-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LqC+DAH1FmjSPI0hJT9KJ2TYRaNxC7ZKRIqXV9coUyBLRZJFeIINhaaT/rblpspx 1Ap7lFeGNeItPqeyXp3MBQ== 0000051410-96-000030.txt : 19960715 0000051410-96-000030.hdr.sgml : 19960715 ACCESSION NUMBER: 0000051410-96-000030 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19960531 FILED AS OF DATE: 19960712 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERNATIONAL MULTIFOODS CORP CENTRAL INDEX KEY: 0000051410 STANDARD INDUSTRIAL CLASSIFICATION: GRAIN MILL PRODUCTS [2040] IRS NUMBER: 410871880 STATE OF INCORPORATION: DE FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06699 FILM NUMBER: 96594291 BUSINESS ADDRESS: STREET 1: 33 S SIXTH ST STREET 2: P O BOX 2942 CITY: MINNEAPOLIS STATE: MN ZIP: 55402-0942 BUSINESS PHONE: 6123403300 FORMER COMPANY: FORMER CONFORMED NAME: INTERNATIONAL MILLING CO INC DATE OF NAME CHANGE: 19700217 10-Q 1 1ST QTR 10Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended May 31, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to _________ Commission File Number 1-6699 INTERNATIONAL MULTIFOODS CORPORATION (Exact name of registrant as specified in its charter) Delaware 41-0871880 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 33 South 6th Street, Minneapolis, Minnesota 55402 (Address of principal executive offices) (Zip Code) (612) 340-3300 (Registrant's telephone number, including area code) (not applicable) (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No_____ The number of shares outstanding of the registrant's Common Stock, par value $.10 per share, as of June 30, 1996 was 17,985,618. PART I. FINANCIAL INFORMATION INTERNATIONAL MULTIFOODS CORPORATION AND SUBSIDIARIES Consolidated Condensed Statements of Operations (unaudited) (in thousands, except per share amounts) THREE MONTHS ENDED May 31, May 31, 1996 1995 Net sales $626,073 $634,644 Cost of sales (536,758) (534,716) Gross profit 89,315 99,928 Delivery and distribution (40,431) (38,469) Selling, general and administrative (42,298) (49,312) Unusual items (3,600) - Operating earnings 2,986 12,147 Interest, net (4,290) (4,879) Other income (expense), net 222 (246) Earnings (loss) before income taxes (1,082) 7,022 Income taxes 649 (2,458) Net earnings (loss) $ (433) $ 4,564 Net earnings (loss) per share of common stock $ (.02) $ .25 Average shares of common stock outstanding 17,969 17,956 Dividends per share of common stock $ .20 $ .20 See accompanying notes to consolidated condensed financial statements. INTERNATIONAL MULTIFOODS CORPORATION AND SUBSIDIARIES Consolidated Condensed Balance Sheets (in thousands) Condensed from audited financial (Unaudited) statements May 31, Feb. 29, 1996 1996 Assets Current assets: Cash and equivalents $ 9,590 $ 7,508 Trade accounts receivable, net 156,751 165,527 Inventories 252,275 230,626 Other current assets 53,428 55,374 Total current assets 472,044 459,035 Property, plant and equipment, net 224,396 226,498 Goodwill, net 99,321 99,999 Other assets 36,939 36,725 Total assets $832,700 $822,257 Liabilities and Shareholders' Equity Current liabilities: Notes payable $ 56,283 $ 28,541 Current portion of long-term debt 2,500 11,000 Accounts payable 171,078 170,884 Other current liabilities 55,476 61,870 Total current liabilities 285,337 272,295 Long-term debt 203,094 202,937 Employee benefits and other liabilities 48,513 47,462 Total liabilities 536,944 522,694 Shareholders' equity: Common stock 2,184 2,184 Other shareholders' equity 293,572 297,379 Total shareholders' equity 295,756 299,563 Commitments and contingencies Total liabilities and shareholders' equity $832,700 $822,257 See accompanying notes to consolidated condensed financial statements. INTERNATIONAL MULTIFOODS CORPORATION AND SUBSIDIARIES Consolidated Condensed Statements of Cash Flows (unaudited) (in thousands) THREE MONTHS ENDED May 31, May 31, 1996 1995 Cash flows from operations: Net earnings (loss) $ (433) $ 4,564 Adjustments to reconcile net earnings (loss) to cash used for operations: Depreciation and amortization 7,476 7,582 Deferred income tax expense (benefit) (975) 547 Provision for losses on receivables 767 2,601 Provision for unusual charges 3,600 - Changes in operating assets and liabilities, net of business acquisitions: Accounts receivable 8,373 14,187 Inventories (21,612) 7,796 Other current assets 2,780 (10,818) Accounts payable 37 (25,413) Other current liabilities (10,097) (7,559) Other, net 515 269 Cash used for operations (9,569) (6,244) Cash flows from investing activities: Business acquisition - (5,275) Capital expenditures (4,141) (5,370) Proceeds from property disposals 58 675 Cash used for investing activities (4,083) (9,970) Cash flows from financing activities: Net increase in notes payable 27,733 12,197 Net increase (decrease) in long-term debt (8,500) 5,862 Dividends paid (3,571) (3,695) Proceeds from issuance of common stock - 428 Purchase of treasury shares (16) (1,118) Other, net (102) (45) Cash provided by financing activities 15,544 13,629 Effect of exchange rate changes on cash and equivalents 190 7 Net increase (decrease)in cash and equivalents 2,082 (2,578) Cash and equivalents at beginning of period 7,508 10,792 Cash and equivalents at end of period $ 9,590 $ 8,214 See accompanying notes to consolidated condensed financial statements. INTERNATIONAL MULTIFOODS CORPORATION AND SUBSIDIARIES Notes to Consolidated Condensed Financial Statements (unaudited) (1) In the opinion of the Company, the accompanying unaudited consolidated condensed financial statements contain all adjustments (consisting of only normal recurring adjustments, except as noted elsewhere in the notes to the consolidated condensed financial statements) necessary to present fairly its financial position as of May 31, 1996 and the results of its operations and cash flows for the three months ended May 31, 1996 and 1995. These statements are condensed and therefore do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The statements should be read in conjunction with the consolidated financial statements and footnotes included in the Company's Annual Report on Form 10-K for the year ended February 29, 1996. The results of operations for the three months ended May 31, 1996 are not necessarily indicative of the results to be expected for the full year. Certain prior year amounts have been reclassified to conform with the current year presentation. In October 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" (SFAS 123). SFAS 123, which was adopted by the Company on March 1, 1996, establishes financial accounting and reporting standards for stock-based employee compensation plans. SFAS 123 allows companies to either continue the current method of accounting for stock-based compensation, or to switch to a fair-value based method. The Company elected to continue using the current accounting method, and therefore will be required to present pro forma disclosures of net income and earnings per share as if the fair-value based method had been applied. (2) Cost of sales - To more closely match costs with related revenues, the Company classifies the inflation element inherent in interest rates on Venezuelan local currency borrowings and the foreign exchange gains and losses, which occur on such borrowings, as a component of cost of sales. Accordingly, cost of sales was increased by $0.3 million and $1.1 million for the three months ended May 31, 1996 and 1995, respectively. (3) Unusual items - During the quarter ended May 31, 1996, the Company recognized unusual items that resulted in a pre-tax charge of $3.6 million, $2.2 million after tax ($0.12 per share). The unusual items included $2.2 million for severance and other costs resulting from the resignation of the Company's Chief Executive Officer, Anthony Luiso, and $1.4 million primarily for the cost of business assessment studies. (4) Interest, net consisted of the following (in thousands): Three Months Ended May 31, May 31, 1996 1995 Interest expense $4,389 $5,301 Capitalized interest (9) (44) Non-operating interest income (90) (378) Interest, net $4,290 $4,879 Cash payments for interest, net of amounts capitalized, for the three months ended May 31, 1996 and 1995 were approximately $6.7 million and $5.4 million, respectively. (5) Income taxes - Cash payments for income taxes for the three months ended May 31, 1996 and 1995 were $3.9 million and $1.9 million, respectively. (6) Supplemental balance sheet information (in thousands) May 31, Feb. 29, 1996 1996 Trade accounts receivable, net: Trade $166,676 $179,504 Allowance for doubtful accounts (9,925) (13,977) Total trade accounts receivable, net $156,751 $165,527 Inventories: Raw materials, excluding grain $ 19,110 $ 17,529 Grain 57,092 46,331 Finished and in-process goods 168,044 159,077 Packages and supplies 8,029 7,689 Total inventories $252,275 $230,626 Property, plant and equipment, net: Land $ 12,048 $ 12,045 Buildings and improvements 89,925 90,001 Machinery and equipment 221,600 217,567 Transportation equipment 8,952 9,188 Improvements in progress 10,614 13,157 343,139 341,958 Accumulated depreciation (118,743) (115,460) Total property, plant and equipment, net $224,396 $226,498 (7) Segment information - The Company's business segments are as follows: Foodservice Distribution consists of U.S. vending distribution and limited- menu distribution and food exporting business; Bakery consists of U.S. and Canadian bakery products and consumer products in Canada, which includes primarily home baking products and condiments; Venezuela Foods consists of bakery products, consumer products for home baking and agricultural products; Divested Businesses consists of the surimi seafood business which was divested in fiscal 1996. Net Operating Unusual Operating (in millions) Sales Costs Items Earnings Three Months Ended May 31, 1996 Foodservice Distribution $443.3 $(438.2) $ - $ 5.1 Bakery 111.6 (109.5) - 2.1 Venezuela Foods 71.2 (69.1) - 2.1 Corporate Expenses - (2.7) (3.6) (6.3) Total $626.1 $(619.5) $(3.6) $ 3.0 Three Months Ended May 31, 1995 Foodservice Distribution $416.4 $(410.8) $ - $ 5.6 Bakery 108.0 (106.4) - 1.6 Venezuela Foods 96.7 (90.2) - 6.5 Divested Businesses 13.5 (11.9) - 1.6 Corporate Expenses - (3.2) - (3.2) Total $634.6 $(622.5) $ - $12.1 INTERNATIONAL MULTIFOODS CORPORATION AND SUBSIDIARIES Management's Discussion and Analysis of Results of Operations and Financial Condition (Unaudited) Results of Operations: For the first quarter ended May 31, 1996 compared with the corresponding prior period Overview Consolidated fiscal 1997 first quarter net sales declined 1% to $626.1 million, compared with $634.6 million a year ago. Continuing businesses net sales increased slightly from last year. Fiscal 1996 results included the Company's surimi seafood business, which was divested in June 1995. The consolidated net loss for the first quarter was $0.4 million, or $.02 per share, compared with net earnings of $4.6 million, or $.25 per share, a year ago. Excluding unusual items, net earnings for the first quarter of fiscal 1997 were $1.8 million, or $.10 per share. During the first quarter the Company recognized an unusual pre-tax charge of $3.6 million, or $.12 per share, which included $2.2 million for severance and other costs resulting from the resignation of the Company's Chief Executive Officer and $1.4 million primarily for the cost of business assessment studies. In addition to unusual charges, the decline in net earnings was primarily the result of significantly lower Venezuela Foods operating earnings and from the absence of earnings from the Company's surimi seafood business. Segment Results Foodservice Distribution first quarter net sales increased 6% to $443.3 million, compared with $416.4 million a year ago. The increase was from higher volumes in the Company's limited-menu and food exporting businesses, partially offset by a 7% volume decline in the vending distribution business. Unit volumes in the limited-menu business increased 12% exclusive of the additional volumes from the Alum Rock Foodservice business which was acquired by the Company in July 1995. Operating earnings declined 9% to $5.1 million, compared with $5.6 million last year. The decline was from the lower vending distribution volumes which more than offset the benefits of the higher volumes described above and the purchase of certain inventories in the vending distribution business at favorable prices. The vending distribution volume declines are expected to continue to adversely affect the Company's Foodservice Distribution operating results in the second quarter. Bakery first quarter net sales increased 3% to $111.6 million, compared with $108 million a year ago. Sales increased on higher volumes in consumer bakery products and condiments. The increase was partially offset by lower volumes in U.S. bakery mix and North American frozen products. First quarter operating earnings increased 31% to $2.1 million, compared with $1.6 million last year. Operating earnings increased as a result of the higher volumes and a change in the Company's promotional spending strategy. Venezuela Foods first quarter net sales declined 26% to $71.2 million, compared with $96.7 million a year ago. The decline was primarily the result of a significant devaluation in the exchange rate during the second half of fiscal 1996, partially offset by higher volumes in consumer products. The average free-market exchange rate in the first quarter of fiscal 1997 was approximately 480 Venezuelan bolivars per U.S. dollar, compared with the fixed exchange rate established by the Venezuelan government of 170 bolivars per U.S. dollar which was used for translation in the first quarter last year. Operating earnings declined 68% to $2.1 million, compared with $6.5 million last year, primarily from the significant devaluation in the exchange rate during the second half of fiscal 1996. During the first quarter of fiscal 1997, the Venezuelan government implemented major reforms in order to address the country's economic problems. Economic reforms include the removal of controls over foreign exchange, interest rates and prices. The Venezuelan government also signed a letter of intent for a loan agreement with the International Monetary Fund. The Company believes the reforms are a positive development over the long term. The Company expects that its recent ability to increase prices without restrictions in Venezuela will mitigate the significant adverse effect of the aforementioned currency devaluation on its Venezuela Foods operating results in the second quarter of fiscal 1997. However, the Company also expects that its Venezuela Foods operating results in the second quarter of fiscal 1997 will be lower than the same quarter in fiscal 1996 as a result of the benefit last year of the fixed exchange rate which was used for translation. Fiscal 1996 first quarter results included $13.5 million in net sales and $1.6 million in operating earnings from the Company's surimi seafood business, which was divested in June 1995. Non-operating Expense and Income Net interest expense declined to $4.3 million from $4.9 million a year ago. The decline was primarily the result of lower interest rates. Income Taxes Excluding unusual items, the Company's effective tax rate in the first quarter of fiscal 1997 was 30% compared with 35% last year. The decline was the result of a lower effective tax rate in Venezuela. Financial Condition: The debt-to-total capitalization ratio increased slightly from 45% at February 29, 1996 to 47% at May 31, 1996 as a result of higher working capital requirements. Working capital increased on higher inventory levels which resulted from the timing of purchases and seasonal factors. The increase in working capital was also attributable to the timing of payments, including income taxes. During the first quarter of fiscal 1997, the Company entered into an $80 million revolving credit agreement in Canada that replaced an $84 million revolving credit agreement and a $7 million line of credit. The new Canadian revolving credit agreement expires March 15, 2001 and bears interest on borrowings as determined by current market factors. In June 1996, Moody's Investors Service, Inc. announced that it is reviewing the Baa2 long-term debt and Prime-2 commercial paper ratings of the Company for possible downgrade and Standard & Poor's announced that it had placed the Company's BBB long-term debt and A-2 commercial paper ratings on credit watch with negative implications. The Company's management believes that in the event of a ratings downgrade, there would not be a material impact on the results of operations or the Company's ability to obtain financing. PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 4.1 Credit Agreement dated as of May 30, 1996 among Robin Hood Multifoods Inc., various financial institutions and Canadian Imperial Bank of Commerce, as Agent. 10.1 Separation Agreement dated June 21, 1996 between Anthony Luiso and International Multifoods Corporation. 11. Computation of Earnings (Loss) Per Common Share. 12. Computation of Ratio of Earnings to Fixed Charges. 27. Financial Data Schedule. (b) Reports on Form 8-K During the quarter ended May 31, 1996, the Company filed a report on Form 8-K dated May 17, 1996 relating to the announcement by the Company that Anthony Luiso had resigned from the office of Chairman, President and Chief Executive Officer of the Company, effective immediately. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. INTERNATIONAL MULTIFOODS CORPORATION Date: July 12, 1996 By /s/ Duncan H. Cocroft Duncan H. Cocroft Vice President - Finance and Chief Financial Officer (Principal Financial Officer and Duly Authorized Officer) EXHIBIT INDEX 4.1 Credit Agreement dated as of May 30, 1996 among Robin Hood Multifoods Inc., various financial institutions and Canadian Imperial Bank of Commerce, as Agent. 10.1 Separation Agreement dated June 21, 1996 between Anthony Luiso and International Multifoods Corporation. 11. Computation of Earnings (Loss) Per Common Share. 12. Computation of Ratio of Earnings to Fixed Charges. 27. Financial Data Schedule. EX-4.1 2 EXHIBIT 4.1 CREDIT AGREEMENT DATED AS OF MAY 30, 1996 AMONG ROBIN HOOD MULTIFOODS INC., VARIOUS FINANCIAL INSTITUTIONS AND CANADIAN IMPERIAL BANK OF COMMERCE, as Agent CREDIT AGREEMENT I N D E X Page ARTICLE 1 INTERPRETATION 1 Definitions 1 Accounting Terms 9 Currency 9 References 9 Schedules 9 ARTICLE 2 THE CREDITS 10 Establishment of the Credits 10 Purpose of the Credits 11 Pro Rata Accommodation 11 Accommodation 12 Drawdown under the Credits 12 Rollovers and Switches of Accommodation 13 Disbursement of Loans 13 Bankers' Acceptances 13 Cancellation of Commitment 14 ARTICLE 3 PRIME RATE LOANS, U.S. BASE RATE LOANS AND LIBOR LOANS 15 Evidence of Indebtedness 15 Notes 15 Overdrafts 15 Interest 16 Payment of Interest 16 Calculation of Interest 16 Maximum Rate of Return 17 Interest Act 17 ARTICLE 4 BANKERS' ACCEPTANCES 18 General 18 Stamping Fee 18 Acceptance 18 Provisions on Default 19 Presigned Drafts 19 ARTICLE 5 GENERAL PROVISIONS RELATING TO LIBOR LOANS 20 General 20 Early Termination of LIBOR Periods 20 Inability to Make LIBOR Loans 20 Changes in Circumstances 21 Indemnity 21 ARTICLE 6 LETTERS OF CREDIT AND LETTERS OF GUARANTEE 22 Conditions Precedent to Issuance 22 Issuance Fees 22 Payments Pursuant to Letters of Credit and Letters of Guarantee 22 Provision Upon Default 22 ARTICLE 7 FORWARD EXCHANGE CONTRACTS AND INTEREST RATE SWAPS 23 Forward Exchange Contracts 23 Interest Rate Swaps 23 ARTICLE 8 REPAYMENT AND PREPAYMENT 24 Repayment 24 Prepayment 24 Capital Adequacy, etc. 24 No Set-Off or Counterclaim 25 Withholding Taxes: Gross-up 25 Currency of Repayment 26 General 26 ARTICLE 9 GUARANTEE 27 Guarantee 27 ARTICLE 10 REPRESENTATIONS AND WARRANTIES 28 Representations and Warranties of the Borrower 28 ARTICLE 11 COVENANTS 30 Covenants of the Borrower 30 ARTICLE 12 EVENTS OF DEFAULT 33 Events of Default 33 Acceleration 34 Remedies Cumulative 35 Availability of Accommodation after Demand or Default; Appropriation 35 Non-Merger 36 Currency Indemnity 36 ARTICLE 13 CONDITIONS PRECEDENT TO ACCOMMODATION 37 General 37 Opinion of Lenders' Counsel 38 ARTICLE 14 THE AGENT 39 Appointment 39 Delegation of Duties 39 Indemnity 39 Exculpation 40 Reliance 41 Exchange of Information 41 The Agent, Individually 41 Resignation 42 Meetings of Lenders 42 Provisions for Benefit of Lenders Only 43 Arrangements for Repayment of Accommodation 43 Repayment by Lenders to Agent 43 ARTICLE 15 MISCELLANEOUS 45 Payments to the Lenders 45 Fees and Expenses 45 Fees Related to the Credit 46 Amendment, Waiver, etc. 46 Further Assurances 47 Dealings by Agent and Lenders 47 Notices 49 Assignment and Participations 50 Survival 51 Successors and Assigns 52 Governing Law 52 Severability 52 Entire Agreement 52 Counterparts 52 CREDIT AGREEMENT THIS AGREEMENT, dated as of May 30, 1996 entered into among ROBIN HOOD MULTIFOODS INC., CANADIAN IMPERIAL BANK OF COMMERCE AS AGENT and the parties named as Lenders on the execution pages hereof. WHEREAS the Lenders have severally agreed to establish Cdn.$110,000,000 revolving credit facilities in favour of Robin Hood Multifoods Inc. on the terms of this Agreement; THEREFORE it is agreed by the parties as follows: ARTICLE 1 INTERPRETATION 1.1 Definitions In this Agreement, including the recitals, unless the context otherwise requires: "Accommodation" means accommodation obtained under the Credits by way of Prime Rate Loans, Bankers' Acceptances, LIBOR Loans, U.S. Base Rate Loans, Letters of Credit, Letters of Guarantee, Forward Exchange Contracts, Interest Rate Swaps, Overdrafts or any permitted combination thereof; "Agent" means (i) Canadian Imperial Bank of Commerce, or (ii) such other Lender as shall be appointed as the successor Agent pursuant to Section 14.8, and (iii) for the purposes of the Swing Line Credit means the Swing Line Lender; "Bankers' Acceptance" means a draft of the Borrower denominated in Canadian Dollars which has been accepted by a Lender as described in Article 4 of this Agreement; "Bankers' Acceptance Rate" means, with respect to a Schedule I Lender, the Discount Rate of such Lender and, with respect to a Schedule II Lender, the lower of (i) the Discount Rate of such Lender and (ii) the average of the Discount Rates of the Schedule I Lenders plus .07% per annum; "Borrower" means Robin Hood Multifoods Inc.; "Business Day" means (i) any day, other than a Saturday or Sunday, on which Canadian chartered banks are open for business in Toronto, Canada and (ii) in the case of any determination to be made in respect of a LIBOR Loan, a day which is otherwise a Business Day under clause (i) above and on which dealings are carried out in the London Interbank Market and banks operating in such market are generally open for business in London, England; "Canadian Dollars", "Cdn. Dollars" and "$Cdn." mean lawful currency of Canada; "Cdn. Dollar Amount" means at any time with respect to outstanding Accommodation, the aggregate of (i) the amount in Cdn. Dollars of all such Accommodation that is denominated in Cdn. Dollars and (ii) the Cdn. Dollar Exchange Equivalent at such time of such Accommodation that is denominated in a currency other than Cdn. Dollars; "Cdn. Dollar Exchange Equivalent" means, with reference to any amount (the "original amount") expressed in any currency (the "original currency"), the amount expressed in Cdn. Dollars which the Lender would be required to pay in Toronto on the date specified using the Bank of Canada noon rate for such date (or if no date is specified on the date when such amount is being determined) in order to purchase the original amount of the original currency in accordance with the Lender's usual foreign exchange practice; "CDOR" means the rate quoted by the Agent for the Agent's 30 day Canadian Dollar bankers' acceptances that appears on the Reuters Screen CDOR Page as of 10:00 a.m. (Toronto time) on the date of determination, provided that if such rate does not appear on the Reuters Screen CDOR Page at such time on such date, the rate for such date will be the average of the Bankers' Acceptance Rates of the Schedule I Banks which are Lenders for 30 day Canadian Dollar bankers' acceptances at such time and on such date; "Commitment" means, with reference to any Lender, the amount of Credit A which that Lender has severally agreed to make available to the Borrower as initially set out opposite that Lender's name on the execution pages of this Agreement or, in the case of a Lender which has executed a Lender's Acknowledgement, opposite the Lender's name on the Lender's Acknowledgement, all as may be adjusted in accordance with this Agreement; "Credit A" means the revolving credit established in Article 2.1(1); "Credits" means Credit A and the Swing Line Credit; "Default" means any event that with the giving of notice or the passage of time, or both, would be an Event of Default; "Designated Account" means Account No. 0921416 @ Transit #2 (Agent suspense account) maintained by the Agent at its Main Branch, Commerce Court, Toronto, Ontario; "Discount Rate" means in respect of any Bankers' Acceptance, the discount rate quoted by the principal office of the applicable Lender at approximately 10:00 a.m. (Toronto time) (or such other time as may be practicable for the determination of the Discount Rate) as the discount rate at which such Lender would purchase Bankers' Acceptances accepted by such Lender and with a term to maturity the same as the applicable Bankers' Acceptance on the date of the applicable grant of Accommodation; "Documents" means this Agreement, the Notes and all other documents delivered pursuant to this Agreement including the Guarantee; "Eligible Assignee" means a bank, trust company or other financial institution organized under the laws of Canada or any province thereof having a rating of A or better by S&P; "Eurodollars" means U.S. Dollars which are freely convertible, transferable and dealt with in or on the London Interbank Eurodollar Market; "Event of Default" means an event specified in 12.1; "Facility Fee" means the facility fee relative to Credit A and referred to in Section 15.3(a); "Forward Exchange Contract" means a forward exchange contract purchased on behalf of the Borrower under the Swing Line Credit and pursuant to Section 7.1; "Guarantee" means the guarantee referred to in Section 9.1; "Guarantor" means International Multifoods Corporation; "Guarantor's Common Stockholders' Equity" means the common stockholders' equity of the Guarantor and its Subsidiaries determined on a consolidated basis in accordance with U.S. GAAP; "Guarantor's Compliance Certificate" means a certificate substantially in the form of Schedule I; "Guarantor's Current Assets" means, at any time, all assets of the Guarantor and its Subsidiaries which may be properly classified as current assets in accordance with U.S. GAAP on a consolidated basis, exclusive of cash, cash equivalents and short-term investments; "Guarantor's Current Liabilities" means, at any time, all liabilities of the Guarantor and its Subsidiaries which may be properly classified as current liabilities in accordance with U.S. GAAP on a consolidated basis, exclusive of commercial paper, Bankers' Acceptances, notes payable and the current portion of long-term debt; "Guarantor's Earnings from Continuing Operations Before Income Tax" means, for any period, total pre-tax earnings from the continuing operations of the Guarantor and its Subsidiaries, as determined for such period in accordance with U.S. GAAP on a consolidated basis. If the Guarantor is not required to report discontinued operations then "Guarantor's Earnings from Continuing Operations Before Income Tax" shall mean "earnings before income tax" as shown on the Guarantor's consolidated statement of earnings; "Guarantor's Fixed Charge Coverage" means the quotient of: (a) the consolidated sum of (i) interest expense (reduced by capitalized interest), (ii) minimum rentals for operating leases of continuing operations of the Guarantor and its consolidated Subsidiaries and (iii) Guarantor's Earnings from Continuing Operations Before Income Tax (exclusive of (x) unusual or nonrecurring items and (y) any foreign exchange gains or losses that might appear on or be reflected in the consolidated statement of earnings of the Guarantor and its Subsidiaries on a consolidated basis) divided by (b) the consolidated sum of interest expense (reduced by capitalized interest) and minimum rentals for operating leases of continuing operations of the Guarantor and its consolidated Subsidiaries; "Guarantor's Net Worth" means the Guarantor's Common Stockholders' Equity plus (i) any preferred stock of the Guarantor, as set forth on a consolidated balance sheet of the Guarantor, and (ii) the lesser of (A) the outstanding amount of any guarantee of an obligation given by the Guarantor or any Subsidiary of the Guarantor to a lender to a trust holding assets of any employee benefit plan of the Guarantor or any Subsidiary of the Guarantor for the purpose of allowing such trust to borrow monies, which amount has been reflected on the consolidated balance sheet of the Guarantor as a reduction of common stockholders' equity, or (B) two-thirds of the value of any stock held by such trust securing such obligation of the trust. For the purpose of the preceding sentence, the value of a share of common stock (par value ten cents (U.S. Dollars) per share) of the Guarantor at any point in time shall be the average closing price of a share of such common stock on the New York Stock Exchange, Inc. (or its successor) for the 90-day period immediately preceding the date of determination; "Guarantor's Tangible Net Worth" means, at any time, the Guarantor's Net Worth less the amount of goodwill, debt discount and other like intangibles of the Guarantor and its Subsidiaries determined on a consolidated basis; "Guarantor's Total Capitalization" means, at any time, the sum of Guarantor's Total Indebtedness and the Guarantor's Net Worth. For the purposes of computing the Guarantor's Total Capitalization, any decrease since November 30, 1995 to the Guarantor's Common Stockholders' Equity as a component of the Guarantor's Net Worth resulting from a non- recurring non-cash charge in connection with the write-off of goodwill and other intangibles shall be added back to the Guarantor's Common Stockholders' Equity; "Guarantor's Total Indebtedness" means, at any time, total indebtedness for monies borrowed by the Guarantor or any of its Subsidiaries as such items appear on the consolidated balance sheet of the Guarantor and its Subsidiaries on a consolidated basis in accordance with U.S. GAAP ("Debt"). For any date other than August 31 as of any year during the term of this Agreement, the Guarantor's Total Indebtedness shall be calculated by subtracting from Debt the excess, if any, of (i) the Guarantor's Working Capital as of such date excluding increases in the Guarantor's Working Capital resulting from acquisitions and mergers since the preceding August 31 over (ii) the Guarantor's Working Capital as of the preceding August 31 ("Base Amount"), which Base Amount shall be reduced by the amount of the Guarantor's Working Capital attributable to businesses or assets of the Guarantor or any of its consolidated Subsidiaries disposed of since the preceding August 31; "Guarantor's Working Capital" means the excess, if any, of the Guarantor's Current Assets over the Guarantor's Current Liabilities; "Interest Rate Swaps" means interest rate swap agreements obtained pursuant to Section 7.2; "Lender's Acknowledgement" means a document substantially in the form of Schedule "A"; "Lenders" means the financial institutions named as Lenders on the signature pages hereof or any other financial institution which has executed a Lender's Acknowledgement and where applicable means or includes the Swing Line Lender and "Lender" means any one of them; "Letter of Credit" means a letter of credit issued by the Swing Line Lender under the Swing Line Credit on behalf of the Borrower pursuant to Article 6; "Letter of Guarantee" means a letter of guarantee issued by the Swing Line Lender under the Swing Line Credit on behalf of the Borrower pursuant to Article 6; "LIBOR Loan" means a borrowing of Eurodollars under the Swing Line Credit; "LIBOR Period" means a period of 1, 2, 3 or 6 months or such other period as the Borrower and the Swing Line Lender may mutually agree, and readily available in the London Interbank Eurodollar Market. If any LIBOR period, ends on a day which is not a Business Day, such LIBOR Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day falls in the following month in which event such LIBOR Period shall end on the immediately preceeding Business Day; "LIBOR Rate" means, with respect to any LIBOR Loan, the rate of interest per annum at which deposits of U.S. Dollars in a principal amount substantially similar to the principal amount in respect of which such determination is being made and for delivery on the first day of and for the same number of days as are comprised in the LIBOR Period in respect of which such determination is being made are offered by prime banks in the London Interbank Eurodollar Market to the Swing Line Lender at 11:00 a.m., London time, on the second Business Day preceding the first day of such LIBOR Period; "Maturity Date" means March 15, 2001; "Moody's" means Moody's Investors Services, Inc. or any successor thereto; "Multifoods Credit Agreement" means the U.S.$200,000,000 Credit Agreement dated as of March 22, 1996 among International Multifoods Corporation, various financial institutions, Bankers Trust Company, as Syndication Agent, The First National Bank of Chicago, as Documentation Agent, and Bank of America National Trust and Savings Association, as Administrative Agent, and as for the purpose of this Agreement any other amendments made from time to time to the Multifoods Credit Agreement which are accepted by the Required Lenders; "Note" means a grid note of the Borrower in favour of a Lender in substantially the form of Schedules B, C or D as applicable; "Notice of Borrowing" means a notice of the Borrower in substantially the form of Schedule E; "Notice of Rollover/Switch" means a notice of the Borrower in substantially the form of Schedule F; "Overdrafts" means Prime Rate Loans and U.S. Base Rate Loans obtained under the Swing Line Credit in order to meet a drawing upon any account of the Borrower with the Swing Line Lender and for which no Notice of Borrowing is required under Section 2.5 and "Overdraft" means any such loan; "Pricing Grid" means Schedule G as such schedule may be amended from time to time; "Prime Interest Rate" means at any time the greater of (i) the then existing rate of interest per annum that is the rate of interest per annum from time to time declared by the Agent as its prime interest rate for commercial loans in Canada that are denominated in Canadian Dollars and (ii) the then applicable CDOR plus 1/2% per annum; "Prime Rate Loan" means a borrowing under the Credits that bears interest at a rate based on the Prime Interest Rate; "Rating Level" means at any time the Level set forth in the table below opposite the then-current rating for the senior unsecured non-credit-enhanced long-term debt of the Guarantor by Moody's or S&P, whichever results in the numerically higher (one being highest) Level; provided that (i) if there is a numerical difference of two or more Levels between the Moody's rating and the S&P rating, the then- applicable Rating Level shall be one Level below the higher of such Levels; and (ii) if at any time there is no Moody's Rating and no S&P Rating, the Rating Level shall be Level VI. Level Moody's Rating S&P Rating I A2 or better A or better II A3 A- III Baa1 BBB+ IV Baa2 BBB V Baa3 BBB- VI less than Baa3 less than BBB- The Rating Level shall change two days after any applicable change in rating by Moody's or S&P; "Ratings Downgrade" means, at any time, that the rating for the senior unsecured non-credit-enhanced long-term debt of the Guarantor (i) is then rated below Baa3 by Moody's (or is not rated by Moody's) and (ii) is then rated below BBB- by S&P (or is not rated by S&P); "Required Lenders" means, at any time at least two Lenders whose Commitments, which for this purpose includes the Swing Line Lender with respect to the Swing Line Commitment, aggregate at least 51% of all of the Commitments and the Swing Line Commitment; provided that the Commitment or Swing Line Commitment of any Lender or the Swing Line Lender which is in default under this Agreement and such Lender or Swing Line Lender, as the case may be, shall not be included in the calculation of Required Lenders; "Responsible Officer" means the Chairman, the President, any Vice President, the Chief Financial Officer, the Controller, the Treasurer or any Assistant Treasurer of the Guarantor; "S&P" means Standard & Poor's Rating Services, a division of The McGraw-Hill Companies, Inc., or any successor thereto; "Stamping Fee" means the fee referred to in Section 4.2; "Subsidiary" of a person means any corporation of which more than 50% of the Voting Shares are beneficially owned for the time being, directly or indirectly, by the person and includes a Subsidiary of any Subsidiary; "Swing Line Credit" means the revolving credit established in Section 2.1(2); "Swing Line Commitment" means the amount of the Swing Line Credit which the Swing Line Lender has agreed to make available to the Borrower as set out in Section 2.1(2) and opposite the Swing Line Lender's name on the execution pages of this Agreement; "Swing Line Lender" means Canadian Imperial Bank of Commerce in its capacity as swing line lender or any successor and assign in such capacity; "Swing Line Maturity Date" means March 15, 2001 unless otherwise extended with the written consent of the Swing Line Lender; "U.S. Base Rate" means the rate of interest per annum from time to time declared by the Swing Line Lender as its U.S. Base Rate for U.S. Dollar commercial loans in Canada; "U.S. Base Rate Loan" means a borrowing under the Swing Line Credit in U.S. Dollars which bears interest at a rate based on the U.S. Base Rate; "U.S. Dollars" and "$U.S." mean lawful currency of the United States of America; "U.S. GAAP" means generally accepted accounting principles in effect in the United States of America as the same may be amended from time to time; and "Voting Shares" means shares of any class carrying voting rights exercisable for the time being. 1.2 Accounting Terms All accounting terms not otherwise defined in this Agreement have the meanings assigned to them by U.S. GAAP. 1.3 Currency Unless otherwise specified in this Agreement, all statements of, or references to, dollar amounts (without further description) shall mean Canadian Dollars. All financial statements delivered pursuant to this Agreement will be in U.S. Dollars. 1.4 References Unless something in the subject matter or context is inconsistent therewith, all references to Sections, Paragraphs, Articles and Schedules are to Sections, Paragraphs, Articles and Schedules of this Agreement. The words "hereto", "herein", "of this Agreement", "under this Agreement" and similar expressions mean and refer to this Agreement. This "Agreement" includes the Agreement and the Schedules hereto, as amended from time to time by means of a Lender's Acknowledgement or by written agreement among the parties hereto. 1.5 Schedules The Schedules forming part of this Agreement are as follows: Schedule A - Lender's Acknowledgement B - Note for Prime Rate Loans C - Note for U.S. Base Rate Loans D - Note for LIBOR Loans E - Notice of Borrowing F - Notice of Rollover/Switch G - Pricing Grid H - Guarantee I - Guarantor's Compliance Certificate J - Opinion of Counsel for the Borrower K - Opinion of Counsel for the Guarantor ARTICLE 2 THE CREDITS 2.1 Establishment of the Credits (1) Credit A: Subject to the terms of this Agreement (including the restrictions contained in this Article), each Lender hereby severally agrees to make Accommodation available to the Borrower on a revolving basis, provided that the amount of the Accommodation made by any Lender shall not at any time exceed its Commitment from time to time and the total Accommodation outstanding under Credit A shall not at any time exceed $100,000,000. (2) Swing Line Credit Subject to the terms of this Agreement (including the restrictions contained in this Article), the Swing Line Lender hereby agrees to make Accommodation available to the Borrower on a revolving basis, provided that the total Accommodation outstanding under the Swing Line Credit shall not at any time exceed $10,000,000. (3) Accommodation under the Credits: Subject to the terms of this Agreement, the Borrower may from time to time at its option obtain the following types of Accommodation: Credit A: - Prime Rate Loans - Bankers' Acceptances Swing Line Credit: - Prime Rate Loans - Bankers' Acceptances - LIBOR Loans - U.S. Base Rate Loans - Letters of Credit - Letters of Guarantee - Forward Exchange Contracts - Interest Rate Swaps - Overdrafts 2.2 Purpose of the Credits Accommodation obtained under the Credits shall be used for the general corporate purposes of the Borrower and for no other purpose and, for greater certainty, shall not be used to fund a hostile take-over bid. 2.3 Pro Rata Accommodation Contemporaneous Accommodation: All Accommodation under Credit A requested in a Notice of Borrowing shall be made available contemporaneously by the Lenders in the same proportions and types of Accommodation as their respective Commitments, subject to the maximum Commitment of each Lender; however, the Agent shall be entitled at any time to request Accommodation from the Lenders otherwise than in accordance with their respective Commitments to round off drafts presented by the Borrower to the nearest $100,000 in which case the proportion but not the maximum amount of the Commitment by a Lender to accept drafts presented by the Borrower shall be increased if necessary to ensure that the total Accommodation requested is made available and the relative positions of the Lenders shall be readjusted in accordance with their respective Commitments at the earliest possible opportunity by the Agent. No Lender shall be responsible for any default by any other Lender in its obligation to make its proportionate share of requested Accommodation available nor shall the Commitment of any Lender be increased as a result of the default by any other Lender in its obligation to make Accommodation available, except as provided in Subsection 2.3(2). Failure to Advance Accommodation: In the event that any Lender fails to make available its portion of any Accommodation as required, the Agent shall forthwith give notice thereof to each of the other Lenders, and any other Lender, on notice to the Borrower, the Agent and the other Lenders and acknowledgment by the Agent, may advance to the Borrower the amount (or if more than one Lender so elects, its pro rata share of the amount based on the Commitments of the electing Lenders) of the failing Lender's portion of the Accommodation. Upon the making of such advance, the Lender or Lenders making the advance shall have the right to forthwith recover the same from the failing Lender or, if required by any Lender making the advance, the Lenders, the Agent and the Borrower shall enter into such documentation, in form and substance satisfactory to the parties, as may be appropriate to evidence the adjustment of the Commitments of the Lenders necessitated by the advance made by such Lender(s). Nothing in this Agreement shall be deemed to relieve any Lender from its obligation to fulfil its Commitment or to prejudice any rights which the Borrower may have against any Lender as a result of any default by such Lender under this Agreement. 2.4 Accommodation Utilization: Subject to the terms of this Agreement, the Borrower shall have the right at all times to determine the manner and proportions in which it will utilize the different types of Accommodation available under the Credits. The Borrower may at its option, until the applicable Credit has been cancelled or repaid in full, rollover or switch its method(s) of utilizing such Credit, provided that all such rollovers or switches shall involve at least $5,000,000 with respect to Credit A and at least $1,000,000 with respect to the Swing Line Credit and no rollover or switch out of Bankers' Acceptances under either Credit shall be made except upon the maturity of a corresponding amount of Bankers' Acceptances. Form of Accommodation Limitation: The Borrower shall not be permitted to have outstanding at any one time under Credit A, Bankers' Acceptances with more than 8 different dates of maturity. 2.5 Drawdown under the Credits Notice of Borrowing: The Borrower shall deliver to the Agent, in accordance with the following schedule, a Notice of Borrowing prior to each proposed draw under either Credit: Type of Accommodation Notice Required If Equal to or Less If More than $15,000,000 than $15,000,000 Prime Rate Loans Same Day 1 Business Day Bankers' Acceptances 1 Business Day 2 Business Days U.S. Base Rate Loans Same Day 1 Business Day LIBOR Loans 3 Business Days 3 Business Days No Notice of Borrowing will be required with respect to Overdrafts obtained under the Swing Line Credit. The Notice of Borrowing shall be delivered to the Agent prior to 11:00 a.m. Toronto time on the date that the Notice of Borrowing is required. A Notice of Borrowing delivered after that time shall be deemed to have been delivered on the next Business Day. (2) Actions of Agent: On receipt of the Notice of Borrowing requesting a grant of Accommodation under Credit A, the Agent shall promptly notify by telecopy each Lender of (a) the proposed draw, (b) the proportionate amount and type of Accommodation to be made available by such Lender, and (c) the information relating to the Designated Account to which the proceeds of any Prime Rate Loan or Bankers' Acceptance advance is to be credited. 2.6 Rollovers and Switches of Accommodation (1) Timing of Notices: Prior to a proposed switch or rollover of Accommodation, the Borrower shall deliver to the Agent a Notice of Rollover/Switch. The Notice of Rollover/Switch shall be delivered to the Agent within the same time periods as Notices of Borrowing are required to be delivered to the Agent pursuant to Subsection 2.5(1) of this Agreement. (2) Actions of Agent: On receipt of a Notice of Rollover/Switch relating to a grant of Accommodation under Credit A, the Agent shall promptly notify by telecopy each Lender of (a) the proposed rollover/switch, (b) the proportionate amount and type of Accommodation to be made available by such Lender under Credit A on the rollover/switch date, and (c) the information relating to the Designated Account to which the proceeds of any Prime Rate Loan or Bankers' Acceptance advance to be effected on the rollover/switch date are to be credited. (3) Failure to Provide Notice of Rollover/Switch: In the event that the Borrower does not provide the Agent with the required Notice of Rollover/Switch in accordance with Subsection 2.6(1) for any rollover/switch of Accommodation, then such Accommodation shall be switched to a Prime Rate Loan for any amounts outstanding on the rollover/switch date. 2.7 Disbursement of Loans Each Prime Rate Loan, U.S. Base Rate Loan and LIBOR Loan shall be made by each applicable Lender crediting the applicable funds to the appropriate Designated Account in same day funds on the applicable drawdown, rollover or switch date. 2.8 Bankers' Acceptances All Bankers' Acceptances to be accepted by the Lenders shall be obtained through the Agent. Each Lender agrees to purchase at the applicable Bankers' Acceptance Rate each such Bankers' Acceptance accepted by it and to provide to the Agent for the account of the Borrower the discounted proceeds less the Stamping Fee. A Lender may hold, sell, rediscount or otherwise dispose of any or all Bankers' Acceptances accepted and purchased by it in accordance with the terms of this Agreement. 2.9 Cancellation of Commitment The Borrower may at any time during which there is no outstanding Notice of Borrowing, by written notice to the Agent, cancel any undrawn portion of the Lenders' aggregate Commitments or the Swing Line Commitment as of the date specified in the written notice and, in which case, (a) the Commitment of each Lender shall be reduced by an amount which equals that proportion of the sum so specified by the Borrower that such Lender's Commitment is of the original amount of Credit A or (b) the Swing Line Commitment shall be reduced by the amount specified in the written notice, as applicable. ARTICLE 3 PRIME RATE LOANS, U.S. BASE RATE LOANS AND LIBOR LOANS 3.1 Evidence of Indebtedness Each Prime Rate Loan and each U.S. Base Rate Loan (not borrowed by way of Overdraft) and each LIBOR Loan and all payments on account of such borrowings shall be evidenced by a notation on a Note executed by the Borrower in favour of the applicable Lender. 3.2 Notes (1) Recording on Note: The Borrower hereby authorizes each of the Lenders, and each of the Lenders agrees, to record on the appropriate Note held by it the amount of each advance made by it under the applicable Credit on account of a Prime Rate Loan, U.S. Base Rate Loan or LIBOR Loan as the case may be, to increase the balance owing under such Note accordingly and to record any payments made on account of advances evidenced by the Note. (2) Note Evidences Balance Owing: The Borrower acknowledges, confirms and agrees with each of the Lenders that all amounts recorded on the reverse side of any Note executed by the Borrower that is held by a Lender will constitute prima facie evidence of the balance owing under such Note (in the absence of manifest error). Each Lender agrees that on request it will give the Borrower written confirmation of all notations made by a Lender on any Note held by it, provided that the failure of any Lender to give such confirmation shall not impair the validity of any notation. (3) Replacement Notes: The Borrower agrees to execute and deliver to each of the Lenders such replacement Notes as may be requested from time to time and each Lender agrees to destroy or return the Note being replaced on receipt of a duly executed replacement Note. 3.3 Overdrafts The Borrower may obtain Prime Rate Loans and U.S. Base Rate Loans by way of Overdrafts. The Borrower acknowledges, confirms and agrees with the Swing Line Lender that all accounts and records kept by the Swing Line Lender evidencing all Accommodation under the Swing Line Credit by way of Overdrafts and all other amounts owing from time to time by the Borrower to the Swing Line Lender under this Agreement will constitute prima facie evidence of the balance owing by the Borrower to the Swing Line Lender in the absence of manifest error; provided however, that the failure of the Swing Line Lender to make any entry or recording or any error in any entry or recording so made shall not limit or otherwise affect the obligations of the Borrower under this Agreement. 3.4 Interest (1) Prime Rate Loans: Each Prime Rate Loan shall bear interest, with interest on overdue interest in Cdn. Dollars, as well after as before default, demand and judgment at a variable rate per annum equal at all times to the Prime Interest Rate, such rate to be adjusted automatically without notice to the Borrower whenever there is a variation in the Prime Interest Rate. (2) U.S. Base Rate Loans: Each U.S. Base Rate Loan shall bear interest, with interest on overdue interest in U.S. Dollars, as well after as before default, demand and judgment at a variable rate per annum equal at all times to the U.S. Base Rate, such rate to be adjusted automatically without notice to the Borrower whenever there is a variation in the U.S. Base Rate. (3) LIBOR Loans: Each LIBOR Loan shall bear interest, with interest on overdue interest in U.S. Dollars, as well after as before default, demand and judgment at the LIBOR Rate plus the rate set forth in the Pricing Grid. 3.5 Payment of Interest Interest on Prime Rate Loans and U.S. Base Rate Loans shall accrue daily and be payable monthly in arrears in accordance with the Agent's standard practice. Interest on LIBOR Loans shall accrue daily and be payable at the end of each LIBOR Period, provided that where the LIBOR Period exceeds 90 days, interest shall be payable every 90 days during the term of the LIBOR Period and on the last day of the LIBOR Period. If any payment falls due on a day which is not a Business Day, then such payment will be made on the next following Business Day. 3.6 Calculation of Interest The parties agree that for the purpose of the Interest Act (Canada) (a) the principle of deemed reinvestment of interest shall not apply to any interest calculation under this Agreement and (b) the rates of interest stipulated in this Agreement are intended to be nominal rates and not effective rates or yields. 3.7 Maximum Rate of Return Notwithstanding any provision to the contrary contained in this Agreement, in no event shall the aggregate "interest" (as defined in Section 347 of the Criminal Code, R.S.C., 1985, C-46) payable under this Agreement exceed the effective annual rate of interest on the "Credit Advanced" (as defined in that section) lawfully permitted under that section and, if any payment, collection or demand pursuant to this Agreement in respect of "interest" (as defined in that section) is determined to be contrary to the provision of that section, such payment, collection or demand shall be deemed to have been made by mutual mistake of the Borrower and the Lenders and the amount of such payment or collection shall be immediately refunded to the Borrower. 3.8 Interest Act Interest on Prime Rate Loans, U.S. Base Rate Loans, LIBOR Loans and the Stamping Fees for Banker's Acceptances are each calculated on the basis of the actual number of days in which such Accommodation is outstanding divided by 365 in the case of Prime Rate Loans, U.S. Base Rate Loans and Bankers' Acceptances and by 360 in the case of LIBOR Loans. For the purposes of the Interest Act (Canada), such rates expressed as annual rates are equivalent to the rate specified in this Agreement multiplied by the actual number of days in the calendar year in which the same is to be ascertained and divided by 365 in the case of Prime Rate Loans, U.S. Base Rate Loans and Bankers' Acceptances and by 360 in the case of LIBOR Loans. ARTICLE 4 BANKERS' ACCEPTANCES 4.1 General Any draft tendered by the Borrower for acceptance by a Lender shall be payable in Canada, shall be for the minimum principal amount of $1,000,000 and in multiples of $100,000 thereafter, and shall have a term ending on a Business Day of not less than seven or more than 180 days provided any term which is less than 30 days shall be subject to availability, or such other term as may be agreed by all of the Lenders; provided that no term shall extend beyond the Maturity Date. 4.2 Stamping Fee Upon presentation of a draft for acceptance under Credit A, the Borrower shall pay to the Lenders a stamping fee in Cdn. Dollars, calculated on the principal amount and for the term of the draft, at a rate per annum equal to the rate then applicable as set out in the Pricing Grid. Upon presentation of a draft for acceptance under the Swing Line Credit, the Borrower shall pay to the Swing Line Lender a stamping fee in Cdn. Dollars, calculated on the principal amount and for the term of the draft, at the rate set forth in the Pricing Grid. 4.3 Acceptance The Borrower shall provide for each of the Bankers' Acceptances at their respective maturities at the accepting Lender's main branch in the Canadian city where the draft is payable, either by payment of the full principal amount thereof or by a rollover/switch pursuant to Section 2.6 hereof or by a combination of partial payment of the principal amount thereof and partial rollover/switch pursuant to Section 2.6 hereof. The Borrower will continue to be required to provide as aforesaid for each of the Bankers' Acceptances at maturity notwithstanding the fact that a Lender may be the holder of a Bankers' Acceptance accepted by such Lender. Any amount owing in respect of any Bankers' Acceptance which is not paid in accordance with the foregoing shall be subject to the same terms as are applicable to Prime Rate Loans under the Credits, but be payable on demand. 4.4 Provisions on Default In the event that formal demand is made on the Borrower, pursuant to Article 12, the Borrower shall forthwith pay to the Agent for proration amongst the relevant Lenders an amount equal to the aggregate principal amount of outstanding Bankers' Acceptances stamped by the Lenders on behalf of the Borrower less the amount of any prepaid but unearned interest. Such amount shall be held by the Agent for set- off against future indebtedness owing by the Borrower to such Lenders in respect of such Bankers' Acceptances. 4.5 Presigned Drafts The Borrower shall supply each of the Lenders with such number of drafts executed on behalf of the Borrower by one or more of its officers as the Lenders may from time to time reasonably request. The signatures of such officers may be mechanically reproduced in facsimile and such facsimile signatures shall be valid and binding on the Borrower as if they had been manually signed by such officers. Notwithstanding that any of the individuals whose manual or facsimile signatures appears on any draft may no longer hold office at the date thereof or at the date of its acceptance by a Lender hereunder or at any time thereafter, any draft or Bankers' Acceptance signed as provided for in this Section shall be valid and binding on the Borrower. The Lenders will not be liable for their failure to accept drafts pursuant to this Agreement if such failure is, in whole or in part, due to the failure of the Borrower to provide drafts to the Lenders in accordance with this Section 4.5. The Lenders shall provide the Borrower on a timely basis with a sufficient number of drafts to be executed by the Borrower from time to time. The responsibility of each Lender in respect of the safekeeping of executed drafts which are delivered to it for acceptance hereunder shall be limited to the exercise of the same degree of care which the applicable Lender gives to its own property, provided that such Lender shall not be deemed to be an insurer thereof. ARTICLE 5 GENERAL PROVISIONS RELATING TO LIBOR LOANS 5.1 General Minimum: The principal amount of each LIBOR Loan shall be at least $U.S.1,000,000 and shall in all events be a whole multiple of $U.S.100,000. Failure to Specify LIBOR Period: In the event that the Borrower fails at any time to specify a LIBOR Period for any proposed LIBOR Loan then the applicable LIBOR Period shall be deemed to be one month. 5.2 Early Termination of LIBOR Periods To the extent that the Lender is required to arrange for early termination of any LIBOR Period or to arrange to acquire funds for any period other than a LIBOR Period to permit the Borrower to repay any Accommodation obtained by it under the Swing Line Credit, the Borrower shall reimburse the Lender for all reasonable losses and out-of-pocket expenses incurred by it as a result of the early termination of the LIBOR Period in question or as a result of entering into the new arrangement to the extent that such losses and expenses result from such payment. If any such early termination or new arrangement cannot be effected by the Lender, the Borrower shall continue to pay interest to the Lender in U.S. Dollars, at the LIBOR Rate specified under this Agreement on an amount of U.S. Dollars equal to the amount of the principal repayment for the remainder of the then current LIBOR Period. For the purpose of calculating such losses and out-of-pocket expenses, a certificate of the Lender setting out particulars of the calculation of such amounts shall, in the absence of manifest error, be prima facie evidence thereof. 5.3 Inability to Make LIBOR Loans In the event that on any date the Lender determines in good faith (which determination shall be conclusive) that its ability to make a requested LIBOR Loan has become impracticable, unlawful or impossible, or has been materially adversely affected because (a) of any change in applicable laws or regulations, or in the interpretation or administration thereof by competent authorities, or (b) of any material adverse change in or the termination of the London Interbank Eurodollar Market for Eurodollars, or (c) there exists no adequate and fair means for ascertaining the LIBOR Rate for any LIBOR Period for the LIBOR Loan, then in any such case the Lender shall immediately give notice thereof to the Borrower and thereafter the Lender shall have no further obligation with respect to the requested LIBOR Loan provided that the Borrower may elect to borrow the amount originally requested by it by way of some other type of Accommodation upon compliance with the applicable drawdown requirements. 5.4 Changes in Circumstances In the event that on any date the Lender determines in good faith (which determination shall be conclusive) that its ability to maintain an outstanding LIBOR Loan has become unlawful or impossible because of (a) any change in applicable laws or regulations, or in the interpretation or administration thereof by competent authorities, or (b) any material adverse change in or the termination of the London Interbank Eurodollar Market for Eurodollars, or (c) the imposition by any governmental authority of any condition, restriction or limitation upon the Lender, then in any such case the Lender shall immediately give notice thereof to the Borrower and the Borrower shall immediately repay to the Lender the aggregate principal amount of all outstanding LIBOR Loans together with all unpaid interest accrued thereon to the date of repayment and all reasonable other expenses incurred in connection with the termination (including without limitation any expenses resulting from the termination of any LIBOR Period in accordance with Section 5.2). The Borrower may elect to re-borrow the amount repaid by way of some other type of Accommodation. 5.5. Indemnity The Borrower will, on demand, indemnify the Lender against any reasonable loss or expense (including, but not limited to, loss of profit relating to the Lender's spread over its cost of funds) which it may sustain in employing deposits to effect, fund or maintain a LIBOR Loan as a consequence of any failure by the Borrower to make any payment when due of any amount due under this Agreement in connection with such LIBOR Loan. The Borrower will, on demand, further indemnify the Lender against any reasonable loss or expense (including, but not limited to, loss of profit relating to the Lender's spread over its cost of funds) which the Lender reasonably incurs as a result of the failure of the Borrower to consummate any borrowing for which it has given notice to the Lender. A certificate of the Lender as to such cost, setting out the calculations therefor, shall be delivered to the Borrower and shall be prima facie evidence of such costs in the absence of manifest error. ARTICLE 6 LETTERS OF CREDIT AND LETTERS OF GUARANTEE 6.1 Conditions Precedent to Issuance The Lender will issue Letters of Credit and Letters of Guarantee under the Swing Line Credit on behalf of the Borrower upon being reasonably satisfied as to the purpose, terms, conditions and beneficiary(ies) thereof and upon execution by the Borrower of the Lender's usual forms. 6.2 Issuance Fees The Borrower shall pay to the Lender an issuance fee in respect of each outstanding Letter of Credit and Letter of Guarantee at a rate to be agreed upon by the Lender and the Borrower, which rate shall not exceed three-quarters of one percent per annum. Issuance fees in respect of Letters of Credit and Letters of Guarantee shall be calculated on the maximum daily liability of the Lender under the applicable Letter of Credit or Letter of Guarantee and shall be payable in advance. 6.3 Payments Pursuant to Letters of Credit and Letters of Guarantee The Borrower shall forthwith reimburse the Lender for any payment made by it pursuant to a Letter of Credit or Letter of Guarantee, either by payment thereof in full or through utilization of the Credits in accordance with this Agreement or through a combination thereof. 6.4 Provision Upon Default In the event that demand for payment is made upon the occurrence of an Event of Default, the Borrower shall forthwith pay to the Lender an amount equal to the Lender's maximum liability under each outstanding Letter of Credit and Letter of Guarantee. Such amount shall be held by the Lender for set-off against future indebtedness owing by the Borrower to the Lender in respect of such Letters of Credit and Letters of Guarantee. ARTICLE 7 FORWARD EXCHANGE CONTRACTS AND INTEREST RATE SWAPS 7.1 Forward Exchange Contracts Subject to the terms of this Agreement, the Borrower shall be entitled, upon execution of the usual forms, to avail itself of the Swing Line Credit to purchase Forward Exchange Contracts. In such event the Borrower shall be deemed to have utilized the Swing Line Credit to the extent of such percentage, as is reasonably determined by the Lender, of the face amount of any such Forward Exchange Contract. The Borrower shall deliver to the Lender a demand promissory note (bearing the same rate of interest as a Prime Rate Loan) for any amount owing by the Borrower in respect of a Forward Exchange Contract which is not paid when the same becomes due and payable. 7.2 Interest Rate Swaps Subject to the terms of this Agreement, the Borrower shall be entitled, upon execution of the usual forms, to avail itself of the Swing Line Credit to enter into Interest Rate Swaps. In such event the Borrower shall be deemed to have utilized the Swing Line Credit with respect to such Interest Rate Swaps by such amount as the Lender reasonably deems from time to time to be the market risk for payments which may become due thereunder. The Borrower shall deliver to the Lender a demand promissory note (bearing the same rate of interest as a Prime Rate Loan) for any amount owing by the Borrower with respect to an Interest Rate Swap which is not paid when the same becomes due and payable. ARTICLE 8 REPAYMENT AND PREPAYMENT 8.1 Repayment Subject to the provisions of Article 12, the Borrower shall pay to the Lenders all outstanding Accommodation under Credit A on the Maturity Date and all outstanding Accommodation under the Swing Line Credit on the Swing Line Maturity Date. 8.2 Prepayment The Borrower may at any time pay all or any outstanding Accommodation under the Credits by providing the Agent with notice of its intention to so pay in accordance with the notice periods set out in Section 2.5(1) and the provisions of Sections 2.5(2) and 2.6 shall apply to such payments mutatis mutandis. Any payment of a LIBOR Loan prior to the expiry of the relevant LIBOR Period shall be subject to Section 5.3. Any payment of Accommodation evidenced by Bankers' Acceptances, Letters of Credit, Letters of Guarantee, Forward Exchange Contracts or Interest Rate Swaps shall be made by delivering to the relevant Lender under contractual arrangements reasonably satisfactory to such Lender, such amounts as the Lender may be required to pay under such Accommodation. 8.3 Capital Adequacy, etc. If the introduction after the date of this Agreement of or any change in any applicable law, regulation, treaty or official directive or regulatory requirement of Canada now or hereafter in effect (whether or not having the force of law) or in the interpretation or administration thereof by any court or by any judicial or governmental authority charged with the interpretation or administration thereof, or if compliance by any Lender with any request from any central bank or other fiscal, monetary or other authority of Canada (whether or not having the force of law): (a) subjects a Lender to any cost or tax on or changes the basis of taxation of payments due by the Borrower to such Lender or increases any existing cost or tax on payments of principal, interest or other amounts payable by the Borrower to such Lender under this Agreement (except for increased costs or taxes which are fully reflected in the Prime Interest Rate, the U.S. Base Rate, the LIBOR Rate or the Stamping Fee charged by the Lenders in connection with Bankers' Acceptances, or taxes on the overall net income of such Lender imposed by the jurisdiction in which its principal or lending offices are located); (b) imposes, modifies or deems applicable any reserve, special deposit, regulatory or similar requirement against assets held by, or deposits in or for the account of, or loans by, or commitment of, or any other acquisition of funds for Accommodation under the Credits by a Lender; (c) imposes on a Lender a change in the manner in which such Lender is required to allocate capital resources to its obligations under this Agreement; or (d) imposes on a Lender any other cost, tax or condition with respect to this Agreement, and the result of (a), (b), (c) or (d) is in the sole determination of such Lender acting in good faith to increase the cost to such Lender, to incur a liability or to reduce the income receivable by such Lender in respect of the Credits, the Borrower shall pay to the Agent for the benefit of such Lender that amount which indemnifies such Lender for such additional cost, liability or reduction in income ("Additional Compensation"). Upon such a determination by a Lender that it is entitled to Additional Compensation, it shall promptly notify the Agent and the Agent shall then promptly notify the Borrower. A certificate by a duly authorized officer of the applicable Lender setting forth the amount of the Additional Compensation and the basis for it must be submitted by the Agent to the Borrower and is prima facie evidence, in the absence of manifest error, of the amount of the Additional Compensation. The Additional Compensation will accrue from the date of delivery of the certificate to the Borrower. If the Agent notifies the Borrower that Additional Compensation is owed to a Lender, the Borrower has the right, at any time thereafter on written irrevocable notice to the Agent, to make payment in full without penalty or bonus to such Lender in respect of the Accommodation which has given rise to the Additional Compensation on the date specified in such notice together with the Additional Compensation if any to the date of payment or at the Borrower's option to convert such Accommodation into another type of Accommodation. 8.4 No Set-Off or Counterclaim To the fullest extent permitted by law the Borrower shall make all payments under this Agreement regardless of any rights of set-off or any defense or counterclaim. 8.5 Withholding Taxes: Gross-up All payments made under this Agreement shall be made without deduction or withholding for or on account of any withholding taxes. If the Borrower is required by law or by the administration thereof to withhold or deduct withholding taxes, it shall pay to the Lender such additional amounts as may be necessary in order that the net amounts received by the Lender after such withholding or deduction (including any required deduction or withholding on the additional amount) shall equal the amount that the Lender would have received had no deduction or withholding been made. The Lender shall exercise its discretion in good faith as to whether or not it will seek any tax benefit or credit in respect of such deduction or withholding provided that the Lender shall remit to the Borrower any such tax benefit or credit if and when received and shall notify the Borrower of (a) its decision not to apply for any such tax benefit or credit and (b) the reasons therefor. In addition, the Borrower shall forward to the Lender within 60 days of making such payment to the governing or taxing authority such tax receipts or other official documentation with respect to the payment of the withholding taxes so deducted or withheld as may be issued from time to time by such government or taxing authority. Without limiting the foregoing, if the Lender shall become liable for taxes as a result of a payment having been made by the Borrower to the Lender without the withholding taxes required by law having been deducted or withheld, the Borrower shall indemnify the Lender for any taxes payable by the Lender in respect of any such payment. 8.6 Currency of Repayment Each repayment or prepayment will be made in the currency or currencies of the Accommodation being repaid or prepaid. 8.7 General (1) The Borrower will ensure that no Bankers' Acceptance, LIBOR Loan, Letter of Credit, Letter of Guarantee, Forward Exchange Contract or Interest Rate Swap has a maturity date beyond the Swing Line Maturity Date except for Bankers' Acceptances issued under Credit A which are not to have a maturity date beyond the Maturity Date. (2) If at any time the Cdn. Dollar Amount of Accommodation then outstanding under the Swing Line Credit exceeds $10,500,000, the Borrower will forthwith pay to the Swing Line Lender upon demand by the Swing Line Lender the amount by which the Cdn. Dollar Amount of the outstanding Accommodation exceeds $10,000,000 in order to reduce the amount outstanding under the Swing Line Credit to $10,000,000. ARTICLE 9 GUARANTEE 9.1 Guarantee The present and future indebtedness and liability of the Borrower to the Lenders, including the Swing Line Lender, under this Agreement shall be supported by the guarantee of the Guarantor in favour of the Agent, on behalf of the Lenders, in substantially the form set out in Schedule H. ARTICLE 10 REPRESENTATIONS AND WARRANTIES 10.1 Representations and Warranties of the Borrower The Borrower represents and warrants to the Agent and each of the Lenders as follows: (a) it has been duly incorporated and is validly subsisting as a corporation under the laws of Ontario; it is qualified to carry on its business in each jurisdiction in which the nature of its business requires qualification, except where failure to so qualify would not have a material adverse effect on the business, assets, condition or prospects, financial or otherwise, of the Borrower; it has the power and authority to enter into and perform its obligations under the Documents to which it is a party and all other instruments and agreements delivered pursuant to any of the Documents and to own its property and carry on its business as currently conducted; and it has obtained all licences, permits and approvals from all governments, governmental commissions, boards and other agencies required in respect of its operations; (b) the execution, delivery and performance of the Documents to which it is a party and every other instrument or agreement delivered pursuant to the Documents have been duly authorized by all requisite action on the part of the Borrower and each of such documents has been duly executed and delivered by the Borrower and constitutes a valid and binding obligation against it enforceable in accordance with its terms subject to (i) applicable bankruptcy, insolvency, moratorium and similar laws at the time in effect affecting the rights of creditors generally and (ii) equitable remedies such as injunctions and specific performance which may only be granted in the discretion of the court before which they are sought; (c) there are no actions, suits or proceedings pending or, to the knowledge of the Borrower, threatened against or affecting it at law or in equity or before or by any governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, or before any arbitrator of any kind, which would result in any material adverse change in its business, operations, prospects, properties, assets or condition, financial or otherwise, or in its ability to perform its obligations under any Document to which it is a party or any other agreement or instrument delivered pursuant to this Agreement; it is not aware of any existing ground on which any such action, suit or proceeding might be commenced with any reasonable likelihood of success; it is not in default with respect to any judgment, order, writ, injunction, decree, award, rule or regulation of any court, arbitrator or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, which, either separately or in the aggregate, would result in any such material adverse change; (d) it is not a party to any agreement or instrument which materially adversely affects its ability to perform its obligations under any of the Documents to which it is a party or any agreements or instruments delivered pursuant to this Agreement which materially adversely affects its business, operations, prospects, properties, assets or condition, financial or otherwise; (e) it is not subject to any restriction or any judgment, order, writ, injunction, decree or award which materially adversely affects, or to the best of its knowledge in the future will materially adversely affect, its business, operations, prospects, properties, assets or condition, financial or otherwise, or its ability to perform its obligations under any of the Documents to which it is a party or any agreements or instruments delivered pursuant to this Agreement; (f) neither the execution nor delivery of the Documents to which it is a party or any agreements or instruments delivered pursuant to this Agreement, the consummation of the transactions herein and therein contemplated, nor compliance with the terms of this Agreement or thereof conflicts with or will conflict with, or results or will result in any breach of, or constitutes a default under, any of the provisions of its constating documents, articles or by-laws or any agreement, instrument, court order or arbitration award to which it is a party or by which it or any of its property and assets are bound or results or will result in the creation or imposition of any mortgage, lien, charge or encumbrance of any nature whatsoever upon its properties or assets or in the contravention of any applicable law, rule or regulation of Canada or of any jurisdiction in which it carries on business; (g) all consents, approvals, authorizations, declarations, registrations, filings, notices and other actions whatsoever required as at the date of this Agreement in connection with its execution and delivery of any of the Documents to which it is a party and all other agreements or instruments delivered pursuant to this Agreement, and the consummation of the transactions contemplated by this Agreement, have been obtained, made or taken; and (h) no event has occurred which constitutes a Default or an Event of Default. ARTICLE 11 COVENANTS 11.1 Covenants of the Borrower So long as this Agreement is in force and except as otherwise permitted by the prior written consent of the Required Lenders, and of all the Lenders to the extent required by Section 15.4, the Borrower covenants and agrees that: (a) Corporate Existence. It will do or cause to be done all things necessary to keep in full force and effect its corporate existence and all properties, rights, franchises, licences and qualifications required to carry on its business in each jurisdiction in which it owns property or carries on business from time to time, except where the failure to maintain any qualification would not have a material adverse effect on the business, assets, condition or prospects, financial or otherwise, of the Borrower; (b) Insurance. It will maintain insurance of such types, in such amounts and against such risks as is customary in the case of companies engaged in a similar business with insurers; (c) Compliance with Laws. It will comply with all applicable governmental restrictions, laws and regulations and obtain and maintain in good standing all material licences, permits, qualifications and approvals from any and all governments, government commissions, boards or agencies of jurisdictions in which it carries on business, except where the failure to comply would not have a material adverse effect on the business, assets, condition or prospects, financial or otherwise, of the Borrower; (d) Payment of Taxes. It will pay or cause to be paid all taxes, government fees and dues levied, assessed or imposed upon it and its property or any part thereof, as and when the same become due and payable; provided that the Borrower may withhold or protest the payment of any such taxes, fees or dues if it is acting in good faith; (e) Event of Default. It will immediately notify the Agent of the occurrence of any Default or Event of Default; (f) Use of Accommodation. It will not request, use or permit any Accommodation under the Credits to be used for any purpose other than that set out in Section 2.2; (g) Corporate Reorganization. It will not enter into any transaction affecting its corporate structure or existence whether by way of reconstruction, reorganization, consolidation, amalgamation, merger or transfer, sale or lease of substantially all of its assets, except for any reconstruction, reorganization, consolidation, amalgamation or merger after giving effect to which no Event of Default exists hereunder and the Borrower is the surviving entity; (h) Compliance Certificate. It will provide the Agent with a compliance certificate within 60 days following the last day of each fiscal quarter of Borrower and within 95 days of each fiscal year end of Borrower signed by an authorized officer of Borrower indicating that Borrower is in compliance with the covenants and agreements contained in Section 11.1 of this Agreement and that the representations and warranties of the Borrower in Article 10 are true and correct in all material respects as if made at the date of the certificate; (i) Guarantor's Financial Statements. It will provide the Agent for delivery to the Lenders: (i) within 95 days after the end of each fiscal year of the Guarantor, a consolidated balance sheet of Guarantor and its Subsidiaries as at the close of such fiscal year and consolidated statements of earnings and cash flows of the Guarantor and its Subsidiaries for such year, certified by independent public accountants of national standing selected by Guarantor; (ii) within 15 days after the date of their filing, copies of all reports on Forms 8-K, 10-Q and 10-K (or any substantially equivalent reports at any time prescribed by applicable regulations) filed by the Guarantor with the Securities and Exchange Commission; (iii) promptly following any requests therefor, such other financial data excluding projections (except in the event that the Guarantor's then-current Rating Level is Level VI) as any Lender may reasonably request from time to time; and (iv) as soon as available, but in any event not later than 50 days after the end of each of the first three quarterly periods of each fiscal year of the Guarantor, the unaudited consolidated condensed balance sheet of the Guarantor and its Subsidiaries as at the end of such quarterly period and the related unaudited consolidated condensed statements of earnings and cash flows of the Guarantor and its Subsidiaries for such quarterly period (except that the statement of cash flows shall be on a year-to-date basis) and the portion of the fiscal year through such date, setting forth in each case in comparative form the figures for the previous year, certified by a Responsible Officer (subject to normal year-end audit adjustments) in accordance with U.S. GAAP (it being understood that delivery of a report on Form 10-Q filed by the Guarantor with the Securities and Exchange Commission for the relevant quarter shall satisfy the requirements of this clause (iv)). All of the above financial statements delivered hereunder shall be prepared in accordance with U.S. GAAP and stated in U.S. Dollars. (j) Guarantor's Compliance Certificate. It will provide to the Agent for delivery to the Lenders at the time of the delivery of each set of financial statements of the Guarantor pursuant to Subsections 11.1(i) (i), (ii) and (iv), the Guarantor's Compliance Certificate signed by a Responsible Officer of the Guarantor. ARTICLE 12 EVENTS OF DEFAULT 12.1 Events of Default Any one or more of the following events shall constitute an Event of Default under this Agreement: (a) Default in Payment - If the Borrower fails to repay any indebtedness on account of principal or interest or any other amount payable under this Agreement on the due date and such default continues for a period of 5 Business Days or more after written notice has been delivered by the Agent. (b) Defaults under this Agreement - Subject to Section 12.1 (a), if the Borrower defaults in the performance or observance of any covenant or agreement contained in this Agreement, provided that no such Default shall constitute an Event of Default if, being capable of remedy, it is remedied within 15 days of the Agent giving notice to the Borrower of such default (or such longer period as the Required Lenders may designate in their sole discretion in situations where the Borrower is diligently proceeding to remedy a Default that is capable of being remedied and the required Lenders are satisfied, in their sole discretion, that they are not being prejudiced by the continuance of the Default). (c) Representations and Warranties - If any representation, warranty or statement made in this Agreement, the Guarantee or any certificate or other document delivered to the Agent or any of the Lenders pursuant to this Agreement is untrue or incorrect in any material respect when made. (d) Default under Other Agreements with Lenders - If the Borrower defaults in the performance or observance of any material term, condition, representation or covenant contained in any agreement between the Borrower and the Agent or any of the Lenders which agreement involves more than $10,000,000 (other than this Agreement) and such default continues for a period of 30 days or more after written notice thereof to the Borrower. (e) Default in other Indebtedness - If any event of default as defined in any instrument or agreement (other than this Agreement) shall occur such that any of the indebtedness or liability of the Borrower in excess of $10,000,000 under such instrument or agreement is declared due and payable prior to the date on which the same would otherwise become due and payable or if the Borrower defaults in the payment of any principal amount in excess of $10,000,000 (other than to the Agent or any of the Lenders) which has become due and payable. (f) Winding-up, etc. - If an order is made or an effective resolution passed for the winding-up, liquidation or dissolution of the Borrower. (g) Insolvency, etc. - If the Borrower consents to or makes a general assignment for the benefit of creditors or makes a proposal or files a notice of intention to file a proposal under the Bankruptcy Act, or is declared bankrupt, or if a liquidator, trustee in bankruptcy, custodian or receiver and manager or other officer with similar powers is appointed of the Borrower or of its property or any part thereof and such appointment is not being contested in good faith by the Borrower or if the Borrower seeks the benefit of any insolvency law. (h) Judgments - If a final judgment for an amount in excess of $10,000,000 (which amount has not been paid or is not covered by insurance) is rendered against the Borrower and, within 60 days after entry thereof, such judgment has not been discharged or execution thereof stayed pending appeal or if, within 60 days after the expiration of any such stay, such judgment has not been discharged. (i) Guarantee - If the Guarantee, or any part thereof, ceases at any time after its execution and delivery to constitute in favour of any of the Agent or the Lenders a security instrument in the manner contemplated by this Agreement or if the Guarantor is in default with respect to any of the provisions of the Guarantee; provided that, with respect to Section 19 of the Guarantee, there shall be no default in the performance or breach of such provision unless the failure to comply with such provision continues for a period of 30 days. (j) International Multifoods Corporation Credit Agreement - If there occurs an Event of Default under the Multifoods Credit Agreement which for the purposes of this Agreement shall be deemed to be in existence in the event that it is terminated. 12.2 Acceleration On the occurrence of any Event of Default, the Agent in its discretion may, and on written request by the Required Lenders shall, by written notice to the Borrower, take any or all of the following actions: (a) declare the principal of and accrued interest owing in respect of the Credits to be, and the same shall thereupon become, immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Borrower; (b) declare the Commitments and the Swing Line Commitment terminated, whereupon the Commitment of each Lender and the Swing Line Commitment shall terminate immediately and all amounts payable under the Credits shall immediately become due and payable without any further notice of any kind; (c) demand on the Guarantee as provided for therein; and (d) without limitation, proceed by any other action, suit, remedy or proceeding authorized or permitted by this Agreement or by law or by equity. 12.3 Remedies Cumulative The rights and remedies of the Agent and the Lenders under this Agreement are cumulative and in addition to and not in substitution for any rights or remedies provided by law. 12.4 Availability of Accommodation after Demand or Default; Appropriation (1) The Agent and each Lender may from time to time when a Default or an Event of Default has occurred and is continuing, refuse to grant any further Accommodation to the Borrower under the Credits. The Lenders may also refuse to permit any switches or rollovers of outstanding Accommodation other than to Prime Rate Loans and may appropriate any moneys received in or towards payment of such of the indebtedness and liability of the Borrower to the Lenders under this Agreement as each Lender in its discretion may see fit and the Borrower shall not have any right to require any inconsistent appropriation. (2) If any Lender shall at any time receive payment or satisfaction of all or any part of its loans, interest thereon or any other amount payable under this Agreement or under the Notes with respect to the Credits by whatever means in a proportion which, in relation to any amounts received by any other Lender or Lenders, represents more than the percentage of its Commitment or the Swing Line Commitment as the case may be for the time being of the aggregate outstanding Commitments and the Swing Line Commitment, then such Lender shall pay to the other Lenders such amount as will ensure that each Lender will receive a proportion of such payment equal to the percentage that its Commitment or Swing Line Commitment bears to the aggregate of the outstanding Commitments and the Swing Line Commitment. Accommodation under Credit A and the Swing Line Credit shall rank pari passu. (3) In the event that at any time any Lender shall be required to refund (as a preference or otherwise) any amount which has been paid to or received by it on account of any part of its loans, interest thereon or any other amount payable under this Agreement or under the Notes and which has been paid to any other Lender pursuant to this Section 12.4, such other Lender shall repay a proportionate amount of the sums so refunded without interest, or, as the case may be, repurchase for cash from the first-mentioned Lender a proportionate part of the indebtedness of the Borrower to the first-mentioned Lender. (4) If a Lender is required to make any payment to any other Lender pursuant to this Section 12.4, it shall give notice thereof to the Agent and, at the option of the Lender making such payment, (a) subject to Subsection 12.4(3) of this Agreement, the liability of the Borrower to the Lender making such payment under this Agreement shall be treated as not having been reduced by the amount of such payment and the liability of the Borrower to any Lender receiving such payment shall be treated as having been reduced by the amount of the payment received by such Lender or (b) the Borrower shall fully indemnify the Lender making such payment for the amount of any payment made pursuant to this Section 12.4. 12.5 Non-Merger The taking of a judgment or judgments or any other action or dealing whatsoever by the Agent or any Lender in respect of the Guarantee shall not operate as a merger of any indebtedness or liability of the Borrower to the Agent or any of the Lenders or in any way suspend payment or affect or prejudice the rights, remedies and powers, legal or equitable, which the Agent or any Lender may have in connection with such liabilities and the surrender, cancellation or any other dealings with any security for such liabilities shall not release or affect the liability of the Borrower under this Agreement. 12.6 Currency Indemnity Any payment on account of an amount payable under this Agreement in a specified currency made to or for the account of any Lender in a currency other than the specified currency pursuant to a judgment or order of a court or tribunal of any jurisdiction shall constitute a discharge of the obligation under this Agreement only to the extent of the amount of the specified currency which such Lender is able, on the date of receipt of such payment, to purchase in Toronto, Ontario with the amount so received by it. If the amount of the specified currency which such Lender is so able to purchase is less than the amount of the specified currency originally due to it, the Borrower shall indemnify and save harmless such Lender from and against any loss or damage arising as a result of such deficiency. This indemnity shall constitute an obligation separate and independent from the other obligations contained in this Agreement, shall give rise to a separate and independent cause of action, shall apply irrespective of any indulgence granted by any Lender from time to time and shall continue in full force and effect notwithstanding any judgment or order for a liquidated sum in respect of an amount due under this Agreement or under any judgment or order. ARTICLE 13 CONDITIONS PRECEDENT TO ACCOMMODATION 13.1 General (1) The Borrower shall deliver or have delivered to the Agent for the Lenders at the time of execution of this Agreement the following documents: (a) copies of the charter documents of the Borrower and the Guarantor, certified by the Secretary of the Borrower and the Guarantor, respectively ; (b) certified copies of all corporate action taken by the Borrower to authorize the execution and delivery of the Documents to which it is a party and all other agreements or instruments to be delivered by it pursuant to this Agreement; (c) certified copies of all corporate action taken by the Guarantor to authorize the Guarantee; (d) the Notes; (e) the Guarantee; and (f) the opinions of counsel for the Borrower and the Guarantor acceptable to the Agent and the Lenders (substantially in the forms of Schedule J and Schedule K, respectively). (2) The Borrower shall deliver to the Agent on or before the date on which the Borrower first requests Accommodation under either of the Credits the following documents: (a) the necessary Notice of Borrowing required under this Agreement; (b) a certificate of the Borrower, executed by a senior officer of the Borrower and dated the date on which the Accommodation is to be granted certifying that as at such date: (i) no Default or Event of Default has occurred and is continuing; and (ii) the representations and warranties of the Borrower contained in Article 10 of this Agreement are true and correct in all material respects as if made at the date of the certificate. (3) Prior to the second and each subsequent request made by the Borrower for Accommodation under the Credits, the Borrower shall deliver to the Agent all necessary Notes and documents respecting the granting of Accommodation under this Agreement. 13.2 Opinion of Lenders' Counsel Neither the Agent nor any of the Lenders shall be required to make any Accommodation available under the Credits until the Agent and the Lenders have received a satisfactory legal opinion of the Lenders' counsel regarding such legal matters incident to the Documents and the transactions provided for or contemplated herein or therein as they have reasonably requested. ARTICLE 14 THE AGENT 14.1 Appointment The Lenders appoint Canadian Imperial Bank of Commerce ("CIBC") to act as Agent for the Lenders in the manner and on the terms provided in this Agreement. Except as may be specifically provided to the contrary in this Agreement, each of the Lenders irrevocably authorizes CIBC, as the Agent for such Lender, to take such action on its behalf under the provisions of the Documents and any other instruments and agreements referred to in them, and to exercise such powers and to perform such duties under such documents as are delegated to the Agent by the terms of those documents, together with such other powers as are reasonably incidental thereto which may be necessary for the Agent to exercise in order that the provisions of the Documents are carried out. The Agent shall only be required to exercise such powers and perform such duties as Agent under this Agreement as it shall be instructed to exercise from time to time by the Lenders. 14.2 Delegation of Duties The Agent may perform any of its duties under any Document or any other instruments and agreements referred to therein by or through its agents or employees and shall be entitled to the advice of counsel concerning all matters pertaining to its duties. 14.3 Indemnity The Lenders agree to indemnify the Agent (to the extent not reimbursed by the Borrower) ratably according to their Commitments and the Swing Line Commitment from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any nature or kind whatsoever which may be imposed on, incurred by, or asserted against the Agent in such capacity in any way relating to or arising out of the Documents and any other instruments and agreements referred to in them or any action taken or omitted by the Agent under the Documents or any other instruments and agreements referred to in them; provided that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Agent's gross negligence or willful misconduct. Without limiting the generality of the foregoing, each Lender agrees to reimburse the Agent promptly on demand for its ratable share as above described of out-of-pocket expenses (including the fees and disbursements of counsel) incurred by the Agent in connection with the determination or preservation of any rights of the Agent or the Lenders under, or the enforcement of, or legal advice in respect of rights or responsibilities under, the Documents or any other instruments and agreements referred to in them, to the extent that the Agent is not reimbursed for such expenses by the Borrower on demand. In addition, the Agent may refrain from exercising any right, power or discretion or taking any action to protect or enforce the rights of any Lender under the Documents or any other instruments and agreements referred to in them until it has been indemnified or secured to its satisfaction against any and all costs, losses, expenses or liabilities (including legal fees) which it would or might sustain or incur as a result of such exercise or action. 14.4 Exculpation The Agent shall have no duties or responsibilities except those expressly set out in this Agreement. Neither the Agent nor any of its officers, directors, employees or agents shall be liable for any action taken or omitted to be taken under this Agreement or in connection with it, unless caused by its or their gross negligence or willful misconduct. The duties of the Agent shall be mechanical and administrative in nature; the Agent shall not have by reason of this Agreement a fiduciary relationship in respect of any Lender and nothing in this Agreement, expressed or implied, is intended to, or shall be construed so as to, impose on the Agent any obligation except as expressly set out in this Agreement. The Agent shall not be responsible for any recitals, statements, representations or warranties herein or which may be contained in any document subsequently received by the Agent or for the authorization, execution, effectiveness, genuineness, validity or enforceability of the Documents or any other instruments and agreements referred to therein and shall not be required to make any inquiry concerning the performance or observance of any of the terms, provisions or conditions of the Documents or any other instruments and agreements referred to therein. Each of the Lenders severally represents and warrants to the Agent that it has made and will continue to make such independent investigation of the financial condition and affairs of the Borrower and related parties as such Lender deems appropriate in connection with its entering into this Agreement and the making and continuance of borrowings under the Credits, that such Lender has and will continue to make its own appraisal of the creditworthiness of the Borrower and related parties and that such Lender in connection with such investigation and appraisal has not relied upon any information provided to such Lender by the Agent. The Agent may at any time request instructions from the Lenders with respect to any actions or approvals which, by the terms of this Agreement, the Agent is permitted or required to take or to grant, and the Agent shall be absolutely entitled to refrain from taking any action or to withhold any approval and shall not be under any liability whatsoever to any person for refraining from taking any action or withholding any approval under this Agreement until it has received such instructions from the Required Lenders or all of the Lenders, as applicable. No Lender shall have any right of action whatsoever against the Agent as a result of the Agent acting or refraining from acting under this Agreement in accordance with instructions received from the Required Lenders or all of the Lenders, as applicable. 14.5 Reliance The Agent shall be entitled to rely upon any writing, notice, statement, certificate, telex, teletype message, cablegram, facsimile, order or other document or telephone conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper person or persons, and, with respect to all legal matters pertaining to this Agreement and its duties under this Agreement, upon the advice of counsel selected by it. 14.6 Exchange of Information The Borrower agrees that the Agent and each Lender may provide to the other Lenders or the Agent such information on a confidential basis concerning the financial position, property and operations of the Borrower, the Guarantor and their respective Subsidiaries as in the opinion of the Agent or such Lender is relevant to the ability of the Borrower to fulfil its obligations under or in connection with this Agreement, provided that the Agent shall not be under any obligation to disclose any information to any of the Lenders in respect of the Borrower, the Guarantor and their respective Subsidiaries, other than providing to such Lenders forthwith copies of this Agreement, the Guarantee, financial statements not distributed directly to the Lenders by the Borrower, and copies of any certificates and other notices delivered by the Borrower pursuant to this Agreement. Any such information received by the Agent and the Lenders which is not publicly available shall be considered confidential and shall not be disclosed by the Agent or any Lender without the prior written consent of the Borrower and the Guarantor or as may be required by law. The Agent and each Lender receiving such confidential information will take all reasonable precautions necessary (a) to safeguard the confidential information from disclosure to anyone other than a limited number of appropriate officers, directors, examiners, auditors and agents of the Agent or the Lenders who have a need to have access to the confidential information and (b) to ensure that all of such persons who have access to the confidential information will keep it confidential. 14.7 The Agent, Individually With respect to its Commitment and the Swing Line Commitment, the Accommodation granted by it under the Credits and any Notes issued to it, the Agent shall have the same rights and powers under this Agreement as any other Lender and may exercise the same as though it were not the Agent, and the term "Lenders" or any similar terms shall, unless the context clearly indicates otherwise, include the Agent in its individual capacity. It is understood and agreed by all of the Lenders that the Agent may accept deposits from, lend money to, and generally engage in banking business with the Borrower and its Subsidiaries as if it were not the Agent under this Agreement including the right to refinance the Credits. 14.8 Resignation If at any time the Agent deems it advisable, in its sole discretion, it may deliver to each of the Lenders and the Borrower written notification of its resignation insofar as it acts on behalf of the Lenders pursuant to this Article 14, such resignation to be effective on the date of the appointment of a successor by all of the Lenders, which appointment shall be promptly made and written notice thereof given to the Borrower concurrently with such appointment. If no such appointment has been made within 30 days, the resigning Agent may make such appointment on behalf of the Lenders and shall forthwith give notice of such appointment to the Lenders and the Borrower. 14.9 Meetings of Lenders Except with respect to any approval, instruction or other expression referred to in Section 15.4, an approval, instruction, waiver or other expression of the Lenders (including, subject to Section 15.4, any amendment to the terms of this Agreement) may be obtained by instrument in writing as provided in the next paragraph or may be included in a resolution that is submitted to a meeting or adjourned meeting of all Lenders duly called and held for the purpose of considering the same as hereinafter provided and shall be deemed to have been obtained if such resolution is passed by the affirmative vote of the Required Lenders given on a poll of such Lenders with respect to such resolution. A meeting of Lenders may be called by the Agent and shall be called by the Agent on the request of any two Lenders. Every meeting shall be held in the city where the head office of the Agent is situated or at such other reasonable place as the Agent may approve. At least 10 Business Days notice of the time and place of any meeting shall be given to the Lenders and shall include or be accompanied by a draft of the resolution to be submitted to the meeting, but the notice may state that such draft is subject to amendment at the meeting or any adjournment thereof. The Lenders who are present in person or by proxy at the time and place specified in the notice shall constitute a quorum. A person nominated in writing by the Agent shall be chairman of the meeting. Upon every poll taken at any meeting, each Lender who is not in default hereunder who is present in person or represented by a proxy duly appointed in writing (who need not be a Lender) shall be entitled to one vote in respect of each dollar of principal amount of outstanding Accommodation which it is then owed under the Credits, calculated as of the Business Day first preceding the day of the meeting. In respect of all matters concerning the convening, holding and adjourning of Lenders' meetings, the form, execution and deposit of instruments, appointing proxies and all other relevant matters, the Agent may from time to time make reasonable regulations not inconsistent with this Section 14.9 as it shall deem expedient and any regulations as made by the Agent shall be binding on the Borrower, the Agent and the Lenders. A resolution passed pursuant to this Section 14.9 shall be binding on all Lenders, and the Agent (subject to the provisions for its indemnity in this Agreement) shall be bound to give effect thereto accordingly. Any approval, instruction or other expression that is specifically stated to be required of the Required Lenders or under Section 15.4 may be obtained either by a resolution passed at a meeting of Lenders called and held in accordance with this Section 14.9 or by an instrument in writing signed in one or more counterparts by the applicable Lenders. 14.10 Provisions for Benefit of Lenders Only The provisions of this Article 14 relating to the rights and obligations of the Agent and the Lenders inter alia shall be operative as between the Agent and the Lenders only, and the Borrower shall not have any rights under or be entitled to rely for any purposes upon such provisions. 14.11 Arrangements for Repayment of Accommodation Prior to an acceleration of the payment of amounts outstanding under this Agreement pursuant to Section 12.2, on receipt by the Agent of payments from the Borrower on account of principal, interest, fees or any other payment made to the Agent on behalf of the Lenders with respect to Credit A the Agent shall pay over to each Lender the amount to which it is entitled under this Agreement. Such payment shall be made promptly following receipt and, in any event, the Agent shall use reasonable efforts to pay to each Lender at the applicable Lender's branch of account such amount on the same Business Day as such amount is received by the Agent. 14.12 Repayment by Lenders to Agent (1) Unless the Agent has been notified in writing by the Borrower at least one Business Day prior to the date on which any payment to be made by the Borrower with respect to Credit A under this Agreement is due that the Borrower does not intend to remit such payment, the Agent may, in its discretion, assume that the Borrower has remitted such payment when so due and the Agent may, in its discretion and in reliance on such assumption, make available to each Lender on such payment date an amount equal to such Lender's rateable portion of such assumed payment. If the Borrower does not in fact remit such payment to the Agent, without restricting the obligation of the Borrower to make such payment, the Agent shall promptly notify each Lender and each such Lender shall forthwith on demand repay to the Agent the amount of such assumed payment made available to such Lender, together with interest thereon until the date of repayment thereof at a rate determined by the Agent (such rate to be conclusive and binding on such Lender) in accordance with the Agent's usual banking practice for such advances to financial institutions of like standing to such Lender, but in any event at a rate no greater than the usual interbank offered rate for the sale of deposits in the applicable currency. (2) Unless the Agent has been notified in writing by a Lender at least one Business Day prior to a drawdown date that such Lender does not intend to make available its proportion of any Accommodation under Credit A, the Agent may, in its discretion, assume that such Lender has remitted funds to the Agent and the Agent may, in its discretion and in reliance on such assumption, make available to the Borrower on such drawdown date an amount equal to such Lender's proportion of such Accommodation. If a Lender does not in fact remit such funds to the Agent, without restricting the obligation of such Lender to make such funds available, the Agent shall promptly notify such Lender and the Borrower shall forthwith on demand repay to the Agent the amount made available by the Agent on behalf of such Lender, together with interest thereon until the date of repayment thereof at a rate determined by the Agent (such rate to be conclusive and binding on such Lender and the Borrower) in accordance with the amount payable under this Agreement for a Prime Rate Loan. ARTICLE 15 MISCELLANEOUS 15.1 Payments to the Lenders (1) All payments required to be made by the Borrower under this Agreement shall be made in immediately available funds and amounts payable by the Borrower to the Lenders under this Agreement on account of interest, Stamping Fees and Facility Fees shall be paid by the Agent debiting the same to a designated account maintained with the Agent (for the Borrower). (2) Except as provided for in Subsection 2.3(1), all payments required to be made by the Agent to the Lenders under this Agreement in connection with Credit A shall be made on a pro rata basis in accordance with the then outstanding amount of each Lender's Commitment. 15.2 Fees and Expenses (1) The Borrower agrees to pay all reasonable out-of-pocket expenses, including reasonable legal fees and disbursements, now or hereafter paid or incurred by the Agent on behalf of the Lenders or by the Swing Line Lender in connection with the preparation of the Documents and all other agreements or instruments delivered pursuant to this Agreement, including any amendment thereof whether or not the transactions contemplated by this Agreement are consummated. (2) The Borrower agrees to reimburse the Agent on behalf of the Lenders, on demand, for all reasonable sums charged by it or them on its own behalf or paid to others on account of expenses incurred or services rendered (expressly including legal advices and services) in connection with the administration, maintenance and enforcement of this Agreement and/or any Lender's Acknowledgement, and the Guarantee after any default by the Borrower or any demand on the Borrower. (3) The Borrower shall pay or indemnify the Lenders against any and all registration fees and similar taxes or charges which may be payable or determined to be payable under Canadian law in connection with the execution, delivery, performance, registration or enforcement of this Agreement or any other Document or any of the transactions contemplated hereby or thereby, subject to the provisions of Sections 5.4, 8.3 and 8.5. 15.3 Fees Related to the Credit (a) The Borrower shall pay to the Agent on behalf of the Lenders a Facility Fee equal to the rate per annum then applicable as set out in the Pricing Grid, calculated on the aggregate of the Commitments on a daily basis beginning on the date of the execution of this Agreement and continuing until the Maturity Date, such fee to be payable quarterly in arrears on the last day of each March, June, September and December commencing on June 30, 1996 with the fee for the period from the end of the last quarter for which the Facility Fee has been paid to the Maturity Date payable on the Maturity Date. (b) The Borrower will pay to the Agent for the Agent's account, such fee as agreed between the Agent and the Borrower. (c) The Borrower shall pay to the Swing Line Lender a fee equal to one-eighth of one percent per annum calculated on the amount of the Swing Line Commitment on a daily basis beginning on the date of the execution of this Agreement and continuing until the Swing Line Maturity Date, such fee to be payable quarterly in arrears on the last day of each of March, June, September and December commencing on June 30, 1996 with the fee for the period from the end of the last quarter for which the facility fee has been paid to the Swing Line Maturity Date payable on the Swing Line Maturity Date. 15.4 Amendment, Waiver, etc. Subject to the provisions of this Section 15.4, the Agent or the Lenders and the Borrower may, from time to time, enter into written amendments, supplements or modifications hereto for the purpose of adding any provisions to this Agreement or changing in any manner the rights of the Lenders or the Borrower hereunder or waiving, on such terms and conditions as may be specified in such instrument, any of the requirements of this Agreement or any Default or Event of Default and its consequences. No waiver or delay on the part of the Agent or any of the Lenders in exercising any right or privilege under this Agreement shall operate as a waiver thereof unless made in writing and signed by an authorized officer of the Agent; provided however that no amendment, waiver or consent, unless in writing and signed by all of the Lenders, shall be effective to do any of the following: (a) reduce or forgive the payment of any principal, interest, Stamping Fees or any other amount payable by the Borrower pursuant to this Agreement; (b) postpone the date for payment of any amount payable by the Borrower pursuant to this Agreement; (c) release or discharge the Guarantee; (d) increase the Commitments of the Lenders or the Swing Line Commitment or subject the Lenders to any additional obligations; (e) change the percentage of the Commitments or of the aggregate unpaid principal amount of the Credits, or the proportion of Lenders, which shall be required for the Lenders or any of them to take any action under this Agreement; (f) amend this Section 15.4 or Section 15.10; or (g) amend the definition of "Required Lenders"; and provided further that no amendment, waiver or consent shall, unless in writing and signed by the Agent and all of the Lenders, affect the rights or duties of the Agent under this Agreement. No written waiver shall preclude the further or other exercise by the Agent or any of the Lenders of any right, power or privilege under this Agreement, or extend to or apply to any further Event of Default. The Borrower shall be entitled to rely without further enquiry on any document or instrument and on any approval, instruction, waiver or other expression given to it by the Agent purporting to indicate, and reasonably believed by the Borrower to be genuine, that any requisite waiver, consent or approval of the Lenders hereunder has been obtained or granted. 15.5 Further Assurances The Borrower shall from time to time immediately on the Agent's request do, make and execute all such further assignments, documents, acts, matters and things (other than security documents) as may be reasonably required by the Agent with respect to this Agreement in accordance with the terms of this Agreement to give effect to these presents. 15.6 Dealings by Agent and Lenders The Agent and each of the Lenders may grant extensions of time and other indulgences, take and give up securities, accept compositions, grant releases and discharges and otherwise deal with the Borrower, debtors of the Borrower and others and any securities as they may see fit without prejudice to the liability of the Borrower under this Agreement or the Lender's right to hold and enforce this Agreement and any of its rights and remedies. 15.7 Notices Any notice or communication to be given under this Agreement may be effectively given by delivering the same at the addresses hereinafter set out or by sending the same by prepaid registered mail or facsimile to the parties at such addresses. Any notice so mailed shall be deemed to have been received five days following the mailing thereof provided the postal service is in operation during such time and any notice sent by facsimile shall be deemed to have been received on transmission. The mailing addresses and facsimile numbers of the parties for the purposes of this Agreement shall respectively be: in the case of the Borrower: Robin Hood Multifoods Inc. 60 Columbia Way Markham, Ontario, L3R 0C9 Attention: Secretary Treasurer Facsimile No.: (905) 940-0742 with a copy to: International Multifoods Corporation Multifoods Tower 33 South 6th Street P.O. Box 2942 Minneapolis, Minnesota 55402 Attention: Vice President and General Counsel Treasurer Facsimile No.: (612) 340-6502 in the case of the Agent: Canadian Imperial Bank of Commerce Commerce Court West, 7th Floor Toronto, Ontario, M5L 1A2 Attention: Manager, Agency Administration Facsimile No.: (416) 980-5151 in the case of CIBC as Lender: Canadian Imperial Bank of Commerce Commerce Court West, 7th Floor Toronto, Ontario, M5L 1A2 Attention: Director, Cross Border Group Facsimile No.: (416) 980-8384 in the case of the Guarantor: International Multifoods Corporation Multifoods Tower 33 South 6th Street P.O. Box 2942 Minneapolis, Minnesota, 55402 Attention: Vice President and General Counsel Treasurer Facsimile No.: (612) 340-6502 The address and facsimile number of each Lender is set out in the execution pages of this Agreement or the applicable Lender's Acknowledgement or where CIBC is the Lender, the address or facsimile number of CIBC set out above. The Borrower, the Guarantor, the Agent or any Lender may from time to time notify each other, in accordance with the provisions of this Agreement, of any change of address or facsimile number which thereafter, until changed by like notice, shall be the address or facsimile number of such party for all purposes of this Agreement. 15.8 Assignment and Participations (1) A Lender, including the Agent, may with the prior written consent of the Borrower (which consent shall not be unreasonably withheld) at any time sell, transfer or assign any of its rights or obligations under this Agreement to one or more Eligible Assignees, provided that (a) any such assignment of a Lender's Commitment or the Swing Line Commitment hereunder must be at least a minimum of $10,000,000 and in no event without the written consent of the Borrower, which may be withheld for any reason, shall any assignment be made which would lower a Lender's Commitment below $15,000,000 after giving effect to such assignment, (b) the Borrower may withhold consent to such assignment in the event the Borrower, in the exercise of its good faith business judgment, determines that such assignment would adversely affect the Borrower, and (c) such assignee executes a Lender's Acknowledgment in the form attached hereto as Schedule A. The costs and expenses of such assignment shall be borne by the applicable Lender or assignee and the Borrower agrees to execute such documentation as may reasonably be required by such Lender to acknowledge and complete the assignment. Upon completion of such assignment, the assignee will be entitled to the assigned rights and obligations of the Lender to the same extent as if the assignee were an original party in respect thereof to this Agreement and the Lender as assignor shall be released and discharged accordingly. (2) A Lender, including the Agent, may with the prior written consent of the Borrower (which consent may be withheld for any reason) at any time sell to one or more banks or other entities ("Participants") participating interests in any Prime Rate Loan owing to such Lender or any Note or Bankers' Acceptance accepted by such Lender. In the event of any such sale by a Lender of participating interests to a Participant, such Lender's obligations under this Agreement shall remain unchanged, such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, such Lender shall remain the holder of any such Note and the acceptor of any Bankers' Acceptance accepted by such Lender for all purposes under this Agreement, all amounts payable by the Borrower under this Agreement shall be determined as if such Lender had not sold such participating interests, and the Borrower and the Agent shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement. (3) Any Lender may disclose with the prior written consent of the Borrower (which consent shall not be unreasonably withheld), on a confidential basis in accordance with Section 14.6, to a potential assignee which has been approved by the Borrower under subsection 15.8(1) or with the prior written consent of the Borrower, to any potential Participant which has been approved under Section 15.8(2), such information about the Borrower, the Guarantor and their respective Subsidiaries as such Lender may see fit; provided that such potential assignee or potential Participant agrees in writing to keep such information confidential to the same extent as required of the Lenders hereunder. 15.9 Survival This Agreement shall continue in full force and effect so long as any indebtedness or liability is due and payable to the Agent or any of the Lenders in respect of the Credits unless it is varied or terminated in writing. All agreements, representations, warranties and covenants of the Borrower made herein or in any document delivered by or on behalf of the Borrower to the Agent or any of the Lenders pursuant to the provisions of this Agreement or otherwise shall be deemed to have been relied on by the Agent and the Lenders notwithstanding any investigation heretofore or hereafter made by the Agent or any of the Lenders, their respective solicitors or any representative of the Agent or any of the Lenders and shall survive the execution of this Agreement and the granting of Accommodation under the Credits until repayment in full of all amounts owing to the Agent and the Lenders. 15.10 Successors and Assigns This Agreement shall be binding on and shall enure to the benefit of the Borrower, the Agent and each Lender and their respective successors and permitted assigns, provided that the Borrower shall not assign any of its rights or obligations under this Agreement without the prior written consent of all of the Lenders. No part of any Credit may be assigned by a Lender to a non-resident of Canada within the meaning of the Income Tax Act (Canada) and no non-resident of Canada may participate in the Credits. No Lender will book any part of the Credits outside of Canada. 15.11 Governing Law The Documents and all certificates and other instruments delivered to the Agent or the Lenders pursuant to this Agreement shall be construed and interpreted in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein. 15.12 Severability Any term of this Agreement which is void or unenforceable in any jurisdiction is, as to that jurisdiction, ineffectual to that extent without invalidating the remaining provisions of this Agreement. 15.13 Entire Agreement There are no representations, warranties, covenants, indemnities or other agreements binding on the Borrower relating to the subject matter hereof except as stated or referred to herein. 15.14 Counterparts This Agreement may be executed in two or more counterparts, either in original or telecopy form, each of which shall constitute an original and all of which together shall constitute one and the same agreement. IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the date first above written. ROBIN HOOD MULTIFOODS INC. By: /s/ ALLAN C. TURNER Name: ALLAN C. TURNER Title: SECRETARY TREASURER CANADIAN IMPERIAL BANK OF COMMERCE, as Agent By: /s/ DOUG ZINKIEWICH Name: DOUG ZINKIEWICH Title: DIRECTOR Commitment: $35,000,000 CANADIAN IMPERIAL BANK OF Swing Line Commitment: $10,000,000 COMMERCE, as Lender Address: By: /s/ DOUG ZINKIEWICH North American Corporate Banking Name: DOUG ZINKIEWICH Commerce Court West, 7th Floor Title: DIRECTOR Toronto, Ontario, M5L 1A2 Attention: Mr. D. Zinkiewich Director Telephone: (416) 980-5311 Facsimile: (416) 980-8384 Commitment: $35,000,000 THE TORONTO-DOMINION BANK, as Lender Address: By: /s/ David Pankhurst Corporate & Investment Name: DAVID PANKHURST Banking Group Title: MANAGER Toronto-Dominion Tower, 2nd Floor Toronto, Ontario, M5K 1A2 Attention: Ms. L. Williams Credit Administration Officer Telephone: (416) 982-7671 Facsimile: (416) 982-6630 Commitment: $30,000,000 THE BANK OF NOVA SCOTIA, as Lender Address: By: /s/ JUDY MCKAY Corporate Banking Name: JUDY MCKAY 44 King Street West, 16th Floor Title: RELATIONSHIP MANAGER Toronto, Ontario, M5H 1H1 Attention: Ms. J. McKay Relationship Manager Telephone: (416) 866-3632 Facsimile: (416) 866-2009 SCHEDULE A LENDER'S ACKNOWLEDGEMENT TO: CANADIAN IMPERIAL BANK OF COMMERCE, as Agent AND TO: ROBIN HOOD MULTIFOODS INC. Reference is made to the credit agreement dated as of May 30, 1996 among Robin Hood Multifoods Inc., the financial institutions listed as Lenders on the execution pages thereof or which have executed a Lender's Acknowledgement as lenders (each a "Lender" and collectively the "Lenders"), and Canadian Imperial Bank of Commerce, as agent for the Lenders in the manner and to the extent described in Article 14 thereof (the "Agent"), as such credit agreement may be amended, restated or revised from time to time (the "Credit Agreement"). The undersigned acknowledges that its proper officers have received and reviewed a copy of the Credit Agreement and it hereby takes cognizance of the provisions thereof. All initially capitalized terms used herein and not otherwise defined shall have the meanings given to them by the Credit Agreement. The undersigned wishes to become a Lender under the Credit Agreement and accordingly furnishes this instrument to the Agent and the Borrower subject to the terms of the Credit Agreement. The undersigned, by its execution and delivery of this instrument, hereby agrees to be bound by all of the provisions of the Credit Agreement that are applicable to Lenders including, without limitation, the appointment of the Agent on the terms and conditions set forth in Article 14 of the Credit Agreement all as the same may be amended, restated or revised from time to time. The undersigned executes and delivers this instrument on the basis that, subject to the terms and conditions of the Credit Agreement, it severally agrees to make Accommodation available to the Borrower under Credit A, provided that the amount of such Accommodation does not exceed $_____. The undersigned, the Agent and the Borrower acknowledge and agree that, on execution of this instrument, the existing commitments in respect of Credit A shall be adjusted to reflect the foregoing Commitments in the following manner: [Name of Lender] Commitment reduced/increased by [$] TOTAL [Lender] Commitment [$] Such Commitments may be adjusted from time to time pursuant to and in accordance with the terms of the Credit Agreement. This instrument shall be governed and construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein. This instrument shall be binding on the undersigned and its permitted successors and assigns. IN WITNESS WHEREOF, the undersigned has caused this instrument to be duly executed this 30th day of May, 1996. Address: ___________________________________ Telecopy No.: By: _______________________________ Commitment: Title: ____________________________ By: _______________________________ Title: ____________________________ The foregoing Lender's Acknowledgement is acknowledged and agreed to this 30th day of May, 1996. ROBIN HOOD MULTIFOODS INC. By: _______________________________ Title: ____________________________ By: _______________________________ Title: ____________________________ CANADIAN IMPERIAL BANK OF COMMERCE, as Agent By: ________________________________ Title: _____________________________ SCHEDULE B NOTE FOR PRIME RATE LOANS May 30, 1996 For value received, the undersigned hereby acknowledges itself indebted to _____ , a Lender (as defined in the credit agreement, dated as of May 30, 1996 among the undersigned, the financial institutions named as Lenders on the execution pages thereof or which have executed a Lender's Acknowledgement as lenders, and Canadian Imperial Bank of Commerce, as Agent for the Lenders in the manner and to the extent described in Article 14 thereof (such credit agreement amended, restated or revised from time to time is referred to as the "Credit Agreement")), and unconditionally promises to pay on demand to or to the order of _________, at the place, on the dates and in the manner provided for in the Credit Agreement, the unpaid principal balance of all Prime Rate Loans made by ________________ to the undersigned under the Credit, as recorded on the grid attached to this Note. The principal amount (including any overdue interest) outstanding hereunder from time to time shall bear interest at the rate payable for Prime Rate Loans in accordance with the Credit Agreement as well after as before maturity, default and judgment until paid. The indebtedness evidenced hereby may forthwith become due and payable without notice on the occurrence of any one or more of the Events of Default defined in the Credit Agreement. This Note evidences indebtedness incurred under, and is subject to the terms and provisions of, the Credit Agreement and all amendments thereto, and all initially capitalized terms used herein and not otherwise defined have the meanings given to them by the Credit Agreement. ROBIN HOOD MULTIFOODS INC. By: ___________________________ Name: Title: ADVANCES AND PAYMENT OF PRINCIPAL Amount of Amount of Unpaid Date Advance Principal Interest Paid Principal Notation Prepaid Balance Made by _______ _________ ___________ _____________ __________ ________ _______ _________ ___________ _____________ __________ ________ _______ _________ ___________ _____________ __________ ________ _______ _________ ___________ _____________ __________ ________ _______ _________ ___________ _____________ __________ ________ _______ _________ ___________ _____________ __________ ________ _______ _________ ___________ _____________ __________ ________ _______ _________ ___________ _____________ __________ ________ _______ _________ ___________ _____________ __________ ________ _______ _________ ___________ _____________ __________ ________ _______ _________ ___________ _____________ __________ ________ _______ _________ ___________ _____________ __________ ________ _______ _________ ___________ _____________ __________ ________ _______ _________ ___________ _____________ __________ ________ _______ _________ ___________ _____________ __________ ________ SCHEDULE C NOTE FOR U.S. BASE RATE LOANS May 30, 1996 For value received, the undersigned hereby acknowledges itself indebted to _______________ , a Lender (as defined in the credit agreement, dated as of May 30, 1996 among the undersigned, the financial institutions named as Lenders on the execution pages thereof or which have executed a Lender's Acknowledgement as lenders, and Canadian Imperial Bank of Commerce, as Agent for the Lenders in the manner and to the extent described in Article 14 thereof (such credit agreement amended, restated or revised from time to time is referred to as the "Credit Agreement")), and unconditionally promises to pay on demand to or to the order of _________________, at the place, on the dates and in the manner provided for in the Credit Agreement, the unpaid principal balance of all U.S. Base Rate Loans made by ___________________ to the undersigned under the Credit, as recorded on the grid attached to this Note. The principal amount (including any overdue interest) outstanding hereunder from time to time shall bear interest at the rate payable for U.S. Base Rate Loans in accordance with the Credit Agreement as well after as before maturity, default and judgment until paid. The indebtedness evidenced hereby may forthwith become due and payable without notice on the occurrence of any one or more of the Events of Default defined in the Credit Agreement. This Note evidences indebtedness incurred under, and is subject to the terms and provisions of, the Credit Agreement and all amendments thereto, and all initially capitalized terms used herein and not otherwise defined have the meanings given to them by the Credit Agreement. ROBIN HOOD MULTIFOODS INC. By: ___________________________________ Name: Title: ADVANCES AND PAYMENT OF PRINCIPAL Amount of Amount of Unpaid Date Advance Principal Interest Paid Principal Notation Prepaid Balance Made by _______ _________ ___________ _____________ __________ ________ _______ _________ ___________ _____________ __________ ________ _______ _________ ___________ _____________ __________ ________ _______ _________ ___________ _____________ __________ ________ _______ _________ ___________ _____________ __________ ________ _______ _________ ___________ _____________ __________ ________ _______ _________ ___________ _____________ __________ ________ _______ _________ ___________ _____________ __________ ________ _______ _________ ___________ _____________ __________ ________ _______ _________ ___________ _____________ __________ ________ _______ _________ ___________ _____________ __________ ________ _______ _________ ___________ _____________ __________ ________ _______ _________ ___________ _____________ __________ ________ _______ _________ ___________ _____________ __________ ________ _______ _________ ___________ _____________ __________ ________ SCHEDULE D NOTE FOR LIBOR LOANS May 30, 1996 For value received, the undersigned hereby acknowledges itself indebted to ____________ , a Lender (as defined in the credit agreement, dated as of May 30, 1996 among the undersigned, the financial institutions named as Lenders on the execution pages thereof or which have executed a Lender's Acknowledgement as lenders, and Canadian Imperial Bank of Commerce, as Agent for the Lenders in the manner and to the extent described in Article 14 thereof (such credit agreement amended, restated or revised from time to time is referred to as the "Credit Agreement")), and unconditionally promises to pay on demand to or to the order of _____________ , at the place, on the dates and in the manner provided for in the Credit Agreement, the unpaid principal balance of all LIBOR Loans made by __________________ to the undersigned under the Credit, as recorded on the grid attached to this Note. The principal amount (including any overdue interest) outstanding hereunder from time to time shall bear interest at the rate payable for LIBOR Loans in accordance with the Credit Agreement as well after as before maturity, default and judgment until paid. The indebtedness evidenced hereby may forthwith become due and payable without notice on the occurrence of any one or more of the Events of Default defined in the Credit Agreement. This Note evidences indebtedness incurred under, and is subject to the terms and provisions of, the Credit Agreement and all amendments thereto, and all initially capitalized terms used herein and not otherwise defined have the meanings given to them by the Credit Agreement. ROBIN HOOD MULTIFOODS INC. By: ________________________________ Name: Title: ADVANCES AND PAYMENT OF PRINCIPAL Amount of Amount of Unpaid Date Advance Principal Interest Paid Principal Notation Prepaid Balance Made by _______ _________ ___________ _____________ __________ ________ _______ _________ ___________ _____________ __________ ________ _______ _________ ___________ _____________ __________ ________ _______ _________ ___________ _____________ __________ ________ _______ _________ ___________ _____________ __________ ________ _______ _________ ___________ _____________ __________ ________ _______ _________ ___________ _____________ __________ ________ _______ _________ ___________ _____________ __________ ________ _______ _________ ___________ _____________ __________ ________ _______ _________ ___________ _____________ __________ ________ _______ _________ ___________ _____________ __________ ________ _______ _________ ___________ _____________ __________ ________ _______ _________ ___________ _____________ __________ ________ _______ _________ ___________ _____________ __________ ________ _______ _________ ___________ _____________ __________ ________ SCHEDULE E NOTICE OF BORROWING TO: CANADIAN IMPERIAL BANK OF COMMERCE, as Agent 1. This Notice of Borrowing is delivered to you pursuant to Section 2.5 of the credit agreement, dated as of May 30, 1996, among the undersigned, the financial institutions named as Lenders on the execution pages thereof or which have executed a Lender's Acknowledgement as lenders, and Canadian Imperial Bank of Commerce as Agent for the Lenders in the manner and to the extent described in Article 14 thereof (such credit agreement as amended, restated or revised from time to time is referred to as the "Credit Agreement"). All references to section numbers herein are in respect of the Credit Agreement and all capitalized terms set forth in this Notice of Borrowing shall have the respective meanings specified in the Credit Agreement. 2. The undersigned certifies that as at the date hereof the representations and warranties of the undersigned contained in Article 10 of the Credit Agreement are true and correct in all material respects as if given on the date hereof. 3. All conditions precedent under the Credit Agreement for the granting of the Accommodation requested herein have been satisfied. 4. No Event of Default or Default has occurred and is continuing. 5. The undersigned hereby gives you notice that on ___________, the undersigned wishes to obtain the following Accommodation under: Credit A: Prime Rate Loan: $____________ Bankers' Acceptance: Principal Amount $____________ Term _______ days Swing Line Credit: Prime Rate Loan: $____________ U.S. Base Rate Loans $____________ LIBOR Loan $____________ Term _______ days Bankers' Acceptance: Principal Amount $____________ Term _______ days DATED at _______________, this 30th day of May, 1996. ROBIN HOOD MULTIFOODS INC. By: __________________________________ Name: Title: SCHEDULE F NOTICE OF ROLLOVER/SWITCH TO: CANADIAN IMPERIAL BANK OF COMMERCE, as Agent 1. This Notice of Rollover/Switch is delivered to you pursuant to Section 2.6 of the credit agreement, dated as of May 30, 1996, among the undersigned, the financial institutions named as Lenders on the execution pages thereof or which have executed a Lender's acknowledgement as lenders, and Canadian Imperial Bank of Commerce as Agent for the Lenders in the manner and to the extent described in Article 14 thereof (such credit agreement as amended, restated or revised from time to time is referred to as the "Credit Agreement"). All references to section numbers herein are in respect of the Credit Agreement and all capitalized terms set forth in this Notice of Rollover/Switch shall have the respective meanings specified in the Credit Agreement. 2. The undersigned certifes that as at the date hereof no Event of Default or Default has occurred and is continuing. 3. The undersigned hereby gives you notice that on ___________, the undersigned wishes to undertake a Rollover/Switch of the following Accommodation outstanding under the Credit: [Describe outstanding Accommodation and specify the Credit] into the following Accommodation: If under Credit A: Prime Rate Loan $____________ Bankers' Acceptance: Principal Amount $____________ Term ______ days; If under the Swing Line Credit: Prime Rate Loan $____________ U.S. Base Rate Loan $____________ LIBOR Loan $____________ Bankers' Acceptance: Principal Amount $____________ Term ______ days; Dated at ____________ this 30th day of May, 1996. ROBIN HOOD MULTIFOODS INC. By: _____________________________ Name: Title: SCHEDULE G PRICING GRID (in Basis Points) Rating Level Level I Level II Level III Level IV Level V Level VI Facility Fee 8.00 9.00 11.25 13.75 15.00 22.50 Stamping Fee 22.00 23.50 26.25 28.75 35.00 52.50 All-In Drawn Margin 30.00 32.50 37.50 42.50 50.00 75.00 LIBOR 22.00 23.50 26.25 28.75 35.00 52.50 SCHEDULE H GUARANTEE WHEREAS Robin Hood Multifoods Inc. (the "Debtor") has entered into a credit agreement dated as of May 30, 1996, among the Debtor, the financial institutions named as Lenders on the execution pages thereof or which have executed a Lender's Acknowledgement as lenders including Canadian Imperial Bank of Commerce as the Swing Line Lender (the "Swing Line Lender") (each a "Lender" and collectively the "Lenders") and Canadian Imperial Bank of Commerce, as Agent for the Lenders in the manner and to the extent described in Article 14 thereof (the "Agent"), such credit agreement as amended, restated or revised from time to time is referred to as the "Credit Agreement"; AND WHEREAS it is a condition precedent to the granting of Accommodation under the Credit Agreement that the undersigned (the "Guarantor") guarantee to the Agent, on behalf of the Lenders, the indebtedness and liability of the Debtor to the Lenders under the Credit Agreement; NOW THEREFORE for valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Guarantor hereby agrees as follows: 1. All capitalized terms in this Guarantee that are defined in the Credit Agreement unless otherwise defined in this Guarantee have the meaning attributed to them in the Credit Agreement. 2. The Guarantor hereby unconditionally guarantees payment to the Agent, on behalf of the Lenders including the Swing Line Lender, forthwith after demand therefor by the Agent following any Event of Default, the indebtedness and liability which the Debtor has incurred or is under or may incur or be under to the Lenders including the Swing Line Lender pursuant to, in respect of or in any manner related to the Credit Agreement, plus interest thereon at the rate or rates provided in the Credit Agreement from the date of demand for payment hereunder. 3. The Agent and the Lenders may grant extensions of time or other indulgences, take and give up securities, accept compositions, grant releases and discharges and otherwise deal with the Debtor and other parties and securities as the Agent or the Lenders may see fit, and may apply all moneys received from the Debtor or others, or from securities, upon such part of the Debtor's liability to the Lenders under the Credit Agreement as the Agent or the Lenders may think best, without prejudice to or in any way limiting or lessening the obligation of the Guarantor under this Guarantee. 4. Neither the Agent nor the Lenders are bound to exhaust their recourse against the Debtor or other parties or the securities they may hold before being entitled to payment from the Guarantor under this Guarantee; and the benefit of any statute affecting the liability of the Guarantor hereunder or enforcement thereof is hereby waived to the extent permitted by law. 5. Any loss of or in respect of any securities received by the Agent or the Lenders from the Debtor or any other person, whether occasioned through the fault of the Agent or the Lenders or otherwise, shall not discharge pro tanto or limit or lessen the liability of the Guarantor under this Guarantee. 6. This shall be a continuing Guarantee and shall cover all present and future liabilities of the Debtor to the Lenders incurred pursuant to the Credit Agreement, and shall be binding as a continuing security on the Guarantor. 7. Any change or changes in the name of the Debtor shall not affect or in any way limit or lessen the liability of the Guarantor hereunder and this Guarantee shall extend to the person, firm or corporation acquiring or from time to time carrying on the business of the Debtor. 8. All moneys, advances, renewals and credits in fact borrowed or obtained from the Lenders pursuant to the Credit Agreement shall be deemed to form part of the liabilities hereby guaranteed notwithstanding any incapacity, disability or lack or limitation of status or of power of the Debtor or of the directors, officers or agents thereof or that the Debtor may not be a legal entity, or any irregularity, defect or informality in the Debtor or obtaining of such moneys, advances, renewals or credits. 9. The Guarantor shall assume the responsibility for being and keeping itself informed of the financial condition of the Debtor and of all other circumstances bearing upon the risk of non-payment of the liability under this Guarantee. 10. In the event that the Agent or the Lenders receive from the Guarantor a payment or payments in full or on account of the Guarantor's liability hereunder, the Guarantor shall not be entitled to recover repayment against the Debtor until all claims of the Lenders against the Debtor have been paid in full; and in the case of liquidation, winding up or bankruptcy of the Debtor (whether voluntary or compulsory) or in the event that the Debtor shall make a bulk sale of any of the Debtor's assets within the bulk transfer provisions of any applicable legislation or any composition with creditors or scheme or arrangement, the Lenders shall have the right to rank for their full claim and receive all dividends or other payments in respect thereof until such claim has been paid in full and the Guarantor shall continue to be liable for any balance which may be owing to the Lenders. If the Lenders value and/or retain any securities, such valuation and/or retention shall not, as between the Lenders and the Guarantor, be considered as a purchase of such securities, or as payment or satisfaction or reduction of the Debtor's liabilities to the Lenders, or any part thereof. 11. The Guarantor shall make payment to the Agent of the amount of the liability of the Guarantor forthwith after demand therefor is made in writing by the Agent following and during the continuance of an Event of Default and such demand shall be conclusively deemed to have been effectually made by delivering or mailing by prepaid registered mail an envelope containing that addressed to the Guarantor in accordance with the terms of the Credit Agreement. The liability of the Guarantor shall bear interest from the date of receipt of such demand at the rate or rates then applicable to the liabilities of the Debtor to the Lenders under the Credit Agreement. 12. The Guarantor shall pay all reasonable legal fees and all other costs and expenses which may be incurred by the Agent or the Lenders in the enforcement of this Guarantee. 13. Nothing herein contained or in any security now held or hereafter acquired by the Agent or the Lenders, nor any act or omission of the Agent or the Lenders with respect to any such security, shall in any way prejudice or affect the rights, remedies or powers of the Agent or the Lenders with respect to any other security at any time held by the Agent or the Lenders. 14. The Agent and the Lenders may, at their election, exercise any right or remedy they respectively might have against the Debtor or any security held by the Agent or the Lenders, including without limitation the right to foreclose upon any such security by judicial or non-judicial sale, without affecting or impairing in any way the liability of the Guarantor hereunder except to the extent the indebtedness has been paid. The Guarantor waives any defence arising out of the absence, impairment or loss of any right of reimbursement or subrogation or other right or remedy of the Guarantor against the Debtor or any such security, whether resulting from such election by the Agent or the Lenders or otherwise, to the extent permitted by law. 15. Until all indebtedness of the Debtor to the Lenders has been paid in full, the Guarantor shall have no right to subrogation and waives any right to enforce any remedy which the Agent or the Lenders now have or may hereafter have against the Debtor, and waives any benefit of any right to participate in the security now or hereafter held by the Agent or the Lenders. The Guarantor waives all presentments, demands for performance, notices of non-performance, protests, notices of protest, notices of dishonour, and notices of acceptance of this Guarantee and of the existence, creation or incurring of new or additional indebtedness. 16. The Guarantor shall make each payment in the currency in which the Debtor is obliged to make payment to the Lenders (the "Original Currency"). If the Guarantor makes payment in a currency other than the Original Currency (the "Other Currency"), such payment shall constitute a discharge of the liability of the Guarantor hereunder only to the extent of the amount of the Original Currency which the Lender is able to purchase at Toronto, Ontario with the Other Currency on the date of receipt in accordance with its normal practice. If the amount of the Original Currency which the Lender is able to purchase is less than the amount of such currency originally due to it, the Guarantor shall indemnify and save the Lender harmless from and against any loss as a result of such deficiency. This indemnity shall constitute an obligation separate and independent from the other obligations contained in this Guarantee and shall continue in full force and effect notwithstanding any judgment or order in respect of any amount due hereunder. 17. This instrument is in addition and without prejudice to any securities of any kind now or hereafter held by the Agent or the Lenders. 18. The Guarantor represents and warrants to the Agent, on behalf of the Lenders, as follows: (a) Organization and Existence: The Guarantor is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. In all respects material to the Guarantor and its Subsidiaries, taken as a whole, the Guarantor has all requisite power and authority, corporate and otherwise, to own, operate and lease its properties and to carry on its business as now being conducted. The Guarantor is qualified to do business and is in good standing as a foreign corporation in each jurisdiction where the character of its properties owned or leased or the nature of the activities conducted by the Guarantor makes such qualification necessary, except where failure so to qualify would not have a material adverse effect on the business, assets, condition or prospects, financial or otherwise, of the Guarantor and its Subsidiaries, taken as a whole. (b) Power and Authority: (i) The Guarantor has all power and authority necessary to execute, deliver and carry out the terms and provisions of the Guarantee. All action on the part of the Guarantor which is required for the execution, delivery and performance of the Guarantee has been duly and effectively taken. (ii) The Guarantee constitutes a valid and binding obligation of the Guarantor enforceable in accordance with its terms, in each case as enforceability may be subject to bankruptcy, reorganization, insolvency, moratorium or other similar laws and court decisions relating to or affecting the enforcement of creditors' rights generally and as enforceability may be subject to limitations imposed by law upon the availability of specific enforcement, injunctive relief or other equitable remedies. The execution, delivery and performance of the Guarantee will not violate the terms and conditions or any other material agreement, instrument, mortgage or similar document to which the Guarantor is a party. (c) Financial Position: The Guarantor has delivered to the Lenders the consolidated balance sheet of the Guarantor and its Subsidiaries as of February 29, 1996, accompanied by related consolidated statements of earnings and cash flows, for the fiscal year ended on such date and the related report of the Guarantor's auditors. Such financial statements, with the notes thereto, present fairly the consolidated financial position of the Guarantor and its Subsidiaries and the results of their operations and cash flows as of the date and for the period indicated, and were prepared in accordance with U.S. GAAP. Since February 29, 1996 to the date of this Guarantee, there has not occurred any material adverse change in the business, operations or financial condition of the Guarantor and its Subsidiaries, taken as a whole, except as described in any reports on Forms 8-K, 10-Q and 10-K filed during such period by the Guarantor with the Securities and Exchange Commission. (d) Litigation: Except as disclosed in the notes to the Guarantor's financial statements referred to in Subsection 18(c) hereof, no litigation, investigation or proceeding of or before any arbitrator or governmental authority is pending or, to the knowledge of the Guarantor, threatened by or against the Guarantor or any of its Subsidiaries or against any of its or their respective properties or revenues which would reasonably be expected to have a material adverse effect on the business, operations, properties or financial condition of the Guarantor and its Subsidiaries, taken as a whole. (e) No Violation of Law or Instrument: The execution, delivery and performance of the Guarantee does not require any action or consent of, or any registration with, any governmental authority, or of any other party under any material contract or agreement to which the Guarantor or any of its Subsidiaries is a party, or under any order or decree to which the Guarantor or any of its Subsidiaries is a party or to which any of their properties or assets are subject, or conflict with, or entitle any party, with the giving of notice or lapse of time or otherwise, to terminate or declare a default under, any such contract, agreement, order or decree. 19. So long as this Guarantee is in force and except as otherwise permitted by the prior written consent of the Required Lenders, the Guarantor covenants and agrees with the Agent on behalf of the Lenders that: (a) the ratio of Guarantor's Total Indebtedness to Guarantor's Total Capitalization at any time will not be greater than .55 to 1.0; provided that the Guarantor may exceed the specified ratio at any time, and from time to time, during any period of 270 consecutive days from the date such ratio was first exceeded so long as on the date such ratio is first exceeded the Guarantor's Fixed Charge Coverage for the period of four consecutive fiscal quarters ending on the last day of the most- recently ended fiscal quarter was equal to or greater than 1.5; and provided, further, that (i) such ratio may be exceeded for only one such period of 270 days in any period of eighteen months beginning on the date such ratio was first exceeded and (ii) in no event shall the ratio of Guarantor's Total Indebtedness to Guarantor's Total Capitalization at any time be greater than .65 to 1.0; (b) as of the last day of any fiscal quarter of the Guarantor during which a Ratings Downgrade exists (regardless of whether a Ratings Downgrade exists on such last day), the Guarantor's Fixed Charge Coverage for the period of four consecutive fiscal quarters ending on such last day will not be less than 1.5; and (c) the Guarantor's Tangible Net Worth shall at all times be not less than U.S.$80,000,000. 20. There are no representations, collateral agreements or conditions with respect to this instrument or affecting the Guarantor's liability hereunder other than as contained herein. 21. All amounts payable by the Guarantor hereunder shall be made without setoff or counterclaim and without deduction for or on account of any present or future taxes of any nature, unless the Guarantor is prohibited by law from doing so, in which case the Guarantor shall pay to the Agent on behalf of the Lenders such additional amount as is necessary to ensure that the Lenders receive the full amount they would have received if no deduction or withholding had been made. 22. This Guarantee shall be construed in accordance with the laws of the Province of Ontario, Canada and the Guarantor agrees that any legal suit, action or proceeding arising out of or relating to this Guarantee may be instituted in the courts of such jurisdiction and the Guarantor hereby accepts and irrevocably submits to the jurisdiction of such courts and acknowledges their competence and agrees to be bound by any judgment thereof, provided that nothing herein shall limit the Agent's or the Lenders' rights to bring proceedings against the Guarantor elsewhere. 23. This Guarantee shall extend and enure to the benefit of the successors and assigns of the Agent and the Lenders and shall be binding upon the Guarantor and its successors and assigns. EXECUTED at Minneapolis, Minnesota this 30th day of May, 1996. INTERNATIONAL MULTIFOODS CORPORATION By: Name: Title: SCHEDULE I FORM OF GUARANTOR'S COMPLIANCE CERTIFICATE TO: Canadian Imperial Bank of Commerce, as Agent, and the Lenders which are party to the Credit Agreement referred to below Reference is made to the Credit Agreement dated as of May 30, 1996 (as amended or otherwise modified from time to time, the "Credit Agreement") among Robin Hood Multifoods Inc., various financial institutions and Canadian Imperial Bank of Commerce, as Agent. Terms used but not otherwise defined herein are used herein as defined in the Credit Agreement. I. Reports. Pursuant to Section 11.1(i) of the Credit Agreement, enclosed herewith [are copies of (i) the Annual Report of the Guarantor containing the consolidated balance sheet of the Guarantor and its subsidiaries as at the close of the fiscal year of the Guarantor ended ___________________________ and consolidated statements of earnings and cash flows of the Guarantor and its subsidiaries for such year, certified by the Guarantor's independent public accountants, and (ii) the Guarantor's most recent Form 10-K filed with the SEC.] [is a copy of the Guarantor's most recent Form 10-Q filed with the SEC.] II. Financial Tests. The Guarantor hereby certifies and warrants to you that the following is a true and correct computation as at _____________________________ of the following ratios and/or financial restrictions contained in the Guarantee. A. Subsection 19(a) Guarantor's Total Indebtedness to Guarantor's Total Capitalization Long-term Debt (net of current portion) $ Current portion of long-term debt $ Notes payable $ Less: Excess Working Capital(1) $ _______________________ (1) For every computation date other than the August 31 computation date, subtract the excess, if any, of Guarantor's Working Capital as of such computation date (excluding increases in Guarantor's Working Capital due to acquisitions since the preceding August 31) over Guarantor's Working Capital as of the previous August 31 (reduced by any decreases in Guarantor's Working Capital due to dispositions since the preceding August 31). Guarantor's Total Indebtedness Guarantor's Common Stockholders' Equity $ Preferred stock $ Other(2) $___________ Guarantor's Net Worth $ Plus: Non-recurring write-offs of $___________ goodwill and other intangibles since November 30, 1995 Guarantor's Total Capitalization $ Guarantor's Total Indebtedness to __________% Guarantor's Total Capitalization Maximum permitted ratio 0.55% Maximum permitted temporary ratio 0.65% ____________________ (2) "Other" equals the lesser of (i) the outstanding amount of any guaranty of an obligation given by the Guarantor or any Subsidiary of the Guarantor to a lender to a trust holding assets of any employee benefit plan of the Guarantor or any Subsidiary of the Guarantor for the purpose of allowing such trust to borrow monies, which amount has been reflected on the consolidated balance sheet of the Guarantor as a reduction of common stockholders' equity, or (ii) two-thirds of the value of any stock owned by such trust securing such obligation of the trust. B. Subsection 19(b) Maintenance of Guarantor's Fixed Charge Coverage [This covenant only applies in the event of a Ratings Downgrade] (FQE) (FQE) (FQE) (FQE) TOTAL 1. Consolidated interest $_____ $_____ $_____ $_____ $_____ expense (reduced by capitalized interest) 2. Minimum rentals for $_____ $_____ $_____ $_____ $_____ operating leases of continuing operations of the Guarantor and its consolidated Subsidiaries 3. Guarantor's Earnings from $_____ $_____ $_____ $_____ $_____ Continuing Operations Before Income Tax (exclusive of (x) unusual or non-recurring items and (y) any foreign exchange gains or losses that might appear on or be reflected in the consolidated statement of earnings of the Guarantor and its Subsidiaries on a consolidated basis) 4. Item 1 plus Item 2 plus $_____ Item 3 5. Item 1 plus Item 2 $______ 6. Ratio of Item 4 to Item 5 ____ to 1.00 7. Required Fixed Charge Coverage 1.50 to 1.00 C. Subsection 19(c) Guarantor's Minimum Tangible Net Worth Guarantor's Net Worth $ Less: Goodwill, debt discount and other $_______________ like intangibles Guarantor's Tangible Net Worth $ Required Minimum Tangible Net Worth $80,000,000 III. Defaults. The Guarantor hereby further certifies and warrants to you that no Event of Default (as defined in the Multifoods Credit Agreement) or Unmatured Event of Default (as defined in the Multifoods Credit Agreement) has occurred and is continuing. IN WITNESS WHEREOF, the Guarantor has caused this Certificate to be executed and delivered by its duly authorized officer this ___________ day of __________________, 19___. INTERNATIONAL MULTIFOODS CORPORATION By: _______________________________________ Title: SCHEDULE J LEGAL OPINION IN RESPECT OF THE BORROWER May 30, 1996 Canadian Imperial Bank of Commerce, As Agent for the Lenders under the Credit Agreement referred to below Commerce Court West, 7th Floor Toronto, Ontario M5L 1A2 Ladies and Gentlemen: Re: Cdn. $110,000,000 Credit Agreement dated as of May 30, 1996 Among Robin Hood Multifoods Inc., Canadian Imperial Bank of Commerce, as Agent, and the parties named from time to time as Lenders thereto (the "Credit Agreement") We have acted as counsel in Ontario to Robin Hood Multifoods Inc. (the "Borrower") in connection with the execution and delivery by the Borrower of the Credit Agreement and as special counsel in Ontario to International Multifoods Corporation (the "Guarantor") in connection with the execution and delivery of the guarantee dated May 30, 1996, made by the Guarantor in favour of the Agent on behalf of the Lenders under the Credit Agreement (the "Guarantee"). For the purposes of the opinions hereinafter expressed, we have examined and relied on certified copies of resolutions of the board of directors of the Borrower and such other corporate records of the Borrower and such other material as we have deemed necessary as a basis for the opinions expressed herein, including, without limitation, a certificate of compliance dated May 30, 1996 and issued by Consumer and Corporate Affairs Canada with respect to the Borrower. We have also examined originally executed copies of the Credit Agreement and the Guarantee and we have considered such questions of law as we have deemed relevant and necessary as a basis for the opinions hereinafter expressed. As to various questions of fact material to this opinion, we have relied solely upon the certificate, a copy of which is attached hereto, of an officer of the Borrower. Our opinion relates solely to the laws of Ontario and the federal laws of Canada applicable therein and we have made no investigation of the laws of any other jurisdiction. Based upon and subject to the foregoing and the assumptions and qualifications set out at the end of this opinion, we are of the opinion that: (1) The Borrower is incorporated and validly subsisting under the laws of Ontario and has full corporate capacity and authority to execute, deliver and perform its obligations under the Credit Agreement. (2) The Borrower has taken all necessary corporate action and proceedings to duly authorize the execution, delivery and performance of the Credit Agreement. (3) The Credit Agreement has been duly executed and delivered by the Borrower and constitutes a legal, valid and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms. (4) The Guarantee constitutes a legal, valid and binding obligation of the Guarantor, enforceable against the Guarantor in accordance with its terms. (5) No consent, license, approval, authorization or exemption of any governmental body or regulatory authority or any filing is required for or in connection with the execution and delivery by the Borrower of the Credit Agreement. This opinion is subject to the following assumptions and qualifications: (1) we have assumed the genuineness of all signatures (whether on originals or copies of documents), the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as notarial, certified, conformed, photostatic or telecopied copies thereof and the authenticity of the originals of such documents; (2) we have assumed that the Credit Agreement is a legal, valid and binding obligation of, and is enforceable in accordance with its terms against, each of the parties thereto, other than the Borrower; (3) we have assumed that the Guarantor is a subsisting corporation under the laws of its jurisdiction of incorporation, that the Guarantor has all requisite power, authority and capacity to execute and deliver the Guarantee and perform its obligations thereunder, that the Guarantor has taken all necessary corporate action to authorize the execution and delivery of the Guarantee and the performance of its obligations thereunder and has duly executed and delivered the Guarantee; (4) the enforceability of the Credit Agreement and the Guarantee and the rights and remedies set out therein or any judgement arising out of or in connection therewith may be limited by any applicable bankruptcy, insolvency, winding-up, reorganization, arrangement, moratorium or other laws affecting creditors' rights generally; (5) the enforceability of the Credit Agreement and the Guarantee and the rights and remedies set out therein may be limited by general principles of equity and the obligation to act in a reasonable manner, and no opinion is given as to any specific remedy that may be granted, imposed or rendered (including equitable remedies such as those of specific performance and injunction; (6) a court may not treat as conclusive those certificates and determinations which the Credit Agreement states are to be so treated; (7) the ability to recover or claim for certain costs or expenses may be subject to judicial discretion; (8) no opinion is given as to the enforceability of Section 15.12 of the Credit Agreement; (9) the effectiveness of provisions which purport to relieve a person from a liability or duty otherwise owed, may be limited by law, and provisions requiring indemnification or reimbursement may not be enforced by a court, to the extent that they relate to the failure of such person to have performed such duty or liability; and (10) no opinion is expressed as to the enforceability of any provisions in the Credit Agreement which suggest that modifications, amendments or waivers of or with respect to the Credit Agreement that are not in writing will not be effective. * * * * * This opinion is rendered solely for the benefit of Canadian Imperial Bank of Commerce as Agent for the Lenders under the Credit Agreement, and for the benefit of the Lenders and their permitted successors and assigns, in connection with the Credit Agreement and the Guarantee and may not be relied upon by any other person or used for the benefit of any other purpose without our prior written consent. Yours very truly, SCHEDULE K LEGAL OPINION IN RESPECT OF THE GUARANTEE [Date] Canadian Imperial Bank of Commerce, As Agent for the Lenders under the Credit Agreement referred to below Commerce Court West, 7th Floor Toronto, Ontario M5L 1A2 Ladies and Gentlemen: Re: Cdn. $110,000,000 Credit Agreement Among Robin Hood Multifoods Inc., Canadian Imperial Bank of Commerce, as Agent, and the parties named as Lenders thereto I am Vice President, General Counsel and Secretary of International Multifoods Corporation, a Delaware corporation, United States of America (the "Guarantor") and have acted for the Guarantor in connection with the Guarantor's execution of that certain Guarantee dated as of May 30, 1996 (the "Guarantee") in favour of Canadian Imperial Bank of Commerce (the "Bank") as Agent for the Lenders under the Credit Agreement dated as of May 30, 1996 among Robin Hood Multifoods Inc. ("Robin Hood"), Canadian Imperial Bank of Commerce as Agent for the Lenders and the Lenders named as Lenders on the execution pages thereof or which may execute a Lender's Acknowledgement (the "Credit Agreement") under which the Guarantor has guaranteed the payment obligations of Robin Hood, a corporation continued under the laws of Ontario, as and to the extent provided in the Guarantee. I have examined the Guarantee, such documents and records of the Guarantor and such other matters of fact and law that I deem necessary or appropriate to render this opinion. In such examination, I have assumed the authenticity of all documents submitted to me as originals, the genuineness of all signatures and the conformity to the originals of all documents submitted to me as copies. In rendering this opinion, I do not express any opinion concerning any matter respecting or affected by any laws other than the laws now in effect of the State of Minnesota, the federal laws of the United States of America and the provisions now in effect of the Delaware General Corporation Law. Based upon the foregoing and subject to the qualifications set out at the end of this opinion, it is my opinion that: (1) The Guarantor is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has the corporate power to execute and deliver the Guarantee and perform its obligations thereunder. (2) The execution and delivery of the Guarantee by the Guarantor and the performance by the Guarantor of its obligations thereunder have been duly authorized by all necessary action and proceedings on the part of the Guarantor. (3) The Guarantee has been duly executed and delivered by the Guarantor. (4) Neither the execution of the Guarantee by the Guarantor nor the performance of the Guarantee contravenes any provision of the Guarantor's Restated Certificate of Incorporation, as amended, or Bylaws or any contractual agreement known to me which is binding on or applicable to the performance of the Guarantor's obligations under the Guarantee. (5) In the event that the Guarantee were sought to be enforced against the Guarantor in the State of Minnesota, the courts of competent jurisdiction in Minnesota, subject to public policy, would give effect to the choice of Ontario as the law governing the Guarantee. I am not aware of any reason as to why the recognition and application of Ontario law would be contrary to public policy in Minnesota. Minnesota Statutes, Section 290.371, Subdivision 4, provides that any corporation required to file a Notice of Business Activities Report does not have a cause of action upon which it may bring suit under Minnesota law unless the corporation has filed a Notice of Business Activities Report and provides that the use of the courts of the State of Minnesota for all contracts executed and all causes of action that arose before the end of any period for which a corporation failed to file a required report may be precluded or delayed. Insofar as my opinion may relate to the valid, binding and enforceable character of any agreement under Minnesota law or in a Minnesota court, I have assumed that any party seeking to enforce such agreement has at all times been, and will continue at all times to be, exempt from the requirement of filing a Notice of Business Activities Report or, if not exempt, has duly filed, and will continue to duly file, all Notice of Business Activities Reports. This opinion is rendered solely for the benefit of the Bank as Agent for the Lenders under the Credit Agreement and for the benefit of the Lenders and their permitted successors and assignees in connection with the Guarantee and may not be relied upon by any other person or used for any other purpose without my prior written consent. Yours very truly, Vice President, General Counsel and Secretary EX-10.1 3 EXHIBIT 10.1 SEPARATION AGREEMENT This Separation Agreement ("Agreement") is made and entered into on June 21, 1996 by and between Anthony Luiso ("Luiso"), a Minnesota resident, and International Multifoods Corporation ("the Company"), a Delaware corporation. BACKGROUND A. Luiso has been employed by the Company for approximately nine years, during which time he was a director and Chairman of the Board, President and Chief Executive Officer of the Company. B. Luiso has been employed by the Company pursuant to the terms of a Revised and Restated Employment Agreement dated as of September 17, 1993 ("Employment Agreement"), and during his employment he has been eligible to participate in other plans and programs of the Company, including, but not limited to, the Management Incentive Plan, the Compensation Deferral Plan, the Deferred Income Capital Accumulation Plan for Executives of International Multifoods Corporation, Amended and Restated as of September 17, 1993, the 1986 Stock Option Incentive Plan, the Amended and Restated 1989 Stock-Based Incentive Plan, the Multifoods Pension Equity Plan (formerly known as the Employees' Retirement Plan), the Management Benefit Plan, and a Supplement Retirement Benefit described in the Employment Agreement. C. In May 1996 the Board of Directors of the Company and Luiso agreed that it was in their mutual interests that Luiso resign as Chairman of the Board, President and Chief Executive Officer as of May 17, 1996, and that he resign as an employee as of June 17, 1996. In spite of his agreement to resign as a director, officer, and employee, Luiso believes that certain matters relating to his separation from the Company could give rise to legal claims by him against the Company, including claims for breach of his Employment Agreement. If Luiso brought and were able to prove the legal claims referred to in the preceding paragraph, then he would be entitled to receive damages from the Company. D. The Company expressly denies that it may be liable to Luiso on any basis or that it has engaged in any improper or unlawful conduct or wrongdoing against him. E. Luiso and the Company desire to resolve all present issues in dispute between them rather than to engage in protracted and expensive litigation. F. Luiso and the Company have agreed to a full settlement of all present issues in dispute between them. G. Under the circumstances, it is one of the purposes of this Agreement to provide for the exchange of consideration between the parties, to provide for the exchange of releases of claims and potential claims between the parties, and to consolidate within one document the parties' obligations to each other. NOW, THEREFORE, in consideration of the mutual promises and provisions contained in this Agreement and the Releases referred to below, the parties agree as follows: AGREEMENTS 1. Release of Claims by Luiso. At the same time Luiso executes this Agreement, he also will execute a Release, in the form attached to this Agreement as Exhibit A ("Luiso Release"), in favor of the Company, its insurers, affiliates, divisions, committees, directors, officers, employees, agents, successors, and assigns. This Agreement will not be interpreted or construed to limit the Luiso Release in any manner. Further, the existence of any dispute respecting the interpretation of this Agreement or the alleged breach of this Agreement will not nullify or otherwise affect the validity or enforceability of the Luiso Release. 2. Release of Claims by the Company. At the same time the Company executes this Agreement, the Company also will execute a Release, in the form attached to this Agreement as Exhibit B ("Multifoods Release"), in favor of Luiso and his successors and assigns. This Agreement will not be interpreted or construed to limit the Multifoods Release in any manner. Further, the existence of any dispute respecting the interpretation of this Agreement or the alleged breach of this Agreement will not nullify or otherwise affect the validity or enforceability of the Multifoods Release. 3. Resignation. By executing this Agreement, Luiso confirms his resignation as an employee of the Company effective as of June 17, 1996. 4. Payments. The Company will make the payments set forth in subparagraphs 4.a. through 4.j. below and the payment of the Supplemental Retirement Benefit under the Employment Agreement referred to in paragraph 9. below to Luiso or for his benefit in lieu of any further payments that he would otherwise be entitled to receive under the Employment Agreement, the Management Incentive Plan, the Deferred Income Capital Accumulation Plan for Executives of International Multifoods Corporation, Amended and Restated as of September 17, 1993 ("DICAP Plan"), and the Compensation Deferral Plan. The Company will make the payments set forth in subparagraphs 4.c., 4.d., and 4.f. through 4.j. below and the payment of the Supplemental Retirement Benefit under the Employment Agreement referred to in paragraph 9 below only if: (i) Luiso has not rescinded this Agreement or the Luiso Release within the applicable rescission period; (ii) the Company has received written confirmation from Luiso, in the form attached to this Agreement as Exhibit C, dated not earlier than the day after the expiration of the applicable rescission period, that Luiso has not rescinded and will not rescind this Agreement or the Luiso Release; and (iii) Luiso has not breached his obligations pursuant to this Agreement or the Luiso Release. Payment of any amount set forth below will not modify or terminate the parties' obligations to each other as established by this Agreement. The payments set forth below will be sent by first-class mail to Luiso's last known residence address, unless he advises the Company in writing that he wants the payments sent to a different address. a. Base Salary. The Company will continue to pay Luiso his current base salary, less all applicable withholding, through June 17, 1996. b. Vacation Pay. The Company will pay Luiso $49,288.39 for his accrued and earned vacation not yet taken as of May 17, 1996, less all applicable withholding, in a lump sum on the later of June 17, 1996 or the second business day following the expiration of the applicable rescission period ("Payment Date"). c. Severance Pay. The Company will pay Luiso severance pay equal to his current base salary of $45,833.33 per month, less all applicable withholding, in semi-monthly installments during the period between June 18, 1996 and June 18, 1997; provided, however, that no installment will be paid to Luiso before the Payment Date. Any installment otherwise due prior to the Payment Date will not be forfeited but will be paid to Luiso on the Payment Date. d. Bonus. The Company will pay Luiso or his estate $550,000.00, less all applicable withholding, in a lump sum on the Payment Date. e. Deferred Compensation. Luiso is a participant in the Company's Compensation Deferral Plan and the DICAP Plan. The Company will continue to pay Luiso under the Compensation Deferral Plan $1,101.68 per month, less all applicable withholding, with the last monthly payment to be made in December 1999. In addition, the Company will pay Luiso his DICAP Plan benefits, less all applicable withholding, at the times and in the amounts described below: i. With respect to his 1989 deferral: an annual amount that is initially estimated to be $34,449.00 per year and that will be adjusted on July 1 of each year to reflect changes in Luiso's account balance, which will be paid in nearly equal monthly installments during each 12-month period commencing on the later of July 1, 1996 or the Payment Date and ending in June 2001. Any installment otherwise due prior to the Payment Date will not be forfeited but will be paid to Luiso on the Payment Date. ii. With respect to his 1987 deferral: an amount based on Luiso's account balance determined as of July 1, 2001, which will be paid in nearly equal monthly installments commencing on July 1, 2001 and ending in June 2006. After the payment of DICAP benefits commence, interest will be credited to each of Luiso's accounts at a rate to be determined by the Company's Vice President - Finance (or his successor), which rate will be determined as specified in the DICAP Plan as if Luiso were a current employee of the Company but will not exceed 8% per year. f. Medical Insurance Reimbursement. The Company will apply $2,500.00 to offset the premiums that Luiso otherwise would be required to pay for the continuation of his group medical, dental, and vision insurance coverages under the terms of subparagraph 8.a. below; provided, however, that if Luiso does not elect such coverages, or discontinues such coverages before the full $2,500.00 is so applied, then the Company will pay the balance of the $2,500.00, less all applicable withholding, to Luiso promptly after the later of the Payment Date or the date of discontinuance. g. Special Executive Benefits. The Company will pay (i) the cost of Luiso's annual physical examination at the Mayo Clinic in 1997, (ii) Luiso's 1996 and 1997 income tax preparation fees and financial planning fees, subject to a total maximum limitation of $25,000.00, and (iii) Luiso's Interlachen Club basic membership dues through June 15, 1997. The Company will pay those amounts, at Luiso's election, either directly to the party that provides invoices for those amounts or to Luiso upon his submission of proper requests for reimbursement of those amounts. In addition, the Company will continue to pay Luiso his monthly car allowance at the current rate through June 17, 1997. Luiso acknowledges that amounts paid to him or for his benefit pursuant to this subparagraph will be subject to income tax withholding, unless otherwise provided by law. h. Outplacement. The Company will pay directly to the outplacement firm of Market Share Inc. an amount not to exceed $50,000.00 for outplacement services provided to date and to be provided in the future to Luiso. Such amount will be paid to Market Share Inc. on the later of June 30, 1996 or the Payment Date. i. Business Office. The Company, at its expense, will provide Luiso with an appropriate business office in the Twin Cities metropolitan area between June 3, 1996 and June 18, 1997. The Company will pay all the ordinary and necessary expenses of operating Luiso's business office, including rent, insurance, depreciation, furniture, equipment, supplies, telephones and telecommunications, and part-time secretarial and clerical personnel. If, before June 19, 1997, Luiso changes his legal residence to a location outside the Twin Cities metropolitan area, then the Company will have no further obligation to continue to pay the expenses of Luiso's office. j. Attorneys' Fees. The Company will pay to the law firm of Mackall, Crounse & Moore PLC ("Mackall") an amount not to exceed $25,000.00 for attorneys' fees and costs that Luiso incurs in connection with his separation from employment with the Company. Mackall will submit its invoice for fees and costs directly to the Company's Vice President, General Counsel and Secretary, and the Company will make payment of the amount of the invoice, subject to the maximum limitation specified above, within 30 days after receipt of the invoice. 5. Expense Reimbursement. The Company will reimburse Luiso for his regular and necessary business expenses incurred through May 17, 1996 according to the Company's regular policies and practices, and will reimburse Luiso for five non-refundable airline tickets that he has purchased, upon his submission of proper requests for reimbursement therefor. Luiso will submit all his requests for reimbursement to the Company no later than June 30, 1996, and the Company will make reimbursement to Luiso on or before July 31, 1996. 6. Stock Options and Restricted Stock. Luiso is a participant in the 1986 Stock Option Incentive Plan and the Amended and Restated 1989 Stock-Based Incentive Plan (together "Stock Plans"). a. Stock Options. Under the terms of the Stock Plans and Luiso's agreements relating to options to purchase shares of the Company's common stock, Luiso is fully vested in options to purchase 374,746 shares of Company common stock and will forfeit options to purchase 25,000 shares of Company common stock upon his resignation as an employee as of June 17, 1996. Pursuant to the special action of the Compensation Committee of the Board of Directors of the Company ("Compensation Committee"), Luiso may exercise those fully- vested stock options for specific periods of time ending on the termination dates of the respective options listed in Schedule 1 attached to this Agreement; provided, however, that if Luiso elects to rescind this Agreement and the Luiso Release prior to the termination of the applicable rescission period, then the termination dates for the first eight options listed in Schedule 1, which total 163,750 shares, will become September 13, 1996. b. Restricted Stock. Under the terms of the Stock Plans and Luiso's agreements relating to the shares of restricted Company common stock held by Luiso and pursuant to the special action of the Compensation Committee, Luiso will be fully vested in 52,035 shares of restricted Company common stock as described below. In addition, Luiso will forfeit 25,000 shares of restricted Company common stock upon his resignation as an employee as of June 17, 1996 pursuant to the terms of the applicable Stock Plan and agreement. The vesting requirements on the 52,035 shares will be removed on the date that is 15 calendar days after the day that Luiso signs this Agreement and the Luiso Release; provided, however, that if Luiso rescinds or revokes this Agreement and the Luiso Release within such period, then the 52,035 shares of restricted stock and all of the rights relating thereto, including the payment of accrued dividends, will be forfeited immediately. The Company will pay Luiso the accrued dividends on all the shares of restricted stock as to which the restrictions are removed as provided in this subparagraph, less all applicable withholding, on the Payment Date. In addition, prior to the delivery by the Company to Luiso of the 52,035 shares of stock that have vested, Luiso will pay the Company an amount equal to the amount of income taxes and other amounts that the Company is required by law to withhold with respect to the vesting of the stock being delivered to Luiso. 7. Employee Benefits. Luiso will continue to participate in all regular employee benefit plans and programs applicable to senior executives of the Company, except the Management Incentive Plan, through June 17, 1996; provided, however, that Luiso's medical, dental, vision, and employee assistance plan benefits will continue through June 30, 1996. 8. Insurance Continuation. a. Medical Insurance. Luiso will have the right to continue his group medical, dental, and vision insurance coverages after June 17, 1996 under COBRA under such terms as are made available to similarly-situated former employees of the Company, provided that Luiso pays 102% of the cost of the lowest-cost group medical option provided by the Company and 102% of the cost of the dental and vision coverages as provided by law (except to the extent paid by the Company pursuant to subparagraph 4.f. above), for 18 months, or until he obtains other qualifying group coverage or his COBRA rights terminate for some other reason, if earlier. In addition, Luiso may elect to convert his current group medical insurance coverage or to purchase individual health insurance coverage in the future. Schedule 2 attached to this Agreement sets forth certain conversion and purchase options available to Luiso at the present time. Any remaining amount specified in subparagraph 4.f. above after discontinuance of COBRA coverage will be applied to pay the premiums that Luiso would otherwise be required to pay for the conversion of his group medical insurance coverage. b. Life insurance. Luiso will have the right to continue his group life insurance coverage after June 17, 1996 under Minnesota law under such terms as are made available to similarly- situated former employees of the Company, provided that Luiso pays 102% of the cost of that insurance as provided by law, for 18 months, or until he obtains other qualifying group coverage or his statutory rights terminate for some other reason, if earlier. 9. Retirement Plans. Luiso is a participant in the Multifoods Pension Equity Plan (formerly known as the Employees' Retirement Plan) and the Management Benefit Plan, and he also is entitled to receive a Supplemental Retirement Benefit under the Employment Agreement (collectively "Retirement Plans"). Luiso will be entitled to begin drawing his retirement benefits at the times and under the terms and conditions set forth in the Retirement Plans. Schedule 3 attached to this Agreement sets forth the amount of the retirement benefits that Luiso will be entitled to receive. 10. No-Competition, Non-Solicitation, and Non-Disclosure Agreements. a. Agreement Not to Compete. Luiso will not, on or before June 17, 1997, without the prior written consent of the Company, become an owner directly or indirectly of more than one percent of the stock of, take employment with, become a director, officer, or partner of, or become a consultant or advisor to, any competitor of the Company in any line of business (except Divested Businesses) in which the Company is engaged as described in the Annual Report on Form 10-K for the fiscal year of the Company ended on February 29, 1996 filed with the Securities and Exchange Commission. b. Agreement Not to Solicit Employees. Luiso will not, on or before June 17, 1998, without the prior written consent of the Company, solicit any person who is then employed by or otherwise engaged to perform services for the Company to terminate his or her relationship with the Company or interfere with the Company's relationship with any such person. Luiso will not, on or before June 17, 1998, without the prior written consent of the Company, provide substantive or qualitative information regarding any person who is then employed by or otherwise engaged to perform services for the Company to any competitor of the Company in any line of business in which the Company is engaged as of the date of this Agreement. c. Agreement Not to Disclose Confidential Commercial Information. Luiso will not, without the prior written consent of the Company, disclose to any person, other than an officer or director of the Company, any trade secrets of the Company or any of the Company's confidential strategic plans or confidential product development, marketing, or sales plans; provided, however, that notwithstanding the provisions of this subparagraph, Luiso will not be prohibited from disclosing any information that, at the time of Luiso's disclosure, if any, is available in the public domain; and provided further, however, that notwithstanding the provisions of this subparagraph, Luiso may disclose any information, including material confidential commercial information, if such disclosure is required by law. d. Scope of Restrictions. The parties intend that, if any court of competent jurisdiction holds that any restriction in subparagraphs 10.a. through 10.c. exceeds the limit of restrictions that are enforceable under applicable law, then the restriction will nevertheless apply to the maximum extent that is enforceable under applicable law. 11. Luiso's Continued Availability. Until June 17, 1997, Luiso will make himself available, when he is not traveling for personal or other business reasons, to confer with the Company's senior executive officers and directors during regular business hours for reasonable amounts of time regarding the Company's significant business matters. The Company will reimburse Luiso for any expenses that he actually incurs when conferring with the Company's senior executive officers or directors after June 17, 1996, but will not make any other payments to Luiso for so conferring. 12. Company Cooperation. The Company will ensure that all proper steps are followed to comply with Luiso's written instructions with respect to his deferred compensation, stock options, restricted stock, retirement benefits, and medical, dental, vision, and life insurance benefits, and will provide him with information that he reasonably requires in accordance with the applicable employee benefit plans sponsored by the Company in which he is a participant. 13. Indemnification. Notwithstanding Luiso's separation from the Company, with respect to events that occurred during his tenure as an employee, officer, or director of the Company, Luiso will be entitled, as a former employee, officer, or director of the Company, to the same rights that are afforded to senior executive officers or directors of the Company now or in the future, to indemnification and advancement of expenses provided in the charter documents of the Company and under applicable law or otherwise, and to coverage and a legal defense under any applicable general liability and/or directors' and officers' liability insurance policies maintained by the Company. 14. Luiso Representation. Luiso represents that, during the entire period that he was an employee, officer, or director of the Company, he acted in good faith, had no reasonable cause to believe that his conduct was unlawful, and reasonably believed that his conduct was in the best interests of the Company. The parties intend that the terms used in this paragraph will have the same meaning as the same terms used in Section 145 of the Delaware General Corporation Law. 15. Company Representation. The Company represents that on the date of this Agreement no transaction or other event has occurred that would constitute a "Change of Control" as that term is defined in the Employment Agreement. 16. Mutual Confidentiality. a. General Standard. It is the intent of the parties that both (i) the substance of Luiso's potential claims against the Company and (ii) the terms of his separation from the Company, including the provisions of this Agreement and the Luiso Release and the Multifoods Release (collectively "Confidential Information"), will be forever treated as confidential. Accordingly, Luiso and the Company will not disclose Confidential Information to anyone at any time, except as provided in subparagraph 16.b. below. b. Exceptions. i. It will not be a violation of this Agreement for the parties to disclose Confidential Information to the Company's directors and stockholders or in public filings in the form of proxy statements or other reports required by securities laws or to governmental agencies as required by law, including, but not limited to, the Securities and Exchange Commission and any federal or state tax authority. ii. It will not be a violation of this Agreement for Luiso to disclose Confidential Information to his immediate family, his attorneys, or his accountants or tax advisors. iii. It will not be a violation of this Agreement for Luiso to disclose to employers and/or prospective employers that he is constrained from certain activities as a result of the terms of subparagraphs 10.a., 10.b., and 10.c. above. Nor will it be a violation of this Agreement for Luiso to inform Company employees who ask him about employment opportunities outside the Company that the terms of paragraph 10.b. of this Agreement preclude him from engaging in certain activities that could interfere with their employment with the Company. iv. It will not be a violation of this Agreement for either party to disclose Confidential Information to the Company's auditors, its attorneys, or its directors, officers, employees, and agents who have a legitimate reason to obtain the Confidential Information in the course of performing their duties or responsibilities for the Company. 17. Non-Disparagement. Luiso will not disparage, defame, or besmirch the reputation, character, image, products, or services of the Company, or the reputation or character of its directors, officers, employees, or agents. The Company will not disparage, defame, or besmirch the reputation, character, or image of Luiso. 18. Claims Involving the Company. Luiso will not recommend or suggest to any potential claimants or plaintiffs or their attorneys or agents that they initiate claims or lawsuits against the Company, any of its affiliates or divisions, or any of its or their directors, officers, employees, or agents, nor will Luiso voluntarily aid, assist, or cooperate with any claimants or plaintiffs or their attorneys or agents in any claims or lawsuits now pending or commenced in the future against the Company, any of its affiliates or divisions, or any of its or their directors, officers, employees, or agents; provided, however, that this paragraph will not be interpreted or construed to prevent Luiso from giving testimony in response to questions asked pursuant to a legally enforceable subpoena, deposition notice, or other legal process, during any legal proceedings involving the Company, any of its affiliates or divisions, or any of its or their directors, officers, employees, or agents. 19. Records, Documents, and Property. Luiso represents that he has returned to the Company all records, correspondence, documents, financial data, plans, computer disks, computer tapes, and other tangible property in his possession belonging to the Company. 20. Time to Consider Agreement. Luiso understands that he may take at least 21 calendar days to decide whether to sign this Agreement and the Luiso Release, which 21-day period will commence on the date on which Luiso first receives copies of this Agreement and the Luiso Release for review. Luiso represents that if he signs this Agreement and the Luiso Release before the expiration of the 21-day period, it is because he has decided that he does not need any additional time to decide whether to sign this Agreement and the Luiso Release. 21. Right to Rescind or Revoke. Luiso understands that he has the right to rescind or revoke this Agreement and the Luiso Release for any reason within 15 calendar days after he signs them (which 15-day period expressly includes any other shorter time periods provided by law). Luiso understands that this Agreement and the Luiso Release will not become effective or enforceable unless and until he has not rescinded this Agreement and the Luiso Release and any applicable rescission period has expired. Luiso understands that if he wishes to rescind, the rescission must be in writing and hand- delivered or mailed to the Company. If hand-delivered, the rescission must be (a) addressed to Mr. Frank W. Bonvino, Vice President, General Counsel and Secretary, International Multifoods Corporation, 33 South Sixth Street, Minneapolis, Minnesota 55402; and (b) delivered to Mr. Bonvino within the 15-day period. If mailed, the rescission must be: (a) postmarked within the 15-day period; (b) addressed to Mr. Frank W. Bonvino, Vice President, General Counsel and Secretary, International Multifoods Corporation, 33 South Sixth Street, P. O. Box 2942, Minneapolis, Minnesota 55402; and (c) sent by certified mail, return receipt requested. 22. Full Compensation. Luiso and his attorneys, Mackall, Crounse & Moore, PLC, understand that the payments made and other consideration provided by the Company under this Agreement will fully compensate Luiso for and extinguish any and all of the claims Luiso is releasing in the Luiso Release, including, but not limited to, his claims for attorneys' fees and costs and any and all claims for any type of legal or equitable relief. 23. No Admission of Wrongdoing. Luiso understands that this Agreement does not constitute an admission that the Company has violated any local ordinance, state or federal statute, or principle of common law, or that the Company has engaged in any improper or unlawful conduct or wrongdoing against Luiso. Luiso will not characterize this Agreement or the payment of any money or other consideration in accordance with this Agreement as an admission that the Company has engaged in any improper or unlawful conduct or wrongdoing against him. 24. Authority. Luiso represents and warrants that he has the authority to enter into this Agreement and the Luiso Release, and that no causes of action, claims, or demands released pursuant to this Agreement and the Luiso Release have been assigned to any person or entity not a party to this Agreement and the Luiso Release. 25. Representation. Luiso acknowledges that he has been represented by his own attorneys in this matter, that he has had a full opportunity to consider this Agreement and the Luiso Release, that he has had a full opportunity to ask any questions that he may have concerning this Agreement, the Luiso Release, or the settlement of his potential claims against the Company, and that he has not relied upon any statements or representations made by the Company or its attorneys, written or oral, other than the statements and representations that are explicitly set forth in this Agreement, the Luiso Release, the Multifoods Release, the DICAP Plan (to the extent not modified by this Agreement), the Stock Plans and Luiso's agreements relating thereto (to the extent not modified by the special action of the Compensation Committee), the Retirement Plans, and any other employee benefit plans sponsored by the Company in which Luiso is a participant. 26. Successors and Assigns. This Agreement will be binding upon and inure to the benefit of the parties and their respective heirs, representatives, successors, and assigns, including, but not limited to, a purchaser of substantially all the business or assets of the Company, but will not be assignable by either party without the prior written consent of the other party. 27. Invalidity. In the event that any provision of this Agreement, the Luiso Release, or the Multifoods Release is determined by a court of competent jurisdiction to be invalid, illegal, or unenforceable in any respect, such a determination will not affect the validity, legality, or enforceability of the remaining provisions of this Agreement, the Luiso Release, or the Multifoods Release, and the remaining provisions of this Agreement, the Luiso Release, and the Multifoods Release will continue to be valid and enforceable, and any court of competent jurisdiction may modify the objectionable provision so as to make it valid and enforceable. 28. Entire Agreement. Before signing this Agreement, the Luiso Release, and the Multifoods Release, the parties and their representatives engaged in discussions and negotiations and generated certain documents, in which the parties and their representatives considered the matters that are the subject of this Agreement, the Luiso Release, and the Multifoods Release. In such discussions, negotiations, and documents, the parties and their representatives may have expressed their judgments and beliefs concerning the intentions, capabilities, and practices of the parties, and may have forecast future events. The parties recognize, however, that all business transactions, including the transactions upon which the parties' judgments, beliefs, and forecasts are based, contain an element of risk, and that it is normal business practice to limit the legal obligations of contracting parties only to those promises and representations that are essential to the transaction so as to provide certainty as to their respective future rights and remedies. Accordingly, this Agreement, the Luiso Release, the Multifoods Release, the DICAP Plan (to the extent not modified by this Agreement), the Stock Plans and Luiso's agreements relating thereto (to the extent not modified by the special action of the Compensation Committee), the Retirement Plans, and any other employee benefit plans sponsored by the Company in which Luiso is a participant are intended to define the full extent of the legally enforceable undertakings of the parties, and no promises or representations, written or oral, that are not set forth explicitly in this Agreement, the Luiso Release, the Multifoods Release, the DICAP Plan (to the extent not modified by this Agreement), the Stock Plans and Luiso's agreements relating thereto (to the extent not modified by the special action of the Compensation Committee), the Retirement Plans, or any other employee benefit plans sponsored by the Company in which Luiso is a participant are intended by either party to be legally binding, and all other agreements and understandings between the parties are hereby superseded. 29. Headings. The descriptive headings of the paragraphs and subparagraphs of this Agreement are inserted for convenience only, and do not constitute a part of this Agreement. 30. Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument. 31. Governing Law. This Agreement, the Luiso Release, and the Multifoods Release will be interpreted and construed in accordance with, and any dispute or controversy arising from any breach or asserted breach of this Agreement, the Luiso Release, or the Multifoods Release will be governed by, the laws of Minnesota. IN WITNESS WHEREOF, the parties have executed this Agreement on the date stated above. /s/ ANTHONY LUISO ------------------------------------ ANTHONY LUISO INTERNATIONAL MULTIFOODS CORPORATION /s/ ROBERT F. MADDOCKS ------------------------------------ Robert F. Maddocks Its Executive Vice President SCHEDULE 1 Termination Date Number Grant (Deadline to of Exercise Date Date exercise) Shares Price Exercisable - ------- ------------- ------- -------- ----------- 11/16/90 8/19/99 22,500 22.75 5/16/91 12/20/91 8/19/99 15,000 25.6875 6/20/92 12/11/92 8/19/99 25,000 28.0625 6/11/93 3/16/87 1/11/97 15,000 19.75 9/16/87 3/16/88 1/11/97 15,000 21.0417 9/16/88 5/5/88 1/11/97 15,000 20.0833 11/05/88 11/17/89 1/11/97 26,250 19.2083 5/17/90 3/17/95 1/11/97 30,000 18.6875 3/17/96 8/18/89 8/19/99 190,483 21.75 4/14/95 3/31/94 6/14/01 20,513 16.875 4/12/95 SCHEDULE 2 1. HealthPartners conversion coverage (a) $241.28 per month premium at present (b) conversion at any time during COBRA continuation coverage period while covered under HealthPartners group coverage (c) coverage substantially similar to present group coverage (d) no requirement to establish insurability (e) no pre-existing condition limitations (f) requirement to reside in service area; out-of-area coverage available only for emergencies 2. HealthPartners individual contract purchase (a) $155.00 per month premium at present (b) purchase option available only as long as HealthPartners offers contract to public (c) coverage substantially similar to present group coverage (d) requirement to establish insurability through physical exam (e) no pre-existing condition limitations (f) requirement to reside in serve area; out-of-area coverage available only for emergencies 3. Blue Cross/Blue Shield individual contract purchase (a) $165.78 per month premium at present (b) purchase option available only as long as BC/BS offers contract to public (c) $150.00 deductible followed by 80/20 co-pay on next $5,000.00 of claims; 100% coverage thereafter on eligible expenses (d) requirement to establish insurability through physical exam (e) 12-month exclusion for pre-existing conditions (f) no requirement to reside in specific service area SCHEDULE 3 Luiso may elect to begin receiving pension benefits as early as February 1, 1999 (the first of the month next following his 55th birthday), as late as February 1, 2009 (the first of the month next following his 65th birthday), or on the first of any month between those two dates. Shown below are the annual pension benefits payable under the life-only payment option starting February 1, 1999: Pension Equity Plan $ 13,212 Management Benefit Plan Bonus Related 132,453 Qualified Plan Restoration 35,093 Supplemental Retirement Benefit 67,294 ----------- $ 248,052 Luiso may elect immediate commencement of benefits under the Pension Equity Plan. The lump sum benefit payable effective June 16, 1996 would be $99,200. The life-only annuity starting July 1, 1996 would be $7,511 per year. Such an election would not affect the benefit amount or starting date of payments from the other plans. EXHIBIT A STRICTLY CONFIDENTIAL LUISO RELEASE Definitions. All words used in this Release have their plain meanings in ordinary English. Specific terms used in this Release have the following meanings: A. "I", "me", and "my" mean both me and anyone who has or obtains any legal rights or claims through me. B. "Corporation" means International Multifoods Corporation, a Delaware corporation, any of its present or past affiliates, divisions, committees, or joint venture partners, and any of its predecessors, successors, or assigns. C. "Employer" means the Corporation, any company providing insurance to the Corporation in the present or past, any present or past stock option, deferred compensation, retirement, or other employee benefit plans sponsored by the Corporation, any present or past directors, officers, employees, or agents of the Corporation, and any person who acted on behalf of or on instructions from the Corporation. D. "Agreement" means the Separation Agreement between the Corporation and me that I am executing on the same date that I execute this Release, together with all the documents attached to the Agreement. E. "My Claims" mean all of my existing rights to any relief of any kind from the Employer, whether or not I now know about those rights, including, but not limited to: 1. all claims that arise out of or that relate to my employment or the termination of my employment with the Employer; 2. all claims that arise out of or that relate to the statements or actions of the Employer; 3. all claims for any alleged unlawful discrimination or any other alleged unlawful practices that arise out of or that relate to the statements or actions of the Employer, including, but not limited to, claims under the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Civil Rights Act of 1991, the Minnesota Human Rights Act, the Minnesota Workers' Compensation Act, and any federal or state wage and hour laws; and claims that the Employer engaged in conduct prohibited on any other basis under any federal, state, or local statute, ordinance, or regulation; 4. all claims arising out of the execution, performance, or termination of any employment agreement or any other agreement or contract of any kind between the Employer and me; all claims for alleged unpaid compensation, expenses, stock options, deferred compensation, retirement, and employee benefits; wrongful discharge; harassment; retaliation or reprisal; constructive discharge; assault or battery; defamation; intentional or negligent infliction of emotional distress; invasion of privacy; false imprisonment; fraud; intentional or negligent misrepresentation; interference with contractual or business relationships; violation of public policy; my conduct, if any, as a "whistleblower"; negligence; false imprisonment; breach of contract; breach of fiduciary duty; breach of the covenant of good faith and fair dealing; promissory or equitable estoppel; any other wrongful employment practices; and all claims under any other principle of common law; and 5. all claims for compensatory damages, liquidated damages, punitive damages, attorneys' fees, costs, and disbursements; but excluding all claims that I may have under the Agreement or, except as modified by the Agreement, under any stock option, deferred compensation, retirement, or other employee benefit plans sponsored by the Corporation in which I am a participant, or my rights to indemnification and advancement of expenses as provided in the charter documents of the Corporation and under applicable law, and to coverage and a legal defense under any applicable general liability and/or directors' and officers' liability insurance policies maintained by the Corporation. Agreement to Release My Claims. I will receive certain sums of money and other consideration from the Employer as set forth in the Agreement if I sign and do not rescind this Release as provided below. In exchange for that money and other consideration, I agree to give up all My Claims. I will not bring any lawsuits or make any other demands against the Employer based on My Claims. The money and other consideration that I will receive in exchange for this Release are a full and fair payment for the release of My Claims. The Employer does not owe me anything for the release of My Claims in addition to the money and other consideration that I am receiving in exchange for this Release. My Right to Decide Whether to Sign this Release. I understand that I may take at least 21 calendar days to decide whether to sign this Release, and that this 21-day period will begin when I first receive a copy of this Release. If I sign this Release before the expiration of the 21-day period, it is because I have decided that I do not need any additional time to decide whether to sign this Release. My Right to Rescind this Release. I understand that I have the right to rescind (that is, cancel or revoke) this Release for any reason within 15 calendar days after I sign it. I understand that this 15- day period includes any other shorter time periods provided by law. I understand that this Release will not become effective or enforceable unless and until the rescission period has expired and I have not rescinded this Release. I understand that if I wish to rescind, the rescission must be in writing and hand-delivered or mailed to the Employer. If hand-delivered, the rescission must be: (a) addressed to Mr. Frank W. Bonvino, Vice President, General Counsel and Secretary, International Multifoods Corporation, 33 South Sixth Street, Minneapolis, Minnesota 55402; and (b) delivered to Mr. Bonvino within the 15-day period. If mailed, the rescission must be: (a) postmarked within the 15-day period; (b) addressed to Mr. Frank W. Bonvino, Vice President, General Counsel and Secretary, International Multifoods Corporation, 33 South Sixth Street, P. O. Box 2942, Minneapolis, Minnesota 55402; and (c) sent by certified mail, return receipt requested. Confidentiality. I understand that the terms of this Release are confidential, and that I may not disclose those terms to any person except under the circumstances described in the Agreement. Additional Agreements and Understandings. Even though the Employer will pay me for the release of My Claims, the Employer does not admit that it is responsible or legally obligated to me for My Claims. In fact, I understand that the Employer denies that it is responsible or legally obligated for My Claims or that it has engaged in any improper or unlawful conduct or wrongdoing against me. I have read this Release carefully and I understand all its terms. I have been advised to consult with my own attorneys prior to executing this Release. I have discussed this Release with my own attorneys, who have fully explained it to me. In agreeing to sign this Release, I have not relied on any statements or explanations made by the Employer or its attorneys, other than statements made in this Release, the Agreement, the Release executed by the Corporation, and, except as modified by the Agreement, any stock option or restricted stock (including my agreements relating thereto), deferred compensation, retirement, and other employee benefit plans sponsored by the Corporation in which I am a participant. I understand and agree that this Release, the Agreement, the Release executed by the Corporation, and, except as modified by the Agreement, any stock option or restricted stock (including my agreements relating thereto), deferred compensation, retirement, and other employee benefit plans sponsored by the Corporation in which I am a participant contain all the agreements between the Employer and me relating to this settlement. We have no other written or oral agreements relating to this settlement. I am not under any legal disabilities that prevent me from being legally bound by the agreements that I am making in this Release. I am legally able and entitled to receive the money and other consideration that I will receive from the Employer as set forth in the Agreement in settlement of My Claims. Dated: June ____, 1996. _____________________________ ANTHONY LUISO Witnesses: _________________________ _________________________ EXHIBIT B STRICTLY CONFIDENTIAL MULTIFOODS RELEASE Definitions. All words used in this Release have their plain meanings in ordinary English. Specific terms used in this Release have the following meanings: A. "Multifoods" means International Multifoods Corporation ("Corporation"), any company providing insurance to the Corporation in the present or past, any present or past stock option, deferred compensation, retirement, or other employee benefit plans sponsored by the Corporation, any present or past affiliates, divisions, committees, or joint venture partners of the Corporation, any predecessors, successors, or assigns of the Corporation, and any person who acted on behalf of or on instructions from the Corporation. B. "Luiso" means Anthony Luiso and anyone who has or obtains any legal rights or claims through him. C. "Agreement" means the Separation Agreement between Luiso and the Corporation that the Corporation is executing on the same date that the Corporation executes this Release, together with all the documents attached to the Agreement. D. "Multifoods' Claims" means all of Multifoods' existing rights to any relief of any kind from Luiso, whether or not Multifoods now knows about those rights, including, but not limited to: 1. all claims that arise out of or that relate to Luiso's employment or the termination of his employment with Multifoods; 2. all claims that arise out of or that relate to the statements or actions of Luiso; 3. all claims that arise out of the execution, performance, or termination of any employment agreement or any other agreement or contract of any kind between Luiso and Multifoods; 4. all claims that Multifoods could have made in response to any claims that Luiso has or could have asserted against Multifoods; and 5. all claims for compensatory damages, liquidated damages, punitive damages, attorneys' fees, costs, and disbursements; but excluding all claims Multifoods may have under the Agreement. Agreement to Release Multifoods' Claims. Multifoods will receive certain consideration from Luiso as set forth in the Agreement and the Release executed by him, subject to the terms of the Agreement. In exchange for that consideration, Multifoods agrees to give up all Multifoods' Claims. Multifoods will not bring any lawsuits or make any other demands against Luiso based on Multifoods' Claims. The consideration that Multifoods will receive in exchange for this Release is a full and fair payment for the release of Multifoods' Claims. Luiso does not owe Multifoods anything for the release of Multifoods' Claims in addition to the consideration that Multifoods is receiving in exchange for this Release. Additional Agreements and Understandings. Even though Luiso will provide consideration to Multifoods for the release of Multifoods' Claims, Luiso does not admit that he is responsible or legally obligated to Multifoods for Multifoods' Claims. In fact, Multifoods understands that Luiso denies that he is responsible or legally obligated for Multifoods' Claims or that he has engaged in any improper or unlawful conduct or wrongdoing against Multifoods. The Corporation, through its undersigned officer, has read this Release carefully and understands all its terms. The Corporation has consulted with its own attorneys prior to executing this Release, who have fully explained it to the Corporation. In agreeing to sign this Release, the Corporation has not relied on any statements or explanations made by Luiso or his attorneys, other than statements made in this Release, the Agreement, and the Release executed by Luiso. Multifoods understands and agrees that this Release, the Agreement, the Release executed by Luiso, and, except as modified by the Agreement, any stock option or restricted stock (including Luiso's agreements relating thereto), deferred compensation, retirement, or other employee benefit plans sponsored by the Corporation in which Luiso is a participant contain all the agreements between Multifoods and Luiso relating to this settlement. Multifoods and Luiso have no other written or oral agreements relating to this settlement. The undersigned officer of the Corporation has the authority to legally bind Multifoods by the agreements that Multifoods is making in this Release, and represents that Multifoods is not under any legal disabilities that prevent it from being legally bound by the agreements that Multifoods is making in this Release. Dated: June _____, 1996. INTERNATIONAL MULTIFOODS CORPORATION By:__________________________ Robert F. Maddocks Its Executive Vice President EXHIBIT C STRICTLY CONFIDENTIAL __________________, 1996 Mr. Frank W. Bonvino Vice President, General Counsel and Secretary International Multifoods Corporation 33 South Sixth Street, 49th Floor P. O. Box 2942 Minneapolis, MN 55402-0942 Dear Mr. Bonvino: This is to confirm that I have not rescinded and will not take action to rescind the Separation Agreement and Release that I executed in favor of International Multifoods Corporation and others on June __, 1996. Very truly yours, ___________________________ Anthony Luiso EX-11 4 1ST QTR EXHIBIT 11 Exhibit 11 INTERNATIONAL MULTIFOODS CORPORATION AND SUBSIDIARIES Computation of Earnings (Loss) per Common Share (unaudited) (in thousands, except per share amounts) THREE MONTHS ENDED May 31, May 31, 1996 1995 Average shares of common stock outstanding 17,969 17,956 Common stock equivalents 33 75 Total common stock and equivalents assuming full dilution 18,002 18,031 Net earnings (loss) $ (433) $4,564 Less dividends on redeemable preferred stock - (42) Net earnings (loss) applicable to common stock $ (433) $4,522 Earnings (loss) per share of common stock: Primary $ (.02) $ .25 Fully diluted $ (.02) $ .25 Primary earnings (loss) per share has been computed by dividing net earnings (loss), after deduction of preferred stock dividends, by the weighted average number of shares of common stock outstanding during the period. Common stock options and other common stock equivalents have not entered into the primary earnings per share computations since their effect is not significant. Fully diluted earnings (loss) per share has been computed assuming issuance of all shares for stock options deemed to be common stock equivalents, using the treasury stock method. EX-12 5 1ST QTR EXHIBIT 12 Exhibit 12 INTERNATIONAL MULTIFOODS CORPORATION AND SUBSIDIARIES Computation of Ratio of Earnings to Fixed Charges (unaudited) (in thousands) THREE MONTHS ENDED May 31, May 31, 1996 1995 Earnings (loss) before income taxes $(1,082) $ 7,022 Plus: Fixed charges (1) 6,680 7,742 Less: Capitalized interest (9) (44) Earnings available to cover fixed charges $ 5,589 $14,720 Ratio of earnings to fixed charges (2) 0.84 1.90 (1) Fixed charges consisted of the following: THREE MONTHS ENDED May 31, May 31, 1996 1995 Interest expense, gross $4,389 $5,301 Rentals (Interest factor) 2,291 2,441 Total fixed charges $6,680 $7,742 (2) For the three months ended May 31, 1996 earnings were inadequate to cover fixed charges by $1,091. The deficiency was the result of unusual items as described in Note 3 to the consolidated condensed financial statements. Excluding the unusual items, the ratio of earnings to fixed charges would have been 1.38 for the three months ended May 31, 1996. EX-27 6 1ST QTR EXHIBIT 27
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED CONDENSED BALANCE SHEET, STATEMENTS OF OPERATIONS AND CASH FLOWS AND ACCOMPANYING NOTES AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND NOTES. 1,000 3-MOS FEB-28-1997 MAY-31-1996 9,590 0 166,676 9,925 252,275 472,044 343,139 118,743 832,700 285,337 203,094 0 0 2,184 293,572 832,700 626,073 626,073 536,758 536,758 40,431 767 4,380 (1,082) (649) (433) 0 0 0 (433) (0.02) 0.00
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