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EXHIBIT 20.1
FOODSERVICE SUPPLY AMENDMENT AGREEMENT
THIS IS A FOODSERVICE SUPPLY AMENDMENT AGREEMENT dated as of March 24,
2000 (hereinafter "Amendment Agreement"), by and between Xxxxxxxx Soup Company,
a New Jersey corporation (hereinafter, "Xxxxxxxx"), and Vlasic Foods
International Inc., a New Jersey corporation (hereinafter, "Vlasic"), amending
that certain Foodservice Supply Agreement dated as of March 30, 1998 by and
between Xxxxxxxx and Xxxxxx (hereinafter, "Supply Agreement"). The Supply
Agreement, as amended, is hereinafter referred to as the "Amended Supply
Agreement."
BACKGROUND
A. The Supply Agreement expires as of March 29, 2000.
X. Xxxxxxxx and Vlasic have decided to extend the Supply Agreement through
March 30, 2001, provided that certain terms and conditions of the
Supply Agreement are modified as of March 30, 2000.
C. This Amendment Agreement sets forth the changes to the Supply
Agreement, effective as of March 30, 2000.
INTENDING TO BE LEGALLY BOUND, XXXXXXXX AND XXXXXX AGREE AS FOLLOWS:
1. MODIFICATION OF SUPPLY AGREEMENT
All terms and conditions of the Supply Agreement (including
definitions) remain in full force and effect, except to the extent
modified directly or by implication by this Amendment Agreement.
2. TERM AND TERMINATION
a. The term of this Amendment Agreement shall commence as of
March 30, 2000 and shall continue in full force and effect
through March 30, 2001 (the "Term"), unless extended or
earlier terminated by either party in accordance with the
provisions of this Amendment Agreement.
b. Except as provided in Section 2.c. hereof or unless earlier
terminated in accordance with either Section 2.d. hereof or
Article Ten of the Supply Agreement, this Amendment Agreement
will renew automatically for successive one year terms
commencing upon the initial expiration date set forth in
Section 2.c.
c. In the event that a party does not want this Amendment
Agreement to renew automatically, that party shall so notify
the other party in writing
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not later than the September 30 prior to the then scheduled
termination date.
d. Upon a change of control or substantial recapitalization of
either party or a joint manufacturing or marketing venture
involving the Facility or a sale of the Facility ("Major
Change"), any party may terminate this Amendment Agreement by
written notice delivered no later than thirty (30) days
following the first official public announcement of such a
Major Change, effective six (6) months after receipt of such
notice. "Control" means possessing, directly or indirectly,
the power to direct or cause the direction of the management
and affairs of a party hereto, whether through ownership of
voting shares, contract or otherwise.
e. Upon written notice of any termination in accordance with
Section 2.c or Section 2.d hereof or Article Ten of the Supply
Agreement or expiration of this Amendment Agreement for any
reason other than default by Xxxxxxxx, Vlasic and Xxxxxxxx, in
addition to carrying out the provisions of Article Ten of the
Supply Agreement, shall mutually work together to assure (i)
the orderly and economic shutdown or transition to other use
of the Facility and (ii) the orderly transition of production
to Xxxxxxxx or to an alternative manufacturer designated by
Xxxxxxxx and (iii) to the extent possible, that adequate
Xxxxxxxx inventories of finished product are maintained by,
for example, building inventories prior to an effective date
of termination or expiration ("Transition Plan"). Xxxxxxxx
shall reimburse Vlasic for any additional labor cost
reasonably incurred by Vlasic to maintain adequate line
staffing due to discontinuance of this Amendment Agreement
pursuant to a mutually agreed Transition Plan. Vlasic shall
provide Xxxxxxxx with the consultation and advice of available
Vlasic technical and production employees for so long as the
parties shall deem reasonably necessary to effect an orderly
transition of production, which may include consultation with
Xxxxxxxx or a third party manufacturer after an effective date
of termination or expiration; provided that Vlasic shall be
compensated upon an actual time and expense basis for the
services of such employees, with an administrative fee of five
percent (5%) added thereto.
f. Within thirty (30) days following the termination or
expiration of this Amendment Agreement, the parties shall
settle all amounts owed as provided herein. In addition, each
of the parties shall have the immediate right to offset any
amounts owed to or from the other party under this Amendment
Agreement and under any other supply agreement or co-pack
agreement or purchase order with the other party. The parties
also agree to a mutual right of offset under any supply or
co-pack agreements or purchase orders between them in the
event of a default under any one of them.
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3. DISPOSITION OF EQUIPMENT
The assets subject to the Option on Equipment granted by Section 10.4
of the Supply Agreement are listed on Schedule 3 to this Amendment
Agreement. The period of non-compete associated with the purchase of
any product manufacturing line pursuant to the Option on Equipment
shall be one year, rather than twenty-four months as stipulated in the
Supply Agreement. Moreover, to be effective, any exercise of the Option
on Equipment by Xxxxxxxx must be done by written notice received by
Vlasic no later than May 5, 2000. Transfer of ownership and risk of
loss shall be upon payment of the purchase price, which shall be paid
in full prior to equipment disassembly and no later than the date of
expiration or termination of this Amendment Agreement. Vlasic's costs
shall be reimbursed by Xxxxxxxx no later than thirty days following
receipt of an invoice from Vlasic for the same.
4. PRICE, CHARGES AND PAYMENTS
a. The "business as usual" pricing methodology pursuant to
Schedule "B" of the Supply Agreement is hereby amended by
adding thereto a provision for a margin and other terms as
indicated on Schedule 4.
b. Unless earlier terminated pursuant to the provisions of
Section 2.d. or Article 10 of the Supply Agreement, Xxxxxxxx
will place orders for not less than the aggregate number of
cases of Product set out on Schedule 5 during the term of this
Amendment Agreement and Vlasic will manufacture, package and
supply such Products to Xxxxxxxx. Xxxxxxxx shall also have the
right to order up to an additional 800,000 cases of Product
and Vlasic agrees that it will manufacture such additional
cases of Product, subject to maximum line capacities and the
other terms and conditions of this Amendment Agreement.
c. In the event a quarterly minimum as indicated on Schedule 5 is
not ordered by Xxxxxxxx for delivery in a given quarter,
Xxxxxxxx shall pay Vlasic the costs indicated on Schedule 4,
Paragraph 4(b) with respect to such quarterly minimum.
d. In the event (1) Vlasic, acting reasonably, cannot produce
Product ordered by Xxxxxxxx for delivery as requested by
Xxxxxxxx without running a production line on overtime and (2)
Xxxxxxxx agrees in writing that overtime production should be
run, then Xxxxxxxx shall pay to Vlasic an Overtime Production
Charge as indicated on Schedule 4. If the reason why Vlasic
cannot produce Product requested without running a line on
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overtime is that Vlasic failed to adhere to the Production
Schedule for a reason or reasons not attributable to an action
or failure to act by Xxxxxxxx, then Xxxxxxxx will not be
responsible for an Overtime Production Charge.
e. In the event (1) Xxxxxxxx places an order for delivery of an
SKU the fulfillment of which will cause Vlasic, acting
reasonably, to run a production line for less than one full
eight hour shift and (2) Xxxxxxxx agrees in writing that such
production should take place despite the inefficiencies
involved, then Xxxxxxxx shall pay to Vlasic a Partial Shift
Charge as indicated on Schedule 4.
f. On a quarterly basis, Vlasic will review ingredient and
packaging inventories unique to the performance of this
Amendment Agreement. Vlasic will charge Xxxxxxxx and Xxxxxxxx
will pay the value of all obsolete items. Obsolete items are
those items that (1) are not planned for use according to the
current Rolling Forecast, or (2) are overage or are projected
to be overage as of the next production scheduled per the
Rolling Forecast. In the event that Xxxxxxxx initiates a
packaging or ingredient change that would result in obsolete
inventories, Vlasic shall upon request provide Xxxxxxxx with a
good faith estimate of the amount of any resulting charge.
Xxxxxxxx will arrange and pay for pick-up of such obsolete
items within 30 days of being invoiced for them by Vlasic. If
Xxxxxxxx does not pick up obsolete items within such period,
Vlasic may arrange for disposition of the items on Campbell's
behalf and at Campbell's cost.
g. Special batches will be charged to Xxxxxxxx and Xxxxxxxx will
pay the cost of ingredients, packaging and direct labor plus a
xxxx-up of four hundred percent (400%) of direct labor to
cover overhead.
h. All payments by Xxxxxxxx to Xxxxxx under this Amendment
Agreement shall be by either Electronic Funds Transfer or wire
transfer.
x. Xxxxxx and Xxxxxxxx agree to work together in good faith to
reduce fixed overhead charged to Xxxxxxxx under this Amendment
Agreement to the extent feasible. To facilitate this effort,
Vlasic will provide a breakdown of overhead costs by category
(e.g. fixed, variable, depreciation) by line (6,7, J/K/L) by
April 15, 2000. Both parties will promptly thereafter identify
teams from each company and will instruct them to identify and
pursue cost savings opportunities in order to reduce costs of
Products manufactured hereunder.
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5. PURCHASE PROCEDURES AND TERMS
x. Xxxxxxxx shall provide to Vlasic on or before the 15th day of
every month a good faith, written twelve (12) month rolling
forecast by SKU consistent with Schedule 5 (hereinafter
"Rolling Forecast"). Xxxxxxxx may modify the Rolling Forecast
at any time by a written notice.
b. Fifteen (15) days prior to the beginning of a month, the by
SKU forecast for such month in the current Rolling Forecast
shall become a Binding Production Order for the specific
quantities by SKU specified in the Rolling Forecast for such
month.
c. No later than ten (10) days prior to the beginning of a month,
working from the Binding Production Order, Vlasic will confirm
whether it has the ability to manufacture the requested
quantities and issue a written Production Schedule for the
Product it is able to manufacture during the relevant month.
Orders are considered to be properly filled if delivered to
within five percent (5%) of the case quantity ordered. Written
amendments to the Binding Production Order and the Production
Schedule will be made by mutual agreement of the Vice
President of Operations of the Away From Home Division of
Xxxxxxxx Soup Company and the Vice President of Operations of
Vlasic or their functional successors. In the event that
overtime is required to effect such an amendment, Xxxxxxxx
must agree to the Overtime Production Charge for such
production to be scheduled. Any such amendment shall also be
consistent with Schedule 5, taking into consideration the
different volume run rates by SKU on each line.
d. All Products will be delivered ex Facility, except that Vlasic
shall have the responsibility of loading the Products. Risk of
loss shall pass to Xxxxxxxx upon completion of loading.
6. NON-COMPETE
Schedule "C" of the Supply Agreement is modified in accordance with
Schedule 6 to this Amendment Agreement.
7. MISCELLANEOUS
a. The Committee is dissolved.
b. Mutually agreed capital expenditures in furtherance of the
Cost Improvement Program will be paid by Xxxxxxxx and any
equipment covered by such capital expenditure shall be owned
by Xxxxxxxx and tagged as such.
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c. The following definition is added:
BANKRUPTCY EVENT means with respect to either Xxxxxxxx or
Vlasic, as applicable, (a) the making by such party of an
assignment for the benefit of creditors of all or
substantially all of its assets or the admission by such party
in writing of inability to pay all or substantially all of its
debts as they become due; (b) the adjudication of such party
as bankrupt or insolvent or the filing by such party of a
petition or application to any tribunal for the appointment of
a trustee or receiver for such party or any substantial part
of the assets of such party; or (c) the commencement of any
voluntary or involuntary bankruptcy proceedings (and, with
respect to involuntary bankruptcy proceedings, the failure to
be discharged within 60 days), reorganization proceedings or
similar proceeding with respect to such party or the entry of
an order appointing a trustee or receiver or approving a
petition in any such proceeding.
d. Each party shall maintain all Confidential Information in
strict confidence and shall maintain a secure system for its
storage and/or handling, as applicable. The parties further
agree to (i) restrict disclosure of the Confidential
Information solely to its officers, employees, subcontractors,
and agents with a "need to know" such Confidential Information
for performance of the parties' obligations under this
Amendment Agreement (the persons to whom disclosure is
permissible being collectively called "Representatives"); (ii)
not disclose to any other person or copy the Confidential
Information without the prior written approval of the
disclosing party; (iii) use the Confidential Information
solely for purposes of this Amendment Agreement; and (iv)
inform the Representatives of the confidential nature of the
Confidential Information and obtain their agreement to the
obligations set forth herein. Each party shall be responsible
for breaches of confidentiality with respect to Confidential
Information by its Representatives. Vlasic and Xxxxxxxx shall
each use commercially reasonable efforts to prevent the
disclosure of the terms of this Amendment Agreement to third
parties, except as required by law.
(Signature page follows)
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IN WITNESS WHEREOF the parties hereto have executed this Amendment
Agreement as of the date and year first above written.
XXXXXXXX SOUP COMPANY
BY: /S/ XXXXXXX X. XXXXXX
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NAME: XXXXXXX X. XXXXXX
TITLE: VICE PRESIDENT - PURCHASING
VLASIC FOODS INTERNATIONAL INC.
BY: /S/ XXXXXX X. XXXXXXXXX
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NAME: XXXXXX X. XXXXXXXXX
TITLE: PRESIDENT & CHIEF EXECUTIVE
OFFICER
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