.09. Trustee May File Proofs of Claim.
The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
Section 6.10. Priorities.
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:
First: to the Trustee, its agents and attorneys for
amounts due under Section 7.07 hereof, including payment of all
compensation, expense and liabilities incurred, and all advances
made, by the Trustee and the costs and expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on
the Notes for principal, premium and Special Interest, if any, and
interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Notes for principal,
premium and Special Interest, if any and interest, respectively; and
Third: to the Company or to such party as a court of
competent jurisdiction shall direct.
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The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
Section 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees and expenses, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section does not apply to a suit by the Trustee, a suit by a
Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more
than 10% in principal amount of the then outstanding Notes.
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in its exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need perform only
those duties that are specifically set forth in this Indenture and no
others, and no implied covenants or obligations shall be read into this
Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions furnished
to the Trustee and conforming to the requirements of this Indenture.
However, in the case of any certificates or opinions which by any
provision hereof are specifically required to be furnished to the Trustee,
the Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b)
of this Section;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
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(iii) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or incur any liability. The Trustee shall be under
no obligation to exercise any of its rights and powers under this Indenture at
the request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
Section 7.02. Rights of Trustee.
(a) The Trustee may conclusively rely upon any document believed by
it to be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel of its selection and the advice of such counsel or any Opinion of
Counsel shall be full and complete authorization and protection from liability
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent appointed with
due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders unless such Holders shall have offered to the Trustee
security or indemnity satisfactory to it against the costs, expenses and
liabilities that might be incurred by it in compliance with such request or
direction.
(g) the Trustee shall not be deemed to have notice of any Default or
Event of Default unless a Responsible Officer of the Trustee has actual
knowledge thereof or unless written notice of any event which is in fact such a
default is received by the Trustee at the Corporate Trust Office of the Trustee,
and such notice references the Notes and this Indenture; and
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(h) the rights, privileges, protections, immunities and benefits
given to the Trustee, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Trustee in each
of its capacities hereunder, and to each agent, custodian and other Person
employed to act hereunder.
Section 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the SEC for
permission to continue as trustee or resign. Any Agent may do the same with like
rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof.
Section 7.04. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
Section 7.05. Notice of Defaults.
If a Default or Event of Default occurs and is continuing and if it
is known to a Responsible Officer of the Trustee, the Trustee shall mail to
Holders of Notes a notice of the Default or Event of Default within 90 days
after it occurs. Except in the case of a Default or Event of Default in payment
of principal of, premium, if any, or interest on any Note, the Trustee may
withhold the notice if and so long as a committee of its Responsible Officers in
good faith determines that withholding the notice is in the interests of the
Holders of the Notes.
Section 7.06. Reports by Trustee to Holders of the Notes.
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, and for so long as Notes remain outstanding, the
Trustee shall mail to the Holders of the Notes a brief report dated as of such
reporting date that complies with TIA Section 313(a) (but if no event described
in TIA Section 313(a) has occurred within the twelve months preceding the
reporting date, no report need be transmitted). The Trustee also shall comply
with TIA Section 313(b)(2). The Trustee shall also transmit by mail all reports
as required by TIA Section 313(c).
A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Company and filed with the SEC and each stock
exchange on which the Notes are listed in accordance with TIA Section 313(d).
The Company shall promptly notify the Trustee when the Notes are listed on any
stock exchange or any delisting thereof.
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Section 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee such reasonable compensation as
the company and Trustee shall agree from time to time in writing for its
acceptance of this Indenture and services hereunder. The Trustee's compensation
shall not be limited by any law on compensation of a trustee of an express
trust. The Company shall reimburse the Trustee promptly upon request for all
reasonable disbursements, advances and expenses incurred or made by it in
addition to the compensation for its services. Such expenses shall include the
reasonable compensation, disbursements and expenses of the Trustee's agents and
counsel.
The Company shall indemnify the Trustee or any predecessor Trustee
and their agents for and to hold them harmless against any and all losses,
damages, claims, liabilities or expenses incurred by it arising out of or in
connection with the acceptance or administration of its duties under this
Indenture, including the costs and expenses of enforcing this Indenture against
the Company (including this Section 7.07) and defending itself against any claim
(whether asserted by the Company or any Holder or any other person) or liability
in connection with the exercise or performance of any of its powers or duties
hereunder, except to the extent any such loss, damage, claim, liability or
expense may be attributable to its negligence or bad faith. The Trustee shall
notify the Company promptly of any claim for which it may seek indemnity.
Failure by the Trustee to so notify the Company shall not relieve the Company of
its obligations hereunder. The Company shall defend the claim and the Trustee
shall cooperate in the defense. The Trustee may have separate counsel and the
Company shall pay the reasonable fees and expenses of such counsel. The Company
need not pay for any settlement made without its consent, which consent shall
not be unreasonably withheld.
The obligations of the Company under this Section 7.07 shall survive
the satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this Section, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the satisfaction and
discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 6.01(h) or (i) hereof occurs, the expenses and
the compensation for the services (including the fees and expenses of its agents
and counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA Section 313(b)(2)
to the extent applicable.
Section 7.08. Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company. The Holders of a majority
in principal amount of the then outstanding Notes may remove the Trustee by so
notifying the Trustee and the Company in writing. The Company may remove the
Trustee if:
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(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order
for relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of at least 10% in principal amount of the then outstanding Notes
may petition any court of competent jurisdiction for the appointment of a
successor Trustee, at the expense of the Company.
If the Trustee, after written request by any Holder who has been a
Holder for at least six months, fails to comply with Section 7.10, such Holder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders. The retiring Trustee shall promptly transfer all property
held by it as Trustee to the successor Trustee, provided all sums owing to the
Trustee hereunder have been paid and subject to the Lien provided for in Section
7.07 hereof. Notwithstanding replacement of the Trustee pursuant to this Section
7.08, the Company's obligations under Section 7.07 hereof shall continue for the
benefit of the retiring Trustee.
Section 7.09. Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or transfers
all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee.
Section 7.10. Eligibility; Disqualification.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $50 million
as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to
TIA Section 310(b).
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Section 7.11. Preferential Collection of Claims Against Company.
The Trustee is subject to TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated therein.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance.
The Company may, at the option of its Board of Directors evidenced by
a resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon
compliance with the conditions set forth below in this Article Eight.
Section 8.02. Legal Defeasance and Discharge.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Notes on the
date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall be
deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Notes, which shall thereafter be deemed to be "outstanding" only for
the purposes of Section 8.05 hereof and the other Sections of this Indenture
referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following provisions which shall survive
until otherwise terminated or discharged hereunder: (a) the rights of Holders of
outstanding Notes to receive solely from the trust fund described in Section
8.04 hereof, and as more fully set forth in such Section, payments in respect of
the principal of, premium, if any, and interest (including Special Interest) on
such Notes when such payments are due, (b) the Company's obligations with
respect to such Notes under Article 2 and Section 4.02 hereof, (c) the rights,
powers, trusts, duties and immunities of the Trustee hereunder and the Company's
obligations in connection therewith and (d) this Article Eight. Subject to
compliance with this Article Eight, the Company may exercise its option under
this Section 8.02 notwithstanding the prior exercise of its option under Section
8.03 hereof.
Section 8.03. Covenant Defeasance.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be released from its
obligations under the covenants contained in Sections 4.03, 4.05, 4.07, 4.08,
4.09, 4.10, 4.11, 4.12, 4.14, 4.15, 4.16, 4.17 and 4.18 hereof and clause (iv)
of Section 5.01 hereof with respect to the outstanding Notes on and after the
date the conditions set forth in Section 8.04 are satisfied (hereinafter,
"Covenant Defeasance"), and the Notes shall thereafter be deemed not
"outstanding" for the purposes of any direction, waiver, consent or declaration
or act of Holders (and the consequences of any thereof) in connection with such
covenants, but shall continue to be deemed "outstanding" for all other purposes
hereunder (it being understood that such Notes shall not be deemed outstanding
for accounting
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purposes). For this purpose, Covenant Defeasance means that, with respect to the
outstanding Notes, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event of Default under Section 6.01
hereof, but, except as specified above, the remainder of this Indenture and such
Notes shall be unaffected thereby. In addition, upon the Company's exercise
under Section 8.01 hereof of the option applicable to this Section 8.03 hereof,
subject to the satisfaction of the conditions set forth in Section 8.04 hereof,
Sections 6.01(c) through 6.01(g) hereof shall not constitute Events of Default.
Section 8.04. Conditions to Legal or Covenant Defeasance.
The following shall be the conditions to the application of either
Section 8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders, cash in United States dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, premium and Special Interest, if any, and
interest on the outstanding Notes on the stated date for payment thereof or on
the applicable redemption date, as the case may be, and the Company must specify
whether the Notes are being defeased to maturity or to a particular redemption
date;
(b) in the case of an election under Section 8.02 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that (i) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (ii) since the date of this Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, subject to customary
assumptions and exclusions, the Holders of the outstanding Notes will not
recognize income, gain or loss for federal income tax purposes as a result of
such Legal Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.03 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee, which may be subject to customary
assumptions and exclusions, confirming that the Holders of the outstanding Notes
will not recognize income, gain or loss for federal income tax purposes as a
result of such Covenant Defeasance and will be subject to federal income tax on
the same amounts, in the same manner and at the same times as would have been
the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of Default
resulting from the incurrence of Indebtedness all or a portion of the proceeds
of which will be used to defease the Notes pursuant to this Article Eight
concurrently with such incurrence) or insofar as Sections 6.01(h) or 6.01(i)
hereof is concerned, at any time in the period ending on the 91st day after the
date of deposit;
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(e) such Legal Defeasance or Covenant Defeasance shall not result in
a breach or violation of, or constitute a default under, any material agreement
or instrument (other than this Indenture) to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound;
(f) the Company shall have delivered to the Trustee an Opinion of
Counsel (which may be subject to customary exceptions) to the effect that,
assuming no intervening bankruptcy of the Company between the date of deposit
and the 91st day following the deposit and assuming that no Holder is an
"insider" of the Company under applicable bankruptcy law, after the 91st day
following the deposit, the trust funds will not be subject to the effect of any
applicable bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally;
(g) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the intent
of preferring the Holders over any other creditors of the Company with the
intent of defeating, hindering, delaying or defrauding creditors of the Company
or others; and
(h) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, which opinion may be subject to customary
assumptions and exclusions, each stating that all conditions precedent provided
for or relating to the Legal Defeasance or the Covenant Defeasance have been
complied with.
Section 8.05. Deposited Money and Government Securities to be Held in Trust;
Other Miscellaneous Provisions.
Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as Paying Agent) as the
Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal, premium, if any, and interest, but
such money need not be segregated from other funds except to the extent required
by law.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the cash or non-callable
Government Securities deposited pursuant to Section 8.04 hereof or the principal
and interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article Eight to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the written
request of the Company any money or non-callable Government Securities held by
it as provided in Section 8.04 hereof which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee (which may be the opinion
delivered under Section 8.04(a) hereof), are in excess of the amount thereof
that would then be required to be deposited to effect an equivalent Legal
Defeasance or Covenant Defeasance.
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Section 8.06. Repayment to Company.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of, premium, if
any, or interest on any Note and remaining unclaimed for two years after such
principal, and premium, if any, or interest has become due and payable shall be
paid to the Company on its request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Note shall thereafter look
only to the Company for payment thereof, and all liability of the Trustee or
such Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease; provided, however, that the
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Company cause to be published once, in the New York
Times and The Wall Street Journal (national edition), notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such notification or publication, any
unclaimed balance of such money then remaining will be repaid to the Company.
Section 8.07. Reinstatement.
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02 or
8.03 hereof, as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.02 or 8.03
hereof, as the case may be; provided, however, that, if the Company makes any
payment of principal of, premium, if any, or interest on any Note following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money held by the
Trustee or Paying Agent.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Notes.
Notwithstanding Section 9.02 of this Indenture, the Company and the
Trustee may amend or supplement this Indenture or the Notes without the consent
of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes or to alter the provisions of Article 2 hereof (including the
related definitions) in a manner that does not materially adversely affect any
Holder;
(c) to provide for the assumption of the Company's obligations to the
Holders of the Notes by a successor to the Company pursuant to Article 5 hereof;
(d) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the legal
rights hereunder of any Holder of the Note; or
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(e) to comply with requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
7.02 hereof, the Trustee shall join with the Company in the execution of any
amended or supplemental Indenture authorized or permitted by the terms of this
Indenture and to make any further appropriate agreements and stipulations that
may be therein contained, but the Trustee shall not be obligated to enter into
such amended or supplemental Indenture that affects its own rights, duties or
immunities under this Indenture or otherwise.
Section 9.02. With Consent of Holders of Notes.
Except as provided below in this Section 9.02, the Company and the
Trustee may amend or supplement this Indenture (including Section 3.09, 4.10 and
4.14 hereof) and the Notes with the consent of the Holders of at least a
majority in principal amount of the Notes then outstanding voting as a single
class (including consents obtained in connection with a tender offer or exchange
offer for, or purchase of, the Notes), and, subject to Sections 6.04 and 6.07
hereof, any existing Default or Event of Default (other than a Default or Event
of Default in the payment of the principal of, premium, if any, or interest on
the Notes, except a payment default resulting from an acceleration that has been
rescinded) or compliance with any provision of this Indenture or the Notes may
be waived with the consent of the Holders of a majority in principal amount of
the then outstanding Notes voting as a single class (including consents obtained
in connection with a tender offer or exchange offer for, or purchase of, the
Notes).
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by
the Trustee of the documents described in Section 7.02 hereof, the Trustee shall
join with the Company in the execution of such amended or supplemental Indenture
unless such amended or supplemental Indenture directly affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise, in which case
the Trustee may in its discretion, but shall not be obligated to, enter into
such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of Notes
under this Section 9.02 to approve the particular form of any proposed amendment
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a
majority in aggregate principal amount of the Notes then outstanding voting as a
single class may waive compliance in a particular instance by the Company with
any provision of this Indenture or the Notes. However, without the consent of
each Holder affected, an amendment or waiver under this Section 9.02 may not
(with respect to any Notes held by a non-consenting Holder):
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(a) reduce the principal amount of Notes whose Holders must consent
to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any Note
or alter or waive any of the provisions with respect to the redemption of the
Notes except as provided above with respect to Sections 3.09, 4.10 and 4.14
hereof;
(c) reduce the rate of or change the time for payment of interest,
including default interest, on any Note;
(d) waive a Default or Event of Default in the payment of principal
of or premium, if any, or interest or Special Interest on the Notes (except a
rescission of acceleration of the Notes by the Holders of at least a majority in
aggregate principal amount of the then outstanding Notes and a waiver of the
payment default that resulted from such acceleration);
(e) make any Note payable in money other than that stated in the
Notes;
(f) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of Notes to receive payments
of principal of or interest or Special Interest on the Notes; or
(g) make any change in Section 6.04 or 6.07 hereof or in the
foregoing amendment and waiver provisions.
In addition, any amendment to, or waiver of, any of the provisions of
Article 10 of this Indenture relating to subordination that adversely affects
the rights of the Holders of Notes will require the consent of the Holders of at
least 75% in aggregate principal amount of Notes then outstanding.
Section 9.03. Compliance with Trust Indenture Act.
Every amendment or supplement to this Indenture or the Notes shall be
set forth in a amended or supplemental Indenture that complies with the TIA as
then in effect.
Section 9.04. Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
Section 9.05. Notation on or Exchange of Notes.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee
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shall, upon receipt of an Authentication Order, authenticate new Notes that
reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall
not affect the validity and effect of such amendment, supplement or waiver.
Section 9.06. Trustee to Sign Amendments, etc.
The Trustee shall sign any amended or supplemental Indenture
authorized pursuant to this Article Nine if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
The Company may not sign an amendment or supplemental Indenture until the Board
of Directors approves it. In executing any amended or supplemental indenture,
the Trustee shall be entitled to receive and (subject to Section 7.01 hereof)
shall be fully protected in relying upon, in addition to the documents required
by Section 11.04 hereof, an Officers' Certificate and an Opinion of Counsel
stating that the execution of such amended or supplemental indenture is
authorized or permitted by this Indenture.
ARTICLE 10
SUBORDINATION
Section 10.01. Agreement to Subordinate.
The Company agrees, and each Holder by accepting a Note agrees, that
the Indebtedness evidenced by the Notes is subordinated in right of payment, to
the extent and in the manner provided in this Article 10, to the prior payment
in full of all Senior Debt (whether outstanding on the date hereof or hereafter
created, incurred, assumed or guaranteed), and that the subordination is for the
benefit of the holders of Senior Debt.
Section 10.02. Certain Definitions.
"Designated Senior Debt" means (i) any Indebtedness outstanding under
the Senior Credit Facility and (ii) any other Senior Debt permitted under this
Indenture, the principal amount of which is $25.0 million or more and that has
been designated by the Company as "Designated Senior Debt."
"Representative" means the indenture trustee or other trustee, agent
or representative for any Senior Debt.
"Senior Debt" means (i) all Indebtedness of the Company outstanding
under Credit Facilities and all Hedging Obligations with respect thereto, (ii)
any other Indebtedness of the Company permitted to be incurred pursuant to this
Indenture, unless the instrument under which such Indebtedness is incurred
expressly provides that it is on a parity with or subordinated in right of
payment to the Notes, and (iii) all Obligations with respect to the items listed
in the preceding clauses (i) and (ii). Notwithstanding anything to the contrary
in the foregoing, Senior Debt shall not include (w) any liability for federal,
state, local or other taxes owed or owing by the Company, (x) any Indebtedness
of the Company to any of its Subsidiaries or other Affiliates, (y) any trade
payables or (z) the portion of any Indebtedness that is incurred in violation of
this Indenture; provided that in no event will Indebtedness under Credit
Facilities cease to be Senior Debt as a result of this clause (z) if an Officer
of the Company
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certifies at the time of borrowing under Credit Facilities that such borrowing
is permitted by the terms of the Indenture.
Section 10.03. Liquidation; Dissolution; Bankruptcy.
Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, in
an assignment for the benefit of the Company's creditors or any marshaling of
the Company's assets and liabilities:
(i) holders of Senior Debt shall be entitled to receive payment
in full of all Obligations due in respect of such Senior Debt (including
interest after the commencement of any such proceeding at the rate
specified in the applicable Senior Debt, whether or not allowable as a
claim in such proceeding) before Holders of the Notes shall be entitled to
receive any payment with respect to the Notes; and
(ii) until all Obligations with respect to Senior Debt (as
provided in clause (i) above) are paid in full, any distribution to which
Holders would be entitled but for this Article 10 shall be made to holders
of Senior Debt, as their interests may appear.
Section 10.04. Default on Designated Senior Debt.
(a) The Company may not make any payment or distribution to the
Trustee or any Holder in respect of Obligations with respect to the Notes and
may not acquire from the Trustee or any Holder any Notes for cash or property
until all principal and other Obligations with respect to the Senior Debt have
been paid in full if:
(i) a default in the payment of any Obligation on Designated
Senior Debt occurs and is continuing beyond any applicable grace period in
the agreement, indenture or other document governing such Designated
Senior Debt; or
(ii) a default, other than a payment default, on any series of
Designated Senior Debt occurs and is continuing that then permits holders
of that series of Designated Senior Debt to accelerate its maturity and
the Trustee receives a notice of the default (a "Payment Blockage Notice")
from the Company or the holders of any Designated Senior Debt. If the
Trustee receives any such Payment Blockage Notice, no subsequent Payment
Blockage Notice shall be effective for purposes of this Section unless and
until (A) at least 360 days shall have elapsed since the delivery of the
immediately prior Payment Blockage Notice and (B) all scheduled payments
of principal, premium, if any, and interest (including Special Interest)
on the Notes that have come due have been paid in full in cash. No
nonpayment default that existed or was continuing on the date of delivery
of any Payment Blockage Notice to the Trustee shall be, or be made, the
basis for a subsequent Payment Blockage Notice unless such default shall
have been cured or waived for a period of not less than 180 days.
(b) The Company may and shall resume payments on and distributions in
respect of the Notes upon the earlier of:
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(i) in the case of a payment default, the date upon which the
default is cured or waived, or
(ii) in the case of a default referred to in clause (ii) of
Section 10.04(a) hereof, the earlier of the date on which such nonpayment
default is cured or waived or 179 days pass after the date on which the
applicable Payment Blockage Notice is received, unless the maturity of any
Designated Senior Debt has been accelerated,
if this Article 10 otherwise permits the payment, distribution or acquisition at
the time of such payment or acquisition.
Section 10.05. Acceleration of Notes.
If payment of the Notes is accelerated because of an Event of
Default, the Company shall promptly notify holders of Senior Debt of the
acceleration.
Section 10.06. When Distribution Must Be Paid Over.
In the event that the Trustee or any Holder receives any payment of
any Obligations with respect to the Notes at a time when the Trustee or such
Holder, as applicable, has actual knowledge that such payment is prohibited by
Section 10.04 hereof, such payment shall be held by the Trustee or such Holder,
in trust for the benefit of, and shall be paid forthwith over and delivered,
upon written request, to, the holders of Senior Debt as their interests may
appear or their Representative under the indenture or other agreement (if any)
pursuant to which Senior Debt may have been issued, as their respective
interests may appear, for application to the payment of all Obligations with
respect to Senior Debt remaining unpaid to the extent necessary to pay such
Obligations in full in accordance with their terms, after giving effect to any
concurrent payment or distribution to or for the holders of Senior Debt.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform only such obligations on the part of the Trustee as are specifically set
forth in this Article 10, and no implied covenants or obligations with respect
to the holders of Senior Debt shall be read into this Indenture against the
Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt, and shall not be liable to any such holders if the
Trustee shall pay over or distribute to or on behalf of Holders or the Company
or any other Person money or assets to which any holders of Senior Debt shall be
entitled by virtue of this Article 10, except if such payment is made as a
result of the willful misconduct or gross negligence of the Trustee.
Section 10.07. Notice by Company.
The Company shall promptly notify the Trustee and the Paying Agent of
any facts known to the Company that would cause a payment of any Obligations
with respect to the Notes to violate this Article 10, but failure to give such
notice shall not affect the subordination of the Notes to the Senior Debt as
provided in this Article 10.
Section 10.08. Subrogation.
After all Senior Debt is paid in full and until the Notes are paid in
full, Holders of Notes shall be subrogated (equally and ratably with all other
Indebtedness pari passu with the Notes) to the rights of
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holders of Senior Debt to receive distributions applicable to Senior Debt to the
extent that distributions otherwise payable to the Holders of Notes have been
applied to the payment of Senior Debt. A distribution made under this Article 10
to holders of Senior Debt that otherwise would have been made to Holders of
Notes is not, as between the Company and Holders, a payment by the Company on
the Notes.
Section 10.09. Relative Rights.
This Article 10 defines the relative rights of Holders of Notes and
holders of Senior Debt. Nothing in this Indenture shall:
(i) impair, as between the Company and Holders of Notes, the
obligation of the Company, which is absolute and unconditional, to pay
principal of and interest on the Notes in accordance with their terms;
(ii) affect the relative rights of Holders of Notes and
creditors of the Company other than their rights in relation to holders of
Senior Debt; or
(iii) prevent the Trustee or any Holder of Notes from
exercising its available remedies upon a Default or Event of Default,
subject to the rights of holders and owners of Senior Debt to receive
distributions and payments otherwise payable to Holders of Notes.
If the Company fails because of this Article 10 to pay principal of
or interest on a Note on the due date, the failure is still a Default or Event
of Default.
Section 10.10. Subordination May Not Be Impaired by Company.
No right of any holder of Senior Debt to enforce the subordination of
the Indebtedness evidenced by the Notes shall be impaired by any act or failure
to act by the Company or any Holder or by the failure of the Company or any
Holder to comply with this Indenture.
Section 10.11. Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders of
Senior Debt, the distribution may be made and the notice given to their
Representative.
Upon any payment or distribution of assets of the Company referred to
in this Article 10, the Trustee and the Holders of Notes shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction or
upon any certificate of such Representative or of the liquidating trustee or
agent or other Person making any distribution to the Trustee or to the Holders
of Notes for the purpose of ascertaining the Persons entitled to participate in
such distribution, the holders of the Senior Debt and other Indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article 10.
Section 10.12. Rights of Trustee and Paying Agent.
Notwithstanding the provisions of this Article 10 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to
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<PAGE> 82
make payments on the Notes, unless the Trustee shall have received at its
Corporate Trust Office at least five Business Days prior to the date of such
payment written notice of facts that would cause the payment of any Obligations
with respect to the Notes to violate this Article 10. Only the Company or a
Representative may give the notice. Nothing in this Article 10 shall impair the
claims of, or payments to, the Trustee under or pursuant to Section 7.07 hereof.
The Trustee in its individual or any other capacity may hold Senior
Debt with the same rights it would have if it were not Trustee. Any Agent may do
the same with like rights.
Section 10.13. Authorization to Effect Subordination.
Each Holder of Notes, by the Holder's acceptance thereof, authorizes
and directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 10, and appoints the Trustee to act as such Holder's attorney-in-fact
for any and all such purposes. If the Trustee does not file a proper proof of
claim or proof of debt in the form required in any proceeding referred to in
Section 6.09 hereof at least 30 days before the expiration of the time to file
such claim, the Representatives are hereby authorized to file an appropriate
claim for and on behalf of the Holders of the Notes.
Section 10.14. Amendments.
The provisions of this Article 10 shall not be amended or modified
without the written consent of the holders of all Senior Debt.
ARTICLE 11
MISCELLANEOUS
Section 11.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts
with the duties imposed by TIA Section 318(c), the imposed duties shall control.
Section 11.02. Notices.
Any notice or communication by the Company or the Trustee to the
others is duly given if in writing and delivered in Person or mailed by first
class mail (registered or certified, return receipt requested), telecopier
(promptly confirmed in writing) or overnight air courier guaranteeing next day
delivery, to the others' address:
77
<PAGE> 83
If to the Company:
Vlasic Foods International Inc.
Vlasic Plaza
6 Executive Campus
Cherry Hill, NJ
08002-4112
Telecopier No.: (856) 969-7151
Attention: Corporate Secretary
With a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022-3897
Telecopier No.: (212) 735-2000
Attention: Susan J. Sutherland, Esq.
If to the Trustee:
The Bank of New York
101 Barclay Street, 21 West
New York, NY 10286
Telecopier No.: (212) 815-5915
Attention: Corporate Trust Trustee Administration
The Company or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when receipt acknowledged, if telecopied; and the
next Business Day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first
class mail, certified or registered, return receipt requested, or by overnight
air courier guaranteeing next day delivery to its address shown on the register
kept by the Registrar. Any notice or communication shall also be so mailed to
any Person described in TIA Section 313(c), to the extent required by the TIA.
Failure to mail a notice or communication to a Holder or any defect in it shall
not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
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<PAGE> 84
Section 11.03. Communication by Holders of Notes with Other Holders of Notes.
Holders may communicate pursuant to TIA Section 312(b) with other
Holders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar and anyone else shall have the protection of
TIA Section 312(c).
Section 11.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 11.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 11.05 hereof) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been satisfied.
Section 11.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA Section 314(a)(4)) shall comply with the provisions of
TIA Section 314(e) and shall include:
(a) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has
made such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has been
satisfied; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied.
Section 11.06. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting
of Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
Section 11.07. No Personal Liability of Directors, Officers, Employees and
Stockholders.
No past, present or future director, officer, employee, incorporator
or stockholder of the Company, as such, shall have any liability for any
obligations of the Company under the Notes or this
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<PAGE> 85
Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes.
Section 11.08. Governing Law.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE AND THE NOTES WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
Section 11.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret any other indenture, loan
or debt agreement of the Company or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
Section 11.10. Successors.
All agreements of the Company in this Indenture and the Notes shall
bind its successors. All agreements of the Trustee in this Indenture shall bind
its successors.
Section 11.11. Severability.
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 11.12. Counterpart Originals.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
Section 11.13. Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
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<PAGE> 86
SIGNATURES
Dated as of June 29, 1999
VLASIC FOODS INTERNATIONAL INC.
By: /s/ Mitchell P. Goldstein
--------------------------
Name: Mitchell P. Goldstein
Title: Vice President and Chief
Financial Officer
THE BANK OF NEW YORK, AS TRUSTEE
By: /s/ Mary LaGumina
---------------------------
Name: Mary LaGumina
Title: Assistant Vice President
<PAGE> 87
EXHIBIT A
[Face of Note]
________________________________________________________________________________
CUSIP ____________
10 1/4% [Series A] [Series B] Senior Subordinated Notes due 2009
No. ___ $____________
Vlasic Foods International Inc.
promises to pay to______________________________________________________________
or registered assigns,
the principal sum of ___________________________________________________________
Dollars on July 1, 2009.
Interest Payment Dates: January 1 and July 1
Record Dates: December 15 and June 15
VLASIC FOODS INTERNATIONAL INC.
By: ___________________________
Name:
Title:
Dated: _______________, ____
This is one of the Notes referred to in the within-mentioned Indenture:
THE BANK OF NEW YORK,
as Trustee
By: __________________________________
Authorized Signatory
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<PAGE> 88
[Back of Note]
10 1/4% [Series A] [Series B] Senior Subordinated Notes due 2009
[Insert the Global Note Legend, if applicable pursuant to the provisions of the
Indenture]
[Insert the Private Placement Legend, if applicable pursuant to the provisions
of the Indenture]
Capitalized terms used herein shall have the meanings assigned to
them in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Vlasic Foods International Inc., a New Jersey
corporation (the "Company"), promises to pay interest on the principal amount of
this Note at 10 1/4% per annum from June 29, 1999 until maturity and shall pay
the Special Interest payable pursuant to Section 2 of the Registration Rights
Agreement referred to below. The Company will pay interest and Special Interest
semi-annually in arrears on January 1 and June 1 of each year, or if any such
day is not a Business Day, on the next succeeding Business Day (each an
"Interest Payment Date"). Interest on the Notes will accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from the
date of issuance; provided that if there is no existing Default in the payment
of interest, and if this Note is authenticated between a record date referred to
on the face hereof and the next succeeding Interest Payment Date, interest shall
accrue from such next succeeding Interest Payment Date; provided, further, that
the first Interest Payment Date shall be January 1, 2000. The Company shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and premium, if any, from time to time on
demand at the then applicable interest rate to the extent lawful; it shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest and Special Interest
(without regard to any applicable grace periods) from time to time on demand at
the same rate to the extent lawful. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the Notes
(except defaulted interest) and Special Interest to the Persons who are
registered Holders of Notes at the close of business on the December 15 or June
15 next preceding the Interest Payment Date, even if such Notes are canceled
after such record date and on or before such Interest Payment Date, except as
provided in Section 2.12 of the Indenture with respect to defaulted interest.
The Notes will be payable as to principal, premium and Special Interest, if any,
and interest at the office or agency of the Company maintained for such purpose
within or without the City and State of New York, or, at the option of the
Company, payment of interest and Special Interest may be made by check mailed to
the Holders at their addresses set forth in the register of Holders, and
provided that payment by wire transfer of immediately available funds will be
required with respect to principal of and interest, premium and Special Interest
on, all Global Notes and all other Notes the Holders of which shall have
provided wire transfer instructions to the Company or the Paying Agent. Such
payment shall be in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, The Bank of New York, the
Trustee under the Indenture, will act as Paying Agent and Registrar. The Company
may change any Paying Agent or Registrar without notice to any Holder. The
Company or any of its Subsidiaries may act in any such capacity.
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<PAGE> 89
4. INDENTURE. The Company issued the Notes under an Indenture dated
as of June 29, 1999 ("Indenture") between the Company and the Trustee. The terms
of the Notes include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S.
Code Sections 77aaa-77bbbb). The Notes are subject to all such terms, and
Holders are referred to the Indenture and such Act for a statement of such
terms. To the extent any provision of this Note conflicts with the express
provisions of the Indenture, the provisions of the indenture shall govern and be
controlling. The Notes are obligations of the Company limited to $200 million in
aggregate principal amount.
5. OPTIONAL REDEMPTION.
(a) Except as set forth in subparagraph (b) of this Paragraph 5, the
Company shall not have the option to redeem the Notes prior to July 1, 2004.
Thereafter, the Company shall have the option to redeem the Notes, in whole or
in part, upon not less than 30 nor more than 60 days' notice, at the redemption
prices (expressed as percentages of principal amount) set forth below plus
accrued and unpaid interest and Special Interest thereon to the applicable
redemption date, if redeemed during the twelve-month period beginning on July 1
of the years indicated below:
Year Percentage
- ---- ----------
2004............................................................ 105.125%
2005............................................................ 103.417%
2006............................................................ 101.708%
2007 and thereafter............................................. 100.000%
(b) Notwithstanding the provisions of subparagraph (a) of this
Paragraph 5, at any time prior to July 1, 2002, the Company may on one or more
occasions redeem up to 35% of the aggregate principal amount of the Notes
originally issued under the Indenture at a redemption price of 110.25% of the
aggregate principal amount thereof, plus accrued and unpaid interest (including
Special Interest) to the redemption date, with the net cash proceeds of one or
more Public Equity Offerings provided that at least 65% of the aggregate
principal amount of the Notes originally issued under the Indenture remains
outstanding immediately after the occurrence of such redemption (excluding Notes
held by the Company and its Subsidiaries) and that such redemption occurs within
90 days of the date of the closing of such Public Equity Offering.
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Company shall not be
required to make mandatory redemption payments with respect to the Notes.
7. REPURCHASE AT OPTION OF HOLDER.
(a) If there is a Change of Control, the Company shall be required to
make an offer (a "Change of Control Offer") to repurchase all or any part (equal
to $1,000 or an integral multiple thereof) of each Holder's Notes at a purchase
price equal to 101% of the aggregate principal amount thereof plus accrued and
unpaid interest and Special Interest thereon, if any, to the date of purchase
(the "Change of Control Payment"). Within 30 days following any Change of
Control, the Company shall mail a notice to each Holder setting forth the
procedures governing the Change of Control Offer as required by the Indenture.
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(b) If the Company or a Restricted Subsidiary consummates any Asset
Sales, within five days of each date on which the aggregate amount of Excess
Proceeds exceeds $10 million, the Company shall commence an offer pursuant to
Section 3.09 of the Indenture (an "Asset Sale Offer") to all Holders of Notes
and all holders of other Indebtedness that is pari passu with the Notes
containing provisions similar to those set forth in the Indenture with respect
to offers to repurchase or redeem with the proceeds of sales of assets to
purchase the maximum principal amount of Notes and such other pari passu
Indebtedness that may be purchased out of the Excess Proceeds. The offer price
in any Asset Sale Offer will be equal to 100% of the principal amount thereof
plus accrued and unpaid interest and Special Interest thereon, if any, to the
date fixed for the closing of such offer, in accordance with the procedures set
forth in the Indenture. To the extent that the aggregate amount of Notes and
pari passu Indebtedness tendered pursuant to an Asset Sale Offer is less than
the Excess Proceeds, the Company (or such Subsidiary) may use such deficiency
for any purpose not otherwise prohibited by the Indenture. If the aggregate
principal amount of Notes and such other pari passu Indebtedness tendered into
such Asset Sale Offer exceeds the amount of Excess Proceeds, the Trustee shall
select the Notes and such other pari passu Indebtedness to be purchased on a pro
rata basis based on the principal amount of Notes and such other pari passu
Indebtedness tendered. Holders of Notes that are the subject of an offer to
purchase will receive an Asset Sale Offer from the Company prior to any related
purchase date and may elect to have such Notes purchased by completing the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Notes.
8. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least
30 days but not more than 60 days before the redemption date to each Holder
whose Notes are to be redeemed at its registered address. Notes in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Notes held by a Holder are to be redeemed. On and
after the redemption date interest ceases to accrue on Notes or portions thereof
called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture. The Registrar and the Trustee may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and the Company may require a Holder to pay any transfer taxes or similar
governmental charges permitted by Section 2.06 the Indenture. The Company need
not exchange or register the transfer of any Note or portion of a Note selected
for redemption, except for the unredeemed portion of any Note being redeemed in
part. Also, the Company need not exchange or register the transfer of any Notes
for a period of 15 days before the mailing of a notice of Notes to be redeemed
or during the period between a record date and the next succeeding Interest
Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be
treated as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions,
the Indenture or the Notes may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the then outstanding
Notes voting as a single class, and any existing default or compliance with any
provision of the Indenture or the Notes may be waived with the consent of the
Holders of a majority in principal amount of the then outstanding Notes voting
as a single class. Without the consent of any Holder of a Note, the Indenture or
the Notes may be amended or supplemented to cure any ambiguity, defect or
inconsistency, to provide for uncertificated Notes in addition to or in place of
certificated Notes, to provide for the assumption of the Company's obligations
to Holders of the Notes in
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<PAGE> 91
case of a merger or consolidation or sale of all or substantially all of the
Company's assets, to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the legal
rights under the Indenture of any such Holder, or to comply with the
requirements of the SEC in order to effect or maintain the qualification of the
Indenture under the Trust Indenture Act.
12. DEFAULTS AND REMEDIES. Events of Default include: (i) default for
30 days in the payment when due of interest or Special Interest on the Notes,
whether or not prohibited by the subordination provisions of the Indenture; (ii)
default in payment when due of principal of or premium, if any, on the Notes
when the same becomes due and payable at maturity, upon redemption (including in
connection with an offer to purchase) or otherwise, whether or not prohibited by
the subordination provisions of the Indenture; (iii) failure to comply with the
provisions of Section 5.01 of the Indenture; (iv) failure for 30 days after
notice from the Trustee or the Holders of at least 25% in aggregate principal
amount of the Notes then outstanding to comply with any of the provisions of
Section 4.03, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.14, 4.15, 4.16, 4.17 or 4.18
of the Indenture; (v) failure by the Company or any of its Subsidiaries, for 60
days after notice to the Company from the Trustee or the Holders of at least 25%
in aggregate principal amount of the Notes then outstanding voting as a single
class, to observe or perform any other covenant, representation, warranty or
other agreement in the Indenture or this Note; (vi) default under certain other
agreements relating to Indebtedness of the Company which default is caused by a
Payment Default or results in the acceleration of such Indebtedness prior to its
express maturity; (vii) certain final judgments for the payment of money that
remain undischarged for a period of 60 days; and (viii) certain events of
bankruptcy or insolvency with respect to the Company or any of its Restricted
Subsidiaries that is a Significant Subsidiary or any group of Restricted
Subsidiaries that, taken together, would constitute a Restricted Subsidiary.
Subject to complying with the provisions of Section 6.02 of the Indenture
relating to Designated Senior Date if any Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount of
the then outstanding Notes may declare all the Notes to be due and payable.
Notwithstanding the foregoing, in the case of an Event of Default arising from
certain events of bankruptcy or insolvency, all outstanding Notes will become
due and payable without further action or notice. Holders may not enforce the
Indenture or the Notes except as provided in the Indenture. Subject to certain
limitations, Holders of a majority in principal amount of the then outstanding
Notes may direct the Trustee in its exercise of any trust or power. The Trustee
may withhold from Holders of the Notes notice of any continuing Default or Event
of Default (except a Default or Event of Default relating to the payment of
principal or interest) if it determines that withholding notice is in their
interest. The Holders of a majority in aggregate principal amount of the Notes
then outstanding by notice to the Trustee may on behalf of the Holders of all of
the Notes waive any existing Default or Event of Default and its consequences
under the Indenture if the recession would not conflict with any judgment or
decree except a continuing Default or Event of Default in the payment of
interest (including Special Interest) on, or principal or premium of, the Notes.
The Company is required to deliver to the Trustee annually a statement regarding
compliance with the Indenture, and the Company is required upon becoming aware
of any Default or Event of Default, to deliver to the Trustee a statement
specifying such Default or Event of Default.
13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.
14. NO RECOURSE AGAINST OTHERS. A director, officer, employee,
incorporator or stockholder, of the Company, as such, shall not have any
liability for any obligations of the Company
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<PAGE> 92
under the Notes or the Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder by accepting a Note
waives and releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes.
15. AUTHENTICATION. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.
16. ABBREVIATIONS. Customary abbreviations may be used in the name of
a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND
RESTRICTED DEFINITIVE NOTES. In addition to the rights provided to Holders of
Notes under the Indenture, Holders of Restricted Global Notes and Restricted
Definitive Notes shall have all the rights set forth in the Exchange and
Registration Rights Agreement dated as of June 29, 1999, between the Company and
the parties named on the signature pages thereof (the "Registration Rights
Agreement").
18. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Vlasic Foods International Inc.
Vlasic Plaza
6 Executive Campus
Cherry Hill, NJ 08002-4112
Attention: Corporate Secretary.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE AND THE NOTES WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
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<PAGE> 93
ASSIGNMENT FORM
To assign this Note, fill in the form below:
(I) or (we) assign and transfer this Note to: _________________________________
(Insert assignee's legal name)
_______________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint ______________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Date: ___________________________
Your Signature: _________________________
(Sign exactly as your name appears on
the face of this Note)
Signature Guarantee*: ____________________________________
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
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<PAGE> 94
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.14 of the Indenture, check the appropriate box
below:
[ ] Section 4.10 [ ] Section 4.14
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.14 of the Indenture, state the
amount you elect to have purchased:
$ ___________________
Date: _____________________
Your Signature: ________________________
(Sign exactly as your name appears on
the face of this Note)
Tax Identification No.: ________________
Signature Guarantee*: ______________________________
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
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<PAGE> 95
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE*
The following exchanges of a part of this Global Note for an interest
in another Global Note or for a Definitive Note, or exchanges of a part of
another Global Note or Definitive Note for an interest in this Global Note, have
been made:
<TABLE>
<CAPTION>
Principal Amount Signature of
Amount of decrease in Amount of increase in of authorized signatory
Principal Amount Principal Amount this Global Note of
of of following such decrease Trustee or Note
Date of Exchange this Global Note this Global Note (or increase) Custodian
---------------- ---------------- ---------------- ------------- ---------
<S> <C> <C> <C> <C>
</TABLE>
* This schedule should be included only if the Note is issued in global form.
A-9
<PAGE> 96
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
Vlasic Foods International Inc.
Vlasic Plaza
6 Executive Campus
Cherry Hill, NJ 08002-4112
The Bank of New York
101 Barclay Street, 21 West
New York, NY 10286
Re: 10 1/4% Senior Subordinated Notes due 2009
Reference is hereby made to the Indenture, dated as of June 29, 1999
(the "Indenture"), between Vlasic Foods International Inc., as issuer (the
"Company"), and The Bank of New York, as trustee. Capitalized terms used but not
defined herein shall have the meanings given to them in the Indenture.
___________________, (the "Transferor") owns and proposes to transfer
the Note[s] or interest in such Note[s] specified in Annex A hereto, in the
principal amount of $___________ in such Note[s] or interests (the "Transfer"),
to ___________________________ (the "Transferee"), as further specified in Annex
A hereto. In connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
INTEREST IN THE 144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO RULE 144A. The
Transfer is being effected pursuant to and in accordance with Rule 144A under
the United States Securities Act of 1933, as amended (the "Securities Act"),
and, accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Note is being transferred to a Person that the Transferor
reasonably believed and believes is purchasing the beneficial interest or
Definitive Note for its own account, or for one or more accounts with respect to
which such Person exercises sole investment discretion, and such Person and each
such account is a "qualified institutional buyer" within the meaning of Rule
144A in a transaction meeting the requirements of Rule 144A and such Transfer is
in compliance with any applicable blue sky securities laws of any state of the
United States. Upon consummation of the proposed Transfer in accordance with the
terms of the Indenture, the transferred beneficial interest or Definitive Note
will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the 144A Global Note and/or the Definitive Note and
in the Indenture and the Securities Act.
2. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
INTEREST IN THE REGULATION S GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO
REGULATION S. The Transfer is being effected pursuant to and in accordance with
Rule 903 or Rule 904 under the Securities Act and, accordingly, the Transferor
hereby further certifies that (i) the Transfer is not being made to a person in
the United States and (x) at the time the buy order was originated, the
Transferee was outside the United States or such Transferor and any Person
acting on its behalf reasonably believed and believes that the Transferee was
outside the United States or (y) the transaction was executed in, on or through
the facilities of a designated offshore securities market and neither such
Transferor nor any Person acting on its behalf knows that the
B-1
<PAGE> 97
transaction was prearranged with a buyer in the United States, (ii) no directed
selling efforts have been made in contravention of the requirements of Rule
903(b) or Rule 904(b) of Regulation S under the Securities Act, (iii) the
transaction is not part of a plan or scheme to evade the registration
requirements of the Securities Act and (iv) if the proposed transfer is being
made prior to the expiration of the Restricted Period, the transfer is not being
made to a U.S. Person or for the account or benefit of a U.S. Person (other than
an Initial Purchaser). Upon consummation of the proposed transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will be subject to the restrictions on Transfer enumerated in
the Private Placement Legend printed on the Regulation S Global Note and/or the
Definitive Note and in the Indenture and the Securities Act.
3. [ ] CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A
BENEFICIAL INTEREST IN THE IAI GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO ANY
PROVISION OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The
Transfer is being effected in compliance with the transfer restrictions
applicable to beneficial interests in Restricted Global Notes and Restricted
Definitive Notes and pursuant to and in accordance with the Securities Act and
any applicable blue sky securities laws of any state of the United States, and
accordingly the Transferor hereby further certifies that (check one):
(a) [ ] such Transfer is being effected pursuant to and in
accordance with Rule 144 under the Securities Act;
or
(b) [ ] such Transfer is being effected to the Company or a
subsidiary thereof;
or
(c) [ ] such Transfer is being effected pursuant to an
effective registration statement under the Securities Act and in
compliance with the prospectus delivery requirements of the Securities
Act;
or
(d) [ ] such Transfer is being effected to an Institutional
Accredited Investor and pursuant to an exemption from the registration
requirements of the Securities Act other than Rule 144A, Rule 144 or Rule
904, and the Transferor hereby further certifies that it has not engaged
in any general solicitation within the meaning of Regulation D under the
Securities Act and the Transfer complies with the transfer restrictions
applicable to beneficial interests in a Restricted Global Note or
Restricted Definitive Notes and the requirements of the exemption claimed,
which certification is supported by (1) a certificate executed by the
Transferee in the form of Exhibit D to the Indenture and (2) if such
Transfer is in respect of a principal amount of Notes at the time of
transfer of less than $250,000, an Opinion of Counsel provided by the
Transferor or the Transferee (a copy of which the Transferor has attached
to this certification), to the effect that such Transfer is in compliance
with the Securities Act. Upon consummation of the proposed transfer in
accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the IAI
Global Note and/or the Definitive Notes and in the Indenture and the
Securities Act.
B-2
<PAGE> 98
4. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
INTEREST IN AN UNRESTRICTED GLOBAL NOTE OR OF AN UNRESTRICTED DEFINITIVE NOTE.
(a) [ ] CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer
is being effected pursuant to and in accordance with Rule 144 under the
Securities Act and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any state of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will no longer be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes, on Restricted Definitive Notes and in the Indenture.
(b) [ ] CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The
Transfer is being effected pursuant to and in accordance with Rule 903 or Rule
904 under the Securities Act and in compliance with the transfer restrictions
contained in the Indenture and any applicable blue sky securities laws of any
state of the United States and (ii) the restrictions on transfer contained in
the Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act. Upon consummation of the proposed
Transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Note will no longer be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the Restricted Global Notes, on Restricted Definitive Notes and in the
Indenture.
(c) [ ] CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The
Transfer is being effected pursuant to and in compliance with an exemption from
the registration requirements of the Securities Act other than Rule 144, Rule
903 or Rule 904 and in compliance with the transfer restrictions contained in
the Indenture and any applicable blue sky securities laws of any State of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will not be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes or Restricted Definitive Notes and in the Indenture.
This certificate and the statements contained herein are made for
your benefit and the benefit of the Company.
__________________________________________
[Insert Name of Transferor]
By: ______________________________________
Name:
Title:
Dated: ________________________
B-3
<PAGE> 99
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) [ ] a beneficial interest in the:
(i) [ ] 144A Global Note (CUSIP _________ ), or
(ii) [ ] Regulation S Global Note (CUSIP _______), or
(iii) [ ] IAI Global Note (CUSIP __________ ); or
(b) [ ] a Restricted Definitive Note.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) [ ] a beneficial interest in the:
(i) [ ] 144A Global Note (CUSIP __________ ), or
(ii) [ ] Regulation S Global Note (CUSIP ______ ), or
(iii) [ ] IAI Global Note (CUSIP ____________ ); or
(iv) [ ] Unrestricted Global Note (CUSIP _____ ); or
(b) [ ] a Restricted Definitive Note; or
(c) [ ] an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.
B-4
<PAGE> 100
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
Vlasic Foods International Inc.
Vlasic Plaza
6 Executive Campus
Cherry Hill, NJ 08002-4112
The Bank of New York
101 Barclay Street, 21 West
New York, NY 10286
Re: 10-1/4% Senior Subordinated Notes due 2009
(CUSIP ____________)
Reference is hereby made to the Indenture, dated as of June 29, 1999
(the "Indenture"), between Vlasic Foods International Inc., as issuer (the
"Company"), and The Bank of New York, as trustee. Capitalized terms used but not
defined herein shall have the meanings given to them in the Indenture.
__________________________, (the "Owner") owns and proposes to
exchange the Note[s] or interest in such Note[s] specified herein, in the
principal amount of $____________ in such Note[s] or interests (the "Exchange").
In connection with the Exchange, the Owner hereby certifies that:
1. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN
A RESTRICTED GLOBAL NOTE FOR UNRESTRICTED DEFINITIVE NOTES OR BENEFICIAL
INTERESTS IN AN UNRESTRICTED GLOBAL NOTE
(a) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection
with the Exchange of the Owner's beneficial interest in a Restricted Global Note
for a beneficial interest in an Unrestricted Global Note in an equal principal
amount, the Owner hereby certifies (i) the beneficial interest is being acquired
for the Owner's own account without transfer, (ii) such Exchange has been
effected in compliance with the transfer restrictions applicable to the Global
Notes and pursuant to and in accordance with the United States Securities Act of
1933, as amended (the "Securities Act"), (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act and (iv) the beneficial
interest in an Unrestricted Global Note is being acquired in compliance with any
applicable blue sky securities laws of any state of the United States.
(b) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Exchange of
the Owner's beneficial interest in a Restricted Global Note for an Unrestricted
Definitive Note, the Owner hereby certifies (i) the Definitive Note is being
acquired for the Owner's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to the
Restricted Global Notes and pursuant to and in accordance with the Securities
Act, (iii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act and (iv) the Definitive Note is being acquired in compliance
with any applicable blue sky securities laws of any state of the United States.
C-1
<PAGE> 101
(c) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the
Owner's Exchange of a Restricted Definitive Note for a beneficial interest in an
Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest
is being acquired for the Owner's own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to Restricted Definitive Notes and pursuant to and in accordance with
the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the beneficial interest is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.
(d) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
UNRESTRICTED DEFINITIVE NOTE. In connection with the Owner's Exchange of a
Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby
certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's
own account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
Unrestricted Definitive Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.
2. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN
RESTRICTED GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS
IN RESTRICTED GLOBAL NOTES
(a) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE. In connection with the Exchange of
the Owner's beneficial interest in a Restricted Global Note for a Restricted
Definitive Note with an equal principal amount, the Owner hereby certifies that
the Restricted Definitive Note is being acquired for the Owner's own account
without transfer. Upon consummation of the proposed Exchange in accordance with
the terms of the Indenture, the Restricted Definitive Note issued will continue
to be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Definitive Note and in the Indenture
and the Securities Act.
(b) CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE. In connection with the Exchange
of the Owner's Restricted Definitive Note for a beneficial interest in the
[CHECK ONE] [ ] 144A Global Note, [ ] Regulation S Global Note, [ ] IAI Global
Note with an equal principal amount, the Owner hereby certifies (i) the
beneficial interest is being acquired for the Owner's own account without
transfer and (ii) such Exchange has been effected in compliance with the
transfer restrictions applicable to the Restricted Global Notes and pursuant to
and in accordance with the Securities Act, and in compliance with any applicable
blue sky securities laws of any state of the United States. Upon consummation of
the proposed Exchange in accordance with the terms of the Indenture, the
beneficial interest issued will be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the relevant Restricted
Global Note and in the Indenture and the Securities Act.
C-2
<PAGE> 102
EXHIBIT C
This certificate and the statements contained herein are made for
your benefit and the benefit of the Company.
________________________________
[Insert Name of Transferor]
By: ____________________________
Name:
Title:
Dated: __________________________
C-3
<PAGE> 103
EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Vlasic Foods International Inc.
Vlasic Plaza
6 Executive Campus
Cherry Hill, NJ 08002-4112
The Bank of New York
101 Barclay Street, 21 West
New York, NY 10286
Re: 10-1/4% Senior Subordinated Notes due 2009
Reference is hereby made to the Indenture, dated as of June 29, 1999
(the "Indenture"), between Vlasic Foods International Inc., as issuer (the
"Company"), and The Bank of New York, as trustee. Capitalized terms used but not
defined herein shall have the meanings given to them in the Indenture.
In connection with our proposed purchase of $____________ aggregate
principal amount of:
(a) [ ] a beneficial interest in a Global Note, or
(b) [ ] a Definitive Note,
we confirm that:
1. We understand that any subsequent transfer of the Notes or any
interest therein is subject to certain restrictions and conditions set forth in
the Indenture and the undersigned agrees to be bound by, and not to resell,
pledge or otherwise transfer the Notes or any interest therein except in
compliance with, such restrictions and conditions and the United States
Securities Act of 1933, as amended (the "Securities Act").
2. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes and any interest therein
may not be offered or sold except as permitted in the following sentence. We
agree, on our own behalf and on behalf of any accounts for which we are acting
as hereinafter stated, that if we should sell the Notes or any interest therein,
we will do so only (A) to the Company or any subsidiary thereof, (B) in
accordance with Rule 144A under the Securities Act to a "qualified institutional
buyer" (as defined therein), (C) to an institutional "accredited investor" (as
defined below) that, prior to such transfer, furnishes (or has furnished on its
behalf by a U.S. broker-dealer) to you and to the Company a signed letter
substantially in the form of this letter and , if such transfer is in respect of
a principal amount of Notes, at the time of transfer of less than $250,000, an
Opinion of Counsel in form reasonably acceptable to the Company to the effect
that such transfer is in compliance with the Securities Act, (D) outside the
United States in accordance with Rule 904 of Regulation S under the Securities
Act, (E) pursuant to the provisions of Rule 144(k) under the Securities Act or
(F) pursuant to an effective registration statement under the Securities Act,
and we further agree to provide to any person purchasing the Definitive Note or
beneficial interest in a Global Note from us in a transaction meeting the
requirements of clauses (A) through (E) of this paragraph a notice advising such
purchaser that resales thereof are restricted as stated herein.
D-1
<PAGE> 104
EXHIBIT D
3. We understand that, on any proposed resale of the Notes or
beneficial interest therein, we will be required to furnish to you and the
Company such certifications, legal opinions and other information as you and the
Company may reasonably require to confirm that the proposed sale complies with
the foregoing restrictions. We further understand that the Notes purchased by us
will bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Notes, and we and
any accounts for which we are acting are each able to bear the economic risk of
our or its investment.
5. We are acquiring the Notes or beneficial interest therein
purchased by us for our own account or for one or more accounts (each of which
is an institutional "accredited investor") as to each of which we exercise sole
investment discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
_______________________________________
[Insert Name of Accredited Investor]
By: __________________________________
Name:
Title:
Dated: _________________________
D-2
<PAGE> 1
EXHIBIT 4.3
022411-0074
VLASIC FOODS INTERNATIONAL INC.
10 1/4% SENIOR SUBORDINATED NOTES DUE 2009
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
JUNE 29, 1999
Goldman, Sachs & Co.,
Chase Securities Inc.
Lehman Brothers Inc.
J.P. Morgan & Co.
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Ladies and Gentlemen:
Vlasic Foods International Inc., a New Jersey corporation (the
"COMPANY"), proposes to issue and sell to the Purchasers (as defined herein)
upon the terms set forth in the Purchase Agreement (as defined herein) its
10 1/4% Senior Subordinated Notes due 2009. As an inducement to the Purchasers
to enter into the Purchase Agreement and in satisfaction of a condition to the
obligations of the Purchasers thereunder, the Company agrees with the Purchasers
for the benefit of holders (as defined herein) from time to time of the
Registrable Securities (as defined herein) as follows:
1. Certain Definitions. For purposes of this Exchange and Registration
Rights Agreement, the following terms shall have the following respective
meanings:
"BASE INTEREST" shall mean the interest that would otherwise accrue on
the Securities under the terms thereof and the Indenture, without giving
effect to the provisions of this Agreement.
The term "BROKER-DEALER" shall mean any broker or dealer registered
with the Commission under the Exchange Act.
"CLOSING DATE" shall mean the date on which the Securities are
initially issued.
<PAGE> 2
"COMMISSION" shall mean the United States Securities and Exchange
Commission, or any other federal agency at the time administering the
Exchange Act or the Securities Act, whichever is the relevant statute for
the particular purpose.
"CONDUCT RULES" shall have the meaning assigned thereto in Section
3(d)(xix) hereof.
"EFFECTIVE TIME" in the case of (i) an Exchange Registration, shall
mean the time and date as of which the Commission declares the Exchange
Registration Statement effective or as of which the Exchange Registration
Statement otherwise becomes effective and (ii) a Shelf Registration, shall
mean the time and date as of which the Commission declares the Shelf
Registration Statement effective or as of which the Shelf Registration
Statement otherwise becomes effective.
"ELECTING HOLDER" shall mean any holder of Registrable Securities that
has returned a completed and signed Notice and Questionnaire to the Company
in accordance with Section 3(d)(ii) or 3(d)(iii) hereof.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, or any
successor thereto, as the same shall be amended from time to time.
"EXCHANGE OFFER" shall have the meaning assigned thereto in Section
2(a) hereof.
"EXCHANGE REGISTRATION" shall have the meaning assigned thereto in
Section 3(c) hereof.
"EXCHANGE REGISTRATION STATEMENT" shall have the meaning assigned
thereto in Section 2(a) hereof.
"EXCHANGE SECURITIES" shall have the meaning assigned thereto in
Section 2(a) hereof.
The term "HOLDER" shall mean each of the Purchasers and other persons
who acquire Registrable Securities from time to time (including any
successors or assigns), in each case for so long as such person owns any
Registrable Securities.
"INDENTURE" shall mean the Indenture, dated as of June 29, 1999,
between the Company and The Bank of New York, as Trustee, as the same shall
be amended from time to time.
"NASD" shall have the meaning assigned thereto in Section 3(d)(xix)
hereof.
"NOTICE AND QUESTIONNAIRE" means a Notice of Registration Statement and
Selling Securityholder Questionnaire substantially in the form of Exhibit A
hereto.
The term "PERSON" shall mean a corporation, association, partnership,
organization, business, individual, government or political subdivision
thereof or governmental agency.
"PURCHASE AGREEMENT" shall mean the Purchase Agreement, dated as of
June 22, 1999, between the Purchasers and the Company relating to the
Securities.
"PURCHASERS" shall mean the Purchasers named in Schedule I to the
Purchase Agreement.
2
<PAGE> 3
"REGISTRABLE SECURITIES" shall mean the Securities; provided, however,
that a Security shall cease to be a Registrable Security when (i) in the
circumstances contemplated by Section 2(a) hereof, the Security has been
exchanged for an Exchange Security in an Exchange Offer as contemplated in
Section 2(a) hereof (provided that any Exchange Security that, pursuant to
the last two sentences of Section 2(a), is included in a prospectus for use
in connection with resales by broker-dealers shall be deemed to be a
Registrable Security with respect to Sections 5, 6 and 9 until resale of
such Registrable Security has been effected within the 180-day period
referred to in Section 2(a)); (ii) in the circumstances contemplated by
Section 2(b) hereof, a Shelf Registration Statement registering such
Security under the Securities Act has been declared or becomes effective
and such Security has been sold or otherwise transferred by the holder
thereof pursuant to and in a manner contemplated by such effective Shelf
Registration Statement; (iii) such Security is sold pursuant to Rule 144
under circumstances in which any legend borne by such Security relating to
restrictions on transferability thereof, under the Securities Act or
otherwise, is removed by the Company or pursuant to the Indenture; (iv)
such Security is eligible to be sold pursuant to paragraph (k) of Rule 144;
or (v) such Security shall cease to be outstanding.
"REGISTRATION DEFAULT" shall have the meaning assigned thereto in
Section 2(c) hereof.
"REGISTRATION DEFAULT PERIOD" shall have the meaning assigned thereto
in Section 2(c) hereof.
"REGISTRATION EXPENSES" shall have the meaning assigned thereto in
Section 4 hereof.
"RESALE PERIOD" shall have the meaning assigned thereto in Section 2(a)
hereof.
"RESTRICTED HOLDER" shall mean (i) a holder that is an affiliate of the
Company within the meaning of Rule 405, (ii) a holder who acquires Exchange
Securities outside the ordinary course of such holder's business, (iii) a
holder who has arrangements or understandings with any person to
participate in the Exchange Offer for the purpose of distributing Exchange
Securities and (iv) a holder that is a broker-dealer, but only with respect
to Exchange Securities received by such broker-dealer pursuant to an
Exchange Offer in exchange for Registrable Securities acquired by the
broker-dealer directly from the Company.
"RULE 144," "RULE 405" and "RULE 415" shall mean, in each case, such
rule promulgated under the Securities Act (or any successor provision), as
the same shall be amended from time to time.
"SECURITIES" shall mean, collectively, the 10 1/4% Senior Subordinated
Notes due 2009 of the Company to be issued and sold to the Purchasers, and
securities issued in exchange therefor or in lieu thereof pursuant to the
Indenture.
"SECURITIES ACT" shall mean the Securities Act of 1933, or any
successor thereto, as the same shall be amended from time to time.
"SHELF REGISTRATION" shall have the meaning assigned thereto in Section
2(b) hereof.
"SHELF REGISTRATION STATEMENT" shall have the meaning assigned thereto
in Section 2(b) hereof.
3
<PAGE> 4
"SPECIAL INTEREST" shall have the meaning assigned thereto in Section
2(c) hereof.
"TRUST INDENTURE ACT" shall mean the Trust Indenture Act of 1939, or
any successor thereto, and the rules, regulations and forms promulgated
thereunder, all as the same shall be amended from time to time.
Unless the context otherwise requires, any reference herein to a
"Section" or "clause" refers to a Section or clause, as the case may be, of
this Exchange and Registration Rights Agreement, and the words "herein,"
"hereof" and "hereunder" and other words of similar import refer to this
Exchange and Registration Rights Agreement as a whole and not to any
particular Section or other subdivision. Unless the context otherwise
requires, any reference to a statue, rule or regulation refers to the same
(including any successor statute, rule or regulation thereto) as it may be
amended from time to time.
2. Registration Under the Securities Act.
(a) Except as set forth in Section 2(b) below, the Company agrees to
file under the Securities Act, as soon as practicable, but no later than 90
days after the Closing Date, a registration statement relating to an offer
to exchange (such registration statement, the "EXCHANGE REGISTRATION
STATEMENT," and such offer, the "EXCHANGE OFFER") any and all of the
Securities for a like aggregate principal amount of debt securities issued
by the Company, which debt securities are substantially identical to the
Securities (and are entitled to the benefits of a trust indenture which is
substantially identical to the Indenture or is the Indenture and which has
been qualified under the Trust Indenture Act), except that they have been
registered pursuant to an effective registration statement under the
Securities Act and do not contain provisions for the additional interest
contemplated in Section 2(c) below (such new debt securities hereinafter
called "EXCHANGE SECURITIES"). The Company agrees to use all commercially
reasonable efforts to cause the Exchange Registration Statement to become
effective under the Securities Act as soon as practicable, but no later
than 180 days after the Closing Date. The Exchange Offer will be registered
under the Securities Act on the appropriate form and will comply with all
applicable tender offer rules and regulations under the Exchange Act. The
Company further agrees to use all commercially reasonable efforts to
commence and complete the Exchange Offer promptly, but no later than 45
business days after such Exchange Registration Statement has become
effective, hold the Exchange Offer open for at least 30 days and issue
Exchange Securities for all Registrable Securities that have been properly
tendered and not withdrawn on or prior to the expiration of the Exchange
Offer. The Exchange Offer will be deemed to have been "completed" only if
the debt securities received by holders other than Restricted Holders in
the Exchange Offer for Registrable Securities are, upon receipt,
transferable by each such holder without restriction under Section 5 of the
Securities Act and the Exchange Act (except for the requirement to deliver
a prospectus included in the Exchange Registration Statement applicable to
resales by any broker-dealer of Exchange Securities received by such
broker-dealer pursuant to an Exchange Offer in exchange for Registrable
Securities other than those acquired by the broker-dealer directly from the
Company) and without material restrictions under the blue sky or securities
laws of a substantial majority of the States of the United States of
America. The Exchange Offer shall be deemed to have been completed upon the
earlier to occur of (i) the Company having exchanged the Exchange
Securities for all outstanding Registrable Securities pursuant to the
Exchange Offer and (ii) the Company having exchanged, pursuant to the
Exchange Offer, Exchange Securities for all Registrable Securities that
have been properly tendered and not withdrawn
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<PAGE> 5
before the expiration of the Exchange Offer, which shall be on a date that
is at least 30 days following the commencement of the Exchange Offer. The
Company agrees (x) to include in the Exchange Registration Statement a
prospectus for use in any resales by any holder of Exchange Securities that
is a broker-dealer and (y) to keep such Exchange Registration Statement
effective for a period (the "RESALE PERIOD") beginning when Exchange
Securities are first issued in the Exchange Offer and ending upon the
earlier of the expiration of the 120th day after the Exchange Offer has
been completed or such time as such broker-dealers no longer own any
Registrable Securities. With respect to such Exchange Registration
Statement, such holders shall have the benefit of the rights of
indemnification and contribution set forth in Sections 6(a), (c), (d) and
(e) hereof.
(b) If (i) the Company is not (a) required to file the Exchange Offer
Registration Statement or (b) permitted to consummate the Exchange Offer
because the Exchange Offer is not permitted by applicable law or Commission
policy, (ii) any Holder of Transfer Restricted Securities notifies the
Company prior to the 20th day following consummation of the Exchange Offer
that (a) it is prohibited by law or Commission policy from participating in
the Exchange Offer, (b) that it may not resell the Exchange Securities
acquired by it in the Exchange Offer to the public without delivering a
prospectus and the prospectus contained in the Exchange Offer Registration
Statement is not appropriate or available for such resales or that it is a
broker-dealer and owns Securities acquired directly from the Company or an
affiliate of the Company, the Company shall, in lieu of (or, in the case of
clause (ii), in addition to) conducting the Exchange Offer contemplated by
Section 2(a), use all commercially reasonable efforts to file under the
Securities Act as soon as practicable, but no later than the later of 30
days after the time such obligation to file arises, a "shelf" registration
statement providing for the registration of, and the sale on a continuous
or delayed basis by the holders of, all of the Registrable Securities,
pursuant to Rule 415 or any similar rule that may be adopted by the
Commission (such filing, the "SHELF REGISTRATION" and such registration
statement, the "SHELF REGISTRATION STATEMENT"). The Company agrees to use
all commercially reasonable efforts (x) to cause the Shelf Registration
Statement to become or be declared effective on or prior to 90 days after
such obligation to file arises and to keep such Shelf Registration
Statement continuously effective for a period ending on the earlier of the
second anniversary of the Effective Time or such time as there are no
longer any Registrable Securities outstanding, provided, however, that no
holder shall be entitled to be named as a selling securityholder in the
Shelf Registration Statement or to use the prospectus forming a part
thereof for resales of Registrable Securities unless such holder is an
Electing Holder, and (y) after the Effective Time of the Shelf Registration
Statement, promptly upon the request of any holder of Registrable
Securities that is not then an Electing Holder, to take any action
reasonably necessary to enable such holder to use the prospectus forming a
part thereof for resales of Registrable Securities, including, without
limitation, any action necessary to identify such holder as a selling
securityholder in the Shelf Registration Statement, provided, however, that
nothing in this clause (y) shall relieve any such holder of the obligation
to return a completed and signed Notice and Questionnaire to the Company in
accordance with Section 3(d)(iii) hereof. The Company further agrees to
supplement or make amendments to the Shelf Registration Statement, as and
when required by the rules, regulations or instructions applicable to the
registration form used by the Company for such Shelf Registration Statement
or by the Securities Act or rules and regulations thereunder for shelf
registration, and the Company agrees to furnish to each Electing Holder
copies of any such supplement or amendment prior to its being used or
promptly following its filing with the Commission.
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<PAGE> 6
(c) In the event that (i) the Company has not filed the Exchange
Registration Statement or Shelf Registration Statement on or before the
date on which such registration statement is required to be filed pursuant
to Section 2(a) or 2(b), respectively, or (ii) such Exchange Registration
Statement or Shelf Registration Statement has not become effective or been
declared effective by the Commission on or before the date on which such
registration statement is required to become or be declared effective
pursuant to Section 2(a) or 2(b), respectively, or (iii) the Exchange Offer
has not been completed within 45 business days after the initial effective
date of the Exchange Registration Statement relating to the Exchange Offer
(if the Exchange Offer is then required to be made) or (iv) any Exchange
Registration Statement or Shelf Registration Statement required by Section
2(a) or 2(b) hereof is filed and declared effective but shall thereafter
either be withdrawn by the Company or shall become subject to an effective
stop order issued pursuant to Section 8(d) of the Securities Act suspending
the effectiveness of such registration statement (except as specifically
permitted herein) without being succeeded immediately by an additional
registration statement filed and declared effective (each such event
referred to in clauses (i) through (iv), a "REGISTRATION DEFAULT" and each
period during which a Registration Default has occurred and is continuing,
a "REGISTRATION DEFAULT PERIOD"), then, as liquidated damages for such
Registration Default, subject to the provisions of Section 9(b), special
interest ("SPECIAL INTEREST"), in addition to the Base Interest, shall
accrue in an amount equal to $.05 per week per $1,000 principal amount of
Securities held by such holder, which amount shall increase after the first
90-day period following the occurrence of the first Registration Default
and at the beginning of each subsequent 90-day period during such
Registration Default by an additional $.05 per week per $1,000 principal
amount of Securities with respect to each subsequent week during which any
Registration Default exists up to a maximum amount of $.20 per week per
$1,000 principal amount of Securities, for the period from an including the
date of occurrence of the first Registration Default until such time as no
Registration Default is in effect (after which such Special Interest shall
cease to be payable and the interest rate shall return to the Base
Interest). In the event that any Special Interest becomes payable, the
Company shall promptly notify the Trustee of such event, including any
subsequent increase in the amount of Special Interest, and the beginning
and ending dates therefor. All accrued Special Interest will be paid by the
Company on each January 1 and July 1 ("DAMAGES PAYMENT DATE") to the holder
of Securities by wire transfer of immediately available funds or by federal
funds check, and to holders of certificated Securities by wire transfer to
the accounts specified by them or by mailing checks to their registered
addresses if no such accounts have been specified.
(d) The Company shall take all actions necessary or advisable to be
taken by it to ensure that the transactions contemplated herein are
effected as so contemplated.
(e) Any reference herein to a registration statement as of any time
shall be deemed to include any document incorporated, or deemed to be
incorporated, therein by reference as of such time and any reference herein
to any post-effective amendment to a registration statement as of any time
shall be deemed to include any document incorporated, or deemed to be
incorporated, therein by reference as of such time.
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<PAGE> 7
3. Registration Procedures.
If the Company files a registration statement pursuant to Section
2(a) or Section 2(b), the following provisions shall apply:
(a) At or before the Effective Time of the Exchange Offer or the Shelf
Registration, as the case may be, the Company shall qualify the Indenture
under the Trust Indenture Act.
(b) In the event that such qualification would require the appointment
of a new trustee under the Indenture, the Company shall appoint a new
trustee thereunder pursuant to the applicable provisions of the Indenture.
(c) In connection with the Company's obligations with respect to the
registration of Exchange Securities as contemplated by Section 2(a) (the
"EXCHANGE REGISTRATION"), if applicable, the Company shall, as soon as
reasonably practicable (or as otherwise specified):
(i) prepare and file with the Commission, no later than 90
days after the Closing Date, an Exchange Registration Statement
on any form which may be utilized by the Company and which shall
permit the Exchange Offer and resales of Exchange Securities by
broker-dealers during the Resale Period to be effected as
contemplated by Section 2(a), and use its reasonable best efforts
to cause such Exchange Registration Statement to become effective
no later than 180 days after the Closing Date;
(ii) prepare and file with the Commission such amendments
and supplements to such Exchange Registration Statement and the
prospectus included therein as may be necessary to effect and
maintain the effectiveness of such Exchange Registration
Statement for the periods and purposes contemplated in Section
2(a) hereof and as may be required by the applicable rules and
regulations of the Commission and the instructions applicable to
the form of such Exchange Registration Statement, and promptly
provide each broker-dealer holding Exchange Securities with such
number of copies of the prospectus included therein (as then
amended or supplemented), in conformity in all material respects
with the requirements of the Securities Act and the Trust
Indenture Act and the rules and regulations of the Commission
thereunder, as such broker-dealer reasonably may request prior to
the expiration of the Resale Period, for use in connection with
resales of Exchange Securities;
(iii) promptly notify each broker-dealer that has requested
or received copies of the prospectus included in such
registration statement, and, if requested by such person, confirm
such advice in writing, (A) when such Exchange Registration
Statement or the prospectus included therein or any prospectus
amendment or supplement or post-effective amendment has been
filed, and, with respect to such Exchange Registration Statement
or any post-effective amendment, when the same has become
effective, (B) of any material comments by the Commission and by
the blue sky or securities commissioner or regulator of any state
with respect thereto or any request by the Commission for
amendments or supplements to such Exchange Registration Statement
or prospectus or for additional information, (C) of the issuance
by the Commission of any stop order suspending the effectiveness
of such Exchange Registration Statement or the initiation of any
proceedings for that
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<PAGE> 8
purpose, (D) if at any time the representations and warranties of
the Company contemplated by Section 5 cease to be true and
correct in all material respects, (E) of the receipt by the
Company of any notification with respect to the suspension of the
qualification of the Exchange Securities for sale in any
jurisdiction or the initiation of any proceeding for such
purpose, or (F) at any time during the Resale Period when a
prospectus is required to be delivered under the Securities Act,
that such Exchange Registration Statement, prospectus, prospectus
amendment or supplement or post-effective amendment does not
conform in all material respects to the applicable requirements
of the Securities Act and the Trust Indenture Act and the rules
and regulations of the Commission thereunder or contains an
untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the
circumstances then existing;
(iv) in the event that the Company would be required,
pursuant to Section 3(e)(iii)(F) above, to notify any
broker-dealers holding Exchange Securities, without unreasonable
delay prepare and furnish to each such holder a reasonable number
of copies of a prospectus supplemented or amended so that, as
thereafter delivered to purchasers of such Exchange Securities
during the Resale Period, such prospectus shall conform in all
material respects to the applicable requirements of the
Securities Act and the Trust Indenture Act and the rules and
regulations of the Commission thereunder and shall not contain an
untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances
then existing;
(v) use its reasonable best efforts to obtain the withdrawal
of any order suspending the effectiveness of such Exchange
Registration Statement or any post-effective amendment thereto at
the earliest practicable date;
(vi) use its reasonable best efforts to (A) register or
qualify the Exchange Securities under the securities laws or blue
sky laws of such jurisdictions as are contemplated by Section
2(a) no later than the commencement of the Exchange Offer, (B)
keep such registrations or qualifications in effect and comply
with such laws so as to permit the continuance of offers, sales
and dealings therein in such jurisdictions until the expiration
of the Resale Period and (C) take any and all other actions as
may be reasonably necessary or advisable to enable each
broker-dealer holding Exchange Securities to consummate the
disposition thereof in such jurisdictions; provided, however,
that the Company shall not be required for any such purpose to
(1) qualify as a foreign corporation in any jurisdiction wherein
it would not otherwise be required to qualify but for the
requirements of this Section 3(c)(vi), (2) consent to general
service of process or taxation in any such jurisdiction or (3)
make any changes to its certificate of incorporation or by-laws
or any agreement between it and its stockholders;
(vii) use its reasonable best efforts to obtain the consent
or approval of each governmental agency or authority, whether
federal, state or local, which may be required to effect the
Exchange Registration, the Exchange Offer and the offering and
sale of Exchange Securities by broker-dealers during the Resale
Period;
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<PAGE> 9
(viii) provide a CUSIP number for all Exchange Securities,
not later than the applicable Effective Time;
(ix) comply with all applicable rules and regulations of the
Commission, and make generally available to its securityholders
as soon as practicable but no later than eighteen months after
the effective date of such Exchange Registration Statement, an
earnings statement of the Company and its subsidiaries complying
with Section 11(a) of the Securities Act (including, at the
option of the Company, Rule 158 thereunder).
(d) In connection with the Company's obligations with respect to the Shelf
Registration, if applicable, the Company shall, as soon as reasonably
practicable (or as otherwise specified):
(i) prepare and file with the Commission, within the time
periods specified in Section 2(b), a Shelf Registration Statement
on any form which may be utilized by the Company and which shall
register all of the Registrable Securities for resale by the
holders thereof in accordance with such method or methods of
disposition as may be specified in writing by such of the holders
as, from time to time, may be Electing Holders and use its
reasonable best efforts to cause such Shelf Registration
Statement to become effective within the time periods specified
in Section 2(b);
(ii) not less than 30 calendar days prior to the Effective
Time of the Shelf Registration Statement, mail the Notice and
Questionnaire to the holders of Registrable Securities; no holder
shall be entitled to be named as a selling securityholder in the
Shelf Registration Statement as of the Effective Time, and no
holder shall be entitled to use the prospectus forming a part
thereof for resales of Registrable Securities at any time, unless
such holder has returned a completed and signed Notice and
Questionnaire to the Company by the deadline for response set
forth therein; provided, however, holders of Registrable
Securities shall have at least 28 calendar days from the date on
which the Notice and Questionnaire is first mailed to such
holders to return a completed and signed Notice and Questionnaire
to the Company;
(iii) after the Effective Time of the Shelf Registration
Statement, upon the request of any holder of Registrable
Securities that is not then an Electing Holder, promptly send a
Notice and Questionnaire to such holder; provided that the
Company shall not be required to take any action to name such
holder as a selling securityholder in the Shelf Registration
Statement or to enable such holder to use the prospectus forming
a part thereof for resales of Registrable Securities until such
holder has returned a completed and signed Notice and
Questionnaire to the Company;
(iv) prepare and file with the Commission such amendments
and supplements to such Shelf Registration Statement and the
prospectus included therein as may be necessary to effect and
maintain the effectiveness of such Shelf Registration Statement
for the period specified in Section 2(b) hereof and as may be
required by the applicable rules and regulations of the
Commission and the instructions applicable to the form of such
Shelf Registration Statement, and furnish to the
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<PAGE> 10
Electing Holders copies of any such supplement or amendment
simultaneously with or prior to its being used or filed with the
Commission;
(v) comply with the provisions of the Securities Act with
respect to the disposition of all of the Registrable Securities
covered by such Shelf Registration Statement in accordance with
the intended methods of disposition by the Electing Holders
provided for in such Shelf Registration Statement;
(vi) provide (A) the Electing Holders, (B) the underwriters
(which term, for purposes of this Exchange and Registration
Rights Agreement, shall include a person deemed to be an
underwriter within the meaning of Section 2(a)(11) of the
Securities Act), if any, thereof, (C) any sales or placement
agent therefor, (D) counsel for any such underwriter or agent and
(E) not more than one counsel for all the Electing Holders the
opportunity to participate in the preparation of such Shelf
Registration Statement, each prospectus included therein or filed
with the Commission and each amendment or supplement thereto;
(vii) for a reasonable period prior to the filing of such
Shelf Registration Statement, and throughout the period specified
in Section 2(b), make available at reasonable times at the
Company's principal place of business or such other reasonable
place determined by the Company for inspection by the persons
referred to in Section 3(d)(vi) who shall certify to the Company
that they have a current intention to sell the Registrable
Securities pursuant to the Shelf Registration such relevant
financial and other information and books and records of the
Company, and use its reasonable best efforts to cause the
officers, employees, counsel and independent certified public
accountants of the Company to respond to such inquiries, as shall
be necessary, in the reasonable judgment of the respective
counsel referred to in such Section, to conduct a reasonable
investigation within the meaning of Section 11 of the Securities
Act; provided, however, that each such party shall be required to
maintain in confidence and not to disclose to any other person
any information or records reasonably designated by the Company
as being confidential, until such time as (A) such information
becomes a matter of public record (whether by virtue of its
inclusion in such registration statement or otherwise), or (B)
such person shall be required so to disclose such information
pursuant to a subpoena or order of any court or other
governmental agency or body having jurisdiction over the matter
(subject to the requirements of such order, and only after such
person shall have given the Company prompt prior written notice
of such requirement), or (C) such information is required to be
set forth in such Shelf Registration Statement or the prospectus
included therein or in an amendment to such Shelf Registration
Statement or an amendment or supplement to such prospectus in
order that such Shelf Registration Statement, prospectus,
amendment or supplement, as the case may be, complies with
applicable requirements of the federal securities laws and the
rules and regulations of the Commission and does not contain an
untrue statement of a material fact or omit to state therein a
material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the
circumstances then existing;
(viii) promptly notify each of the Electing Holders, any
sales or placement agent therefor and any underwriter thereof
(which notification may be made through any managing underwriter
that is a representative of such underwriter for such purpose)
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<PAGE> 11
and, if requested in writing by such person confirm such advice
in writing, (A) when such Shelf Registration Statement or the
prospectus included therein or any prospectus amendment or
supplement or post-effective amendment has been filed, and, with
respect to such Shelf Registration Statement or any
post-effective amendment, when the same has become effective, (B)
of any comments by the Commission and by the blue sky or
securities commissioner or regulator of any state with respect
thereto or any request by the Commission for amendments or
supplements to such Shelf Registration Statement or prospectus or
for additional information, (C) of the issuance by the Commission
of any stop order suspending the effectiveness of such Shelf
Registration Statement or the initiation of any proceedings for
that purpose, (D) if at any time the representations and
warranties of the Company contemplated by Section 3(d)(xvii) or
Section 5 cease to be true and correct in all material respects,
(E) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Registrable
Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, or (F) if at any
time when a prospectus is required to be delivered under the
Securities Act, that such Shelf Registration Statement,
prospectus, prospectus amendment or supplement or post-effective
amendment does not conform in all material respects to the
applicable requirements of the Securities Act and the Trust
Indenture Act and the rules and regulations of the Commission
thereunder or contains an untrue statement of a material fact or
omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading in light
of the circumstances then existing;
(ix) use its reasonable best efforts to obtain the
withdrawal of any order suspending the effectiveness of such
registration statement or any post-effective amendment thereto at
the earliest practicable date;
(x) if requested by any managing underwriter or
underwriters, any placement or sales agent or any Electing
Holder, promptly incorporate in a prospectus supplement or
post-effective amendment such information as is required by the
applicable rules and regulations of the Commission and as such
managing underwriter or underwriters, such agent or such Electing
Holder specifies in writing to the Company should be included
therein relating to the terms of the sale of such Registrable
Securities, including information with respect to the principal
amount of Registrable Securities being sold by such Electing
Holder or agent or to any underwriters, the name and description
of such Electing Holder, agent or underwriter, the offering price
of such Registrable Securities and any discount, commission or
other compensation payable in respect thereof, the purchase price
being paid therefor by such underwriters and with respect to any
other terms of the offering of the Registrable Securities to be
sold by such Electing Holder or agent or to such underwriters;
and make all required filings of such prospectus supplement or
post-effective amendment promptly after notification of the
matters to be incorporated in such prospectus supplement or
post-effective amendment;
(xi) furnish to each Electing Holder, each placement or
sales agent, if any, therefor, each underwriter, if any, thereof
and the counsel referred to in Section 3(d)(vi) an executed copy
(or, in the case of an Electing Holder, a conformed copy) of such
Shelf Registration Statement, each such amendment and supplement
thereto (in each case including all exhibits thereto (in the case
of an Electing Holder
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<PAGE> 12
of Registrable Securities, upon request in writing to the
Company) and documents incorporated by reference therein) and
such number of copies of such Shelf Registration Statement
(excluding exhibits thereto and documents incorporated by
reference therein unless specifically so requested in writing to
the Company by such Electing Holder, agent or underwriter, as the
case may be) and of the prospectus included in such Shelf
Registration Statement (including each preliminary prospectus and
any summary prospectus), in conformity in all material respects
with the applicable requirements of the Securities Act and the
Trust Indenture Act and the rules and regulations of the
Commission thereunder, and such other documents, as such Electing
Holder, agent, if any, and underwriter, if any, may reasonably
request in writing to the Company in order to facilitate the
offering and disposition of the Registrable Securities owned by
such Electing Holder, offered or sold by such agent or
underwritten by such underwriter and to permit such Electing
Holder, agent and underwriter to satisfy the prospectus delivery
requirements of the Securities Act; and the Company hereby
consents to the use of such prospectus (including such
preliminary and summary prospectus) and any amendment or
supplement thereto by each such Electing Holder and by any such
agent and underwriter, in each case in the form most recently
provided to such person by the Company, in connection with the
offering and sale of the Registrable Securities covered by the
prospectus (including such preliminary and summary prospectus) or
any supplement or amendment thereto;
(xii) use its reasonable best efforts to (A) register or
qualify the Registrable Securities to be included in such Shelf
Registration Statement under such securities laws or blue sky
laws of such jurisdictions as any Electing Holder and each
placement or sales agent, if any, therefor and underwriter, if
any, thereof shall reasonably request, in writing to the Company
(B) keep such registrations or qualifications in effect and
comply with such laws so as to permit the continuance of offers,
sales and dealings therein in such jurisdictions during the
period the Shelf Registration is required to remain effective
under Section 2(b) above and for so long as may be necessary to
enable any such Electing Holder, agent or underwriter to complete
its distribution of Securities pursuant to such Shelf
Registration Statement and (C) take any and all other actions as
may be reasonably necessary or advisable to enable each such
Electing Holder, agent, if any, and underwriter, if any, to
consummate the disposition in such jurisdictions of such
Registrable Securities; provided, however, that the Company shall
not be required for any such purpose to (1) qualify as a foreign
corporation in any jurisdiction wherein it would not otherwise be
required to qualify but for the requirements of this Section
3(d)(xii), (2) consent to general service of process or taxation
in any such jurisdiction or (3) make any changes to its
certificate of incorporation or by-laws or any agreement between
it and its stockholders;
(xiii) use its reasonable best efforts to obtain the consent
or approval of each governmental agency or authority, whether
federal, state or local, which may be required to effect the
Shelf Registration or the offering or sale in connection
therewith or to enable the selling holder or holders to offer, or
to consummate the disposition of, their Registrable Securities;
(xiv) unless any Registrable Securities shall be in
book-entry only form, cooperate with the Electing Holders and the
managing underwriters, if any, to
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<PAGE> 13
facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold, which
certificates, if so required by any securities exchange upon
which any Registrable Securities are listed, shall be penned,
lithographed or engraved, or produced by any combination of such
methods, on steel engraved borders, and which certificates shall
not bear any restrictive legends; and, in the case of an
underwritten offering, enable such Registrable Securities to be
in such denominations and registered in such names as the
managing underwriters may request at least two business days
prior to any sale of the Registrable Securities;
(xv) provide a CUSIP number for all Registrable Securities,
not later than the applicable Effective Time;
(xvi) enter into one or more underwriting agreements,
engagement letters, agency agreements, "best efforts"
underwriting agreements or similar agreements, as appropriate,
including customary provisions relating to indemnification and
contribution, and take such other actions in connection therewith
as any Electing Holders aggregating at least 25% in aggregate
principal amount of the Registrable Securities at the time
outstanding shall reasonably request in order to expedite or
facilitate the disposition of such Registrable Securities,
provided that the Company shall not be required to entered into
any such agreement more than twice with respect to all of the
Registrable Securities and may delay entering into any such
agreement until the consummation of any underwritten public
offering in which the Company shall be engaged provided that such
delay is reasonable;
(xvii) whether or not an agreement of the type referred to
in Section 3(d)(xvi) hereof is entered into and whether or not
any portion of the offering contemplated by the Shelf
Registration is an underwritten offering or is made through a
placement or sales agent or any other entity, (A) make such
representations and warranties to the Electing Holders and the
placement or sales agent, if any, therefor and the underwriters,
if any, thereof in form, substance and scope as are customarily
made in connection with an offering of debt securities pursuant
to any appropriate agreement or to a registration statement filed
on the form applicable to the Shelf Registration; (B) obtain an
opinion of counsel to the Company in customary form and covering
such matters, of the type customarily covered by such an opinion,
as the managing underwriters, if any, or as any Electing Holders
of at least 25% in aggregate principal amount of the Registrable
Securities at the time outstanding may reasonably request,
addressed to such Electing Holder or Electing Holders and the
placement or sales agent, if any, therefor and the underwriters,
if any, thereof and dated the effective date of such Shelf
Registration Statement (and if such Shelf Registration Statement
contemplates an underwritten offering of a part or all of the
Registrable Securities, dated the date of the closing under the
underwriting agreement relating thereto) (C) obtain a "cold
comfort" letter or letters from the independent certified public
accountants of the Company addressed to the selling Electing
Holders, the placement or sales agent, if any, therefor or the
underwriters, if any, thereof, dated (i) the effective date of
such Shelf Registration Statement and (ii) the effective date of
any prospectus supplement to the prospectus included in such
Shelf Registration Statement or post-effective amendment to such
Shelf Registration Statement which includes unaudited or audited
financial statements as of a date or for a period subsequent to
that of the latest such statements included in such prospectus
(and, if such Shelf Registration Statement contemplates an
underwritten
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<PAGE> 14
offering pursuant to any prospectus supplement to the prospectus
included in such Shelf Registration Statement or post-effective
amendment to such Shelf Registration Statement which includes
unaudited or audited financial statements as of a date or for a
period subsequent to that of the latest such statements included
in such prospectus, dated the date of the closing under the
underwriting agreement relating thereto), such letter or letters
to be in customary form and covering such matters of the type
customarily covered by letters of such type; (D) deliver such
documents and certificates, including officers' certificates, as
may be reasonably requested by any Electing Holders of at least
25% in aggregate principal amount of the Registrable Securities
at the time outstanding or the placement or sales agent, if any,
therefor and the managing underwriters, if any, thereof to
evidence the accuracy of the representations and warranties made
pursuant to clause (A) above or those contained in Section 5(a)
hereof and the compliance with or satisfaction of any agreements
or conditions contained in the underwriting agreement or other
agreement entered into by the Company; and (E) undertake such
obligations relating to expense reimbursement, indemnification
and contribution as are provided in Section 6 hereof;
(xviii) notify in writing each holder of Registrable
Securities affected thereby of any proposal by the Company to
amend or waive any provision of this Exchange and Registration
Rights Agreement pursuant to Section 9(h) hereof and of any
amendment or waiver effected pursuant thereto, each of which
notices shall contain the text of the amendment or waiver
proposed or effected, as the case may be;
(xix) in the event that any broker-dealer registered under
the Exchange Act shall underwrite any Registrable Securities or
participate as a member of an underwriting syndicate or selling
group or "assist in the distribution" (within the meaning of the
Conduct Rules (the "CONDUCT RULES") of the National Association
of Securities Dealers, Inc. ("NASD") or any successor thereto, as
amended from time to time) thereof, whether as a holder of such
Registrable Securities or as an underwriter, a placement or sales
agent or a broker or dealer in respect thereof, or otherwise,
assist such broker-dealer in complying with the requirements of
such Conduct Rules, including by (A) if such Conduct Rules shall
so require, engaging a "qualified independent underwriter" (as
defined in such Conduct Rules) to participate in the preparation
of the Shelf Registration Statement relating to such Registrable
Securities, to exercise usual standards of due diligence in
respect thereto and, if any portion of the offering contemplated
by such Shelf Registration Statement is an underwritten offering
or is made through a placement or sales agent, to recommend the
yield of such Registrable Securities, (B) indemnifying any such
qualified independent underwriter to the extent of the
indemnification of underwriters provided in Section 6 hereof (or
to such other customary extent as may be requested by such
underwriter), and (C) providing such information to such
broker-dealer as may be required in order for such broker-dealer
to comply with the requirements of the Conduct Rules; and
(xx) comply with all applicable rules and regulations of the
Commission, and make generally available to its securityholders
as soon as practicable but in any event not later than eighteen
months after the effective date of such Shelf Registration
Statement, an earnings statement of the Company and its
subsidiaries
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complying with Section 11(a) of the Securities Act (including, at
the option of the Company, Rule 158 thereunder).
(e) In the event that the Company would be required, pursuant to
Section 3(d)(viii)(F) above, to notify the Electing Holders, the placement
or sales agent, if any, therefor and the managing underwriters, if any,
thereof, the Company shall without unreasonable delay prepare and furnish
to each of the Electing Holders, to each placement or sales agent, if any,
and to each such underwriter, if any, a reasonable number of copies of a
prospectus supplemented or amended so that, as thereafter delivered to
purchasers of Registrable Securities, such prospectus shall conform in all
material respects to the applicable requirements of the Securities Act and
the Trust Indenture Act and the rules and regulations of the Commission
thereunder and shall not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances
then existing. Each Electing Holder agrees that upon receipt of any notice
from the Company pursuant to Section 3(d)(viii)(F) hereof, such Electing
Holder shall forthwith discontinue the disposition of Registrable
Securities pursuant to the Shelf Registration Statement applicable to such
Registrable Securities until such Electing Holder shall have received
copies of such amended or supplemented prospectus, and if so directed by
the Company, such Electing Holder shall deliver to the Company (at the
Company's expense) all copies, other than permanent file copies, then in
such Electing Holder's possession at the time of receipt of such notice.
(f) In the event of a Shelf Registration, in addition to the
information required to be provided by each Electing Holder in its Notice
Questionnaire, the Company may require such Electing Holder to furnish to
the Company such additional information regarding such Electing Holder and
such Electing Holder's intended method of distribution of Registrable
Securities as may be required in order to comply with the Securities Act.
No holder may include any of its Registrable Securities in any Shelf
Registration pursuant to the Exchange and Registration Rights Agreement or
be entitled to receive Special Interest unless and until such Holder
furnishes to the Company, in writing, such information as is required by
applicable law for use in connection with any Shelf Registration or related
prospectus or preliminary prospectus. Each such Electing Holder agrees to
notify the Company in writing as promptly as practicable of any inaccuracy
or change in information previously furnished by such Electing Holder to
the Company or of the occurrence of any event in either case as a result of
which any prospectus relating to such Shelf Registration contains or would
contain an untrue statement of a material fact regarding such Electing
Holder or such Electing Holder's intended method of disposition of such
Registrable Securities or omits to state any material fact regarding such
Electing Holder or such Electing Holder's intended method of disposition of
such Registrable Securities required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances
then existing, and promptly to furnish to the Company any additional
information required to correct and update any previously furnished
information or required so that such prospectus shall not contain, with
respect to such Electing Holder or the disposition of such Registrable
Securities, an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then
existing.
(g) Until the expiration of two years after the Closing Date, the
Company will not, and will not permit any of its "affiliates" (as defined
in Rule 144) to, resell any of the Securities
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<PAGE> 16
that have been reacquired by any of them except pursuant to an effective
registration statement under the Securities Act.
4. Registration Expenses.
The Company agrees to bear and to pay or cause to be paid promptly all
expenses incident to the Company's performance of or compliance with this
Exchange and Registration Rights Agreement (excluding fees and disbursements of
counsel to the Initial Purchasers and fees and disbursements of underwriters'
counsel in connection with a Shelf Registration, in each case other than
reasonable fees and disbursements relating to blue sky qualifications or as
otherwise set forth herein or any other agreement in writing), including (a) all
Commission and any NASD registration, filing and review fees and expenses, (b)
all fees and expenses in connection with the qualification of the Securities for
offering and sale under the State securities and blue sky laws referred to in
Section 3(d)(xii) hereof and determination of their eligibility for investment
under the laws of such jurisdictions as any managing underwriters or the
Electing Holders may designate in writing to the Company, including reasonable
fees and disbursements of counsel for the Electing Holders or underwriters in
connection with such qualification and determination, (c) all expenses relating
to the preparation, printing, production, distribution and reproduction of each
registration statement required to be filed hereunder, each prospectus included
therein or prepared for distribution pursuant hereto, each amendment or
supplement to the foregoing, the expenses of preparing the Securities for
delivery and the expenses of printing or producing any underwriting agreements,
agreements among underwriters, selling agreements and blue sky or legal
investment memoranda and all other documents in connection with the offering,
sale or delivery of Securities to be disposed of (including certificates
representing the Securities), (d) messenger and delivery expenses relating to
the offering, sale or delivery of Securities and the preparation of documents
referred in clause (c) above, (e) fees and expenses of the Trustee under the
Indenture, any agent of the Trustee and any counsel for the Trustee and of any
collateral agent or custodian, (f) internal expenses (including all salaries and
expenses of the Company's officers and employees performing legal or accounting
duties), (g) fees, disbursements and expenses of counsel and independent
certified public accountants of the Company (including the expenses of any
opinions or "cold comfort" letters required by or incident to such performance
and compliance), (h) fees, disbursements and expenses of any "qualified
independent underwriter" engaged pursuant to Section 3(d)(xix) hereof, (i)
reasonable fees, disbursements and expenses of one counsel for the Electing
Holders retained in connection with a Shelf Registration, as selected by the
Electing Holders of at least a majority in aggregate principal amount of the
Registrable Securities held by Electing Holders (which counsel shall be
reasonably satisfactory to the Company), (j) any fees charged by securities
rating services for rating the Securities, and (k) fees, expenses and
disbursements of any other persons, including special experts, retained by the
Company in connection with such registration (collectively, the "REGISTRATION
EXPENSES"). To the extent that any Registration Expenses are incurred, assumed
or paid by any holder of Registrable Securities or any placement or sales agent
therefor or underwriter thereof, the Company shall reimburse such person for the
amount of the Registration Expenses so incurred, assumed or paid promptly after
receipt of a written request (which includes a description of the Registration
Expenses for which reimbursement is sought) therefor. Notwithstanding the
foregoing, the holders of the Registrable Securities being registered shall pay
all agency fees and commissions and underwriting discounts and commissions
attributable to the sale of such Registrable Securities and the fees and
disbursements of any counsel or other advisors or experts retained by such
holders (severally or jointly), other than the counsel and experts specifically
referred to above.
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<PAGE> 17
5. Representations and Warranties.
The Company represents and warrants to, and agrees with, each
Purchaser and each of the holders from time to time of Registrable Securities
that:
(a) Each registration statement covering Registrable Securities and
each prospectus (including any preliminary or summary prospectus) contained
therein or furnished pursuant to Section 3(d) or Section 3(c) hereof and
any further amendments or supplements to any such registration statement or
prospectus, when it becomes effective or is filed with the Commission, as
the case may be, and, in the case of an underwritten offering of
Registrable Securities, at the time of the closing under the underwriting
agreement relating thereto, will conform in all material respects to the
requirements of the Securities Act and the Trust Indenture Act and the
rules and regulations of the Commission thereunder and will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading; and at all times subsequent to the Effective Time when a
prospectus would be required to be delivered under the Securities Act,
other than from (i) such time as a notice has been given to holders of
Registrable Securities pursuant to Section 3(d)(viii)(F) or Section
3(c)(iii)(F) hereof until (ii) such time as the Company furnishes an
amended or supplemented prospectus pursuant to Section 3(e) or Section
3(c)(iv) hereof, each such registration statement, and each prospectus
(including any summary prospectus) contained therein or furnished pursuant
to Section 3(d) or Section 3(c) hereof, as then amended or supplemented,
will conform in all material respects to the requirements of the Securities
Act and the Trust Indenture Act and the rules and regulations of the
Commission thereunder and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the
light of the circumstances then existing; provided, however, that this
representation and warranty shall not apply to any statements or omissions
made in reliance upon and in conformity with information furnished in
writing to the Company by a holder of Registrable Securities expressly for
use therein.
(b) Any documents incorporated by reference in any prospectus referred
to in Section 5(a) hereof, when they become or became effective or are or
were filed with the Commission, as the case may be, will conform or
conformed in all material respects to the requirements of the Securities
Act or the Exchange Act, as applicable, and none of such documents will
contain or contained an untrue statement of a material fact or will omit or
omitted to state a material fact required to be stated therein or necessary
to make the statements therein not misleading; provided, however, that this
representation and warranty shall not apply to any statements or omissions
made in reliance upon and in conformity with information furnished in
writing to the Company by a holder of Registrable Securities expressly for
use therein.
(c) The compliance by the Company with all of the provisions of this
Exchange and Registration Rights Agreement and the consummation of the
transactions herein contemplated will not conflict with or result in a
breach of any of the terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, loan agreement or other material
agreement or instrument, to which the Company or any subsidiary of the
Company is a party or by which the Company or any subsidiary of the Company
is bound or to which any of the property or assets of the Company or any
subsidiary of the Company is subject except for such conflicts, breaches,
violations or defaults which would not have a
17
<PAGE> 18
material adverse effect on the business, consolidated financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries taken as a whole, nor will such action result in any violation
of the provisions of the certificate of incorporation, as amended, or the
by-laws of the Company or any statute or any order, rule or regulation of
any court or governmental agency or body having jurisdiction over the
Company or any subsidiary of the Company or any of their properties; and no
consent, approval, authorization, order, registration or qualification of
or with any such court or governmental agency or body is required for the
consummation by the Company of the transactions contemplated by this
Exchange and Registration Rights Agreement, except the registration under
the Securities Act of the Securities, qualification of the Indenture under
the Trust Indenture Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under State securities
or blue sky laws in connection with the offering and distribution of the
Securities.
(d) This Exchange and Registration Rights Agreement has been duly
authorized, executed and delivered by the Company.
6. Indemnification.
(a) Indemnification by the Company. The Company will indemnify and
hold harmless each of the holders of Registrable Securities included in an
Exchange Registration Statement, each of the Electing Holders of
Registrable Securities included in a Shelf Registration Statement and each
person who participates as a placement or sales agent or as an underwriter
in any offering or sale of such Registrable Securities against any losses,
claims, damages or liabilities, joint or several, to which such holder,
agent or underwriter may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact contained in any
Exchange Registration Statement or Shelf Registration Statement, as the
case may be, under which such Registrable Securities were registered under
the Securities Act, or any preliminary, final or summary prospectus
contained therein or furnished by the Company to any such holder, Electing
Holder, agent or underwriter, or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse such holder, such
Electing Holder, such agent and such underwriter for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such action or claim as such expenses are incurred; provided,
however, that the Company shall not be liable to any such person in any
such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in such registration
statement, or preliminary, final or summary prospectus, or amendment or
supplement thereto, in reliance upon and in conformity with written
information furnished to the Company by such person expressly for use
therein;and provided, further, that with respect to any loss, claim, damage
or liability caused by an untrue statement or omission of a material fact
made in a preliminary prospectus, the indemnity agreement contained in this
Section 6(a) shall not inure to the benefit of any person from whom the
person asserting any such loss, claim, damage or liability purchased the
Registrable Securities concerned, to the extent that any such loss, claim,
damage or liability of such person occurs under the circumstance where (i)
it shall have been determined by a court of competent jurisdiction by final
and nonappealable judgment that
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<PAGE> 19
(w) the Company had previously furnished copies of the final prospectus (or
the final prospectus as amended or supplemented) to such person or their
representative in sufficient quantities and at such time to permit its
delivery at or prior to the confirmation of the sale of such Registrable
Securities, (x) delivery of the final prospectus (or the final prospectus
as amended or supplemented) was required by law to be made to such person,
(y) the untrue statement or omission of a material fact contained in the
preliminary prospectus was corrected in the final prospectus (or the final
prospectus as amended or supplemented), and (z) there was not sent or given
to the person, at or prior to the written confirmation of the sale of such
Registrable Securities to such person, a copy of the final prospectus (or
the final prospectus as amended or supplemented) and (ii) such loss, claim,
damage or liability would have been eliminated by the delivery of such
corrected final prospectus (or the final prospectus as amended or
supplemented).
(b) Indemnification by the Holders and any Agents and Underwriters.
The Company may require, as a condition to including any Registrable
Securities in any registration statement filed pursuant to Section 2(b)
hereof and to entering into any underwriting agreement with respect
thereto, that the Company shall have received an undertaking reasonably
satisfactory to it from the Electing Holder of such Registrable Securities
and from each underwriter named in any such underwriting agreement,
severally and not jointly, to (i) indemnify and hold harmless the Company
and all other holders of Registrable Securities, against any losses,
claims, damages or liabilities to which the Company or such other holders
of Registrable Securities may become subject, under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact contained in such
registration statement, or any preliminary, final or summary prospectus
contained therein or furnished by the Company to any such Electing Holder,
agent or underwriter, or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity
with written information furnished to the Company by such Electing Holder
or underwriter expressly for use therein, and (ii) reimburse the Company
for any legal or other expenses reasonably incurred by the Company in
connection with investigating or defending any such action or claim as such
expenses are incurred; provided, however, that no such Electing Holder
shall be required to undertake liability to any person under this Section
6(b) for any amounts in excess of the dollar amount of the proceeds to be
received by such Electing Holder from the sale of such Electing Holder's
Registrable Securities pursuant to such registration.
(c) Notices of Claims, Etc. Promptly after receipt by an indemnified
party under subsection (a) or (b) above of written notice of the
commencement of any action, such indemnified party shall, if a claim in
respect thereof is to be made against an indemnifying party pursuant to the
indemnification provisions of or contemplated by this Section 6, notify
such indemnifying party in writing of the commencement of such action; but
the omission so to notify the indemnifying party shall not relieve it from
any liability which it may have to any indemnified party otherwise than
under the indemnification provisions of or contemplated by Section 6(a) or
6(b) hereof. In case any such action shall be brought against any
indemnified party and it shall notify an indemnifying party of the
commencement thereof, such indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense
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<PAGE> 20
thereof, with counsel reasonably satisfactory to such indemnified party
(who shall not, except with the consent of the indemnified party, be
counsel to the indemnifying party), and, after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, such indemnifying party shall not be liable to such indemnified
party for any legal expenses of other counsel or any other expenses, in
each case subsequently incurred by such indemnified party, in connection
with the defense thereof other than reasonable costs of investigation. No
indemnifying party shall, without the written consent of the indemnified
party, effect the settlement or compromise of, or consent to the entry of
any judgment with respect to, any pending or threatened action or claim in
respect of which indemnification or contribution may be sought hereunder
(whether or not the indemnified party is an actual or potential party to
such action or claim) unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all
liability arising out of such action or claim and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act
by or on behalf of any indemnified party. No indemnifying party shall be
liable for the cost of any settlement effected by an indemnified party
without the written consent of such indemnifying party, which consent shall
not be unreasonably withheld.
(d) Contribution. If for any reason the indemnification provisions
contemplated by Section 6(a) or Section 6(b) are unavailable to or
insufficient to hold harmless an indemnified party in respect of any
losses, claims, damages or liabilities (or actions in respect thereof)
referred to therein, then each indemnifying party shall, contribute to the
amount paid or payable by such indemnified party as a result of such
losses, claims, damages or liabilities (or actions in respect thereof) in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party and the indemnified party in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative fault of such indemnifying party and
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to
information supplied by such indemnifying party or by such indemnified
party, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The
parties hereto agree that it would not be just and equitable if
contributions pursuant to this Section 6(d) were determined by pro rata
allocation (even if the holders or any agents or underwriters or all of
them were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations
referred to in this Section 6(d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages, or
liabilities (or actions in respect thereof) referred to above shall be
deemed to include any legal or other fees or expenses reasonably incurred
by such indemnified party in connection with investigating or defending any
such action or claim. Notwithstanding the provisions of this Section 6(d),
no holder shall be required to contribute any amount in excess of the
amount by which the dollar amount of the proceeds received by such holder
from the sale of any Registrable Securities (after deducting any fees,
discounts and commissions applicable thereto) exceeds the amount of any
damages which such holder has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission,
and no underwriter shall be required to contribute any amount in excess of
the amount by which the total price at which the Registrable Securities
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages which such underwriter has otherwise been
required to pay by reason of such untrue or
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<PAGE> 21
alleged untrue statement or omission or alleged omission. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The holders' and any
underwriters' obligations in this Section 6(d) to contribute shall be
several in proportion to the principal amount of Registrable Securities
registered or underwritten, as the case may be, by them and not joint.
(e) The obligations of the Company under this Section 6 shall be in
addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each officer, director and
partner of each holder, agent and underwriter and each person, if any, who
controls any holder, agent or underwriter within the meaning of the
Securities Act; and the obligations of the holders and any agents or
underwriters contemplated by this Section 6 shall be in addition to any
liability which the respective holder, agent or underwriter may otherwise
have and shall extend, upon the same terms and conditions, to each officer
and director of the Company (including any person who, with his consent, is
named in any registration statement as about to become a director of the
Company) and to each person, if any, who controls the Company within the
meaning of the Securities Act.
7. Underwritten Offerings.
(a) Selection of Underwriters. If any of the Registrable Securities
covered by the Shelf Registration are to be sold pursuant to an
underwritten offering, the managing underwriter or underwriters thereof
shall be designated by Electing Holders holding at least a majority in
aggregate principal amount of the Registrable Securities to be included in
such offering, provided that such designated managing underwriter or
underwriters is or are reasonably acceptable to the Company.
(b) Participation by Holders. Each holder of Registrable Securities
hereby agrees with each other such holder that no such holder may
participate in any underwritten offering hereunder unless such holder (i)
agrees to sell such holder's Registrable Securities on the basis provided
in any underwriting arrangements approved by the persons entitled hereunder
to approve such arrangements and (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements
and other documents reasonably required under the terms of such
underwriting arrangements.
8. Rule 144.
The Company covenants to the holders of Registrable Securities that
to the extent it shall be required to do so under the Exchange Act, the Company
shall timely file the reports required to be filed by it under the Exchange Act
or the Securities Act (including the reports under Section 13 and 15(d) of the
Exchange Act referred to in subparagraph (c)(1) of Rule 144 adopted by the
Commission under the Securities Act) and the rules and regulations adopted by
the Commission thereunder, and shall take such further action as any holder of
Registrable Securities may reasonably request, all to the extent required from
time to time to enable such holder to sell Registrable Securities without
registration under the Securities Act within the limitations of the exemption
provided by Rule 144 under the Securities Act, as such Rule may be amended from
time to time, or any similar or successor rule or regulation hereafter adopted
by the Commission. Upon the written request of any holder of Registrable
Securities in connection with that holder's sale pursuant to Rule 144, the
Company shall deliver to such
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<PAGE> 22
holder a written statement as to whether it has complied with such requirements.
Notwithstanding the foregoing, nothing in this Section 8 shall be deemed to
require the Company to register any of its securities pursuant to the Exchange
Act.
9. Miscellaneous.
(a) No Inconsistent Agreements. The Company represents, warrants,
covenants and agrees that it has not granted, and shall not grant,
registration rights with respect to Registrable Securities or any other
securities which would be inconsistent with the terms contained in this
Exchange and Registration Rights Agreement.
(b) Specific Performance. The parties hereto acknowledge that there
would be no adequate remedy at law if the Company fails to perform any of
its obligations hereunder and that the Purchasers and the holders from time
to time of the Registrable Securities may be irreparably harmed by any such
failure, and accordingly agree that the Purchasers and such holders, in
addition to any other remedy to which they may be entitled at law or in
equity, shall be entitled to compel specific performance of the obligations
of the Company under this Exchange and Registration Rights Agreement in
accordance with the terms and conditions of this Exchange and Registration
Rights Agreement, in any court of the United States or any State thereof
having jurisdiction.
(c) Notices. All notices, requests, claims, demands, waivers and other
communications hereunder shall be in writing and shall be deemed to have
been duly given when delivered by hand, if delivered personally or by
courier, or three days after being deposited in the mail (registered or
certified mail, postage prepaid, return receipt requested) as follows: If
to the Company, to it at Vlasic Plaza, 6 Executive Campus, Cherry Hill, NJ,
08002-4112, Attn: Corporate Secretary and if to a holder, to the address of
such holder set forth in the security register or other records of the
Company, or to such other address as the Company or any such holder may
have furnished to the other in writing in accordance herewith, except that
notices of change of address shall be effective only upon receipt.
(d) Parties in Interest. All the terms and provisions of this Exchange
and Registration Rights Agreement shall be binding upon, shall inure to the
benefit of and shall be enforceable by the parties hereto and the holders
from time to time of the Registrable Securities and the respective
successors and assigns of the parties hereto and such holders. In the event
that any transferee of any holder of Registrable Securities shall acquire
Registrable Securities, in any manner, whether by gift, bequest, purchase,
operation of law or otherwise, such transferee shall, without any further
writing or action of any kind, be deemed a beneficiary hereof for all
purposes and such Registrable Securities shall be held subject to all of
the terms of this Exchange and Registration Rights Agreement, and by taking
and holding such Registrable Securities such transferee shall be entitled
to receive the benefits of, and be conclusively deemed to have agreed to be
bound by all of the applicable terms and provisions of this Exchange and
Registration Rights Agreement. If the Company shall so request, any such
successor, assign or transferee shall agree in writing to acquire and hold
the Registrable Securities subject to all of the applicable terms hereof.
(e) Survival. The respective indemnities, agreements, representations,
warranties and each other provision set forth in this Exchange and
Registration Rights Agreement or made pursuant hereto shall remain in full
force and effect regardless of any investigation (or statement as to the
results thereof) made by or on behalf of any holder of Registrable
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<PAGE> 23
Securities, any director, officer or partner of such holder, any agent or
underwriter or any director, officer or partner thereof, or any controlling
person of any of the foregoing, and shall survive delivery of and payment
for the Registrable Securities pursuant to the Purchase Agreement and the
transfer and registration of Registrable Securities by such holder and the
consummation of an Exchange Offer.
(f) GOVERNING LAW. THIS EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK.
(g) Headings. The descriptive headings of the several Sections and
paragraphs of this Exchange and Registration Rights Agreement are inserted
for convenience only, do not constitute a part of this Exchange and
Registration Rights Agreement and shall not affect in any way the meaning
or interpretation of this Exchange and Registration Rights Agreement.
(h) Entire Agreement; Amendments. This Exchange and Registration
Rights Agreement and the other writings referred to herein (including the
Indenture and the form of Securities) or delivered pursuant hereto which
form a part hereof contain the entire understanding of the parties with
respect to its subject matter. This Exchange and Registration Rights
Agreement supersedes all prior agreements and understandings between the
parties with respect to its subject matter. This Exchange and Registration
Rights Agreement may be amended and the observance of any term of this
Exchange and Registration Rights Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively) only
by a written instrument duly executed by the Company and the holders of at
least a majority in aggregate principal amount of the Registrable
Securities at the time outstanding. Each holder of any Registrable
Securities at the time or thereafter outstanding shall be bound by any
amendment or waiver effected pursuant to this Section 9(h), whether or not
any notice, writing or marking indicating such amendment or waiver appears
on such Registrable Securities or is delivered to such holder.
(i) Inspection. For so long as this Exchange and Registration Rights
Agreement shall be in effect, this Exchange and Registration Rights
Agreement and a complete list of the names and addresses of all the holders
of Registrable Securities shall be made available for inspection and
copying on any business day by any holder of Registrable Securities for
proper purposes only (which shall include any purpose related to the rights
of the holders of Registrable Securities under the Securities, the
Indenture and this Agreement) at the offices of the Company at the address
thereof set forth in Section 9(c) above and at the office of the Trustee
under the Indenture.
(j) Counterparts. This agreement may be executed by the parties in
counterparts, each of which shall be deemed to be an original, but all such
respective counterparts shall together constitute one and the same
instrument.
23
<PAGE> 24
If the foregoing is in accordance with your understanding, please sign
and return to us four counterparts hereof, and upon the acceptance hereof by
you, on behalf of each of the Purchasers, this letter and such acceptance hereof
shall constitute a binding agreement between each of the Purchasers and the
Company. It is understood that your acceptance of this letter on behalf of each
of the Purchasers is pursuant to the authority set forth in a form of Agreement
among Purchasers, the form of which shall be submitted to the Company for
examination upon request, but without warranty on your part as to the authority
of the signers thereof.
Very truly yours,
Vlasic Foods International Inc.
By: /s/ Mitchell P. Goldstein
------------------------------
Name: Mitchell P. Goldstein
Title: Vice President and Chief
Financial Officer
Accepted as of the date hereof:
Goldman, Sachs & Co.
Chase Securities Inc.
Lehman Brothers Inc.
J.P. Morgan Securities Inc.
By: /s/ Goldman, Sachs & Co.
-------------------------------
(Goldman, Sachs & Co.)
<PAGE> 25
EXHIBIT A
VLASIC FOODS INTERNATIONAL INC.
INSTRUCTION TO DTC PARTICIPANTS
(Date of Mailing)
URGENT - IMMEDIATE ATTENTION REQUESTED
DEADLINE FOR RESPONSE: [DATE] *
The Depository Trust Company ("DTC") has identified you as a DTC Participant
through which beneficial interests in the Vlasic Foods International Inc. (the
"COMPANY") % Senior Subordinated Notes due 2009 (the "SECURITIES") are held.
The Company is in the process of registering the Securities under the Securities
Act of 1933 for resale by the beneficial owners thereof. In order to have their
Securities included in the registration statement, beneficial owners must
complete and return the enclosed Notice of Registration Statement and Selling
Securityholder Questionnaire.
It is important that beneficial owners of the Securities receive a copy of the
enclosed materials as soon as possible as their rights to have the Securities
included in the registration statement depend upon their returning the Notice
and Questionnaire by _______________ [28 days after mailing]. Please forward a
copy of the enclosed documents to each beneficial owner that holds interests in
the Securities through you. If you require more copies of the enclosed materials
or have any questions pertaining to this matter, please contact Vlasic Foods
International Inc., Vlasic Plaza, 6 Executive Campus, Cherry Hill, NJ
08002-4112.
- ----------
* Not less than 28 calendar days from date of mailing.
A-1
<PAGE> 26
VLASIC FOODS INTERNATIONAL INC.
Notice of Registration Statement
and
Selling Securityholder Questionnaire
(Date)
Reference is hereby made to the Exchange and Registration Rights Agreement (the
"EXCHANGE AND REGISTRATION RIGHTS AGREEMENT") between Vlasic Foods International
Inc. (the "COMPANY") and the Purchasers named therein. Pursuant to the Exchange
and Registration Rights Agreement, the Company has filed with the United States
Securities and Exchange Commission (the "COMMISSION") a registration statement
on Form [__] (the "SHELF REGISTRATION STATEMENT") for the registration and
resale under Rule 415 of the Securities Act of 1933, as amended (the "SECURITIES
ACT"), of the Company's __% Senior Subordinated Notes due 2009 (the
"SECURITIES"). A copy of the Exchange and Registration Rights Agreement is
attached hereto. All capitalized terms not otherwise defined herein shall have
the meanings ascribed thereto in the Exchange and Registration Rights Agreement.
Each beneficial owner of Registrable Securities (as defined below) is entitled
to have the Registrable Securities beneficially owned by it included in the
Shelf Registration Statement. In order to have Registrable Securities included
in the Shelf Registration Statement, this Notice of Registration Statement and
Selling Securityholder Questionnaire ("NOTICE AND QUESTIONNAIRE") must be
completed, executed and delivered to the Company's counsel at the address set
forth herein for receipt ON OR BEFORE ______________ [28 days after mailing].
Beneficial owners of Registrable Securities who do not complete, execute and
return this Notice and Questionnaire by such date (i) will not be named as
selling securityholders in the Shelf Registration Statement and (ii) may not use
the Prospectus forming a part thereof for resales of Registrable Securities.
Certain legal consequences arise from being named as a selling securityholder in
the Shelf Registration Statement and related Prospectus. Accordingly, holders
and beneficial owners of Registrable Securities are advised to consult their own
securities law counsel regarding the consequences of being named or not being
named as a selling securityholder in the Shelf Registration Statement and
related Prospectus.
The term "REGISTRABLE SECURITIES" is defined in the Exchange and Registration
Rights Agreement.
A-2
<PAGE> 27
ELECTION
The undersigned holder (the "SELLING SECURITYHOLDER") of Registrable Securities
hereby elects to include in the Shelf Registration Statement the Registrable
Securities beneficially owned by it and listed below in Item (3). The
undersigned, by signing and returning this Notice and Questionnaire, agrees to
be bound with respect to such Registrable Securities by the terms and conditions
of this Notice and Questionnaire and the Exchange and Registration Rights
Agreement, including, without limitation, Section 6 of the Exchange and
Registration Rights Agreement, as if the undersigned Selling Securityholder were
an original party thereto.
Upon any sale of Registrable Securities pursuant to the Shelf Registration
Statement, the Selling Securityholder will be required to deliver to the Company
and Trustee the Notice of Transfer set forth in Appendix A to the Prospectus and
as Exhibit B to the Exchange and Registration Rights Agreement.
The Selling Securityholder hereby provides the following information to the
Company and represents and warrants that such information is accurate and
complete:
A-3
<PAGE> 28
QUESTIONNAIRE
(1) (a) Full Legal Name of Selling Securityholder:
______________________________________________________________________
(b) Full Legal Name of Registered Holder (if not the same as in (a) above)
of Registrable Securities Listed in Item (3) below:
______________________________________________________________________
(c) Full Legal Name of DTC Participant (if applicable and if not the
same as (b) above) Through Which Registrable Securities Listed in
Item (3) below are Held:
______________________________________________________________________
(2) Address for Notices to Selling Securityholder:
________________________
________________________
________________________
Telephone: ________________________
Fax: ________________________
Contact Person: ________________________
(3) Beneficial Ownership of Securities:
Except as set forth below in this Item (3), the undersigned does not
beneficially own any Securities.
(a) Principal amount of Registrable Securities beneficially owned:______
CUSIP No(s). of such Registrable Securities: _______________________
(b) Principal amount of Securities other than Registrable Securities
beneficially owned: ________________________________________________
CUSIP No(s). of such other Securities: _____________________________
(c) Principal amount of Registrable Securities which the undersigned
wishes to be included in the Shelf Registration Statement: _________
CUSIP No(s). of such Registrable Securities to be included in the
Shelf Registration Statement: ______________________________________
(4) Beneficial Ownership of Other Securities of the Company:
Except as set forth below in this Item (4), the undersigned Selling
Securityholder is not the beneficial or registered owner of any
other securities of the Company, other than the Securities listed
above in Item (3).
State any exceptions here:
A-4
<PAGE> 29
(5) Relationships with the Company:
Except as set forth below, neither the Selling Securityholder nor any
of its affiliates, officers, directors or principal equity holders
(5% or more) has held any position or office or has had any other
material relationship with the Company (or its predecessors or
affiliates) during the past three years.
State any exceptions here:
(6) Plan of Distribution:
Except as set forth below, the undersigned Selling Securityholder
intends to distribute the Registrable Securities listed above in
Item (3) only as follows (if at all): Such Registrable Securities
may be sold from time to time directly by the undersigned Selling
Securityholder or, alternatively, through underwriters,
broker-dealers or agents. Such Registrable Securities may be sold in
one or more transactions at fixed prices, at prevailing market
prices at the time of sale, at varying prices determined at the time
of sale, or at negotiated prices. Such sales may be effected in
transactions (which may involve crosses or block transactions) (i)
on any national securities exchange or quotation service on which
the Registered Securities may be listed or quoted at the time of
sale, (ii) in the over-the-counter market, (iii) in transactions
otherwise than on such exchanges or services or in the
over-the-counter market, or (iv) through the writing of options. In
connection with sales of the Registrable Securities or otherwise,
the Selling Securityholder may enter into hedging transactions with
broker-dealers, which may in turn engage in short sales of the
Registrable Securities in the course of hedging the positions they
assume. The Selling Securityholder may also sell Registrable
Securities short and deliver Registrable Securities to close out
such short positions, or loan or pledge Registrable Securities to
broker-dealers that in turn may sell such securities.
State any exceptions here:
By signing below, the Selling Securityholder acknowledges that it understands
its obligation to comply, and agrees that it will comply, with the provisions of
the Exchange Act and the rules and regulations thereunder, particularly
Regulation M.
In the event that the Selling Securityholder transfers all or any portion of the
Registrable Securities listed in Item (3) above after the date on which such
information is provided to the Company, the Selling Securityholder agrees to
notify the transferee(s) at the time of the transfer of its rights and
obligations under this Notice and Questionnaire and the Exchange and
Registration Rights Agreement.
By signing below, the Selling Securityholder consents to the disclosure of the
information contained herein in its answers to Items (1) through (6) above and
the inclusion of such information in the Shelf Registration Statement and
related Prospectus. The Selling
A-5
<PAGE> 30
Securityholder understands that such information will be relied upon by the
Company in connection with the preparation of the Shelf Registration Statement
and related Prospectus.
In accordance with the Selling Securityholder's obligation under Section 3(d) of
the Exchange and Registration Rights Agreement to provide such information as
may be required by law for inclusion in the Shelf Registration Statement, the
Selling Securityholder agrees to promptly notify the Company of any inaccuracies
or changes in the information provided herein which may occur subsequent to the
date hereof at any time while the Shelf Registration Statement remains in
effect. All notices hereunder and pursuant to the Exchange and Registration
Rights Agreement shall be made in writing, by hand-delivery, first-class mail,
or air courier guaranteeing overnight delivery as follows:
(i) To the Company:
Vlasic Foods International Inc.
Vlasic Plaza
6 Executive Campus
Cherry Hill, NJ 08002-4112
Attn: Norma Carter, Esq.
(ii) With a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022-3897
Attn: Susan J. Sutherland, Esq.
Once this Notice and Questionnaire is executed by the Selling Securityholder and
received by the Company's counsel, the terms of this Notice and Questionnaire,
and the representations and warranties contained herein, shall be binding on,
shall inure to the benefit of and shall be enforceable by the respective
successors, heirs, personal representatives, and assigns of the Company and the
Selling Securityholder (with respect to the Registrable Securities beneficially
owned by such Selling Securityholder and listed in Item (3) above). This
Agreement shall be governed in all respects by the laws of the State of New
York.
A-6
<PAGE> 31
IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused this
Notice and Questionnaire to be executed and delivered either in person or by its
duly authorized agent.
Dated: ___________________
_____________________________________________________________
Selling Securityholder
(Print/type full legal name of beneficial owner of Registrable
Securities)
By: _________________________________________________________
Name:
Title:
PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE FOR RECEIPT ON
OR BEFORE _______________________[28 days after mailing] TO THE COMPANY'S
COUNSEL AT:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022-3897
Attn: Susan J. Sutherland, Esq.
A-7
<PAGE> 32
EXHIBIT B
NOTICE OF TRANSFER PURSUANT TO REGISTRATION STATEMENT
The Bank of New York
Vlasic Foods International Inc.
c/o The Bank of New York
Corporate Trust Administration
101 Barclay Street
Floor 21 West
New York, NY 10286
Attention: Trust Officer
Re: Vlasic Foods International Inc. (the "Company")
__% Senior Subordinated Notes due 2009
Dear Sirs:
Please be advised that ___ has transferred $___ aggregate principal amount of
the above-referenced Notes pursuant to an effective Registration Statement on
Form [___] (File No. 333-_____ ) filed by the Company.
We hereby certify that the prospectus delivery requirements, if any, of the
Securities Act of 1933, as amended, have been satisfied and that the above-named
beneficial owner of the Notes is named as a "Selling Holder" in the Prospectus
dated ______ or in supplements thereto, and that the aggregate principal amount
of the Notes transferred are the Notes listed in such Prospectus opposite such
owner's name.
Dated:
Very truly yours,
_________________________________
(Name)
By: _____________________________
(Authorized Signature)
B-1
<PAGE> 1
Exhibit 5.1
Norma B. Carter, Esq.
Vlasic Foods International Inc.
6 Executive Campus
Cherry Hill, New Jersey 08002-4112
August 18, 1999
Vlasic Foods International Inc.
Vlasic Plaza
6 Executive Campus
Cherry Hill, New Jersey 08002-4112
Re: Vlasic Foods International Inc.
Registration Statement on Form S-4
Ladies and Gentlemen:
I am the Vice President, General Counsel and Corporate Secretary of Vlasic
Foods International Inc., a New Jersey corporation (the "Company"), and have
acted as the general counsel to the Company in connection with the public
offering of $200,000,000 aggregate principal amount of the Company's 10 1/4%
Series B Senior Subordinated Notes due 2009 (the "Exchange Notes"). The Exchange
Notes are to be issued pursuant to an exchange offer (the "Exchange Offer") in
exchange for a like principal amount of the issued and outstanding 10 1/4%
Series A Senior Subordinated Notes due 2009 of the Company (the "Original
Notes") under an Indenture dated as of June 29, 1999 (the "Indenture"), between
the Company and The Bank of New York, as Trustee (the "Trustee"), as
contemplated by the Exchange and Registration Rights Agreement dated as of June
29, 1999 (the "Registration Rights Agreement"), by and among the Company,
Goldman, Sachs & Co., Chase Securities Inc., Lehman Brothers Inc. and J.P.
Morgan & Co.
This opinion is being furnished in accordance with the requirements of
Item 601(b)(5) of Regulation S-K under the Securities Act of 1933, as amended
(the "Act").
<PAGE> 2
Vlasic Foods International Inc.
August 18, 1999
Page 2
In connection with this opinion, I have examined originals or copies,
certified or otherwise identified to my satisfaction, of (i) the Registration
Statement on Form S-4 to be filed with the Securities and Exchange Commission
(the "Commission") on the date hereof under the Act (the "Registration
Statement"), (ii) an executed copy of the Registration Rights Agreement; (iii)
an executed copy of the Indenture; (iv) the Amended and Restated Certificate of
Incorporation of the Company, as amended to date; (v) the Amended and Restated
By-Laws of the Company, as amended to date; (vi) certain resolutions adopted by
the Board of Directors of the Company relating to the Exchange Offer, the
issuance of the Original Notes and the Exchange Notes, the Indenture and related
matters; (vii) the Form T-1 of the Trustee filed as an exhibit to the
Registration Statement; and (viii) the form of the Exchange Notes. I have also
examined originals or copies, certified or otherwise identified to my
satisfaction, of such records of the Company and such agreements, certificates
of public officials, certificates of officers or other representatives of the
Company and others, and such other documents, certificates and records as I have
deemed necessary or appropriate as a basis for the opinion set forth herein.
In my examination, I have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to me as originals, the conformity to original documents of all
documents submitted to me as certified, conformed or photostatic copies and the
authenticity of the originals of such latter documents. In making my examination
of executed documents or documents to be executed, I have assumed that the
parties thereto, other than the Company, had or will have the power, corporate
or other, to enter into and perform all obligations thereunder and have also
assumed the due authorization by all requisite action, corporate or other, and
the execution and delivery by such parties of such documents and that such
documents constitute valid and binding obligations of such parties. As to any
facts material to the opinion expressed herein which I have not independently
established or verified, I have relied upon statements and representations of
officers and other representatives of the Company and others.
My opinion set forth herein is limited to the laws of the State of New
Jersey and the laws of the State of New York which are normally applicable to
2
<PAGE> 3
Vlasic Foods International Inc.
August 18, 1999
Page 3
transactions of the type contemplated by the Exchange Offer and to the extent
that judicial or regulatory orders or decrees or consents, approvals, licenses,
authorizations, validations, filings, recordings or registrations with
governmental authorities are relevant, to those required under such laws (all
of the foregoing being referred to as "Opined on Law"). I do not express any
opinion with respect to the law of any jurisdiction other than Opined on Law or
as to the effect of any such non opined law on the opinion herein stated. I
have relied, with your consent, as to matters of New York law on the opinion of
Skadden, Arps, Slate, Meagher & Flom LLP, dated the date hereof and to be filed
as Exhibit 5.2 to the Registration Statement.
Based upon and subject to the foregoing and the limitations,
qualifications, exceptions and assumptions set forth herein, I am of the
opinion that when the Exchange Notes (in the form examined by me) have been
duly executed and authenticated in accordance with the terms of the Indenture
and have been delivered upon consummation of the Exchange Offer against receipt
of Original Notes surrendered in exchange therefor in accordance with the terms
of the Exchange Offer, the Exchange Notes will constitute valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms, except to the extent that enforcement thereof may be limited by
(1) bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance
or other similar laws now or hereafter in effect relating to creditors' rights
generally and (2) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity).
I hereby consent to the filing of this opinion with the Commission as an
exhibit to the Registration Statement. I also consent to the reference to me
and to my opinion under the caption "Legal Matters" in the Registration
Statement. In giving this consent, I do not thereby admit that I am included in
the category of persons whose consent is required under Section 7 of the Act or
the rules and regulations of the Commission.
Very truly yours,
/s/ NORMA B. CARTER
3
<PAGE> 1
Exhibit 5.2
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
August 18, 1999
Vlasic Foods International Inc.
Vlasic Plaza
6 Executive Campus
Cherry Hill, New Jersey 08002-4112
Re. Vlasic Foods International Inc.
Registration Statement on Form S-4
-----------------------------------
Ladies and Gentlemen:
We have acted as special counsel to Vlasic Foods International Inc., a New
Jersey corporation (the "Company"), in connection with the public offering of
$200,000,000 aggregate principal amount of the Company's 10 1/4% Series B Senior
Subordinated Notes due 2009 (the "Exchange Notes"). The Exchange Notes are to be
issued pursuant to an exchange offer (the "Exchange Offer") in exchange for a
like principal amount of the issued and outstanding 10 1/4% Series A of Senior
Subordinated Notes due 2009 of the Company (the "Original Notes") under an
Indenture dated as of June 29, 1999 (the "Indenture"), between the Company and
The Bank of New York, as Trustee (the "Trustee"), as contemplated by the
Exchange and Registration Rights Agreement dated as of June 29, 1999 (the
"Registration Rights Agreement"), by and among the Company, Goldman, Sachs &
Co., Chase Securities Inc., Lehman Brothers Inc. and J.P. Morgan & Co.
This opinion is being furnished in accordance with the requirements of
Item 601(b)(5) of Regulation S-K under the Securities Act of 1933, as amended
(the "Act").
In connection with this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of (i) the Registration
<PAGE> 2
Vlasic Foods International Inc.
August 18, 1999
Page 2
Statement on Form S-4 to be filed with the Securities and Exchange Commission
(the "Commission") on the date hereof under the Act (the "Registration
Statement"); (ii) an executed copy of the Registration Rights Agreement; (iii)
an executed copy of the Indenture; (iv) the Form T-1 of the Trustee filed as an
exhibit to the Registration Statement; and (v) the form of the Exchange Notes.
We have also examined originals or copies, certified or otherwise identified to
our satisfaction, of such records of the Company and such agreements,
certificates of public officials, certificates of officers or other
representatives of the Company and others, and such other documents,
certificates and records as we have deemed necessary or appropriate as a basis
for the opinion set forth herein.
In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified, conformed or photostatic copies and the
authenticity of the originals of such latter documents. In making our
examination of executed documents or documents to be executed, we have assumed
that the parties thereto (including the Company) have been duly organized and
are validly existing, had or will have the power, corporate or other, to enter
into and perform all obligations thereunder and have also assumed the due
authorization by all requisite action, corporate or other, and the execution and
delivery by such parties of such documents and (except to the extent we have
opined on such matters below with respect to the Exchange Notes) that such
documents constitute valid and binding obligations of such parties. We have also
assumed that the Company has complied with all aspects of New Jersey law in
connection with the transactions contemplated by the Registration Rights
Agreement and the Exchange Offer. As to any facts material to the opinion
expressed herein which we have not independently established or verified, we
have relied upon statements and representations of officers and other
representatives of the Company and others.
Our opinion set forth herein is limited to the laws of the State of New
York which are normally applicable to transactions of the type contemplated by
the Exchange Offer and to the extent that judicial or regulatory orders or
decrees or
<PAGE> 3
Vlasic Foods International Inc.
August 18, 1999
Page 3
consents, approvals, licenses, authorizations, validations, filings, recordings
or registrations with governmental authorities are relevant to those required
under such laws (all of the foregoing being referred to as "Opined on Law"). We
do not express any opinion with respect to the law of any jurisdiction other
than Opined on Law or as to the effect of any such non opined law on the opinion
herein stated. Norma B. Carter, Esq., Vice President, General Counsel and
Corporate Secretary of the Company, may rely on this opinion in rendering her
opinion dated the date hereof and to be filed as Exhibit 5.1 to the Registration
Statement.
Based upon and subject to the foregoing and the limitations,
qualifications, exceptions and assumptions set forth herein, we are of the
opinion that when the Exchange Notes (in the form examined by us) have been
duly executed and authenticated in accordance with the terms of the Indenture
and have been delivered upon consummation of the Exchange Offer against receipt
of Original Notes surrendered in exchange therefor in accordance with the terms
of the Exchange Offer, the Exchange Notes will constitute valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms, except to the extent that enforcement thereof may be limited by
(1) bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance
or other similar laws now or hereafter in effect relating to creditors' rights
generally and (2) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity).
In rendering the opinion set forth above, we have assumed that the
execution and delivery by the Company of the Indenture and the Exchange Notes
and the performance by the Company of its obligations thereunder do not and
will not violate, conflict with or constitute a default under any agreement or
instrument to which the Company or its properties is subject, except for those
agreements and instruments which have been identified to us by the Company as
being material to it and which are listed as material contracts in Part II of
the Registration Statement. With respect to any agreement or instrument
reviewed by us, that by its terms or otherwise is governed by the laws of any
jurisdiction other than the laws of the State of New York, our opinion herein
is based solely upon our understanding of the plain language of such agreement
or instrument, and we do not express any opinion with respect to the
interpretation, validity, binding nature or enforceability of any such
<PAGE> 4
Vlasic Foods International Inc.
August 18, 1999
Page 4
agreement or instrument, and we do not assume any responsibility with respect
to the effect on the opinions or statements set forth herein of any
interpretation thereof inconsistent with such understanding.
We hereby consent to the filing of this opinion with the Commission as
an exhibit to the Registration Statement. We also consent to the reference to
our firm under the caption "Legal Matters" in the Registration Statement. In
giving this consent, we do not thereby admit that we are included in the
category of persons whose consent is required under Section 7 of the Act or the
rules and regulations of the Commission.
Very truly yours,
/s/ SKADDEN, ARPS, SLATE,
MEAGHER & FLOM LLP
<PAGE> 1
Exhibit 12.1
EXHIBIT 12.1
Vlasic Foods International Inc.
Statement Regarding the Computation of the Ratio of Earnings to Fixed Charges
(dollars in thousands)
<TABLE>
<CAPTION>
Nine Months
Ended Fiscal Year Ended
----------- ---------------------------------------------------------
May 2, 1999 August 2, August 3, July 28, July 30, July 31,
1999 1998 1997 1996 1995 1994
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Earnings
Earnings before taxes $(103,959) $ 9,579 $ 115,615 $ 88,228 $ 106,693 $ 78,632
Interest expense 32,756 13,446 1,600 1,071 2,016 1,281
Amortization of debt issue costs 211 -- -- -- -- --
Interest portion of rent 1,831 2,751 3,029 3,223 3,617 3,596
Amortization of previously capitalized interest 1,200 1,577 1,509 1,373 1,422 582
--------- --------- --------- --------- --------- ---------
Earnings (67,961) 27,353 121,753 93,895 113,748 84,091
========= ========= ========= ========= ========= =========
Fixed Charges
Gross interest:
Interest expense 32,756 13,446 1,600 1,071 2,016 1,281
Capitalized interest 500 448 -- -- -- --
Amortization of debt issue costs 211 -- -- -- -- --
Interest portion of rent 1,831 2,751 3,029 3,223 3,617 3,596
--------- --------- --------- --------- --------- ---------
Fixed charges 35,298 16,645 4,629 4,294 5,633 4,877
========= ========= ========= ========= ========= =========
Ratio of earnings to fixed charges $ -- $ 1.6 $ 26.3 $ 21.9 $ 20.2 $ 17.2
========= ========= ========= ========= ========= =========
Additional earnings required to achieve a ratio of 1:1 $ 103,259
=========
</TABLE>
<PAGE> 1
EXHIBIT 12.2
Vlasic Foods International Inc.
Statement Regarding the Computation of the
Pro Forma Ratio of Earnings to Fixed Charges
(dollars in thousands)
<TABLE>
<CAPTION>
Nine Months Fiscal Year
Ended Ended
----------- --------------
May 2, 1999 August 2, 1998
<S> <C> <C>
Earnings
Earnings before taxes $(103,959) $ 9,579
Interest expense 32,756 13,446
Amortization of debt issue costs 211 --
Interest portion of rent 1,831 1,300
Amortization of previously capitalized interest 1,200 1,577
--------- -------
Earnings $ (67,961) $25,902
========= =======
Fixed Charges
Gross interest:
Pro Forma Interest
Spin-Off $ -- $25,555
Outstanding notes and exchange notes 6,445 9,555
Interest expense 32,756 13,446
Capitalized interest 500 449
Amortization of debt issue costs 211 --
Interest portion of rent 1,831 1,300
--------- -------
Fixed charges $ 41,743 $50,306
========= =======
Ratio of earnings to fixed charges $ -- $ 0.5
========= =======
Additional earnings required to achieve a ratio of 1:1 $ 109,704
--=======
</TABLE>
<PAGE> 1
Exhibit 21.1
SUBSIDIARIES OF VLASIC
<TABLE>
<CAPTION>
NAME OF SUBSIDIARY AND NAME
UNDER WHICH IT DOES BUSINESS JURISDICTION OF INCORPORATION
<S> <C>
Aligar, Inc. Delaware
Deleco Grosshandels GmbH (Divested January 1999) Germany
Cargal, Inc. Delaware
Freshbake Foods Limited Great Britain
Theodor Kattus GmbH (Divested January 1999) Germany
Stratford-Upon-Avon Foods Limited Great Britain
Swift-Armour Sociedad Anonima Argentina (Divested July 1999) Argentina
VF Brands, Inc. Delaware
Vlasic Farms, Inc. Ohio
Vlasic Foods Distribution Company Arkansas
Vlasic Foods Canada, Inc. Ontario
Vlasic Foods, Inc. (Merged into Parent August 1999) Michigan
Vlasic International Brands Inc. Delaware
Vlasic International Sales Inc. New Jersey
Vlasic Standards, Inc. New Jersey
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this Registration Statement on Form S-4 of
Vlasic Foods International Inc. of our report dated September 16, 1998 relating
to the financial statements of Vlasic Foods International Inc., which appear in
such Registration Statement. We also consent to the references to us under the
headings "Experts," "Summary Financial Information" and "Selected
Historical Financial Information" in such Registration Statement.
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
August 16, 1999
<PAGE> 1
EXHIBIT 25.1
===============================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
One Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
Vlasic Foods International Inc.
(Exact name of obligor as specified in its charter)
New Jersey 52-2067518
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
6 Executive Campus
Cherry Hills, New Jersey 08002-4112
(Address of principal executive offices) (Zip code)
----------------------
10-1/4 % Senior Subordinated Notes due 2009
(Title of the indenture securities)
===============================================================================
<PAGE> 2
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH
IT IS SUBJECT.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------------------
<S> <C>
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
</TABLE>
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE
7a-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R.
229.10(d).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit
1 to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form
T-1 filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or
examining authority.
-2-
<PAGE> 3
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 11th day of August, 1999.
THE BANK OF NEW YORK
By: /s/REMO J. REALE
--------------------------
Name: REMO J. REALE
Title: VICE PRESIDENT
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 11th day of August, 1999.
THE BANK OF NEW YORK
By: /s/REMO J. REALE
-------------------------------
Name: REMO J. REALE
Title: ASSISTANT VICE PRESIDENT
<PAGE> 5
Consolidated Report of Condition of
THE BANK OF NEW YORK
of One Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business March 31, 1999,
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS In Thousands
<S> <C>
Cash and balances due from depository
institutions:
Noninterest-bearing balances and currency
and coin $ 4,508,742
Interest-bearing balances 4,425,071
Securities:
Held-to-maturity securities 836,304
Available-for-sale securities 4,047,851
Federal funds sold and Securities purchased
under agreements to resell 1,743,269
Loans and lease financing receivables:
Loans and leases, net of unearned income.......39,349,679
LESS: Allowance for loan and lease losses.........603,025
LESS: Allocated transfer risk reserve..............15,906
Loans and leases, net of unearned income, allowance, and reserve 38,730,748
Trading Assets 1,571,372
Premises and fixed assets (including capitalized leases) 685,674
Other real estate owned 10,331
Investments in unconsolidated subsidiaries
and associated companies 182,449
Customers' liability to this bank on
acceptances outstanding 1,184,822
Intangible assets 1,129,636
Other assets 2,632,309
------------
Total assets $ 61,688,578
============
LIABILITIES
Deposits:
In domestic offices $ 25,731,036
Noninterest-bearing............................10,252,589
Interest-bearing...............................15,478,447
In foreign offices, Edge and Agreement
subsidiaries, and IBFs 18,756,302
Noninterest-bearing...............................111,386
Interest-bearing...............................18,644,916
Federal funds purchased and Securities sold
under agreements to repurchase 3,276,362
Demand notes issued to the U.S. Treasury 230,671
Trading liabilities 1,554,493
Other borrowed money:
With remaining maturity of one year or less 1,154,502
With remaining maturity of more than one
year through three years 465
With remaining maturity of more than
three years 31,080
Bank's liability on acceptances executed and
outstanding 1,185,364
Subordinated notes and debentures 1,308,000
Other liabilities 2,743,590
----------
Total liabilities 55,971,865
==========
EQUITY CAPITAL
Common stock 1,135,284
Surplus 764,443
Undivided profits and capital reserves 3,807,697
Net unrealized holding gains (losses) on
available-for-sale securities 44,106
Cumulative foreign currency translation
adjustments (34,817)
-------------
Total equity capital 5,716,713
-------------
Total liabilities and equity capital $ 61,688,578
=============
</TABLE>
I, Thomas J. Mastro, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Thomas J. Mastro
We, the undersigned directors, attest to the correctness of this Report
of Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
Thomas A. Reyni } Directors
Alan R. Griffith }
Gerald L. Hassell }
<PAGE> 1
LETTER OF TRANSMITTAL
VLASIC FOODS INTERNATIONAL INC.
OFFER FOR ALL OUTSTANDING
10 1/4% SERIES A SENIOR SUBORDINATED NOTES DUE 2009
IN EXCHANGE FOR
10 1/4% SERIES B SENIOR SUBORDINATED NOTES DUE 2009
WHICH HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED,
PURSUANT TO THE PROSPECTUS, DATED , 1999
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M. NEW YORK CITY TIME, ON
, UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS MAY BE
WITHDRAWN BEFORE 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
Delivery To: The Bank of New York, Exchange Agent
<TABLE>
<S> <C>
By Hand or Overnight Delivery: By Registered or Certified Mail:
The Bank of New York The Bank of New York
101 Barclay Street 101 Barclay Street, 7E
Corporate Trust Services Window New York, New York 10286
Ground Level Attention: ,
New York, New York 10286 Reorganization Section
Attention: ,
Reorganization Section
</TABLE>
For Information Call:
(212) 815-6333
By Facsimile Transmission
(for Eligible Institutions only):
(212) 571-3080
Confirm by Telephone:
(212) 815-6333
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE, WILL
NOT CONSTITUTE A VALID DELIVERY.
<PAGE> 2
The undersigned acknowledges that he or she has received the Prospectus,
dated , 1999 (the "Prospectus"), of Vlasic Foods International
Inc., a New Jersey corporation (the "Company"), and this Letter of Transmittal
(the "Letter"), which together constitute the Company's offer (the "Exchange
Offer") to exchange an aggregate principal amount of up to $200,000,000 of the
Company's 10 1/4% Series B Senior Subordinated Notes due 2009 (the "Exchange
Notes") which have been registered under the Securities Act of 1933, as amended
(the "Securities Act"), for a like principal amount of the Company's issued and
outstanding 10 1/4% Series A Senior Subordinated Notes due 2009 (the "Original
Notes") from the registered holders thereof (the "Holders").
For each Original Note accepted for exchange, the Holder of such Original
Note will receive an Exchange Note having a principal amount equal to that of
the surrendered Original Note. The Exchange Notes will bear interest from the
most recent date to which interest has been paid on the Original Notes or, if no
interest has been paid on the Original Notes, from June 29, 1999. Accordingly,
registered Holders of Exchange Notes on the relevant record date for the first
interest payment date following the consummation of the Exchange Offer will
receive interest accruing from the most recent date to which interest has been
paid or, if no interest has been paid, from June 29, 1999. Original Notes
accepted for exchange will cease to accrue interest from and after the date of
consummation of the Exchange Offer. Holders of Original Notes whose Original
Notes are accepted for exchange will not receive any payment in respect of
accrued interest on such Original Notes otherwise payable on any interest
payment date the record date for which occurs on or after consummation of the
Exchange Offer.
This Letter is to be completed by a holder of Original Notes either if
certificates are to be forwarded herewith or if a tender of certificates for
Original Notes, if available, is to be made by book-entry transfer to the
account maintained by the Exchange Agent at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedures set forth in "The
Exchange Offer -- Book-Entry Transfer" section of the Prospectus. Holders of
Original Notes whose certificates are not immediately available, or who are
unable to deliver their certificates or confirmation of the book-entry tender of
their Original Notes into the Exchange Agent's account at the Book-Entry
Transfer Facility (a "Book-Entry Confirmation") and all other documents required
by this Letter to the Exchange Agent on or before the Expiration Date, must
tender their Original Notes according to the guaranteed delivery procedures set
forth in "The Exchange Offer -- Guaranteed Delivery Procedures" section of the
Prospectus. See Instruction 1. Delivery of documents to the Book-Entry Transfer
Facility does not constitute delivery to the Exchange Agent.
The undersigned has completed the appropriate boxes below and signed this
Letter to indicate the action the undersigned desires to take with respect to
the Exchange Offer.
List below the Original Notes to which this Letter relates. If the space
provided below is inadequate, the certificate numbers and principal amount of
Original Notes should be listed on a separate signed schedule affixed hereto.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF ORIGINAL NOTES 1 2 3
- ----------------------------------------------------------------------------------------------------------------------
AGGREGATE PRINCIPAL PRINCIPAL
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) CERTIFICATE AMOUNT OF AMOUNT
(PLEASE FILL IN, IF BLANK) NUMBER(S)* ORIGINAL NOTE(S) TENDERED**
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
TOTAL
- ----------------------------------------------------------------------------------------------------------------------
* Need not be completed if Original Notes are being tendered by book-entry transfer.
** Unless otherwise indicated in this column, a holder will be deemed to have tendered ALL of the Original Notes
represented by the Original Notes indicated in column 2. See Instruction 2. Original Notes tendered hereby must be
in denominations of principal amount of $1,000 and any integral multiple thereof. See Instruction 1.
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE> 3
[ ] CHECK HERE IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution
Account Number
------------------------------- Transaction Code Number
-------------------------------
[ ] CHECK HERE IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND
COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s)
Window Ticket Number (if any)
Date of Execution of Notice of Guaranteed Delivery
Name of Institution Which Guaranteed Delivery
IF DELIVERED BY BOOK-ENTRY TRANSFER, COMPLETE THE FOLLOWING:
Account Number
------------------------------- Transaction Code Number
-------------------------------
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name:
Address:
----------------------------------------------------------------------------
If the undersigned is not a broker-dealer, the undersigned represents that
it is not engaged in, and does not intend to engage in, a distribution of
Exchange Notes. If the undersigned is a broker-dealer that will receive Exchange
Notes for its own account in exchange for Original Notes that were acquired as a
result of market-making activities or other trading activities, it acknowledges
that it will deliver a prospectus meeting the requirements of the Securities Act
in connection with any resale of such Exchange Notes; however, by so
acknowledging and by delivering such a prospectus, the undersigned will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act. If the undersigned is a broker-dealer that will receive Exchange Notes, it
represents that the Original Notes to be exchanged for the Exchange Notes were
acquired as a result of market-making activities or other trading activities.
3
<PAGE> 4
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the aggregate principal amount of
Original Notes indicated above. Subject to, and effective upon, the acceptance
for exchange of the Original Notes tendered hereby, the undersigned hereby
sells, assigns and transfers to, or upon the order of, the Company all right,
title and interest in and to such Original Notes as are being tendered hereby.
The undersigned hereby irrevocably constitutes and appoints the Exchange
Agent as the undersigned's true and lawful agent and attorney-in-fact with
respect to such tendered Original Notes, with full power of substitution, among
other things, to cause the Original Notes to be assigned, transferred and
exchanged. The undersigned hereby represents and warrants that the undersigned
has full power and authority to tender, sell, assign and transfer the Original
Notes, and to acquire Exchange Notes issuable upon the exchange of such tendered
Original Notes, and that, when the same are accepted for exchange, the Company
will acquire good and unencumbered title thereto, free and clear of all liens,
restrictions, charges and encumbrances and not subject to any adverse claim when
the same are accepted by the Company. The undersigned hereby further represents
that any Exchange Notes acquired in exchange for Original Notes tendered hereby
will have been acquired in the ordinary course of business of the person
receiving such Exchange Notes, whether or not such person is the undersigned,
that neither the Holder of such Original Notes nor any such other person is
participating in, intends to participate in or has an arrangement or
understanding with any person to participate in the distribution of such
Exchange Notes and that neither the Holder of such Original Notes nor any such
other person is an "affiliate," as defined in Rule 405 under the Securities Act,
of the Company.
The undersigned acknowledges that this Exchange Offer is being made in
reliance on interpretations by the staff of the Securities and Exchange
Commission (the "SEC"), as set forth in no-action letters issued to third
parties, that the Exchange Notes issued pursuant to the Exchange Offer in
exchange for the Original Notes may be offered for resale, resold and otherwise
transferred by Holders thereof (other than any such Holder that is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act), without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such Exchange Notes are acquired
in the ordinary course of such Holders' business and such Holders have no
arrangement with any person to participate in the distribution of such Exchange
Notes. However, the SEC has not considered the Exchange Offer in the context of
a no-action letter and there can be no assurance that the staff of the SEC would
make a similar determination with respect to the Exchange Offer as in other
circumstances. If the undersigned is not a broker-dealer, the undersigned
represents that it is not engaged in, and does not intend to engage in, a
distribution of Exchange Notes and has no arrangement or understanding to
participate in a distribution of Exchange Notes. If any Holder is an affiliate
of the Company, is engaged in or intends to engage in or has any arrangement or
understanding with respect to the distribution of the Exchange Notes to be
acquired pursuant to the Exchange Offer, such Holder (i) could not rely on the
applicable interpretations of the staff of the SEC and (ii) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. If the undersigned is a broker-dealer
that will receive Exchange Notes for its own account in exchange for Original
Notes, it represents that the Original Notes to be exchanged for the Exchange
Notes were acquired by it as a result of market-making activities or other
trading activities and acknowledges that it will deliver a prospectus meeting
the requirements of the Securities Act in connection with any resale of such
Exchange Notes; however, by so acknowledging and by delivering a prospectus
meeting the requirements of the Securities Act, the undersigned will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Company to be necessary or desirable to complete the
sale, assignment and transfer of the Original Notes tendered hereby. All
authority conferred or agreed to be conferred in this Letter and every
obligation of the undersigned hereunder shall be binding upon the successors,
assigns, heirs, executors, administrators, trustees in bankruptcy and legal
representatives of the undersigned and shall not be affected by, and shall
survive, the death or incapacity of the undersigned. This tender may be
withdrawn only in accordance with the procedures set forth in "The Exchange
Offer -- Withdrawal Rights" section of the Prospectus.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, please deliver the Exchange Notes (and, if applicable,
substitute certificates representing Original Notes for any Original Notes not
4
<PAGE> 5
exchanged) in the name of the undersigned or, in the case of a book-entry
delivery of Original Notes, please credit the account indicated above maintained
at the Book-Entry Transfer Facility. Similarly, unless otherwise indicated under
the box entitled "Special Delivery Instructions" below, please send the Exchange
Notes (and, if applicable, substitute certificates representing Original Notes
for any Original Notes not exchanged) to the undersigned at the address shown
above in the box entitled "Description of Original Notes."
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF ORIGINAL
NOTES" ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED THE
ORIGINAL NOTES AS SET FORTH IN SUCH BOX ABOVE.
- ------------------------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
- ------------------------------------------------------------
To be completed ONLY if certificates for Original Notes not exchanged
and/or Exchange Notes are to be issued in the name of and sent to someone
other than the person or persons whose signature(s) appear(s) on this Letter
above, or if Original Notes delivered by book-entry transfer which are not
accepted for exchange are to be returned by credit to an account maintained at
the Book-Entry Transfer Facility other than the account indicated above.
Issue Exchange Notes and/or Original Notes to:
Name(s)
------------------------------------------------
(PLEASE TYPE OR PRINT)
-----------------------------------------------------------
(PLEASE TYPE OR PRINT)
Address
-------------------------------------------------
-----------------------------------------------------------
(ZIP CODE)
(COMPLETE SUBSTITUTE FORM W-9)
[ ] Credit unexchanged Old Notes delivered by book-entry transfer to the
Book-Entry Transfer Facility account set forth below.
-----------------------------------------------------------
(BOOK-ENTRY TRANSFER FACILITY
ACCOUNT NUMBER, IF APPLICABLE)
- ------------------------------------------------------------
- ------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
- ------------------------------------------------------------
To be completed ONLY if certificates for Original Notes not exchanged
and/or Exchange Notes are to be sent to someone other than the person or
persons whose signature(s) appear(s) on this Letter above or to such person 6r
persons at an address other than shown in the box entitled "Description of
Original Notes" on this Letter above.
Mail Exchange Notes and/or Original Notes to:
Name(s)
------------------------------------------------
(PLEASE TYPE OR PRINT)
-----------------------------------------------------------
(PLEASE TYPE OR PRINT)
Address
-------------------------------------------------
-----------------------------------------------------------
(ZIP CODE)
- ------------------------------------------------------------
IMPORTANT: THIS LETTER OR A FACSIMILE HEREOF (TOGETHER WITH THE CERTIFICATES
FOR ORIGINAL NOTES OR A BOOK-ENTRY CONFIRMATION AND ALL OTHER REQUIRED DOCUMENTS
OR THE NOTICE OF GUARANTEED DELIVERY) MUST BE RECEIVED BY THE EXCHANGE AGENT
BEFORE 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
5
<PAGE> 6
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING ANY BOX ABOVE.
<TABLE>
<S> <C>
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
(COMPLETE ACCOMPANYING SUBSTITUTE FORM W-9 BELOW)
X ------------------------------------------------------ ------------------------------------------------- , 1999
X ------------------------------------------------------ ------------------------------------------------- , 1999
(SIGNATURE(S) OF OWNER) (DATE)
Area Code and Telephone Number:
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
If a holder is tendering any Original Notes, this Letter must be signed by
the registered holder(s) as the name(s) appear(s) on the certificate(s) for the
Original Notes or by any person(s) authorized to become registered holder(s) by
endorsements and documents transmitted herewith. If signature is by a trustee,
executor, administrator, guardian, officer or other person acting in a fiduciary
or representative capacity, please set forth full title. See Instruction 3.
Name(s):
- --------------------------------------------------------------------------------
------------------------------------------------------------------------
(PLEASE TYPE OR PRINT)
Capacity:
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
------------------------------------------------------------------------
(INCLUDING ZIP CODE)
SIGNATURE GUARANTEE
(IF REQUIRED BY INSTRUCTION 3)
Signature(s) Guaranteed by
an Eligible Institution:
- --------------------------------------------------------------------------------
(AUTHORIZED SIGNATURE)
- --------------------------------------------------------------------------------
(TITLE)
- --------------------------------------------------------------------------------
(NAME AND FIRM)
Dated:
- --------------------------------------------------------------------------------
6
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER FOR THE
10 1/4% SERIES A SENIOR SUBORDINATED NOTES DUE 2009 OF VLASIC FOOD INTERNATIONAL
INC.
IN EXCHANGE FOR THE
10 1/4% SERIES B SENIOR SUBORDINATED NOTES DUE 2009 OF VLASIC FOODS
INTERNATIONAL INC.
WHICH HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
1. DELIVERY OF THIS LETTER AND NOTES; GUARANTEED DELIVERY PROCEDURES.
This Letter is to be completed by holders of Original Notes either if
certificates are to be forwarded herewith or if tenders are to be made pursuant
to the procedures for delivery by book-entry transfer set forth in "The Exchange
Offer -- Book-Entry Transfer" section of the Prospectus. Certificates for all
physically tendered Original Notes, or Book-Entry Confirmation, as the case may
be, as well as a properly completed and duly executed Letter (or manually signed
facsimile hereof) and any other documents required by this Letter, must be
received by the Exchange Agent at the address set forth herein on or before the
Expiration Date, or the tendering holder must comply with the guaranteed
delivery procedures set forth below. Original Notes tendered hereby must be in
denominations of principal amount of $1,000 and any integral multiple thereof.
Holders whose certificates for Original Notes are not immediately available
or who cannot deliver their certificates and all other required documents to the
Exchange Agent on or before the Expiration Date, or who cannot complete the
procedure for book-entry transfer on a timely basis, may tender their Original
Notes pursuant to the guaranteed delivery procedures set forth in "The Exchange
Offer -- Guaranteed Delivery Procedures" section of the Prospectus. Pursuant to
such procedures, (i) such tender must be made through an Eligible Institution,
(ii) before 5:00 P.M., New York City time, on the Expiration Date, the Exchange
Agent (as defined below) must receive from such Eligible Institution a properly
completed and duly executed Letter (or a facsimile thereof) and Notice of
Guaranteed Delivery, substantially in the form provided by the Company (by
facsimile transmission, mail or hand delivery), setting forth the name and
address of the holder of Original Notes and the amount of Original Notes
tendered, stating that the tender is being made thereby and guaranteeing that
within three New York Stock Exchange ("NYSE") trading days after the Expiration
Date, the certificates for all physically tendered Original Notes, in proper
form for transfer, or a Book-Entry Confirmation, as the case may be, and any
other documents required by this Letter will be deposited by the Eligible
Institution with the Exchange Agent, and (iii) the certificates for all
physically tendered Original Notes, in proper form for transfer, or a Book-Entry
Confirmation, as the case may be, and all other documents required by this
Letter, must be received by the Exchange Agent within three NYSE trading days
after the Expiration Date.
The method of delivery of this Letter, the Original Notes and all other
required documents is at the election and risk of the tendering holders, but the
delivery will be deemed made only when actually received or confirmed by the
Exchange Agent. If Original Notes are sent by mail, it is suggested that the
mailing be registered mail, properly insured, with return receipt requested,
made sufficiently in advance of the Expiration Date to permit delivery to the
Exchange Agent before 5:00 P.M., New York City time, on the Expiration Date.
See "The Exchange Offer" section of the Prospectus.
2. PARTIAL TENDERS (NOT APPLICABLE TO NOTEHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER).
If less than all of the Original Notes evidenced by a submitted certificate
are to be tendered, the tendering holder(s) should fill in the aggregate
principal amount of Original Notes to be tendered in the box above entitled
"Description of Original Notes -- Principal Amount Tendered." A reissued
certificate representing the balance of nontendered Original Notes will be sent
to such tendering holder, unless otherwise provided in the appropriate box on
this Letter, promptly after the Expiration Date. ALL OF THE ORIGINAL NOTES
DELIVERED TO THE EXCHANGE AGENT WILL BE DEEMED TO HAVE BEEN TENDERED UNLESS
OTHERWISE INDICATED.
7
<PAGE> 8
3. SIGNATURES ON THIS LETTER; BOND POWERS AND ENDORSEMENTS; GUARANTEE OF
SIGNATURES.
If this Letter is signed by the registered holder of the Original Notes
tendered hereby, the signature must correspond exactly with the name as written
on the face of the certificates without any change whatsoever.
If any tendered Original Notes are owned of record by two or more joint
owners, all of such owners must sign this Letter.
If any tendered Original Notes are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
copies of this Letter as there are different registrations of certificates.
When this Letter is signed by the registered holder or holders of the
Original Notes specified herein and tendered hereby, no endorsements of
certificates or separate bond powers are required. If, however, the Exchange
Notes are to be issued, or any untendered Original Notes are to be reissued, to
a person other than the registered holder, then endorsements of any certificates
transmitted hereby or separate bond powers are required. Signatures on such
certificate(s) must be guaranteed by an Eligible Institution.
If this Letter is signed by a person other than the registered holder or
holders of any certificate(s) specified herein, such certificate(s) must be
endorsed or accompanied by appropriate bond powers, in either case signed
exactly as the name or names of the registered holder or holders appear(s) on
the certificate(s) and signatures on such certificate(s) must be guaranteed by
an Eligible Institution.
If this Letter or any certificates or bond powers are signed by trustees,
executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by the Company,
proper evidence satisfactory to the Company of their authority to so act must be
submitted.
ENDORSEMENTS ON CERTIFICATES FOR ORIGINAL NOTES OR SIGNATURES ON BOND
POWERS REQUIRED BY THIS INSTRUCTION 3 MUST BE GUARANTEED BY A FIRM THAT IS A
FINANCIAL INSTITUTION (INCLUDING MOST BANKS, SAVINGS AND LOAN ASSOCIATIONS AND
BROKERAGE HOUSES) THAT IS A PARTICIPANT IN THE SECURITIES TRANSFER AGENTS
MEDALLION PROGRAM, THE NEW YORK STOCK EXCHANGE MEDALLION SIGNATURE PROGRAM OR
THE STOCK EXCHANGES MEDALLION PROGRAM (EACH AN "ELIGIBLE INSTITUTION").
SIGNATURES ON THIS LETTER NEED NOT BE GUARANTEED BY AN ELIGIBLE
INSTITUTION, PROVIDED THE ORIGINAL NOTES ARE TENDERED: (I) BY A REGISTERED
HOLDER OF ORIGINAL NOTES (WHICH TERM, FOR PURPOSES OF THE EXCHANGE OFFER,
INCLUDES ANY PARTICIPANT IN THE BOOK-ENTRY TRANSFER FACILITY SYSTEM WHOSE NAME
APPEARS ON A SECURITY POSITION LISTING AS THE HOLDER OF SUCH ORIGINAL NOTES) WHO
HAS NOT COMPLETED THE BOX ENTITLED "SPECIAL ISSUANCE INSTRUCTIONS" OR "SPECIAL
DELIVERY INSTRUCTIONS" ON THIS LETTER, OR (II) FOR THE ACCOUNT OF AN ELIGIBLE
INSTITUTION.
4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS.
Tendering holders of Original Notes should indicate in the applicable box
the name and address to which Exchange Notes issued pursuant to the Exchange
Offer and/or substitute certificates evidencing Original Notes not exchanged are
to be issued or sent, if different from the name or address of the person
signing this Letter. In the case of issuance in a different name, the employer
identification or social security number of the person named must also be
indicated. Noteholders tendering Original Notes by book-entry transfer may
request that Original Notes not exchanged be credited to such account maintained
at the Book-Entry Transfer Facility as such noteholder may designate hereon. If
no such instructions are given such Original Notes not exchanged will be
returned to the name and address of the person signing this Letter.
5. TAXPAYER IDENTIFICATION NUMBER.
Federal income tax law generally requires that a tendering holder whose
Original Notes are accepted for exchange must provide the Company (as payor)
with such holder's correct Taxpayer Identification Number ("TIN") on Substitute
Form W-9 below, which in the case of a tendering holder who is an individual, is
his or her social security number. If the Company is not provided with the
current TIN or an adequate basis for an exemption from back-up withholding, such
tendering holder may be subject to a $50 penalty imposed by the Internal Revenue
Service. In addition, the Exchange Agent may be required to withhold 31% of the
amount of any reportable payments made after the
8
<PAGE> 9
exchange to such tendering holder of Exchange Notes. If withholding results in
an overpayment of taxes, a refund may be obtained.
Exempt holders of Original Notes (including, among others, all corporations
and certain foreign individuals) are not subject to these backup withholding and
reporting requirements. See the enclosed Guidelines of Certification of Taxpayer
Identification Number on Substitute Form W-9 (the "W-9 Guidelines") for
additional instructions.
To prevent backup withholding, each tendering holder of Original Notes must
provide its correct TIN by completing the Substitute Form W-9 set forth below,
certifying, under penalties of perjury, that the TIN provided is correct (or
that such holder is awaiting a TIN) and that (i) the holder is exempt from
backup withholding, or (ii) the holder has not been notified by the Internal
Revenue Service that such holder is subject to back-up withholding as a result
of a failure to report all interest or dividends or (iii) the Internal Revenue
Service has notified the holder that such holder is no longer subject to backup
withholding. If the tendering holder of Original Notes is a nonresident alien or
foreign entity not subject to backup withholding, such holder must give the
Exchange Agent a completed Form W-8, Certificate of Foreign Status. These forms
may be obtained from the Exchange Agent. If the Original Notes are in more than
one name or are not in the name of the actual owner, such holder should consult
the W-9 Guidelines for information on which TIN to report. If such holder does
not have a TIN, such holder should consult the W-9 Guidelines for instructions
on applying for a TIN, check the box in Part 2 of the Substitute Form W-9 and
write "applied for" in lieu of its TIN. Note: Checking this box and writing
"applied for" on the form means that such holder has already applied for a TIN
or that such holder intends to apply for one in the near future. If the box in
Part 2 of the Substitute Form W-9 is checked, the Exchange Agent will retain 31%
of reportable payments made to a holder during the sixty (60) day period
following the date of the Substitute Form W-9. If the holder furnishes the
Exchange Agent with his or her TIN within sixty (60) days of the Substitute Form
W-9, the Exchange Agent will remit such amounts retained during such sixty (60)
day period to such holder and no further amounts will be retained or withheld
from payments made to the holder thereafter. If, however, such holder does not
provide its TIN to the Exchange Agent within such sixty (60) day period, the
Exchange Agent will remit such previously withheld amounts to the Internal
Revenue Service as backup withholding and will withhold 31% of all reportable
payments to the holder thereafter until such holder furnishes its TIN to the
Exchange Agent.
6. TRANSFER TAXES.
The Company will pay all transfer taxes, if any, applicable to the transfer
of Original Notes to it or its order pursuant to the Exchange Offer. If,
however, Exchange Notes and/or substitute Original Notes not exchanged are to be
delivered to, or are to be registered or issued in the name of, any person other
than the registered holder of the Original Notes tendered hereby, or if tendered
Original Notes are registered in the name of any person other than the person
signing this Letter, or if a transfer tax is imposed for any reason other than
the transfer of Original Notes to the Company or its order pursuant to the
Exchange Offer, the amount of any such transfer taxes (whether imposed on the
registered holder or any other persons) will be payable by the tendering holder.
If satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted herewith, the amount of such transfer taxes will be billed directly to
such tendering holder.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE ORIGINAL NOTES SPECIFIED IN THIS
LETTER.
7. WAIVER OF CONDITIONS.
The Company reserves the absolute right to waive satisfaction of any or all
conditions enumerated in the Prospectus.
8. NO CONDITIONAL TENDERS.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering holders of Original Notes, by execution of this Letter,
shall waive any right to receive notice of the acceptance of their Original
Notes for exchange.
Neither the Company, the Exchange Agent nor any other person is obligated
to give notice of any defect or irregularity with respect to any tender of
Original Notes nor shall any of them incur any liability for failure to give any
such notice.
9
<PAGE> 10
9. MUTILATED, LOST, STOLEN OR DESTROYED ORIGINAL NOTES.
Any holder whose Original Notes have been mutilated, lost, stolen or
destroyed should contact the Exchange Agent at the address indicated above for
further instructions.
10. WITHDRAWAL RIGHTS.
Tenders of Original Notes may be withdrawn at any time before 5:00 P.M.,
New York City time, on the Expiration Date.
For a withdrawal of a tender of Original Notes to be effective, a written
notice of withdrawal must be received by the Exchange Agent at the address set
forth above before 5:00 P.M., New York City time, on the Expiration Date. Any
such notice of withdrawal must (i) specify the name of the person having
tendered the Original Notes to be withdrawn (the "Depositor"), (ii) identify the
Original Notes to be withdrawn (including certificate number or numbers and the
principal amount of such Original Notes), (iii) contain a statement that such
holder is withdrawing his election to have such Original Notes exchanged, (iv)
be signed by the holder in the same manner as the original signature on the
Letter by which such Original Notes were tendered (including any required
signature guarantees) or be accompanied by documents of transfer to have the
Trustee with respect to the Original Notes register the transfer of such
Original Notes in the name of the person withdrawing the tender and (v) specify
the name in which such Original Notes are registered, if different from that of
the Depositor. If Original Notes have been tendered pursuant to the procedure
for book-entry transfer set forth in "The Exchange Offer -- Book-Entry Transfer"
section of the Prospectus, any notice of withdrawal must specify the name and
number of the account at the Book-Entry Transfer Facility to be credited with
the withdrawn Original Notes and otherwise comply with the procedures of such
facility. All questions as to the validity, form and eligibility (including time
of receipt) of such notices will be determined by the Company, whose
determination shall be final and binding on all parties. Any Original Notes so
withdrawn will be deemed not to have been validly tendered for exchange for
purposes of the Exchange Offer and no Exchange Notes will be issued with respect
thereto unless the Original Notes so withdrawn are validly retendered. Any
Original Notes that have been tendered for exchange but which are not exchanged
for any reason will be returned to the Holder thereof without cost to such
Holder (or, in the case of Original Notes tendered by book-entry transfer into
the Exchange Agent's account at the Book-Entry Transfer Facility pursuant to the
book-entry transfer procedures set forth in "The Exchange Offer -- Book-Entry
Transfer" section of the Prospectus, such Original Notes will be credited to an
account maintained with the Book-Entry Transfer Facility for the Original Notes)
as soon as practicable after withdrawal, rejection of tender or termination of
the Exchange Offer. Properly withdrawn Original Notes may be retendered by
following the procedures described above at any time on or before 5:00 P.M., New
York City time, on the Expiration Date.
11. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions relating to the procedure for tendering, as well as requests for
additional copies of the Prospectus and this Letter, and requests for Notices of
Guaranteed Delivery and other related documents may be directed to the Exchange
Agent, at the address and telephone number indicated above.
10
<PAGE> 11
TO BE COMPLETED BY ALL TENDERING HOLDERS
(SEE INSTRUCTION 5)
<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
PAYOR'S NAME: THE BANK OF NEW YORK
- --------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT TIN: --------------------------
FORMW-9 AND CERTIFY BY SIGNING AND DATING BELOW.
Social Security Number or
Employer Identification Number
-------------------------------------------------------------------------------------------
PART 2 -- TIN APPLIED FOR [ ]
-------------------------------------------------------------------------------------------
DEPARTMENT OF THE CERTIFICATION: UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT:
TREASURY INTERNAL (1) the number shown on this form is my correct TIN (or I am waiting for a number to be
REVENUE SERVICE issued to me),
PAYOR'S REQUEST FOR
TAXPAYER IDENTIFICATION (2) I am not subject to back-up withholding either because: (a) I am exempt from backup
NUMBER ("TIN") AND withholding, or (b) I have not been notified by the Internal Revenue Service (the
CERTIFICATION "IRS") that I am subject to backup withholding as a result of a failure to report all
interest or dividends, or (c) the IRS has notified me that I am no longer subject to
back-up withholding, and
(3) any other information provided on this form is true and correct
Signature ----------------------------------------------- Date---------------------
- --------------------------------------------------------------------------------------------------------------------------
You must cross out item (2) of the above certification if you have been notified by the IRS that you are subject to
backup withholding because of under reporting of interest or dividends on your tax return and you have not been notified
by the IRS that you are no longer subject to backup withholding.
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 2 OF SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (a) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office or (b) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a taxpayer identification number by the time of the exchange, 31 percent
of all reportable payments made to me thereafter will be withheld until I
provide a number.
- -------------------------------------------------- ---------------
Signature Date
11
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
FOR
VLASIC FOODS INTERNATIONAL INC.
This form or one substantially equivalent hereto must be used to accept the
Exchange Offer of Vlasic Foods International Inc. (the "Company") made pursuant
to the Prospectus, dated , 1999 (the "Prospectus"), if
certificates for the outstanding 10 1/4% Series A Senior Subordinated Notes due
2009 of the Company (the "Original Notes") are not immediately available or if
the procedure for book-entry transfer cannot be completed on a timely basis or
time will not permit all required documents to reach The Bank of New York, as
exchange agent (the "Exchange Agent") before 5:00 P.M., New York City time, on
the Expiration Date of the Exchange Offer. Such form may be delivered or
transmitted by facsimile transmission, mail or hand delivery to the Exchange
Agent as set forth below. In addition, in order to utilize the guaranteed
delivery procedure to tender Original Notes pursuant to the Exchange Offer, a
completed, signed and dated Letter of Transmittal (or facsimile thereof) must
also be received by the Exchange Agent before 5:00 P.M., New York City time, on
the Expiration Date. Capitalized terms not defined herein are defined in the
Prospectus.
Delivery To: The Bank of New York, Exchange Agent
<TABLE>
<S> <C>
By Registered or Certified Mail: By Hand or Overnight Delivery:
The Bank of New York The Bank of New York
101 Barclay Street, 7E 101 Barclay Street
New York, New York 10286 Corporate Trust Services Window
Attention: , Ground Level
Reorganization Section New York, New York 10286
Attention: ,
Reorganization Section
</TABLE>
For Information Call:
(212) 815-6333
By Facsimile Transmission
(for Eligible Institutions only):
(212) 571-3080
Confirm by Telephone:
(212) 815-6333
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE, WILL
NOT CONSTITUTE A VALID DELIVERY.
<PAGE> 2
Ladies and Gentlemen:
Upon the terms and conditions set forth in the Prospectus and the
accompanying Letter of Transmittal, the undersigned hereby tenders to the
Company the principal amount of Original Notes set forth below pursuant to the
guaranteed delivery procedure described in "The Exchange Offer -- Guaranteed
Delivery Procedures" section of the Prospectus.
Principal Amount of Original Notes Tendered:*
$
- ----------------------------------------------------------
Certificate Nos. (if available):
- ------------------------------------------------------------
Total Principal Amount Represented by
Original Notes Certificate(s):
$
- ----------------------------------------------------------
If Original Notes will be delivered by book-entry transfer to The Depository
Trust Company, provide account number.
Account Number
- ----------------------------------------
ALL AUTHORITY HEREIN CONFERRED OR AGREED TO BE CONFERRED SHALL SURVIVE
THE DEATH OR INCAPACITY OF THE UNDERSIGNED AND EVERY OBLIGATION OF THE
UNDERSIGNED HEREUNDER SHALL BE BINDING UPON THE HEIRS, PERSONAL
REPRESENTATIVES, SUCCESSORS AND ASSIGNS OF THE UNDERSIGNED.
<TABLE>
<S> <C>
PLEASE SIGN HERE
X ----------------------------------- ------------------------------------------
X ----------------------------------- ------------------------------------------
SIGNATURE(S) OF OWNER(S) OR AUTHORIZED SIGNATORY DATE
Area Code and Telephone Number:
- ----------------------------------------------------------------------------------------------------------
</TABLE>
Must be signed by the holder(s) of Original Notes as their name(s)
appear(s) on certificates for Original Notes or on a security position listing,
or by person(s) authorized to become registered holder(s) by endorsement and
documents transmitted with this Notice of Guaranteed Delivery. If signature is
by a trustee, executor, administrator, guardian, attorney-in-fact, officer or
other person acting in a fiduciary or representative capacity, such person must
set forth his or her full title below.
PLEASE PRINT NAME(S) AND ADDRESS(ES)
Name(s):
- --------------------------------------------------------------------------------
------------------------------------------------------------------------
Capacity:
- --------------------------------------------------------------------------------
Address(es):
- --------------------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
- ---------------
* Must be in denominations of principal amount of $1,000 and any integral
multiple thereof.
2
<PAGE> 3
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a financial institution (including most banks, savings and
loan associations and brokerage houses) that is a participant in the Securities
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Program or the Stock Exchanges Medallion Program, hereby guarantees
that the certificates representing the principal amount of Original Notes
tendered hereby in proper form for transfer, or timely confirmation of the
book-entry transfer of such Original Notes into the Exchange Agent's account at
The Depository Trust Company pursuant to the procedures set forth in "The
Exchange Offer -- Guaranteed Delivery Procedures" section of the Prospectus,
together with any required signature guarantee and any other documents required
by the Letter of Transmittal, will be received by the Exchange Agent at the
address set forth above, no later than three New York Stock Exchange trading
days after the Expiration Date.
<TABLE>
<S> <C>
- ----------------------------------------------- -----------------------------------------------
NAME OF FIRM AUTHORIZED SIGNATURE
- ----------------------------------------------- -----------------------------------------------
ADDRESS TITLE
Name:
- ----------------------------------------------- -----------------------------------------------
ZIP CODE (PLEASE TYPE OR PRINT)
Area Code and
Tel. No. Dated:
- ----------------------------------------------- --------------------------------------------- ,
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR ORIGINAL NOTES WITH THIS FORM. CERTIFICATES
FOR ORIGINAL NOTES SHOULD BE SENT ONLY WITH A COPY OF YOUR PREVIOUSLY
EXECUTED LETTER OF TRANSMITTAL.
3
<PAGE> 1
VLASIC FOODS INTERNATIONAL INC.
OFFER FOR ALL OUTSTANDING
10 1/4% SERIES A SENIOR SUBORDINATED NOTES DUE 2009
IN EXCHANGE FOR
10 1/4% SERIES B SENIOR SUBORDINATED NOTES DUE 2009,
WHICH HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933,
AS AMENDED
TO OUR CLIENTS:
Enclosed for your consideration is a Prospectus, dated ,
1999 (the "Prospectus"), and the related Letter of Transmittal (the "Letter of
Transmittal"), relating to the offer (the "Exchange Offer") of Vlasic Foods
International Inc. (the "Company") to exchange its 10 1/4% Series B Senior
Subordinated Notes due 2009, which have been registered under the Securities Act
of 1933, as amended (the "Exchange Notes"), for its outstanding 10 1/4% Series A
Senior Subordinated Notes due 2009 (the "Original Notes"), upon the terms and
subject to the conditions described in the Prospectus and the Letter of
Transmittal. The Exchange Offer is being made in order to satisfy certain
obligations of the Company contained in the Exchange and Registration Rights
Agreement dated June 29, 1999, by and among the Company and the initial
purchasers referred to therein.
This material is being forwarded to you as the beneficial owner of the
Original Notes held by us for your account but not registered in your name. A
TENDER OF SUCH ORIGINAL NOTES MAY ONLY BE MADE BY US AS THE HOLDER OF RECORD AND
PURSUANT TO YOUR INSTRUCTIONS.
Accordingly, we request instructions as to whether you wish us to tender on
your behalf the Original Notes held by us for your account, pursuant to the
terms and conditions set forth in the enclosed Prospectus and Letter of
Transmittal.
Your instructions should be forwarded to us as promptly as possible in
order to permit us to tender the Original Notes on your behalf in accordance
with the provisions of the Exchange Offer. The Exchange Offer will expire at
5:00 P.M., New York City time, on , 1999, unless extended by the
Company. Any Original Notes tendered pursuant to the Exchange Offer may be
withdrawn at any time before the Expiration Date.
Your attention is directed to the following:
1. The Exchange Offer is for any and all Original Notes.
2. The Exchange Offer is subject to certain conditions set forth in the
Prospectus in the section captioned "The Exchange Offer -- Conditions to
the Exchange Offer."
3. Any transfer taxes incident to the transfer of Original Notes from
the holder to the Company will be paid by the Company, except as otherwise
provided in the Instructions in the Letter of Transmittal.
4. The Exchange Offer expires at 5:00 P.M., New York City time, on
, 1999, unless extended by the Company.
<PAGE> 2
If you wish to have us tender your Original Notes, please so instruct us by
completing, executing and returning to us the instruction form on the back of
this letter. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR INFORMATION ONLY
AND MAY NOT BE USED DIRECTLY BY YOU TO TENDER ORIGINAL NOTES.
INSTRUCTIONS WITH RESPECT TO
THE EXCHANGE OFFER
The undersigned acknowledge(s) receipt of your letter and the enclosed
material referred to therein relating to the Exchange Offer made by Vlasic Foods
International Inc. with respect to its Original Notes.
This will instruct you to tender the Original Notes held by you for the
account of the undersigned, upon and subject to the terms and conditions set
forth in the Prospectus and the related Letter of Transmittal.
Please tender the Original Notes held by you for my account as indicated
below:
10 1/4% Series A Senior Subordinated Notes due 2009 $ (Aggregate
Principal Amount of Original Notes)
[ ] Please do not tender any Original Notes held by you for my account.
Dated: 1999
Signature(s):
- --------------------------------------------------------------------------------
Print Name(s) here:
- --------------------------------------------------------------------------------
(Print Address(es)):
- --------------------------------------------------------------------------------
(Area Code and Telephone Number(s)):
- ---------------------------------------------------------------
(Tax Identification or Social Security Number(s)):
- ----------------------------------------------------
None of the Original Notes held by us for your account will be tendered
unless we receive written instructions from you to do so. Unless a specific
contrary instruction is given in the space provided, your signature(s) hereon
shall constitute an instruction to us to tender all the Original Notes held by
us for your account.
2
<PAGE> 1
VLASIC FOODS INTERNATIONAL INC.
OFFER FOR ALL OUTSTANDING
10 1/4% SERIES A SENIOR SUBORDINATED NOTES DUE 2009
IN EXCHANGE FOR
10 1/4% SERIES B SENIOR SUBORDINATED NOTES DUE 2009,
WHICH HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933,
AS AMENDED
TO: BROKERS, DEALERS, COMMERCIAL BANKS,
TRUST COMPANIES AND OTHER NOMINEES:
Vlasic Foods International Inc. (the "Company") is offering, upon and
subject to the terms and conditions set forth in the Prospectus, dated
, 1999 (the "Prospectus"), and the enclosed Letter of Transmittal (the
"Letter of Transmittal"), to exchange (the "Exchange Offer") its 10 1/4% Series
B Senior Subordinated Notes due 2009, which have been registered under the
Securities Act of 1933, as amended, for its outstanding 10 1/4% Series A Senior
Subordinated Notes due 2009 (the "Original Notes"). The Exchange Offer is being
made in order to satisfy certain obligations of the Company contained in the
Exchange and Registration Rights Agreement dated June 29, 1999, by and among the
Company and the initial purchasers referred to therein.
We are requesting that you contact your clients for whom you hold Original
Notes regarding the Exchange Offer. For your information and for forwarding to
your clients for whom you hold Original Notes registered in your name or in the
name of your nominee, or who hold Original Notes registered in their own names,
we are enclosing the following documents:
1. Prospectus dated , 1999;
2. The Letter of Transmittal for your use and for the information of
your clients;
3. A Notice of Guaranteed Delivery to be used to accept the Exchange
Offer if certificates for Original Notes are not immediately available or
time will not permit all required documents to reach the Exchange Agent
prior to the Expiration Date (as defined below) or if the procedure for
book-entry transfer cannot be completed on a timely basis;
4. A form of letter which may be sent to your clients for whose account
you hold Original Notes registered in your name or the name of your
nominee, with space provided for obtaining such clients' instructions with
regard to the Exchange Offer;
5. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
6. Return envelopes addressed to The Bank of New York, the Exchange
Agent for the Exchange Offer.
YOUR PROMPT ACTION IS REQUESTED. THE EXCHANGE OFFER WILL EXPIRE AT 5:00
P.M., NEW YORK CITY TIME, ON , 1999, UNLESS EXTENDED BY THE COMPANY
(THE "EXPIRATION DATE"). ORIGINAL NOTES TENDERED PURSUANT TO THE EXCHANGE OFFER
MAY BE WITHDRAWN AT ANY TIME BEFORE THE EXPIRATION DATE.
To participate in the Exchange Offer, a duly executed and properly
completed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees and any other required documents should be sent to the
Exchange Agent. Certificates representing the Original Notes should be delivered
to the Exchange Agent, all in accordance with the instructions set forth in the
Letter of Transmittal and the Prospectus.
If a registered holder of Original Notes desires to tender, but such
Original Notes are not immediately available, or time will not permit such
holder's Original Notes or other required documents to reach the Exchange Agent
before the Expiration Date, or the procedure for book-entry transfer cannot be
completed on a timely basis, a tender may be effected by following the
guaranteed delivery procedures described in the Prospectus under the caption
"The Exchange Offer -- Guaranteed Delivery Procedures."
<PAGE> 2
The Company will, upon request, reimburse brokers, dealers, commercial
banks and trust companies for reasonable and necessary costs and expenses
incurred by them in forwarding the Prospectus and the related documents to the
beneficial owners of Original Notes held by them as nominee or in a fiduciary
capacity. The Company will pay or cause to be paid all stock transfer taxes
applicable to the exchange of Original Notes pursuant to the Exchange Offer,
except as set forth in Instruction 6 of the Letter of Transmittal.
Any inquiries you may have with respect to the Exchange Offer, or requests
for additional copies of the enclosed materials, should be directed to The Bank
of New York, the Exchange Agent for the Exchange Offer, at its address and
telephone number set forth on the front of the Letter of Transmittal.
Very truly yours,
VLASIC FOODS INTERNATIONAL INC.
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY
PERSON AS AN AGENT OF THE COMPANY OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY
OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF EITHER OF
THEM WITH RESPECT TO THE EXCHANGE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN
THE PROSPECTUS OR THE LETTER OF TRANSMITTAL.
Enclosures
2
<PAGE> 1
Exhibit 99.5
August 18, 1999
EXCHANGE AGENCY AGREEMENT
The Bank of New York
Corporate Trust Trustee Administration
101 Barclay Street - 21st Floor
New York, New York 10286
Ladies and Gentlemen:
Vlasic Foods International Inc. (the "Company") proposes to
make an offer (the "Exchange Offer") to exchange its 10 1/4% Senior Subordinated
Notes due 2009 (the "Original Notes") for its 10 1/4% Senior Subordinated Notes
due 2009 which have been registered under the Securities Act of 1933, as amended
(the "Exchange Notes"). The terms and conditions of the Exchange Offer as
currently contemplated are set forth in a prospectus, dated August 16, 1999 (the
"Prospectus"), to be distributed to all record holders of the Original Notes.
The Original Notes and the Exchange Notes are collectively referred to herein as
the "Notes."
The Company hereby appoints The Bank of New York to act as
exchange agent (the "Exchange Agent") in connection with the Exchange Offer.
References hereinafter to "you" shall refer to The Bank of New York.
The Exchange Offer is expected to be commenced by the Company
on or about , 1999. The Letter of Transmittal accompanying the Prospectus is
to be used by the holders of the Original Notes to accept the Exchange Offer and
contains instructions with respect to the (i) delivery of certificates for
Original Notes tendered in connection therewith and (ii) the book-entry transfer
of Notes to the Exchange Agent's account.
The Exchange Offer shall expire at 5:00 P.M., New York City
time, on , 1999 or on such later date or time to which the Company may
extend the Exchange Offer (the "Expiration Date"). Subject to the terms and
conditions set forth in the Prospectus, the Company expressly reserves the right
to extend the Exchange Offer from time to time and may extend the Exchange Offer
by giving oral (confirmed in writing) or written notice to you before 9:00 A.M.,
New York City
<PAGE> 2
time, on the business day following the previously scheduled Expiration Date.
The Company expressly reserves the right to amend or terminate
the Exchange Offer, and not to accept for exchange any Original Notes not
theretofore accepted for exchange, upon the occurrence of any of the conditions
of the Exchange Offer specified in the Prospectus under the caption "The
Exchange Offer-- Conditions to the Exchange Offer." The Company will give oral
(confirmed in writing) or written notice of any amendment or termination of the
Exchange Offer or nonacceptance of Original Notes to you promptly after any
amendment, termination or nonacceptance.
In carrying out your duties as Exchange Agent, you are to act
in accordance with the following instructions:
1. You will perform such duties and only such duties as are
specifically set forth in the section of the Prospectus captioned "The Exchange
Offer" or as specifically set forth herein; provided, however, that in no way
will your general duty to act in good faith be discharged by the foregoing.
2. You will establish an account with respect to the Original
Notes at The Depository Trust Company (the "Book-Entry Transfer Facility") for
purposes of the Exchange Offer within two business days after the date of the
Prospectus, and any financial institution that is a participant in the
Book-Entry Transfer Facility's systems may make book-entry delivery of the
Original Notes by causing the Book-Entry Transfer Facility to transfer such
Original Notes into your account in accordance with the Book-Entry Transfer
Facility's procedure for such transfer. You will maintain, during the Exchange
Offer, an address in the Borough of Manhattan, The City of New York, in which
tenders of the Original Notes may be made.
3. You are to examine each of the Letters of Transmittal and
certificates for Original Notes (or confirmation of book-entry transfer into
your account at the Book-Entry Transfer Facility) and any other documents
delivered or mailed to you by or for holders of the Original Notes to ascertain
whether: (i) the Letters of Transmit tal and any such other documents are duly
executed and properly completed in accordance with instructions set forth
therein and (ii) the Original Notes have otherwise been properly tendered. In
each case where the Letter of Transmittal or any other document has been
improperly completed or executed or any of the certificates for Original Notes
are not in proper form for transfer or some
<PAGE> 3
other irregularity in connection with the acceptance of the Exchange Offer
exists, you will endeavor to inform the presenters of the need for fulfillment
of all requirements and to take any other action as may be necessary or
advisable to cause such irregularity to be corrected.
4. With the approval of the President, Chief Financial
Officer, Chief Legal Officer, Treasurer or Controller (each, a "Designated
Officer") of the Company, or of counsel to the Company, (such approval, if given
orally, to be confirmed in writing) or any other party designated by any
Designated Officer in writing, you are authorized to waive any irregularities in
connection with any tender of Original Notes pursuant to the Exchange Offer.
5. Tenders of Original Notes may be made only as set forth in
the Letter of Transmittal and in the section of the Prospectus captioned "The
Exchange Offer--Procedures for Tendering," and Original Notes shall be
considered properly tendered to you only when tendered in accordance with the
procedures set forth therein.
Notwithstanding the provisions of this paragraph 5, Original
Notes which a Designated Officer, or of counsel to the Company, shall approve as
having been properly tendered shall be considered to be properly tendered (such
approval, if given orally, shall be confirmed in writing).
6. You shall advise the Company with respect to any Original
Notes received subsequent to the Expiration Date and accept its instructions
with respect to disposition of such Original Notes.
7. You shall accept tenders:
(a) in cases where the Original Notes are registered in two or
more names only if signed by all named holders;
(b) in cases where the signing person (as indicated on the
Letter of Transmittal) is acting in a fiduciary or a representative capacity
only when proper evidence of his or her authority so to act is submitted; and
(c) from persons other than the registered holder of Original
Notes provided that customary transfer requirements, including any applicable
transfer taxes, are fulfilled.
You shall accept partial tenders of Original Notes where so
indicated and as permitted in the Letter of Transmittal and deliver certificates
for Original Notes to the transfer agent for split-up and return any untendered
Original Notes to
<PAGE> 4
the holder (or such other person as may be designated in the Letter of
Transmittal) as promptly as practicable after expiration or termination of the
Exchange Offer.
8. Upon satisfaction or waiver of all of the conditions to the
Exchange Offer, the Company will notify you (such notice, if given orally, to be
confirmed in writing) of its acceptance, promptly after the Expiration Date, of
all Original Notes properly tendered and you, on behalf of the Company, will
exchange such Original Notes for Exchange Notes and cause such Original Notes to
be cancelled. Delivery of Exchange Notes will be made on behalf of the Company
by you at the rate of $1,000 principal amount of Exchange Notes for each $1,000
principal amount of Original Notes tendered promptly after notice (such notice
if given orally, to be confirmed in writing) of acceptance of said Original
Notes by the Company; provided, however, that in all cases, Original Notes
tendered pursuant to the Exchange Offer will be exchanged only after timely
receipt by you of certificates for such Original Notes (or confirmation of
book-entry transfer into your account at the Book-Entry Transfer Facility), a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof) with any required signature guarantees and any other required
documents. You shall issue Exchange Notes only in denominations of $1,000 or any
integral multiple thereof.
9. Tenders pursuant to the Exchange Offer are irrevocable,
except that, subject to the terms and upon the conditions set forth in the
Prospectus and the Letter of Transmittal, Original Notes tendered pursuant to
the Exchange Offer may be withdrawn at any time prior to the Expiration Date.
10. The Company shall not be required to exchange any Original
Notes tendered if any of the conditions set forth in the Exchange Offer are not
met. Notice of any decision by the Company not to exchange any Original Notes
tendered shall be given (and confirmed in writing) by the Company to you.
11. If, pursuant to the Exchange Offer, the Company does not
accept for exchange all or part of the Original Notes tendered because of an
invalid tender, the occurrence of certain other events set forth in the
Prospectus under the caption "The Exchange Offer--Conditions to the Exchange
Offer" or otherwise, you shall as soon as practicable after the expiration or
termination of the Exchange Offer return those certificates for unaccepted
Original Notes (or effect appropriate book-entry transfer), together with any
related required documents and the Letters of Transmittal relating thereto that
are in your possession, to the persons who deposited them.
<PAGE> 5
12. All certificates for reissued Original Notes, unaccepted
Original Notes or for Exchange Notes shall be forwarded by first-class mail or
appropriate book-entry transfer.
13. You are not authorized to pay or offer to pay any
concessions, commissions or solicitation fees to any broker, dealer, bank or
other persons or to engage or utilize any person to solicit tenders.
14. As Exchange Agent hereunder you:
(a) shall not be liable for any action or omission to
act unless the same constitutes your own gross negligence, willful misconduct or
bad faith, and in no even shall you be liable to a security holder, the Company
or any third party for special, indirect or consequential damages, or lost
profits, arising in connection with this Agreement.
(b) shall have no duties or obligations other than
those specifically set forth herein or as may be subsequently agreed to in
writing by you and the Company;
(c) will be regarded as making no representations and
having no responsibilities as to the validity, sufficiency, value or genuineness
of any of the certificates or the Original Notes represented thereby deposited
with you pursuant to the Exchange Offer, and will not be required to and will
make no representation as to the validity, value or genuineness of the Exchange
Offer; provided, however, that in no way will your general duty to act in good
faith be discharged by the foregoing;
(d) shall not be obligated to take any legal action
hereunder which might in your reasonable judgment involve any expense or
liability, unless you shall have been furnished with reasonable indemnity
satisfactory to you;
(e) may reasonably rely on and shall be protected in
acting in reliance upon any certificate, instrument, opinion, notice, letter or
other document (whether in its original or facsimile form) or security delivered
to you and reasonably believed by you to be genuine and to have been signed by
the proper party or parties;
(f) may reasonably act upon any tender, statement,
request, comment, agreement or other instrument whatsoever not only as to its
due
<PAGE> 6
execution and validity and effectiveness of its provisions, but also as to the
truth and accuracy of any information contained therein, which you shall in good
faith believe to be genuine or to have been signed or represented by a proper
person or persons;
(g) may conclusively rely on and shall be protected
in acting upon written or oral instructions from any Designated Officer of the
Company;
(h) may consult with your counsel with respect to any
questions relating to your duties and responsibilities and the advice or opinion
of such counsel shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted to be taken by you hereunder in
good faith and in accordance with the advice or opinion of such counsel; and
(i) shall not advise any person tendering Original
Notes pursuant to the Exchange Offer as to the wisdom of making such tender or
as to the market value or decline or appreciation in market value of any
Original Notes.
15. You shall take such action as may from time to time be
requested by the Company or its counsel or any Designated Officer (and such
other action as you may reasonably deem appropriate) to furnish copies of the
Prospectus, Letter of Transmittal and the Notice of Guaranteed Delivery (as
defined in the Prospectus) or such other forms as may be approved from time to
time by the Company, to all persons requesting such documents and to accept and
comply with telephone requests for information relating to the Exchange Offer,
provided that such information shall relate only to the procedures for accepting
(or withdrawing from) the Exchange Offer. The Company will furnish you with
copies of such documents at your request. All other requests for information
relating to the Exchange Offer shall be directed to the Company, Attention:
Norma B. Carter, Esq., Vice President, General Counsel and Corporate Secretary.
16. You shall advise by facsimile transmission or telephone,
and promptly thereafter confirm in writing to Norma B. Carter, Esq., Vice
President, General Counsel and Corporate Secretary of the Company and such other
person or persons as it may request, daily (and more frequently during the week
immediately preceding the Expiration Date and if otherwise requested) up to and
including the Expiration Date, as to the number of Original Notes which have
been tendered pursuant to the Exchange Offer and the items received by you
pursuant to this Agreement, separately reporting and giving cumulative totals as
to items properly
<PAGE> 7
received and items improperly received. In addition, you will also inform, and
cooperate in making available to, the Company or any such other person or
persons upon oral request made from time to time prior to the Expiration Date of
such other information as it or he or she reasonably requests. Such cooperation
shall include, without limitation, the granting by you to the Company and such
person as the Company may request of access to those persons on your staff who
are responsible for receiving tenders, in order to ensure that immediately prior
to the Expiration Date the Company shall have received information in sufficient
detail to enable it to decide whether to extend the Exchange Offer. You shall
prepare a final list of all persons whose tenders were accepted, the aggregate
principal amount of Original Notes tendered, the aggregate principal amount of
Original Notes accepted and deliver said list to the Company.
17. Letters of Transmittal and Notices of Guaranteed Delivery
shall be stamped by you as to the date and the time of receipt thereof and shall
be preserved by you for a period of time at least equal to the period of time
you preserve other records pertaining to the transfer of securities. You shall
dispose of unused Letters of Transmittal and other surplus materials by
returning them to the Company.
18. You hereby expressly waive any lien, encumbrance or right
of set-off whatsoever that you may have with respect to funds deposited with you
for the payment of transfer taxes by reasons of amounts, if any, borrowed by the
Company, or any of its subsidiaries or affiliates pursuant to any loan or credit
agreement with you or for compensation owed to you hereunder.
19. For services rendered as Exchange Agent hereunder, you
shall be entitled to such compensation as set forth on Schedule I attached
hereto. The provisions of this section shall survive the termination of this
agreement.
20. You hereby acknowledge receipt of the Prospectus and the
Letter of Transmittal and further acknowledge that you have examined each of
them. Any inconsistency between this Agreement, on the one hand, and the
Prospectus and the Letter of Transmittal (as they may be amended from time to
time), on the other hand, shall be resolved in favor of the latter two
documents, except with respect to the duties, liabilities and indemnification of
you as Exchange Agent, which shall be controlled by this Agreement.
21. (a) The Company covenants and agrees to indemnify and hold
you harmless in your capacity as Exchange Agent hereunder against any loss,
liability, cost or expense, including attorneys' fees and expenses, arising out
of or in connection with any act, omission, delay or refusal made by you in
reliance upon any signature, endorsement, assignment, certificate, order,
request, notice, instruction or other in strument or document (whether in its
original or facsimile form) reasonably
<PAGE> 8
believed by you to be valid, genuine and sufficient and in accepting any tender
or effecting any transfer of Original Notes reasonably believed by you in good
faith to be authorized, and in delaying or refusing in good faith to accept any
tenders or effect any transfer of Original Notes; provided, however, that the
Company shall not be liable for indemnifi cation or otherwise for any loss,
liability, cost or expense to the extent arising out of your gross negligence,
willful misconduct or bad faith. In no case shall the Company be liable under
this indemnity with respect to any claim against you unless the Company shall be
notified by you, by letter or by facsimile confirmed by letter, of the written
as sertion of a claim or notice of commencement of an action against you or of
any other action commenced against you, promptly after you shall have received
any such written assertion or notice of commencement of an action. The Company
shall be entitled to participate at its own expense in the defense of any such
claim or other action, and, if the Company so elects, the Company shall assume
the defense of any suit brought to enforce any such claim. In the event that the
Company shall assume the defense of any such suit or threatened action in
respect of which indemnification may be sought hereunder, the Company shall not
be liable for the fees and expenses of any additional counsel thereafter
retained by you so long as the Company shall retain counsel reasonably
satisfactory to you to defend such suit, and so long as you have not determined,
in your reasonable judgment, that a conflict of interest exists between you and
the Company.
22. You shall arrange to comply with all requirements under
the tax laws of the United States, including those relating to missing Tax
Identification Numbers, and shall file any appropriate reports with the Internal
Revenue Service. The Company understands that you are required to deduct 31% on
payments to holders who have not supplied their correct Taxpayer Identification
Number or required certification. Such funds will be turned over to the Internal
Revenue Service in accordance with applicable regulations.
23. At the Company's written direction, you shall deliver or
cause to be delivered, in a timely manner to each governmental authority to
which any transfer taxes are payable, if any, in respect of the exchange of
Original Notes, your check in the amount of all transfer taxes so payable, and
the Company shall reimburse you for the amount of any and all transfer taxes
payable in respect of the exchange of Original Notes; provided, however, that
you shall reimburse the Company for amounts refunded to you in respect of your
payment of any such transfer taxes, at such time as such refund is received by
you.
24. This Agreement and your appointment as Exchange Agent
<PAGE> 9
hereunder shall be construed and enforced in accordance with the laws of the
State of New York applicable to agreements made and to be performed entirely
within such state, and without regard to conflicts of law principles, and shall
inure to the benefit of, and the obligations created hereby shall be binding
upon, the successors and assigns of each of the parties hereto.
25. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
26. In case any provision of this Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
27. This Agreement shall not be deemed or construed to be
modified, amended, rescinded, cancelled or waived, in whole or in part, except
by a written in strument signed by a duly authorized representative of the party
to be charged. This Agreement may not be modified orally.
28. Unless otherwise provided herein, all notices, requests
and other communications to any party hereunder shall be in writing (including
facsimile or similar writing) and shall be given to such party, addressed to it,
at its address or telecopy number set forth below:
If to the Company:
Vlasic Foods International Inc.
Vlasic Plaza
6 Executive Campus
Cherry Hill, New Jersey 08002-4112
Facsimile: (856) 969-7411
Attention: Norma B. Carter, Esq.
If to the Exchange Agent:
The Bank of New York
101 Barclay Street
<PAGE> 10
Floor 21 West
New York, New York 10286
Facsimile: (212) 815-5915
Attention: Corporate Trust Trustee Administration
29. Unless terminated earlier by the parties hereto, this Agreement
shall terminate 90 days following the Expiration Date. Notwithstanding the
foregoing, Paragraphs 19, 21 and 23 shall survive the termination of this
Agreement. Upon any termination of this Agreement, you shall promptly deliver to
the Company any certificates for Notes, funds or property then held by you as
Exchange Agent under this Agreement.
30. This Agreement shall be binding and effective as of the date
hereof.
<PAGE> 11
Please acknowledge receipt of this Agreement and confirm the
arrangements herein provided by signing and returning the enclosed copy.
VLASIC FOODS INTERNATIONAL INC.
By:________________________________
Name: Norma B. Carter, Esq.
Title: Vice President, General Counsel
and Corporate Secretary
Accepted as of the date first above written:
THE BANK OF NEW YORK, as Exchange Agent
By:_____________________
Name:
Title:
<PAGE> 12
SCHEDULE I
FEES
Exchange Agent Fee: $____
Out of Pocket Expenses: Fees quoted do not include any out-of-pocket expenses
including but not limited to facsimile, stationary, postage, telephone,
overnight courier and messenger costs. These expenses will be billed at cost
when incurred.
Outside Counsel Fees and Expenses: Fees quoted do not included the fees and
expenses for services rendered by outside counsel.
<PAGE> 1
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<C> <S> <C>
- ------------------------------------------------------------
GIVE THE
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY
NUMBER OF--
- ------------------------------------------------------------
1. An individual's account The individual
2. Two or more individuals (joint The actual owner of
account) the account or, if
combined funds, any
one of the
individuals(1)
3. Husband and wife (joint account) The actual owner of
the account or, if
joint funds, either
person(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor (joint account) The adult or, if
the minor is the
only contributor,
the minor(1)
6. Account in the name of guardian or The ward, minor, or
committee for a designated ward, incompetent
minor, or incompetent person person(3)
7. a. The usual revocable savings The grantor-
trust account (grantor is also trustee(1)
trustee)
b. So-called trust account that is The actual owner(1)
not a legal or valid trust
under State law
8. Sole proprietorship account The Owner(4)
- ------------------------------------------------------------
- ------------------------------------------------------------
GIVE THE
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY
NUMBER OF--
- ------------------------------------------------------------
9. A valid trust, estate, or pension Legal entity (Do
trust not furnish the
identifying number
of the personal
representative or
trustee unless the
legal entity itself
is not designated
in the account
title.)(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization account
12. Partnership account held in the The partnership
name of the business
13. Association, club, or other tax- The organization
exempt organization
14. A broker or registered nominee The broker or
nominee
15. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a State or
local government, school district,
or prison) that receives
agricultural program payments
- ------------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER OF SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a), or an individual
retirement plan.
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
- An international organization or any agency, or instrumentality thereof.
- A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a).
- An exempt charitable remainder trust, or a nonexempt trust described in
section 4947(a)(1).
- An entity registered at all times under the Investment Company Act of 1940.
- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid in
money.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid
in the course of the payer's trade or business and you have not provided
your correct taxpayer identification number to the payer.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- Payments described in section 6049(b)(5) to non-resident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER. IF THE PAYMENTS ARE INTEREST DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041(a),
6045, and 6050A.
PRIVACY ACT NOTICE--Section 6109 requires most recipients of dividend, interest,
or other payments to give taxpayer identification numbers to payers who must
report the payments to IRS. IRS uses the numbers for identification purposes.
Payers must be given the numbers whether or not recipients are required to file
tax returns. Beginning January 1, 1984, payers must generally withhold 20% of
taxable interest, dividend, and certain other payments to a payee who does not
furnish a taxpayer identification number to a payer. Certain penalties may also
apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being due
to negligence and will be subject to a penalty of 5% on any portion of an
under-payment attributable to that failure unless there is clear and convincing
evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
