-----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, Kw5GI0+ihAZOp9Kw1D0JVdMeWx2LgwhrhcRmROwxv5fBVsKgR0vkzl/FVilHbSl5 kTVttSr2+RraSEp5wi2pbw== 0000051410-96-000017.txt : 19960517 0000051410-96-000017.hdr.sgml : 19960517 ACCESSION NUMBER: 0000051410-96-000017 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 12 CONFORMED PERIOD OF REPORT: 19960229 FILED AS OF DATE: 19960515 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-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-06699 FILM NUMBER: 96566130 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-K 1 2/29/96 FORM 10K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) [ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended February 29, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] 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 of (I.R.S. Employer Identification No.) incorporation or organization) 33 South 6th Street, Minneapolis, Minnesota 55402 (Address of principal executive offices) (Zip Code) (612) 340-3300 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Name of each exchange Title of each class on which registered ------------------- --------------------- Common Stock (par value $.10 per share) New York Stock Exchange Preferred Stock Purchase Rights New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None 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 [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] The aggregate market value of Common Stock, par value $.10 per share, held by non-affiliates of the registrant (see Item 12 hereof) as of May 1, 1996 (based on the closing sale price of $18.75 per share as reported in the consolidated transaction reporting system on such date) was $332,711,925. The number of shares outstanding of the registrant's Common Stock, par value $.10 per share, as of May 1, 1996 was 17,994,868. DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant's Annual Report to Stockholders for the fiscal year ended February 29, 1996 are incorporated by reference into Parts I and II. Portions of the registrant's Proxy Statement for the Annual Meeting of Stockholders to be held June 21, 1996 are incorporated by reference into Part III. PART I Item 1. Business. General International Multifoods Corporation, incorporated in Delaware in 1969 as the successor to a business founded in 1892, operates in three businesses: foodservice distribution in the United States, bakery products in the United States and Canada, and bakery, consumer and agricultural products in Venezuela. Unless indicated otherwise or the context suggests otherwise, the term "Company," as used in this Report, means International Multifoods Corporation and its consolidated subsidiaries. In fiscal year 1996, the Company divested its surimi seafood business. The Company's business segments are Foodservice Distribution, Bakery, Venezuela Foods, and Divested Businesses. Financial information for the last three fiscal years for each of the Company's business segments, which is included in Note 19 to the Company's Consolidated Financial Statements on page 37 of the Company's Annual Report to Stockholders for the fiscal year ended February 29, 1996 ("1996 Annual Report to Stockholders"), is incorporated herein by reference. Foodservice Distribution The Company's Foodservice Distribution segment includes the Company's vending distribution business, the limited-menu distribution business, and the food exporting business. No single customer accounts for a significant portion of the segment's sales. Vending Distribution. The Company is the largest U.S. vending distributor, serving approximately 14,000 vending and office coffee service operators and other concessionaires. The Company distributes and sells more than 8,000 food products consisting primarily of candy, snacks, frozen and refrigerated products, pastries, hot beverages and juices. Most of the products are nationally advertised brand products. The Company also sells certain products, such as premium ground and whole-bean coffee, hot cocoa, creamer and sugar, under its own private labels, VENDOR'S SELECT and GRINDSTONE CAFE. Deliveries are made directly to vending and office coffee service operators from 20 distribution centers located nationwide. The frequency of deliveries varies, depending upon customer needs, but generally deliveries are made once a week. The Company leases a fleet of approximately 175 tractor-trailers, most of which are equipped with an on-board computer system from which drivers obtain delivery performance and route information. The Company also operates 18 cash-and-carry locations from which customers can make purchases. The vending distribution business is highly competitive. While the Company is the only nationwide vending distributor, it encounters significant competition from regional and local distributors as well as warehouse clubs. Price is a significant competitive element in the vending distribution business, however other important competitive factors are prompt and accurate delivery of orders, availability of a wide variety of products and customer service. Limited-Menu Distribution. The Company is a leading specialty distributor in the United States to independent pizza restaurants and other select limited-menu operators, including sandwich shops, Mexican restaurants, bakery shops and movie theaters. The Company distributes a broad selection of cheeses, meats, snacks, paper goods and other products, including pizza ingredients sold under the Company's ULTIMO brand as well as major national brands. Deliveries are made directly to customers, generally once a week, from 14 distribution centers located strategically around the country to provide efficient and timely delivery to customers. The distribution centers are linked by computer network to the distribution business' headquarters. The Company maintains a fleet of more than 250 tractors and 300 trailers, approximately half of which are owned and half of which are leased by the Company. The limited-menu distribution business is highly competitive. The Company competes with several national and regional broadline distributors and numerous regional specialty foodservice distributors and local independent distributors. The Company competes on the basis of product quality and consistency, customer service and the availability of a wide variety of products, as well as price and prompt and accurate delivery of orders. The Company believes that its pizza expertise, which includes providing customers with ideas on promotions, menu planning and baking, differentiates the Company in part from its competitors. In addition, the Company believes that it further distinguishes itself from broadline distributors by providing more personalized customer service. Food Exporting. The Company's food exporting business markets and exports a variety of goods, primarily branded and commodity food products. Export sales are made to customers in diverse geographic areas, including Eastern Europe, Asia, the Middle East and the Caribbean region. The Company markets its food products under the MULTIFOODS, PRIMA, GOLDEN TEMPLE and ROBIN HOOD brands. The food exporting business sells food products to Russia. The Company's continued ability to do business in this region may be affected by political events or the economic stability of that region. Bakery The Company's Bakery segment processes and markets bakery products for retail, in-store and wholesale bakeries and foodservice customers in North America and consumer products in Canada, which include primarily home baking products and condiments. No single customer accounts for a significant portion of the segment's sales. North America Bakery. The Company's North America Bakery division produces approximately 3,000 products for retail, in-store and wholesale bakeries and foodservice customers in the United States and Canada. The Company produces bakery mix products, including mixes for breads, rolls, bagels, donuts, muffins, danish, cakes, cookies, brownies, bars and pizza crusts, as well as fillings and icings. Bakery mix products are marketed under its MULTIFOODS and JAMCO brands in the United States and under its ROBIN HOOD brand in Canada. In addition, the Company manufactures and markets frozen desserts under its MULTIFOODS, GOURMET BAKER and FANTASIA brands. In Canada, the Company also produces wheat flour and durum and oat products. Bakery products are marketed through the Company's own sales organization and independent distributors and brokers. The Company encounters significant competition in the bakery products market. The Company is the leading supplier of bakery mixes to retail and in- store bakeries in North America and it competes with several large corporations and regional producers of bakery mixes. With respect to frozen bakery products, the Company competes primarily in the foodservice and in- store bakery markets with several large corporations and numerous regional suppliers that have select product offerings. The Company competes primarily in Canada with respect to its commercial flour products and its competitors include both large corporations and regional producers. The Company competes on the basis of product quality and uniqueness, product convenience, brand loyalty, timely delivery and customer service as well as price. Consumer Products. The Company's consumer products division is the leading marketer in Canada of flour and specialty baking mixes sold to consumers. More than 40 consumer baking mixes are sold under the Company's ROBIN HOOD brand, while consumer flour is sold under the Company's ROBIN HOOD, BRODIE, CREAM OF THE WEST and MONARCH brands. The Company also sells hot cereals under its ROBIN HOOD, OLD MILL, RED RIVER and PURITY brands. The Company also manufactures and markets pickles, relishes and other condiments to consumers in Canada, where its BICK'S brand is the leading brand. The Company also sells condiments under its HABITANT, GATTUSO, WOODMAN'S, ROSE and MCLARENS labels. Consumer products are marketed primarily through the Company's own sales organization, supported by advertising and other promotional activities. The Company competes on the basis of product quality, product convenience, the ability to identify and satisfy emerging consumer preferences, brand loyalty, timely delivery and customer service as well as price. Venezuela Foods The Company's Venezuela Foods segment includes consumer products for home baking, bakery products for food processors and commercial and retail bakeries, and products for the agricultural sector. The Company's consumer products include wheat flour, corn flour, whole grain rice, rice flour, corn cooking oil, oat cereals and spices, which are sold to grocery stores principally under the Company's ROBIN HOOD, JUANA, MONICA, PAYARA, GOLD BELL, LASSIE and LA COMADRE brands. The Company's bakery products include wheat flour, which is sold under the Company's POLAR, GRAN AGUANTE, GOLDRIM and ELEFANTE brands, and prepared bakery mixes, which are sold under the ROBIN HOOD brand. The Company's animal feeds are sold principally under the Company's SUPER-S brand to animal producers and farm distributors. The Venezuela Foods segment's products are marketed through the Company's own sales organization and independent distributors and brokers. The Company's Venezuelan subsidiary is one of the largest food companies in Venezuela and the second-largest producer of animal feeds for the agricultural sector. The Company is the leading producer of consumer wheat flour, flour for commercial food processors and retail bakeries, and commercial bakery mixes. No single customer accounts for a significant portion of the Venezuela Foods segment's sales. The Company competes on the basis of quality, price, uniqueness, timely delivery and customer service. The Company's operations in Venezuela are subject to risks inherent in operating under a different legal and political system along with a difficult economic environment. Among these risks are inflation, currency volatility, government price and foreign exchange controls, restrictions on the exchangeability of currency, possible limitations on foreign investment and dividend repatriation, and changes in existing tax laws. Certain of these risks are currently affecting results. See "Management's Discussion and Analysis of Results of Operations and Financial Condition," which is included on pages 16 through 21 of the 1996 Annual Report to Stockholders and is incorporated by reference in Part II, Item 7, hereof, and Note 18 to the Company's Consolidated Financial Statements which are incorporated by reference in Part II, Item 8, hereof. Divested Businesses The Company's Divested Businesses segment consists principally of the Company's Frozen Specialty Foods and Meats businesses which were divested in fiscal year 1995 and the surimi seafood business which was divested in fiscal year 1996. Other Information Relating to the Business of the Company Sources of Supply and Raw Materials. The Company's vending distribution business purchases products directly from numerous manufacturers, processors and independent suppliers. Several of these sources are large corporations from which the Company purchases large quantities of brand name candy and snacks. The Company believes that adequate alternative sources of supply for other vending products are readily available. The Company's limited-menu distribution business purchases products directly from numerous manufacturers, processors and independent suppliers. The Company's limited-menu distribution business is not dependent upon any single supplier and alternative sources of supply are readily available. With respect to the Company's Bakery and Venezuela Foods segments, raw materials generally are available from numerous sources and the Company believes that it will continue to be able to obtain adequate supplies. In Canada, the Company minimizes risks associated with wheat market price fluctuations by hedging its wheat and flour inventories, open wheat purchase contracts and open flour sales contracts with wheat futures contracts. In the United States, the Company also enters into futures contracts to reduce the risk of price increases on certain anticipated raw material purchases. See Note 7 to the Company's Consolidated Financial Statements which are incorporated by reference in Part II, Item 8, hereof. Wheat, oats and soybeans are not grown in Venezuela and adequate quantities of sorghum and yellow corn are not grown in Venezuela. However, adequate wheat, oats, soybean, sorghum and yellow corn requirements generally are available and procured from sources primarily in the United States and Canada. Exchange controls did not have a material impact on the Company's ability to obtain raw materials from sources outside of Venezuela in fiscal year 1996. Generally, adequate quantities of corn (other than yellow corn) and rice, which are grown in Venezuela, are available locally. In the event of a local shortage of corn or rice, the Company has, from time to time, purchased corn and rice from the world market. Trademarks and Other Intellectual Property. The Company owns numerous trademarks, service marks and product formulae which are important to the Company's business. The most significant trademarks and service marks are identified above. Most of the Company's trademarks and service marks are registered. Seasonality. The Company does not experience material seasonal variations in its sales volumes. Environmental Regulation. The Company's facilities in the United States are subject to federal, state and local environmental laws and regulations. Compliance with these provisions has not had, and the Company does not expect such compliance to have, any material adverse effect upon the Company's capital expenditures, net earnings or competitive position. The Company has received notices from the U.S. Environmental Protection Agency and the New York State Department of Environmental Conservation that the Company has been identified as a potentially responsible party ("PRP") under the Comprehensive Environmental Response, Compensation and Liability Act and may be required to share in the cost of cleanup of two environmentally contaminated sites. The Company recognizes that its potential exposure with respect to each of these sites may be joint and several. However, based upon several factors such as the volume of material contributed to the sites, the number and financial viability of other PRP's, allocations of volumetric waste contributions to other PRP's, remediation cost estimates and the present status of the proceedings involving such sites, the Company has concluded that its probable aggregate exposure in regard to such sites is not material. Employees. As of February 29, 1996, the Company and its subsidiaries had 7,115 employees. Item 2. Properties. The Company's principal executive offices are located in Minneapolis, Minnesota in leased office space. Several of the Company's subsidiaries also own or lease office space. The Company operates numerous processing and distribution facilities throughout the United States, Canada and Venezuela. The Company believes that its facilities are suitable and adequate for current production or distribution volumes. Foodservice Distribution The Company owns two and leases 18 distribution centers aggregating approximately 1.6 million square feet for its vending distribution business. These distribution centers are located in Commerce and Fremont, California; Denver, Colorado; East Windsor, Connecticut; Orlando, Florida; Austell, Georgia; Woodridge, Illinois; Shawnee, Kansas; Louisville, Kentucky; Belleville, Michigan; Minneapolis, Minnesota; Greensboro, North Carolina; Paulsboro and Parsippany, New Jersey; Twinsburg, Ohio; Memphis, Tennessee; Dallas and Houston, Texas; Kent, Washington; and Pewaukee, Wisconsin. The Company's vending distribution business also operates 18 cash-and- carry distribution locations, 11 of which are separate from the Company's other distribution centers. The Company owns nine and leases six distribution centers aggregating approximately 1.0 million square feet for its limited-menu distribution business. These distribution centers are located in Tempe, Arizona; Anaheim and Livermore (2), California; Denver, Colorado; Kissimmee, Florida; Atlanta, Georgia; Boise, Idaho; Indianapolis, Indiana; Rice, Minnesota; Springfield, Missouri; Portland, Oregon; Middletown, Pennsylvania; and Dallas and Grand Prairie, Texas. Bakery The Company owns 13 and leases four processing facilities. These processing facilities are located in La Mirada, California; Bonner Springs, Kansas; Malden, Massachusetts; Sedalia, Missouri; Lockport, New York; Elyria, Ohio; Burnaby, British Columbia (2); Winnipeg, Manitoba; Burlington, Dunnville, Port Colborne, Scarborough and Simcoe, Ontario; Montreal, Quebec (2); and Saskatoon, Saskatchewan. The Company also operates two research and development laboratories. Venezuela Foods The Company owns 18 processing facilities and leases one processing facility. These processing facilities are located in Barcelona, Anzoategui; Ciudad Bolivar, Bolivar; Puerto Cabello (5) and Valencia, Carabobo; Calabozo, Guarico (3); Acarigua (3) and Araure, Portuguesa; Cumana, Sucre; and Maracaibo, Zulia (3). The Company owns three and leases 14 warehouse facilities. In addition, the Company owns two and leases 14 agricultural distribution centers. The Company also operates two Company-owned hatcheries and one leased hatchery and operates four Company-owned and seven leased poultry farms. Item 3. Legal Proceedings. Neither the Company nor any of its subsidiaries is a party to any legal proceeding that is material to the business or financial condition of the Company. See the information under the heading "Other Information Relating to the Business of the Company - Environmental Regulation" in Item 1 above for a description of environmental matters in which the Company is involved. Item 4. Submission of Matters to a Vote of Security Holders. No matters were submitted to a vote of security holders of the Company during the fourth quarter of the fiscal year ended February 29, 1996. EXECUTIVE OFFICERS OF THE COMPANY. The information contained in Item 10 in Part III hereof under the heading "Executive Officers of the Company" is incorporated by reference in Part I of this Report. PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters. The Company's Common Stock is listed on the New York Stock Exchange. The high and low sales prices for the Company's Common Stock as reported in the consolidated transaction reporting system and the amount of the cash dividends paid on the Company's Common Stock for each quarterly period within the two most recent fiscal years, shown in Note 20 to the Company's Consolidated Financial Statements on page 38 of the Company's 1996 Annual Report to Stockholders, are incorporated herein by reference. As of May 1, 1996, there were 4,830 holders of record of the Common Stock of the Company. Item 6. Selected Financial Data. The information for fiscal years 1992 through 1996 in the "Six-Year Comparative Summary" on page 39 of the Company's 1996 Annual Report to Stockholders under the headings "Consolidated Summary of Operations," "Year- End Financial Position" and "Dividends Paid" is incorporated herein by reference. The information contained in Note 2 ("Businesses Acquired") and Note 4 ("Unusual Items") to the Company's Consolidated Financial Statements on pages 27 and 28, respectively, of the Company's 1996 Annual Report to Stockholders is also incorporated herein by reference. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. The information under the heading "Management's Discussion and Analysis of Results of Operations and Financial Condition" on pages 16 through 21 of the Company's 1996 Annual Report to Stockholders is incorporated herein by reference. Item 8. Financial Statements and Supplementary Data. The Independent Auditors' Report, the Company's Consolidated Financial Statements as of February 29, 1996 and February 28, 1995, and for each of the fiscal years in the three-year period ended February 29, 1996, and the Notes to the Company's Consolidated Financial Statements on pages 22 through 38 of the Company's 1996 Annual Report to Stockholders are incorporated herein by reference. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None. PART III Item 10. Directors and Executive Officers of the Registrant. The section under the heading "Election of Directors" on pages 3 through 5 and the section entitled "Compliance with Section 16(a) of the Exchange Act" on page 19 of the Company's Proxy Statement dated May 15, 1996 ("1996 Proxy Statement") are incorporated herein by reference. Executive Officers of the Company The following sets forth the name, age and business experience for at least the past five years of each of the executive officers of the Company as of May 1, 1996. Unless otherwise noted, the positions described are positions with the Company or its subsidiaries. Name Age Positions Held Period Anthony Luiso 52 Chairman of the Board, President 1989 to present and Chief Executive Officer Frank W. Bonvino 54 Vice President, General Counsel 1992 to present and Secretary Vice President and Associate 1991 to 1992 General Counsel Associate General Counsel 1986 to 1991 Duncan H. Cocroft 52 Vice President - Finance, Chief 1995 to present Financial Officer and Treasurer Vice President - Finance and 1990 to 1995 Chief Financial Officer D. Bruce Kean 56 President - Multifoods 1994 to present Specialty Distribution, Inc. Senior Vice President - 1989 to 1994 Leprino Foodservice Distribution Division of Leprino Foods Company Robert F. Maddocks 65 Vice President - Human Resources 1990 to present Devendra Mishra 51 President - VSA, Inc. 1994 to present President - New Ventures of 1992 to 1994 Technicolor, Inc. President and Chief Operating 1989 to 1992 Officer of Live Entertainment, Inc. Fidias Robuste 58 President and Managing Director - 1993 to present Molinos Nacionales, C.A. (MONACA) Vice President - Operations 1989 to 1993 of Molinos Nacionales, C.A. (MONACA) John E. Sampson 55 Vice President - Corporate 1992 to present Planning and Development Vice President - Corporate 1990 to 1992 Planning and Development and Treasurer Robert S. Wright 49 President, Bakery Segment 1995 to present President, Specialty Brands 1994 to 1995 Division of Foodbrands America, Inc. President, Prepared Foods 1992 to 1994 Division of International Multifoods Corporation Vice President, Marketing 1991 to 1992 of MasterLock Co. Group Vice President of 1989 to 1991 Universal Foods Corporation The executive officers of the Company are elected annually by the Board of Directors with the exception of the Presidents of the Company's business units, who hold appointed offices. Item 11. Executive Compensation. The section under the heading "Election of Directors" entitled "Compensation of Directors" on page 6 and the section entitled "Executive Compensation" on pages 11 through 18 of the Company's 1996 Proxy Statement are incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management. The section entitled "Security Ownership of Certain Beneficial Owners and Management" on pages 2 and 3 of the Company's 1996 Proxy Statement is incorporated herein by reference. For purposes of computing the market value of the Company's Common Stock held by non-affiliates of the Company on the cover page of this Report, all executive officers and directors of the Company are considered to be affiliates of the Company. This does not represent an admission by the Company or any such person as to the affiliate status of such person. Item 13. Certain Relationships and Related Transactions. Not applicable. PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K. (a) Documents Filed as a Part of this Report 1. Financial Statements The following consolidated financial statements of International Multifoods Corporation and subsidiaries and the Independent Auditors' Report thereon, included in the Company's 1996 Annual Report to Stockholders, are incorporated by reference in Part II, Item 8, hereof: Independent Auditors' Report Consolidated Statements of Operations - Years ended February 29, 1996, February 28, 1995 and February 28, 1994 Consolidated Balance Sheets - February 29, 1996 and February 28, 1995 Consolidated Statements of Cash Flows - Years ended February 29, 1996, February 28, 1995 and February 28, 1994 Notes to Consolidated Financial Statements 2. Financial Statement Schedules The consolidated financial statement schedule of International Multifoods Corporation and subsidiaries and the Independent Auditors' Report thereon required to be filed as part of this Report are listed below and are included at the end of this Report. Independent Auditors' Report Schedule II - Valuation and Qualifying Accounts All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and, therefore, have been omitted. 3. Exhibits 3.1 Restated Certificate of Incorporation of International Multifoods Corporation, as amended to date (incorporated herein by reference to Exhibit 3.1 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993). 3.2 Bylaws of International Multifoods Corporation, as amended to date (incorporated herein by reference to Exhibit 3.2 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1994). 4.1 Indenture, dated as of January 1, 1990, between International Multifoods Corporation and First Trust of New York, National Association, successor to Morgan Guaranty Trust Company of New York (incorporated herein by reference to Exhibit 4.1 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993). 4.2 First Supplemental Indenture, dated as of May 29, 1992, supplementing the Indenture, dated as of January 1, 1990, between International Multifoods Corporation and First Trust of New York, National Association, successor to Morgan Guaranty Trust Company of New York (incorporated herein by reference to Exhibit 4.2 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993). 4.3 Officers' Certificate, with exhibits thereto, relating to the Company's Medium-Term Notes, Series A, issued under the Indenture, dated as of January 1, 1990, as supplemented by the First Supplemental Indenture, dated as of May 29, 1992, between International Multifoods Corporation and First Trust of New York, National Association, successor to Morgan Guaranty Trust Company of New York (incorporated herein by reference to Exhibit 4.3 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993). 4.4 Officers' Certificate and Authentication Order dated February 1, 1996 relating to the Company's Medium-Term Notes, Series B, including the forms of Notes, issuable under the Indenture, dated as of January 1, 1990, as supplemented by the First Supplemental Indenture, dated as of May 29, 1992, between International Multifoods Corporation and First Trust of New York, National Association, successor to Morgan Guaranty Trust Company of New York (incorporated herein by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K dated February 1, 1996). 4.5 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. The Company hereby agrees to furnish to the Securities and Exchange Commission upon request copies of all other instruments defining the rights of holders of long-term debt of International Multifoods Corporation and its consolidated subsidiaries. 10.1 Rights Agreement, dated as of October 4, 1990, as amended as of March 1, 1993, between International Multifoods Corporation and Norwest Bank Minnesota, N.A., with exhibits thereto (incorporated herein by reference to Exhibit 1 to the Company's Registration Statement on Form 8-A dated October 11, 1990 and Exhibit 1 to Amendment No. 1 on Form 8 dated March 1, 1993 to the Company's Registration Statement on Form 8-A dated October 11, 1990). 10.2 Amended and Restated 1989 Stock-Based Incentive Plan of International Multifoods Corporation (incorporated herein by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended August 31, 1993).* 10.3 1986 Stock Option Incentive Plan of International Multifoods Corporation (incorporated herein by reference to Exhibit 4 to the Company's Registration Statement on Form S-8 (Registration No. 33-6223)).* 10.4 1983 Stock Option Incentive Plan of International Multifoods Corporation (incorporated herein by reference to Exhibit 4 to the Company's Registration Statement on Form S-8 (Registration No. 2-84236)).* 10.5 Award Agreement, dated as of August 18, 1989, as amended as of November 16, 1990, between International Multifoods Corporation and Anthony Luiso (incorporated herein by reference to Exhibit 10(c) to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1990 and Exhibit 10(b) to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1991).* 10.6 Irrevocable Waiver Agreement, dated as of August 17, 1989, as amended as of November 16, 1990, between International Multifoods Corporation and Anthony Luiso (incorporated herein by reference to Exhibit 10(b) to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1990 and Exhibit 10(c) to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1991).* 10.7 Non-Qualified Stock Option Agreement, dated as of March 31, 1994, between International Multifoods Corporation and Anthony Luiso (incorporated herein by reference to Exhibit 10.7 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1995).* 10.8 Stock Option Award Agreements, dated as of November 16, 1990, between International Multifoods Corporation and each of Duncan H. Cocroft and Jay I. Johnson (incorporated herein by reference to Exhibits 10(d) and 10(e), respectively, to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1991).* 10.9 Restricted Stock Award Agreement, dated as of December 11, 1992, between International Multifoods Corporation and Anthony Luiso (incorporated herein by reference to Exhibit 10.8 to the Company's Annual Report on Form 10- K for the fiscal year ended February 28, 1993).* 10.10 Management Incentive Plan of International Multifoods Corporation, Amended and Restated as of September 17, 1993, as further amended (incorporated herein by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1993 and Exhibit 10.11 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1995).* 10.11 Multifoods Division Long-Term Incentive Program.* 10.12 Management Benefit Plan of International Multifoods Corporation, Restated Effective September 17, 1993 (incorporated herein by reference to Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1993).* 10.13 Trust Agreement, dated July 30, 1987, between International Multifoods Corporation and Norwest Bank Minnesota, National Association, as successor trustee to Bank of America NT and SA, relating to the Management Benefit Plan of International Multifoods Corporation (incorporated herein by reference to Exhibit 10.11 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993).* 10.14 Compensation Deferral Plan for Executives of International Multifoods Corporation, Amended and Restated as of September 17, 1993 (incorporated herein by reference to Exhibit 10.5 to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1993).* 10.15 Deferred Income Capital Accumulation Plan for Executives of International Multifoods Corporation, Amended and Restated as of September 17, 1993 (incorporated herein by reference to Exhibit 10.6 to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1993).* 10.16 Revised and Restated Employment Agreement, dated as of September 17, 1993, between International Multifoods Corporation and Anthony Luiso (incorporated herein by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1993).* 10.17 Trust Agreement, dated February 25, 1991, between International Multifoods Corporation and Norwest Bank Minnesota, National Association, as successor trustee to Bank of America NT and SA, relating to the Supplemental Retirement Benefit for Anthony Luiso (incorporated herein by reference to Exhibit 10.14 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993).* 10.18 Form of Revised and Restated Severance Agreement between International Multifoods Corporation and each of the Company's executive officers, other than Anthony Luiso (incorporated herein by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1993).* 10.19 Letter Agreement, dated July 10, 1995, between International Multifoods Corporation and Robert S. Wright regarding benefits and severance arrangements.* 10.20 Memorandum of understanding, dated March 29, 1996, between International Multifoods Corporation and Robert S. Wright regarding supplemental retirement benefits.* 10.21 Letter Agreement, dated July 29, 1994, between International Multifoods Corporation and Devendra Mishra regarding compensation and severance arrangements.* 10.22 Letter Agreement, dated August 31, 1994, between International Multifoods Corporation and John E. Sampson regarding severance arrangement (incorporated herein by reference to Exhibit 10.22 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1995).* 10.23 Memorandum of understanding, dated July 24, 1995, between International Multifoods Corporation and Jay I. Johnson regarding severance and retirement arrangements (incorporated herein by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended August 31, 1995).* 10.24 Form of Indemnity Agreement between International Multifoods Corporation and each of the Company's executive officers (incorporated herein by reference to Exhibit 10.19 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993).* 10.25 Fee Deferral Plan for Non-Employee Directors of International Multifoods Corporation, Amended and Restated as of September 17, 1993 (incorporated herein by reference to Exhibit 10.7 to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1993).* 10.26 Deferred Income Capital Accumulation Plan for Directors of International Multifoods Corporation, Amended and Restated as of September 17, 1993 (incorporated herein by reference to Exhibit 10.8 to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1993).* 10.27 Form of Indemnity Agreement between International Multifoods Corporation and each non-employee director of the Company (incorporated herein by reference to Exhibit 10.21 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993).* 10.28 Asset Purchase Agreement dated November 15, 1991 between AGP, L.P. (as the purchaser) and International Multifoods Corporation, Multifoods Transportation, Inc., Lucan Feed Services, Inc. and The Pickaway Grain Company (as the sellers) (incorporated herein by reference to Exhibit 2(a) to the Company's Current Report on Form 8-K dated December 2, 1991). 10.29 Share Purchase Agreement dated November 15, 1991 between AGP, Inc. (as the purchaser) and Damca International Corporation and Robin Hood Multifoods, Inc. (as the sellers) (incorporated herein by reference to Exhibit 2(b) to the Company's Current Report on Form 8-K dated December 2, 1991). 10.30 Stock Purchase Agreement between International Multifoods Corporation (Seller) and Doskocil Companies Incorporated (Buyer) dated as of March 17, 1994 (incorporated herein by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K dated June 1, 1994). 10.31 Asset Purchase Agreement among Multifoods Distribution, Inc. (Buyer), International Multifoods Corporation (Buyer's Parent) and Leprino Foods Company (Seller) and James G. Leprino (Seller's Shareholder) dated as of July 29, 1994 (incorporated herein by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K dated August 22, 1994). 10.32 Stock Purchase Agreement between International Multifoods Corporation (Seller) and Tyson Foods, Inc. (Buyer) dated as of June 7, 1995 (incorporated herein by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K dated June 26, 1995). 11 Computation of Earnings (Loss) Per Common Share. 12 Computation of Ratio of Earnings to Fixed Charges. 13 1996 Annual Report to Stockholders (only those portions expressly incorporated by reference herein shall be deemed filed with the Securities and Exchange Commission). 21 List of significant subsidiaries of the Company. 23 Consent of KPMG Peat Marwick LLP. 27 Financial Data Schedule. - --------------------------------- *Management contract or compensatory plan or arrangement required to be filed as an exhibit to Form 10-K pursuant to Item 14(c) of this Report. (b) Reports on Form 8-K During the quarter ended February 29, 1996, the Company filed a report on Form 8-K, dated February 1, 1996, for the purpose of filing additional exhibits to the Company's Registration Statement on Form S-3 (File No. 33-65221) filed by the Company with the Securities and Exchange Commission relating to the Company's Medium-Term Notes, Series B. (c) See Exhibit Index and Exhibits attached to this Report. (d) See Financial Statement Schedules included at the end of this Report. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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 Dated: May 10, 1996 By /s/ Anthony Luiso Anthony Luiso Chairman of the Board, President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. /s/ Anthony Luiso Chairman of the Board, President May 10, 1996 Anthony Luiso and Chief Executive Officer (Principal Executive Officer) and Director /s/ Duncan H . Cocroft Vice President - Finance, May 10, 1996 Duncan H. Cocroft Chief Financial Officer and Treasurer (Principal Financial Officer) /s/ Dennis R. Johnson Vice President and May 10, 1996 Dennis R. Johnson Controller (Principal Accounting Officer) /s/ James G. Fifield Director May 10, 1996 James G. Fifield /s/ Robert M. Price Director May 10, 1996 Robert M. Price /s/ Nicholas L. Reding Director May 10, 1996 Nicholas L. Reding /s/ Jack D. Rehm Director May 10, 1996 Jack D. Rehm /s/ Lois D. Rice Director May 10, 1996 Lois D. Rice /s/ Peter S. Willmott Director May 10, 1996 Peter S. Willmott Independent Auditors' Report The Board of Directors and Shareholders International Multifoods Corporation: Under date of April 9, 1996, except as to Note 18, which is as of April 23, 1996, we reported on the consolidated balance sheets of International Multifoods Corporation and subsidiaries as of February 29, 1996 and February 28, 1995 and the related consolidated statements of operations and cash flows for each of the years in the three-year period ended February 29, 1996, as contained in the 1996 Annual Report to Stockholders. These consolidated financial statements and our report thereon are incorporated by reference in the Annual Report on Form 10-K for the fiscal year ended February 29, 1996. In connection with our audits of the aforementioned consolidated financial statements, we also have audited the related consolidated financial statement schedule listed in Item 14. The consolidated financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion on the consolidated financial statement schedule based on our audits. In our opinion, such consolidated financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. /s/ KPMG Peat Marwick LLP KPMG Peat Marwick LLP Minneapolis, Minnesota April 9, 1996 Schedule II INTERNATIONAL MULTIFOODS CORPORATION AND SUBSIDIARIES Valuation and Qualifying Accounts Three years ended February 29, 1996 (in thousands)
Additions ---------------------- Balance at Net charges Balance beginning to costs and at end Description of year expenses Other Deductions of year - ------------ ---------- ------------ ------ ---------- --------- Allowance deducted from assets for doubtful receivables: Year ended February 29, 1996 $6,708 $5,783 $2,877 $1,386(a) $13,982(b) Year ended February 28, 1995 $5,219 $4,477 $1,190 $4,178(a) $ 6,708(b) Year ended February 28, 1994 $5,611 $3,783 $ - $4,175(a) $ 5,219(b)
Notes: (a) Deductions include accounts charged off, net of recoveries, and foreign currency translation adjustments which arise from changes in current rates of exchange. (b) Classified in the balance sheets as follows: 1996 1995 1994 Trade accounts receivable $13,977 $6,658 $5,187 Miscellaneous receivables - current 5 50 32 $13,982 $6,708 $5,219 INDEX TO EXHIBITS TO ANNUAL REPORT ON FORM 10-K OF INTERNATIONAL MULTIFOODS CORPORATION FOR THE FISCAL YEAR ENDED FEBRUARY 29, 1996 3.1 Restated Certificate of Incorporation of International Multifoods Corporation, as amended to date (incorporated herein by reference to Exhibit 3.1 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993). 3.2 Bylaws of International Multifoods Corporation, as amended to date (incorporated herein by reference to Exhibit 3.2 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1994). 4.1 Indenture, dated as of January 1, 1990, between International Multifoods Corporation and First Trust of New York, National Association, successor to Morgan Guaranty Trust Company of New York (incorporated herein by reference to Exhibit 4.1 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993). 4.2 First Supplemental Indenture, dated as of May 29, 1992, supplementing the Indenture, dated as of January 1, 1990, between International Multifoods Corporation and First Trust of New York, National Association, successor to Morgan Guaranty Trust Company of New York (incorporated herein by reference to Exhibit 4.2 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993). 4.3 Officers' Certificate, with exhibits thereto, relating to the Company's Medium-Term Notes, Series A, issued under the Indenture, dated as of January 1, 1990, as supplemented by the First Supplemental Indenture, dated as of May 29, 1992, between International Multifoods Corporation and First Trust of New York, National Association, successor to Morgan Guaranty Trust Company of New York (incorporated herein by reference to Exhibit 4.3 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993). 4.4 Officers' Certificate and Authentication Order dated February 1, 1996 relating to the Company's Medium-Term Notes, Series B, including the forms of Notes, issuable under the Indenture, dated as of January 1, 1990, as supplemented by the First Supplemental Indenture, dated as of May 29, 1992, between International Multifoods Corporation and First Trust of New York, National Association, successor to Morgan Guaranty Trust Company of New York (incorporated herein by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K dated February 1, 1996). 4.5 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. The Company hereby agrees to furnish to the Securities and Exchange Commission upon request copies of all other instruments defining the rights of holders of long-term debt of International Multifoods Corporation and its consolidated subsidiaries. 10.1 Rights Agreement, dated as of October 4, 1990, as amended as of March 1, 1993, between International Multifoods Corporation and Norwest Bank Minnesota, N.A., with exhibits thereto (incorporated herein by reference to Exhibit 1 to the Company's Registration Statement on Form 8-A dated October 11, 1990 and Exhibit 1 to Amendment No. 1 on Form 8 dated March 1, 1993 to the Company's Registration Statement on Form 8-A dated October 11, 1990). 10.2 Amended and Restated 1989 Stock-Based Incentive Plan of International Multifoods Corporation (incorporated herein by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended August 31, 1993).* 10.3 1986 Stock Option Incentive Plan of International Multifoods Corporation (incorporated herein by reference to Exhibit 4 to the Company's Registration Statement on Form S-8 (Registration No. 33-6223)).* 10.4 1983 Stock Option Incentive Plan of International Multifoods Corporation (incorporated herein by reference to Exhibit 4 to the Company's Registration Statement on Form S-8 (Registration No. 2-84236)).* 10.5 Award Agreement, dated as of August 18, 1989, as amended as of November 16, 1990, between International Multifoods Corporation and Anthony Luiso (incorporated herein by reference to Exhibit 10(c) to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1990 and Exhibit 10(b) to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1991).* 10.6 Irrevocable Waiver Agreement, dated as of August 17, 1989, as amended as of November 16, 1990, between International Multifoods Corporation and Anthony Luiso (incorporated herein by reference to Exhibit 10(b) to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1990 and Exhibit 10(c) to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1991).* 10.7 Non-Qualified Stock Option Agreement, dated as of March 31, 1994, between International Multifoods Corporation and Anthony Luiso (incorporated herein by reference to Exhibit 10.7 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1995).* 10.8 Stock Option Award Agreements, dated as of November 16, 1990, between International Multifoods Corporation and each of Duncan H. Cocroft and Jay I. Johnson (incorporated herein by reference to Exhibits 10(d) and 10(e), respectively, to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1991).* 10.9 Restricted Stock Award Agreement, dated as of December 11, 1992, between International Multifoods Corporation and Anthony Luiso (incorporated herein by reference to Exhibit 10.8 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993).* 10.10 Management Incentive Plan of International Multifoods Corporation, Amended and Restated as of September 17, 1993, as further amended (incorporated herein by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1993 and Exhibit 10.11 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1995).* 10.11 Multifoods Division Long-Term Incentive Program.* 10.12 Management Benefit Plan of International Multifoods Corporation, Restated Effective September 17, 1993 (incorporated herein by reference to Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1993).* 10.13 Trust Agreement, dated July 30, 1987, between International Multifoods Corporation and Norwest Bank Minnesota, National Association, as successor trustee to Bank of America NT and SA, relating to the Management Benefit Plan of International Multifoods Corporation (incorporated herein by reference to Exhibit 10.11 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993).* 10.14 Compensation Deferral Plan for Executives of International Multifoods Corporation, Amended and Restated as of September 17, 1993 (incorporated herein by reference to Exhibit 10.5 to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1993).* 10.15 Deferred Income Capital Accumulation Plan for Executives of International Multifoods Corporation, Amended and Restated as of September 17, 1993 (incorporated herein by reference to Exhibit 10.6 to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1993).* 10.16 Revised and Restated Employment Agreement, dated as of September 17, 1993, between International Multifoods Corporation and Anthony Luiso (incorporated herein by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1993).* 10.17 Trust Agreement, dated February 25, 1991, between International Multifoods Corporation and Norwest Bank Minnesota, National Association, as successor trustee to Bank of America NT and SA, relating to the Supplemental Retirement Benefit for Anthony Luiso (incorporated herein by reference to Exhibit 10.14 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993).* 10.18 Form of Revised and Restated Severance Agreement between International Multifoods Corporation and each of the Company's executive officers, other than Anthony Luiso (incorporated herein by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1993).* 10.19 Letter Agreement, dated July 10, 1995, between International Multifoods Corporation and Robert S. Wright regarding benefits and severance arrangements.* 10.20 Memorandum of understanding, dated March 29, 1996, between International Multifoods Corporation and Robert S. Wright regarding supplemental retirement benefits.* 10.21 Letter Agreement, dated July 29, 1994, between International Multifoods Corporation and Devendra Mishra regarding compensation and severance arrangements.* 10.22 Letter Agreement, dated August 31, 1994, between International Multifoods Corporation and John E. Sampson regarding severance arrangement (incorporated herein by reference to Exhibit 10.22 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1995).* 10.23 Memorandum of understanding, dated July 24, 1995, between International Multifoods Corporation and Jay I. Johnson regarding severance and retirement arrangements (incorporated herein by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended August 31, 1995).* 10.24 Form of Indemnity Agreement between International Multifoods Corporation and each of the Company's executive officers (incorporated herein by reference to Exhibit 10.19 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993).* 10.25 Fee Deferral Plan for Non-Employee Directors of International Multifoods Corporation, Amended and Restated as of September 17, 1993 (incorporated herein by reference to Exhibit 10.7 to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1993).* 10.26 Deferred Income Capital Accumulation Plan for Directors of International Multifoods Corporation, Amended and Restated as of September 17, 1993 (incorporated herein by reference to Exhibit 10.8 to the Company's Quarterly Report on Form 10-Q for the quarter ended November 30, 1993).* 10.27 Form of Indemnity Agreement between International Multifoods Corporation and each non-employee director of the Company (incorporated herein by reference to Exhibit 10.21 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1993).* 10.28 Asset Purchase Agreement dated November 15, 1991 between AGP, L.P. (as the purchaser) and International Multifoods Corporation, Multifoods Transportation, Inc., Lucan Feed Services, Inc. and The Pickaway Grain Company (as the sellers) (incorporated herein by reference to Exhibit 2(a) to the Company's Current Report on Form 8-K dated December 2, 1991). 10.29 Share Purchase Agreement dated November 15, 1991 between AGP, Inc. (as the purchaser) and Damca International Corporation and Robin Hood Multifoods, Inc. (as the sellers) (incorporated herein by reference to Exhibit 2(b) to the Company's Current Report on Form 8-K dated December 2, 1991). 10.30 Stock Purchase Agreement between International Multifoods Corporation (Seller) and Doskocil Companies Incorporated (Buyer) dated as of March 17, 1994 (incorporated herein by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K dated June 1, 1994). 10.31 Asset Purchase Agreement among Multifoods Distribution, Inc. (Buyer), International Multifoods Corporation (Buyer's Parent) and Leprino Foods Company (Seller) and James G. Leprino (Seller's Shareholder) dated as of July 29, 1994 (incorporated herein by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K dated August 22, 1994). 10.32 Stock Purchase Agreement between International Multifoods Corporation (Seller) and Tyson Foods, Inc. (Buyer) dated as of June 7, 1995 (incorporated herein by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K dated June 26, 1995). 11 Computation of Earnings (Loss) Per Common Share. 12 Computation of Ratio of Earnings to Fixed Charges. 13 1996 Annual Report to Stockholders (only those portions expressly incorporated by reference herein shall be deemed filed with the Securities and Exchange Commission). 21 List of significant subsidiaries of the Company. 23 Consent of KPMG Peat Marwick LLP. 27 Financial Data Schedule. *Management contract or compensatory plan or arrangement required to be filed as an exhibit to Form 10-K pursuant to Item 14(c) of this Report. EX-4.5 2 EXHIBIT 4.5 EXECUTION COPY 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 Arranged by BA SECURITIES, INC. TABLE OF CONTENTS Section Page ARTICLE I DEFINITIONS 1.1 Certain Defined Terms 1 1.2 Other Interpretive Provisions 14 1.3 Accounting Principles 15 ARTICLE II THE CREDITS 2.1 Amounts and Terms of Commitments 16 2.2 Loan Accounts 16 2.3 Procedure for Committed Borrowing 17 2.4 Conversion and Continuation Elections for Committed Borrowings 18 2.5 Bid Borrowings 19 2.6 Procedure for Bid Borrowings 19 2.7 Voluntary Termination or Reduction of Commitments 23 2.8 Optional Prepayments 23 2.9 Repayment. 23 2.10 Interest 23 2.11 Fees 24 2.12 Computation of Fees and Interest 25 2.13 Payments by the Company 25 2.14 Payments by the Lenders to the Administrative Agent 26 2.15 Sharing of Payments, etc. 27 ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY 3.1 Taxes 29 3.2 Illegality 30 3.3 Increased Costs and Reduction of Return 31 3.4 Funding Losses 32 3.5 Inability to Determine Rates 33 3.6 Certificates of Lenders 33 3.7 Substitution of Lenders 33 3.8 Survival 34 ARTICLE IV CONDITIONS PRECEDENT 4.1 Conditions of Initial Loans 34 4.2 Conditions to All Loans 35 ARTICLE V REPRESENTATIONS AND WARRANTIES 5.1 Organization and Existence 36 5.2 Power and Authority; Authorization; Validity 36 5.3 Financial Position 36 5.4 Litigation 37 5.5 No Violation of Law or Instrument 37 5.6 Federal Reserve Regulations 37 5.7 No Default 37 5.8 ERISA Compliance 37 5.9 Environmental Matters 38 5.10 Regulated Entities 38 5.11 Subsidiaries 38 5.12 Full Disclosure 38 5.13 Use of Proceeds 39 ARTICLE VI AFFIRMATIVE COVENANTS 6.1 Corporate Existence 39 6.2 Payment of Taxes and Claims 39 6.3 Financial Statements 39 6.4 Compliance Certificate 40 6.5 Notice of Default 40 6.6 Compliance with Laws 40 6.7 Inspection of Property; Books and Records; Discussions 40 6.8 Maintenance of Property 41 6.9 Insurance 41 6.10 Compliance with ERISA 41 6.11 Environmental Laws 41 6.12 Notice of Ratings Change 41 ARTICLE VII NEGATIVE COVENANTS 7.1 Financial Condition Covenants 42 7.2 Limitation on Liens 42 7.3 Consolidation, Merger and Sale of Assets 45 7.4 Use of Proceeds 45 7.5 ERISA 45 7.6 Change in Business 45 ARTICLE VIII EVENTS OF DEFAULT 8.1 Event of Default 46 8.2 Remedies 48 8.3 Rights Not Exclusive 48 ARTICLE IX THE AGENT 9.1 Appointment and Authorization; "Agent" 49 9.2 Delegation of Duties 49 9.3 Liability of Agents 49 9.4 Reliance by Agents 50 9.5 Notice of Default 50 9.6 Credit Decision 51 9.7 Indemnification of Agents 51 9.8 Agents in Individual Capacity 52 9.9 Resignation; Removal; Successor Administrative Agent 52 9.10 Withholding Tax 53 ARTICLE X MISCELLANEOUS 10.1 Amendments and Waivers 54 10.2 Notices 55 10.3 No Waiver; Cumulative Remedies 56 10.4 Costs and Expenses 56 10.5 Company Indemnification 56 10.6 Payments Set Aside 57 10.7 Successors and Assigns 57 10.8 Assignments, Participations, etc. 58 10.9 Confidentiality 59 10.10 Setoff 60 10.11 Notification of Addresses, Lending Offices, Etc. 61 10.12 Counterparts; Effective Date and Closing Date 61 10.13 Severability 61 10.14 No Third Parties Benefited 61 10.15 Governing Law and Jurisdiction 61 10.16 Waiver of Jury Trial 62 10.17 Entire Agreement 62 SCHEDULES Schedule 1.1 Pricing Schedule Schedule 2.1 Commitments and Pro Rata Shares Schedule 5.11 Restricted Subsidiaries Schedule 10.2 Offshore and Domestic Lending Offices; Addresses for Notices EXHIBITS Exhibit A Form of Notice of Committed Borrowing Exhibit B Form of Notice of Conversion/Continuation Exhibit C Form of Invitation for Competitive Bids Exhibit D Form of Competitive Bid Exhibit E Form of Note Exhibit F Form of Compliance Certificate Exhibit G Form of Legal Opinion of Counsel to the Company Exhibit H Form of Legal Opinion of Special Counsel to the Administrative Agent Exhibit I Form of Assignment and Acceptance CREDIT AGREEMENT This CREDIT AGREEMENT is entered into as of March 22, 1996, among INTERNATIONAL MULTIFOODS CORPORATION, a Delaware corporation (the "Company"), the several financial institutions from time to time party to this Agreement (collectively the "Lenders"; individually each a "Lender"), 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. WHEREAS, the Lenders have agreed to make available to the Company a revolving credit facility upon the terms and conditions set forth in this Agreement; NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained herein, the parties agree as follows: ARTICLE I DEFINITIONS 1.1 Certain Defined Terms Certain Defined Terms. The following terms have the following meanings: Absolute Rate - see subsection 2.6(b)(ii)(D). Absolute Rate Auction means a solicitation of Competitive Bids setting forth Absolute Rates pursuant to Section 2.6. Absolute Rate Bid Loan means a Bid Loan that bears interest at a rate determined with reference to the Absolute Rate. Acquisition means the purchase, in one transaction or a series of related transactions, directly or indirectly (including by merger, tender offer, exchange offer, consolidation or otherwise) by the Company and/or any of its Subsidiaries of more than 50% of the assets or issued and outstanding stock of another Person. Administrative Agent means BofA in its capacity as administrative agent for the Lenders hereunder, and any successor administrative agent arising under Section 9.9. Affiliate means, as to any Person, any other Person which, directly or indirectly, is in control of, or is controlled by, or is under common control with, such Person. A Person shall be deemed to control another Person if the controlling Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of the other Person, whether through the ownership of voting securities or membership interests, by contract or otherwise. Agents means the Administrative Agent, the Documentation Agent and the Syndication Agent; and Agent means any of the Administrative Agent, the Documentation Agent or the Syndication Agent. Agent-Related Persons means any Agent and any successor thereto in such capacity hereunder, together with their respective Affiliates, and the officers, directors, employees, agents and attorneys-in-fact of such Persons and Affiliates. Administrative Agent's Payment Office means the address for payments to the Administrative Agent set forth on Schedule 10.2 or such other address as the Administrative Agent may from time to time specify pursuant to Section 10.2. Agreement means this Credit Agreement. Applicable Margin means, (a) for any Base Rate Committed Loan, zero, and (b) for any Offshore Rate Committed Loan, the applicable percentage set forth in Schedule 1.1 opposite the then-current Rating Level. Arranger means BA Securities, Inc., a Delaware corporation. Assignee - see subsection 10.8(a). Attorney Costs means and includes all reasonable fees and disbursements of any law firm or other external counsel, the allocated cost of internal legal services and all reasonable disbursements of internal counsel. Bankruptcy Code means the Federal Bankruptcy Reform Act of 1978 (11 U.S.C. Section 101, et seq.). Base Rate means, for any day, the higher of: (a) 0.50% per annum above the latest Federal Funds Rate; and (b) the rate of interest in effect for such day as publicly announced from time to time by BofA in San Francisco, California, as its "reference rate." (The "reference rate" is a rate set by BofA based upon various factors including BofA's costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above or below such announced rate.) Any change in the reference rate announced by BofA shall take effect at the opening of business on the day specified in the public announcement of such change. Base Rate Committed Loan means a Committed Loan that bears interest based on the Base Rate. Bid Borrowing means a Borrowing hereunder consisting of one or more Bid Loans made to the Company on the same day by one or more Lenders. Bid Loan means a Loan by a Lender to the Company under Section 2.6, which may be a LIBOR Bid Loan or an Absolute Rate Bid Loan. Bid Loan Lender means, in respect of any Bid Loan, the Lender making such Bid Loan to the Company. BofA means Bank of America National Trust and Savings Association, a national banking association. Borrowing means a borrowing hereunder consisting of Committed Loans of the same Type, or LIBOR Bid Loans or Absolute Rate Bid Loans, made to the Company on the same day by the Lenders under Article II and, other than in the case of Base Rate Committed Loans, having the same Interest Period. A Borrowing may be a Bid Borrowing or a Committed Borrowing. Borrowing Date means any date on which a Borrowing occurs under Section 2.3 or 2.6. Business Day means any day other than a Saturday, Sunday or other day on which commercial banks in New York City, Chicago or San Francisco are authorized or required by law to close and, if the applicable Business Day relates to any Offshore Rate Loan, means such a day on which dealings are carried on in the applicable offshore dollar interbank market. Capital Adequacy Regulation means any guideline, request or directive of any central bank or other Governmental Authority, or any other law, rule or regulation, whether or not having the force of law, in each case, regarding capital adequacy of any bank or of any corporation controlling a bank. Closing Date means the date on which all conditions precedent set forth in Section 4.1 are satisfied or waived by all Lenders (or, in the case of subsection 4.1(e), waived by the Person entitled to receive the applicable payment). Code means the Internal Revenue Code of 1986. Committed Borrowing means a Borrowing hereunder consisting of Committed Loans made by the Lenders ratably according to their respective Pro Rata Shares. Committed Loan means a Loan by a Lender to the Company under Section 2.3, which may be an Offshore Rate Committed Loan or a Base Rate Committed Loan (each a "Type" of Committed Loan). Commitment - see Section 2.1. As of the Effective Date, the initial amount of the combined Commitments of all Lenders is $200,000,000. Common Stockholders' Equity means the common stockholders' equity of the Company and its Subsidiaries determined on a consolidated basis. Company - see the Preamble. Competitive Bid means an offer by a Lender to make a Bid Loan in accordance with subsection 2.6(b). Compliance Certificate means a certificate substantially in the form of Exhibit F. Conversion/Continuation Date means any date on which, under Section 2.4, the Company (a) converts Committed Loans of one Type to another Type or (b) continues as Committed Loans of the same Type, but with a new Interest Period, Committed Loans having an Interest Period expiring on such date. Current Assets means, at any time, all assets of the Company and its Subsidiaries which may be properly classified as current assets in accordance with GAAP on a consolidated basis, exclusive of cash, cash equivalents and short-term investments. Current Liabilities means, at any time, all liabilities of the Company and its Subsidiaries which may be properly classified as current liabilities in accordance with GAAP on a consolidated basis, exclusive of commercial paper, notes payable and the current portion of long-term debt. Documentation Agent means The First National Bank of Chicago in its capacity as documentation agent hereunder. Dollars, dollars and $ each mean lawful money of the United States. Earnings from Continuing Operations Before Income Tax means, for any period, total pre-tax earnings from the continuing operations of the Company and its Subsidiaries, as determined for such period in accordance with GAAP on a consolidated basis. If the Company is not required to report discontinued operations, "Earnings from Continuing Operations Before Income Tax" shall mean "earnings before income tax" as shown on the Company's consolidated statement of earnings. Effective Date means the date on which the Administrative Agent has received counterparts of this Agreement executed by the parties hereto. Eligible Assignee means any of (a) a commercial bank organized under the laws of the United States, or any state thereof, and having a combined capital and surplus of at least $500,000,000; (b) a commercial bank organized under the laws of any other country which is a member of the Organization for Economic Cooperation and Development (the OECD), or a political subdivision of any such country, and having a combined capital and surplus of at least $500,000,000, provided that such bank is acting through a branch or agency located in the United States; and (c) a Person that is primarily engaged in the business of commercial banking and that is (i) a Subsidiary of a Lender, (ii) a Subsidiary of a Person of which a Lender is a Subsidiary, or (iii) a Person of which a Lender is a Subsidiary. Environmental Claims means all claims, however asserted, by any Governmental Authority or other Person alleging potential liability or responsibility for violation of any Environmental Law, or for release or injury to the environment. Environmental Laws means all federal, state or local laws, statutes, common law duties, rules, regulations, ordinances and codes, together with all administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authorities, in each case relating to environmental and land use matters. ERISA means the Employee Retirement Income Security Act of 1974. ERISA Affiliate means any trade or business (whether or not incorporated) under common control with the Company within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code). Event of Default - see Section 8.1. Facility Fee Rate means the applicable rate set forth in Schedule 1.1 opposite the then-current Rating Level. Federal Funds Rate means, for any day, the rate set forth in the weekly statistical release designated as H.15(519), or any successor publication, published by the Federal Reserve Bank of New York (including any such successor, "H.15(519)") on the preceding Business Day opposite the caption "Federal Funds (Effective)"; or, if for any relevant day such rate is not so published on any such preceding Business Day, the rate for such day will be the arithmetic mean as determined by the Administrative Agent of the rates for the last transaction in overnight Federal funds arranged prior to 9:00 a.m. (New York City time) on that day by each of three leading brokers of Federal funds transactions in New York City selected by the Administrative Agent. 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 Company and its consolidated Subsidiaries and (iii) 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 Company 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 Company and its consolidated Subsidiaries. FRB means the Board of Governors of the Federal Reserve System, and any Governmental Authority succeeding to any of its principal functions. Further Taxes means any and all present or future taxes, levies, assessments, imposts, duties, deductions, fees, withholdings or similar charges (including net income taxes and franchise taxes), and all liabilities with respect thereto, imposed by any jurisdiction on account of amounts payable or paid pursuant to Section 3.1. GAAP means generally accepted accounting principles set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the U.S. accounting profession), which are applicable to the circumstances as of the date of any determination. Governmental Authority means any nation or government, any state or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing. Indemnified Liabilities - see Section 10.5. Indemnified Person - see Section 10.5. Insolvency Proceeding means, with respect to any Person, (a) any case, action or proceeding with respect to such Person before any court or other Governmental Authority relating to bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution, winding-up or relief of debtors, or (b) any general assignment for the benefit of creditors, composition, marshalling of assets for creditors, or other similar arrangement in respect of its creditors generally or any substantial portion of its creditors; in each case undertaken under any U.S. Federal, state or foreign law, including the Bankruptcy Code. Interest Payment Date means, as to any Loan other than a Base Rate Committed Loan, the last day of each Interest Period applicable to such Loan and, as to any Base Rate Committed Loan, the last Business Day of each calendar quarter, provided that (a) if any Interest Period for an Offshore Rate Committed Loan exceeds three months, the date that falls three months after the beginning of such Interest Period shall also be an Interest Payment Date and (b) as to any Bid Loan, such intervening dates prior to the maturity thereof as may be specified by the Company and agreed to by the applicable Bid Loan Lender in the applicable Competitive Bid also shall be Interest Payment Dates. Interest Period means, (a) as to any Offshore Rate Loan, the period commencing on the Borrowing Date of such Loan or, in the case of any Offshore Rate Committed Loan, on the Conversion/Continuation Date on which such Loan is converted into or continued as an Offshore Rate Committed Loan, and ending on the date one, two, three or six months thereafter as selected by the Company in its Notice of Committed Borrowing, Notice of Conversion/Continuation or Invitation for Competitive Bids, as the case may be; and (b) as to any Absolute Rate Bid Loan, a period of not less than seven days and not more than 180 days as selected by the Company in the applicable Invitation for Competitive Bids; provided that: (i) if any Interest Period would otherwise end on a day that is not a Business Day, such Interest Period shall be extended to the following Business Day unless, in the case of an Offshore Rate Loan, the result of such extension would be to carry such Interest Period into another calendar month, in which event such Interest Period shall end on the preceding Business Day; (ii) any Interest Period for an Offshore Rate Loan that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and (iii) no Interest Period for any Loan shall extend beyond the Termination Date. Invitation for Competitive Bids - see Section 2.6(a). IRS means the Internal Revenue Service, and any Governmental Authority succeeding to any of its principal functions under the Code. Lender - see the Preamble. Lending Office means, as to any Lender, the office or offices of such Lender specified as its "Lending Office" or "Domestic Lending Office" or "Offshore Lending Office", as the case may be, on Schedule 10.2, or such other office or offices as such Lender may from time to time notify the Company and the Administrative Agent pursuant to Section 10.2. LIBOR Auction means a solicitation of Competitive Bids setting forth a LIBOR Bid Margin pursuant to Section 2.6. LIBOR Bid Loan means any Bid Loan that bears interest at a rate based upon the Offshore Rate. LIBOR Bid Margin - see subsection 2.6(b)(ii)(C). Lien means any security interest, mortgage, deed of trust, pledge, hypothecation, assignment, charge or deposit arrangement, encumbrance, lien (statutory or other) or preferential arrangement of any kind or nature whatsoever in respect of any property (including those created by, arising under or evidenced by any conditional sale or other title retention agreement, the interest of a lessor under a capital lease, or any financing lease having substantially the same economic effect as any of the foregoing, but not including the interest of a lessor under an operating lease). Loan means an extension of credit by a Lender to the Company under Article II. A Loan may be a Committed Loan or a Bid Loan. Material Adverse Effect means a material adverse change in, or a material adverse effect upon, the business, assets or condition, financial or otherwise, of the Company and its Subsidiaries taken as a whole. Material Subsidiary means, at any time, any Restricted Subsidiary that had a net worth of $10,000,000 or more as of the last day of any month during the preceding 12-month period. Moody's means Moody's Investors Service, Inc. or any successor thereto. Multiemployer Plan means a "multiemployer plan", within the meaning of Section 4001(a)(3) of ERISA, with respect to which the Company or any ERISA Affiliate may have any liability. Net Worth means Common Stockholders' Equity plus (a) any preferred stock of the Company, as set forth on a consolidated balance sheet of the Company, and (b) the lesser of (i) the outstanding amount of any guaranty of an obligation given by the Company or any Subsidiary of the Company to a lender to a trust holding assets of any employee benefit plan of the Company or any Subsidiary of the Company for the purpose of allowing such trust to borrow monies, which amount has been reflected on the consolidated balance sheet of the Company 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. The value of a share of common stock (par value ten cents per share) of the Company 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. Note means a promissory note executed by the Company in favor of a Lender pursuant to subsection 2.2(b), in substantially the form of Exhibit E. Notice of Committed Borrowing means a notice in substantially the form of Exhibit A. Notice of Conversion/Continuation means a notice in substantially the form of Exhibit B. Obligations means all advances, debts, liabilities, obligations, covenants and duties arising under this Agreement or any Note owing by the Company to any Lender, any Agent or any Indemnified Person, whether direct or indirect (including those acquired by assignment), absolute or contingent, due or to become due, or now existing or hereafter arising. Offshore Rate means, for any Interest Period, with respect to Offshore Rate Loans comprising part of the same Borrowing, the rate of interest per annum determined by the Administrative Agent as the rate at which dollar deposits in the approximate amount of the Offshore Rate Loan of BofA (or, if BofA is not a Lender, the Affiliate of BofA with the largest Commitment hereunder or, in the case of a Bid Borrowing in which neither BofA nor any Affiliate thereof is participating, in the approximate amount of the largest Loan included in such Borrowing) for such Interest Period would be offered by BofA's Grand Cayman Branch, Grand Cayman B.W.I. (or such other office as may be designated for such purpose by BofA), to major banks in the offshore dollar interbank market at their request at approximately 11:00 a.m. (New York City time) two Business Days prior to the commencement of such Interest Period. Offshore Rate Committed Loan means a Committed Loan that bears interest based on the Offshore Rate. Offshore Rate Loan means an Offshore Rate Committed Loan or a LIBOR Bid Loan. Operating Property means any manufacturing or processing plant, office facility, warehouse or distribution center, together with the land upon which it is situated and fixtures comprising a part thereof, located in the United States or its territories or possessions or in Canada and owned and operated now or hereafter by the Company or any Restricted Subsidiary and having a net book value on the date as of which the determination is being made of more than 0.5% of Tangible Net Worth. Other Taxes means any present or future stamp, court or documentary taxes or any other excise or property taxes, charges or similar levies which arise from any payment made hereunder or from the execution, delivery, performance, enforcement or registration of, or otherwise with respect to, this Agreement or any Note. Participant - see subsection 10.8(c). Payment Sharing Notice means a written notice from the Company or any Lender informing the Administrative Agent that an Event of Default has occurred and is continuing and directing the Administrative Agent to allocate payments received from the Company in accordance with subsection 2.15(b). PBGC means the Pension Benefit Guaranty Corporation, or any Governmental Authority succeeding to any of its principal functions under ERISA. Pension Plan means a pension plan (as defined in Section 3(2) of ERISA) subject to Title IV of ERISA, other than a Multiemployer Plan, with respect to which the Company or any ERISA Affiliate may have any liability. Person means an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture or Governmental Authority. Plan means an employee benefit plan (as defined in Section 3(3) of ERISA), other than a Multiemployer Plan, with respect to which the Company may have any liability. Pro Rata Share means, as to any Lender at any time, the percentage equivalent (expressed as a decimal, rounded to the ninth decimal place) at such time of such Lender's Commitment divided by the combined Commitments of all Lenders. 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 Company by Moody's or S&P, whichever results in the numerically higher (one being highest) Level; provided that (a) 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 (b) 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 Company (a) is then rated below Baa3 by Moody's (or is not rated by Moody's) and (b) is then rated below BBB- by S&P (or is not rated by S&P). Replacement Lender - see Section 3.7. Required Lenders means (a) prior to the Termination Date, Lenders holding at least 66-2/3% of the Commitments, and (b) on and after the Termination Date, Lenders holding at least 66-2/3% of the then aggregate unpaid principal amount of the Loans. Requirement of Law means, as to any Person, any law (statutory or common), treaty, rule or regulation or determination of an arbitrator or of a Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject. Responsible Officer means the Chairman, the President, any Vice President, the Chief Financial Officer, the Controller, the Treasurer or any Assistant Treasurer of the Company. Restricted Subsidiary means any Subsidiary of the Company other than an Unrestricted Subsidiary. S&P means Standard & Poor's Rating Services, a division of The McGraw-Hill Companies, Inc., or any successor thereto. SEC means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions. Subsidiary of a Person means any corporation, association, partnership, limited liability company, joint venture or other business entity of which more than 50% of the voting stock, membership interests or other equity interests (in the case of Persons other than corporations), is owned or controlled directly or indirectly by such Person, or one or more of the Subsidiaries of such Person, or a combination thereof. Unless the context otherwise clearly requires, references herein to a "Subsidiary" refer to a Subsidiary of the Company. Syndication Agent means Bankers Trust Company in its capacity as syndication agent hereunder. Tangible Net Worth means, at any time, Net Worth less the amount of goodwill, debt discount and other like intangibles of the Company and its Subsidiaries determined on a consolidated basis. Taxes means any and all present or future taxes, levies, assessments, imposts, duties, deductions, fees, withholdings or similar charges, and all liabilities with respect thereto, excluding, in the case of each Lender and the Administrative Agent, such taxes (including income taxes or franchise taxes) as are taxes imposed on or measured by each Lender's or the Administrative Agent's net income, profits or capitalization by the jurisdiction (or any political subdivision thereof) under the laws of which such Lender or the Administrative Agent, as the case may be, is organized or maintains a lending office. Termination Date means the earlier to occur of: (a) March 15, 2001; and (b) the date on which the Commitments terminate in accordance with the provisions of this Agreement. Total Capitalization means, at any time, the sum of Total Indebtedness and Net Worth. For purposes of computing Total Capitalization, any decrease since November 30, 1995 to Common Stockholders' Equity as a component of 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 Common Stockholders' Equity. Total Indebtedness means, at any time, total indebtedness for monies borrowed by the Company or any of its Subsidiaries as such items appear on the consolidated balance sheet of the Company and its Subsidiaries on a consolidated basis in accordance with GAAP ("Debt"). For any date other than August 31 as of any year during the term of this Agreement, Total Indebtedness shall be calculated by subtracting from Debt the excess, if any, of (a) Working Capital as of such date excluding increases in Working Capital resulting from Acquisitions since the preceding August 31 over (b) Working Capital as of the preceding August 31 ("Base Amount"), which Base Amount shall be reduced by the amount of Working Capital attributable to businesses or assets of the Company or any of its consolidated Subsidiaries disposed of since the preceding August 31. Type has the meaning specified in the definition of "Committed Loan." United States and U.S. each means the United States of America. Unmatured Event of Default means any event or circumstance which, with the giving of notice, the lapse of time, or both, would (if not cured or otherwise remedied during such time) constitute an Event of Default. Unrestricted Subsidiary means (a) any Subsidiary substantially all of the physical properties of which are located, or substantially all of the business of which is carried on, outside of the United States, and its territories and possessions, and Canada, (b) (i) any Subsidiary the primary business of which consists of financing operations in connection with leasing and conditional sales transactions on behalf of the Company and its Subsidiaries and/or purchasing accounts receivable, and/or making loans secured by accounts receivable or inventory, or which is otherwise primarily engaged in the business of a financing company, (ii) Lucan Feed Service, Inc., (iii) The Pickaway Grain Company, (iv) Multifoods Transportation, Inc., (v) Sea-Pac Corp., or (vi) any other Subsidiary which has been designated as an Unrestricted Subsidiary by the Board of Directors of the Company (provided that no Restricted Subsidiary may be designated as an Unrestricted Subsidiary if at the time of such designation such Restricted Subsidiary owns and operates an Operating Property or owns any shares of stock or indebtedness of a Restricted Subsidiary), in each case unless and until any of the Subsidiaries referred to in the foregoing clauses (i) through (vi) shall be designated by the Board of Directors of the Company as a Restricted Subsidiary, and (c) any Subsidiary a majority of the voting stock of which shall at any time be owned, directly or indirectly, by one or more Unrestricted Subsidiaries. Working Capital means the excess, if any, of Current Assets over Current Liabilities. 1.2 Other Interpretive Provisions. (a) The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms. (b) The words "hereof", "herein", "hereunder" and similar words refer to this Agreement as a whole and not to any particular provision of this Agreement; and subsection, Section, Schedule and Exhibit references are to this Agreement unless otherwise specified. (c) (i) The term "documents" includes any and all instruments, documents, agreements, certificates, indentures, notices and other writings, however evidenced. (ii) The term "including" is not limiting and means "including without limitation." (iii) In the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including"; the words "to" and "until" each mean "to but excluding", and the word "through" means "to and including." (d) Unless otherwise expressly provided herein, (i) references to agreements (including this Agreement) and other contractual instruments shall be deemed to include all subsequent amendments and other modifications thereto, but only to the extent such amendments and other modifications are not prohibited by the terms of this Agreement, and (ii) references to any statute or regulation are to be construed as including all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting the statute or regulation. (e) The captions and headings of this Agreement are for convenience of reference only and shall not affect the interpretation of this Agreement. (f) This Agreement may use several different limitations, tests or measurements to regulate the same or similar matters. All such limitations, tests and measurements are cumulative and shall each be performed in accordance with their terms. Unless otherwise expressly provided herein, any reference to any action of any Agent, the Lenders or the Required Lenders by way of consent, approval or waiver shall be deemed modified by the phrase "in its/their sole discretion." (g) This Agreement is the result of negotiations among and has been reviewed by counsel to the Agents, the Company and the other parties, and is the product of all parties. Accordingly, this Agreement shall not be construed against the Lenders or the Agents merely because of the Agents' or Lenders' involvement in its preparation. 1.3 Accounting Principles. (a) Unless the context otherwise clearly requires, all accounting terms not expressly defined herein shall be construed, and all financial computations required under this Agreement shall be made, in accordance with GAAP, consistently applied; provided that if the Company notifies the Administrative Agent that the Company wishes to amend any covenant in Article VII to eliminate the effect of any change in GAAP on the operation of such covenant (or if the Administrative Agent notifies the Company that the Required Lenders wish to amend Article VII for such purpose), then the Company's compliance with such covenant shall be determined on the basis of GAAP in effect immediately before the relevant change in GAAP became effective, until either such notice is withdrawn or such covenant is amended in a manner satisfactory to the Company and the Required Lenders. (b) References herein to "fiscal year" and "fiscal quarter" refer to such fiscal periods of the Company. ARTICLE II THE CREDITS 2.1 Amounts and Terms of Commitments Amounts and Terms of Commitments. Each Lender severally agrees, on the terms and conditions set forth herein, to make Committed Loans to the Company from time to time on any Business Day during the period from the Closing Date to the Termination Date, in an aggregate amount not to exceed at any time outstanding the amount set forth on Schedule 2.1 (such amount, as the same may be reduced under Section 2.7 or as a result of one or more assignments under Section 10.8, such Lender's "Commitment"); provided, however, that the aggregate principal amount of all outstanding Loans (whether Committed Loans or Bid Loans) shall not at any time exceed the combined Commitments; and provided, further, that the aggregate principal amount of the Committed Loans of any Lender shall not at any time exceed such Lender's Commitment. Within the limits of each Lender's Commitment, and subject to the other terms and conditions hereof, the Company may borrow under this Section 2.1, prepay under Section 2.8 and reborrow under this Section 2.1. 2.2 Loan Accounts Loan Accounts. (a) The Loans made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender in the ordinary course of business. The accounts or records maintained by the Administrative Agent and each Lender shall be conclusive (absent manifest error) of the amount of the Loans made by the Lenders to the Company, and the interest and payments thereon. Any failure so to record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Company hereunder to pay any amount owing with respect to the Loans. (b) Upon the request of any Lender made through the Administrative Agent, the Loans made by such Lender may be evidenced by one or more Notes, instead of or in addition to loan accounts. Each such Lender shall endorse on the schedules annexed to its Note(s) the date, amount and maturity of each Loan made by it and the amount of each payment of principal made by the Company with respect thereto. Each such Lender is irrevocably authorized by the Company to endorse its Note(s) and each Lender's record shall be conclusive absent manifest error; provided, however, that the failure of a Lender to make, or an error in making, a notation thereon with respect to any Loan shall not limit or otherwise affect the obligations of the Company hereunder or under any such Note to such Lender. 2.3 Procedure for Committed Borrowing. (a) Each Committed Borrowing shall be made upon the Company's irrevocable written notice delivered to the Administrative Agent in the form of a Notice of Committed Borrowing, which notice must be received by the Administrative Agent prior to (i) 10:00 a.m. (Chicago time) two Business Days prior to the requested Borrowing Date, in the case of Offshore Rate Loans, and (ii) 11:00 a.m. (Chicago time) on the requested Borrowing Date, in the case of Base Rate Loans, specifying: (A) the amount of the Committed Borrowing, which shall be in an aggregate amount of $5,000,000 or a higher integral multiple of $1,000,000; (B) the requested Borrowing Date, which shall be a Business Day; (C) the Type of Loans comprising such Committed Borrowing; and (D) in the case of Offshore Rate Committed Loans, the duration of the initial Interest Period therefor. (b) The Administrative Agent will promptly notify each Lender of its receipt of any Notice of Committed Borrowing and of the amount of such Lender's Pro Rata Share of such Borrowing. (c) Subject to the conditions precedent set forth herein, each Lender will make the amount of its Pro Rata Share of each Committed Borrowing available to the Administrative Agent for the account of the Company at the Administrative Agent's Payment Office by 12:00 noon (Chicago time) on the Borrowing Date requested by the Company in funds immediately available to the Administrative Agent. Such amounts will then be made available promptly to the Company by the Administrative Agent, at such account and office as the Company shall direct from time to time, in like funds as received by the Administrative Agent. (d) After giving effect to any Committed Borrowing, unless the Administrative Agent otherwise consents, there may not be more than 15 different Interest Periods in effect for all Borrowings (whether Committed Borrowings or Bid Borrowings). 2.4 Conversion and Continuation Elections for Committed Borrowings. (a) The Company may, upon irrevocable written notice to the Administrative Agent in accordance with subsection 2.4(b): (i) elect, as of any Business Day, in the case of Base Rate Committed Loans, or as of the last day of the applicable Interest Period, in the case of Offshore Rate Committed Loans, to convert any such Committed Loans (or any part thereof in an aggregate amount of $5,000,000 or a higher integral multiple of $1,000,000) into Committed Loans of the other Type; or (ii) elect, as of the last day of the applicable Interest Period, to continue any Committed Loans having Interest Periods expiring on such day (or any part thereof in an aggregate amount of $5,000,000 or a higher integral multiple of $1,000,000); provided that if at any time the aggregate amount of Offshore Rate Committed Loans in respect of any Committed Borrowing is reduced, by payment, prepayment, or conversion of any part thereof, to be less than $5,000,000, such Offshore Rate Committed Loans shall automatically convert into Base Rate Committed Loans. (b) The Company shall deliver a Notice of Conversion/Continuation to be received by the Administrative Agent not later than (i) 10:00 a.m. (Chicago time) at least two Business Days in advance of the Conversion/Continuation Date, if the Committed Loans are to be converted into or continued as Offshore Rate Committed Loans; and (ii) 11:00 a.m. (Chicago time) on the Conversion/Continuation Date, if the Committed Loans are to be converted into Base Rate Committed Loans, specifying: (A) the proposed Conversion/Continuation Date; (B) the aggregate amount of Committed Loans to be converted or continued; (C) the Type of Committed Loans resulting from the proposed conversion or continuation; and (D) in the case of conversions into Offshore Rate Committed Loans, the duration of the requested Interest Period. (c) If upon the expiration of any Interest Period applicable to Offshore Rate Committed Loans, the Company has failed to select timely a new Interest Period to be applicable to such Offshore Rate Committed Loans, the Company shall be deemed to have elected to convert such Offshore Rate Committed Loans into Base Rate Committed Loans effective as of the expiration date of such Interest Period. (d) The Administrative Agent will promptly notify each Lender of its receipt of a Notice of Conversion/Continuation, or, if no timely notice is provided by the Company, the Administrative Agent will promptly notify each Lender of the details of any automatic conversion. All conversions and continuations shall be made ratably according to the respective outstanding principal amounts of the Committed Loans held by each Lender with respect to which the notice was given. (e) Unless the Required Lenders otherwise consent, during the existence of an Event of Default or Unmatured Event of Default, the Company may not elect to have a Loan converted into or continued as an Offshore Rate Committed Loan. (f) After giving effect to any conversion or continuation of Committed Loans, unless the Administrative Agent shall otherwise consent, there may not be more than 15 different Interest Periods in effect for all Loans (whether Committed Loans or Bid Loans). 2.5 Bid Borrowings Bid Borrowings. In addition to Committed Borrowings pursuant to Section 2.3, each Lender severally agrees that the Company may, as set forth in Section 2.6, from time to time prior to the Termination Date request the Lenders to submit offers to make Bid Loans to the Company; provided that the Lenders may, but shall have no obligation to, submit such offers and the Company may, but shall have no obligation to, accept any such offers; and provided, further, that (a) the aggregate principal amount of all outstanding Loans (whether Bid Loans or Committed Loans) shall not at any time exceed the combined Commitments and (b) after giving effect to any Bid Borrowing, there may not be more than 15 different Interest Periods in effect for all Borrowings (whether Bid Borrowings or Committed Borrowings). 2.6 Procedure for Bid Borrowings Procedure for Bid Borrowings. (a) When the Company wishes to request the Lenders to submit offers to make Bid Loans hereunder, it shall transmit to each Lender by facsimile transmission a notice in substantially the form of Exhibit C (an "Invitation for Competitive Bids") so as to be received no later than 9:00 a.m. (Chicago time) (x) four Business Days prior to the date of a proposed Bid Borrowing in the case of a LIBOR Auction or (y) one Business Day prior to the date of a proposed Bid Borrowing in the case of an Absolute Rate Auction, specifying: (i) the date of such Bid Borrowing, which shall be a Business Day; (ii) the amount of such Bid Borrowing, which shall be in an aggregate amount of $5,000,000 or a higher integral multiple of $1,000,000; (iii) whether the Competitive Bids requested are to be for LIBOR Bid Loans or Absolute Rate Bid Loans or both; and (iv) the duration of the Interest Period applicable thereto, subject to the provisions of the definition of "Interest Period" herein. (b) (i) Each Lender may at its discretion submit a Competitive Bid containing an offer or offers to make Bid Loans in response to any Invitation for Competitive Bids. Each Competitive Bid must comply with the requirements of this subsection 2.6(b) and must be submitted to the Company by facsimile transmission not later than (A) 8:30 a.m. (Chicago time) three Business Days prior to the proposed date of Borrowing, in the case of a LIBOR Auction, or (B) 8:30 a.m. (Chicago time) on the proposed date of Borrowing, in the case of an Absolute Rate Auction. (ii) Each Competitive Bid shall be in substantially the form of Exhibit D, specifying therein: (A) the proposed date of Borrowing; (B) the principal amount of each Bid Loan for which such Competitive Bid is being made, which principal amount (1) may be equal to, greater than or less than the Commitment of the quoting Lender, (2) must be $5,000,000 or a higher integral multiple of $1,000,000 and (3) may not exceed the principal amount of Bid Loans for which Competitive Bids were requested; (C) if the Company elects a LIBOR Auction, the margin above or below Offshore Rate (the "LIBOR Bid Margin") offered for each such Bid Loan, expressed as a percentage (rounded to the nearest 1/16th of 1%) to be added to or subtracted from the applicable Offshore Rate, and the Interest Period applicable thereto; (D) if the Company elects an Absolute Rate Auction, the rate of interest per annum (which shall be an integral multiple of 1/100th of 1%) (the "Absolute Rate") offered for each such Bid Loan, and the Interest Period applicable thereto; and (E) the identity of the quoting Lender. A Competitive Bid may contain up to three separate offers by the quoting Lender with respect to each Interest Period specified in the related Invitation for Competitive Bids. (iii) Any Competitive Bid shall be disregarded if it: (A) is not substantially in conformity with Exhibit D or does not specify all of the information required by subsection (b)(ii) of this Section; (B) contains qualifying, conditional or similar language; (C) proposes terms other than or in addition to those set forth in the applicable Invitation for Competitive Bids; or (D) arrives after the time set forth in subsection (b)(i) of this Section. (iv) Subject only to the provisions of Sections 3.2, 3.5 and 4.2 hereof and the provisions of this subsection (b), any Competitive Bid shall be irrevocable except with the written consent of the Company. (c) Not later than 9:30 a.m. (Chicago time) three Business Days prior to the proposed date of Borrowing, in the case of a LIBOR Auction, or 9:30 a.m. (Chicago time) on the proposed date of Borrowing, in the case of an Absolute Rate Auction, the Company shall notify (x) each Lender which submitted a Competitive Bid if its offer has been accepted and, if applicable, the amount of the Bid Loan or Bid Loans to be made by it on the date of the relevant Bid Borrowing and (y) the Administrative Agent of the amount of, rate of interest on and Interest Period for, and the identity of the Lender which is to make, each Bid Loan to be made on the date of each Bid Borrowing resulting from each LIBOR Auction and Absolute Rate Auction. The Company shall be under no obligation to accept any offer and may choose to reject all offers. In the case of acceptance, such notice shall specify the aggregate principal amount of offers for each Interest Period that is accepted. The Company may accept any Competitive Bid in whole or in part; provided that: (i) the aggregate principal amount of each Bid Borrowing may not exceed the applicable amount set forth in the related Invitation for Competitive Bids; (ii) the principal amount of each Bid Borrowing must be $5,000,000 or a higher integral multiple of $1,000,000; (iii) acceptance of offers may only be made on the basis of ascending LIBOR Bid Margins or Absolute Rates, as the case may be, within each Interest Period; and (iv) the Company may not accept any offer that is described in subsection 2.6(b)(iii) or that otherwise fails to comply with the requirements of this Agreement. (d) If offers are made by two or more Lenders with the same LIBOR Bid Margins or Absolute Rates, as the case may be, for a greater aggregate principal amount than the amount in respect of which such offers are accepted for the related Interest Period, the principal amount of Bid Loans in respect of which such offers are accepted shall be allocated by the Company among such Lenders as nearly as possible (in such multiples, not less than $1,000,000, as the Company may deem appropriate) in proportion to the aggregate principal amounts of such offers. Determination by the Company of the amount of Bid Loans shall be conclusive in the absence of manifest error. (e) Subject to the conditions precedent set forth herein (including, if applicable, Sections 3.2 and 3.5), each Lender which has received notice pursuant to subsection 2.6(c) that its Competitive Bid has been accepted shall make the amounts of such Bid Loans available to the Administrative Agent for the account of the Company at the Administrative Agent's Payment Office by 1:00 p.m. (Chicago time) on such date of Bid Borrowing, in funds immediately available to the Administrative Agent. Such funds will then be made available promptly to the Company by the Administrative Agent, at such account and office as the Company shall direct from time to time, in like funds as received by the Administrative Agent. (f) Promptly following each Bid Borrowing, the Company shall notify the Administrative Agent and each Lender which so requests of the ranges of bids submitted and the highest and lowest Bids accepted for each Interest Period requested by the Company and the aggregate amount borrowed pursuant to such Bid Borrowing. (g) From time to time, the Company and the Lenders shall furnish such information to the Administrative Agent as the Administrative Agent may request relating to the making of Bid Loans, including the amounts, interest rates, dates of borrowings and maturities thereof, for purposes of the allocation of amounts received from the Company for payment of all amounts owing hereunder. (h) Nothing in this Section 2.6 shall be construed as a right of first offer in favor of the Lenders or to otherwise limit the ability of the Company to request and accept credit facilities from any Person (including any of the Lenders), provided that no Event of Default or Unmatured Event of Default would otherwise arise or exist as a result of the Company executing, delivering or performing under such other credit facilities. 2.7 Voluntary Termination or Reduction of Commitments. The Company may, upon not less than five Business Days' prior notice to the Administrative Agent, terminate the Commitments, or permanently reduce the Commitments by an aggregate amount of $5,000,000 or a higher integral multiple of $1,000,000; unless, after giving effect thereto and to any payments or prepayments of Loans made on the effective date thereof, the aggregate principal amount of all Loans would exceed the amount of the combined Commitments then in effect. Once reduced in accordance with this Section, the Commitments may not be increased. Any reduction of the Commitments shall be applied to each Lender according to its Pro Rata Share. 2.8 Optional Prepayments. (a) Subject to Section 3.4, the Company may, from time to time, upon irrevocable notice to the Administrative Agent not later than 10:30 a.m. (Chicago time) on any Business Day, in the case of Base Rate Loans, and on the day which is two Business Days prior to the date of prepayment, in the case of Offshore Rate Loans, ratably prepay Committed Loans in whole or in part, in an aggregate amount of $5,000,000 or a higher integral multiple of $1,000,000. Such notice of prepayment shall specify the date and amount of such prepayment and the Committed Loans to be prepaid. The Administrative Agent will promptly notify each Lender of its receipt of any such notice, and of such Lender's Pro Rata Share of such prepayment. If such notice is given by the Company, the Company shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein, together with, in the case of Offshore Rate Committed Loans, accrued interest to such date on the amount prepaid and any amounts required pursuant to Section 3.4. (b) Bid Loans may not be voluntarily prepaid. 2.9 Repayment. The Company shall repay each Bid Loan on the last day of each Interest Period therefor. The Company shall repay all Loans (including any outstanding Bid Loan) on the Termination Date. 2.10 Interest. (a) Each Committed Loan shall bear interest on the outstanding principal amount thereof from the applicable Borrowing Date at a rate per annum equal to the Offshore Rate or the Base Rate, as the case may be (and subject to the Company's right to convert to the other Type of Committed Loan under Section 2.4), plus the Applicable Margin as in effect from time to time. Each Bid Loan shall bear interest on the outstanding principal amount thereof from the relevant Borrowing Date at a rate per annum equal to the Offshore Rate plus (or minus) the LIBOR Bid Margin or at the Absolute Bid Rate, as the case may be. (b) Interest on each Loan shall be paid in arrears on each Interest Payment Date. Interest also shall be paid on the date of any conversion of Offshore Rate Committed Loans under Section 2.4 and prepayment of Offshore Rate Committed Loans under Section 2.8, in each case for the portion of the Loans so converted or prepaid. (c) The Company shall pay to each Lender, as long as such Lender shall be required under regulations of the FRB to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency funds or deposits (currently known as "Eurocurrency liabilities"), additional interest on the unpaid principal amount of each Offshore Rate Committed Loan equal to the actual costs of such reserves allocated to such Loan by such Lender (as determined by such Lender in good faith, which determination shall be conclusive), payable on each date on which interest is payable on such Loan, provided that the Company shall have received at least 15 days' prior written notice (with a copy to the Administrative Agent) of the amount of such additional interest from such Lender. If a Lender fails to give notice 15 days prior to the relevant Interest Payment Date, such additional interest shall be payable 15 days after receipt of such notice. (d) Notwithstanding the foregoing provisions of this Section, if all or any portion of the principal amount of any Loan shall not be paid when due (whether at stated maturity, by acceleration or otherwise), then the Company shall pay interest (after as well as before entry of judgment thereon to the extent permitted by law) on such overdue principal amount at a rate per annum equal to the rate otherwise applicable thereto pursuant to the terms hereof (or, after the end of the applicable Interest Period for any Offshore Rate Committed Loan or Bid Loan, the Base Rate) plus 2%. All such interest shall be payable on demand. (e) Anything herein to the contrary notwithstanding, the obligations of the Company to any Lender hereunder shall be subject to the limitation that payments of interest shall not be required for any period for which interest is computed hereunder, to the extent (but only to the extent) that contracting for or receiving such payment by such Lender would be contrary to the provisions of any law applicable to such Lender limiting the highest rate of interest that may be lawfully contracted for, charged or received by such Lender, and in such circumstances the Company shall pay such Lender interest at the highest rate permitted by applicable law. 2.11 Fees. (a) Administrative Agent's and Arranger's Fees. The Company agrees to pay to the Administrative Agent and the Arranger such fees at such times and in such amounts as are mutually agreed to from time to time by the Company and the Administrative Agent or the Arranger, as the case may be. (b) Facility Fees. The Company shall pay to the Administrative Agent for the account of each Lender a facility fee computed at the Facility Fee Rate on the average daily amount of such Lender's Commitment (whether used or unused) or, if the Commitments have terminated, on the principal amount of all of such Lender's Committed Loans. Such facility fee shall accrue from the Effective Date to the Termination Date, and thereafter until all Committed Loans are paid in full, and shall be due and payable quarterly in arrears on the last Business Day of each calendar quarter, with the final payment to be made on the Termination Date (or, if later, on the date all Committed Loans are paid in full); provided that, in connection with any reduction of Commitments under Section 2.7, the accrued facility fee calculated for the period ending on the date of such reduction shall be paid on the date of such reduction, with the following quarterly payment being calculated on the basis of the period from such reduction date to the quarterly payment date. The facility fees shall continue to accrue notwithstanding that one or more conditions to borrowing in Article IV are not met. 2.12 Computation of Fees and Interest. (a) All computations of interest for Base Rate Committed Loans when the Base Rate is determined by BofA's "reference rate" shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed. All other computations of interest and fees shall be made on the basis of a 360-day year and actual days elapsed. Interest and fees shall accrue during each period during which such interest or such fees are computed from the first day thereof to the last day thereof. (b) Each determination of an interest rate by the Administrative Agent shall be conclusive and binding on the Company and the Lenders in the absence of manifest error. The Administrative Agent will, at the request of the Company or any Lender, deliver to the Company or such Lender, as the case may be, a statement showing the quotations used by the Administrative Agent in determining any interest rate and the resulting interest rate. 2.13 Payments by the Company. (a) All payments to be made by the Company shall be made without set-off, recoupment or counterclaim. Except as otherwise expressly provided herein, all payments by the Company shall be made to the Administrative Agent for the account of the Lenders at the Administrative Agent's Payment Office, and shall be made in Dollars and in immediately available funds, no later than 12:00 noon (Chicago time) on the date specified herein. The Administrative Agent will promptly distribute to each Lender its Pro Rata Share (or other applicable share as expressly provided herein) of such payment in like funds as received. Any payment received by the Administrative Agent later than 12:00 noon (Chicago time) shall be deemed to have been received on the following Business Day and any applicable interest or fee shall continue to accrue. (b) Whenever any payment is due on a day other than a Business Day, such payment shall be made on the following Business Day (unless, in the case of an Offshore Rate Loan, the following Business Day is in another calendar month, in which case such payment shall be made on the preceding Business Day), and such extension of time shall in such case be included in the computation of interest or fees, as the case may be. (c) Unless the Administrative Agent receives notice from the Company prior to the date on which any payment is due to the Lenders that the Company will not make such payment in full as and when required, the Administrative Agent may assume that the Company has made such payment in full to the Administrative Agent on such date in immediately available funds and the Administrative Agent may (but shall not be so required), in reliance upon such assumption, distribute to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent the Company has not made such payment in full to the Administrative Agent, each Lender shall repay to the Administrative Agent on demand such amount distributed to such Lender, together with interest thereon at the Federal Funds Rate for each day from the date such amount is distributed to such Lender until the date repaid. 2.14 Payments by the Lenders to the Administrative Agent. (a) Unless the Administrative Agent receives notice from a Lender on or prior to the Closing Date or, with respect to any Committed Borrowing after the Closing Date, at least one Business Day prior to the date of a Committed Borrowing that such Lender will not make available as and when required hereunder to the Administrative Agent for the account of the Company the amount of such Lender's Pro Rata Share of such Committed Borrowing, the Administrative Agent may assume that such Lender has made such amount available to the Administrative Agent in immediately available funds on the Borrowing Date and the Administrative Agent may (but shall not be so required), in reliance upon such assumption, make available to the Company on such date a corresponding amount. If and to the extent any Lender shall not have made its full amount available to the Administrative Agent in immediately available funds and the Administrative Agent in such circumstances has made available to the Company such amount, such Lender shall on the Business Day following such Borrowing Date make such amount available to the Administrative Agent, together with interest at the Federal Funds Rate for each day during such period. A notice of the Administrative Agent submitted to any Lender with respect to amounts owing under this subsection (a) shall be conclusive, absent manifest error. If such amount is so made available, such payment to the Administrative Agent shall constitute such Lender's Committed Loan on the date of Borrowing for all purposes of this Agreement. If such amount is not made available to the Administrative Agent on the Business Day following the Borrowing Date, the Administrative Agent will notify the Company of such failure to fund and, upon demand by the Administrative Agent, the Company shall pay such amount to the Administrative Agent for the Administrative Agent's account, together with interest thereon for each day elapsed since the date of such Borrowing, at a rate per annum equal to the interest rate applicable at the time to the Committed Loans comprising such Committed Borrowing. (b) The failure of any Lender to make any Loan on any Borrowing Date shall not relieve any other Lender of any obligation hereunder to make a Loan on such Borrowing Date, but no Lender shall be responsible for the failure of any other Lender to make the Loan to be made by such other Lender on any Borrowing Date. 2.15 Sharing of Payments, etc. (a) Whenever any payment received by the Administrative Agent to be distributed to the Lenders is insufficient to pay in full the amounts then due and payable to the Lenders, and the Administrative Agent has not received a Payment Sharing Notice, such payment shall be distributed to the Lenders (and for purposes of this Agreement shall be deemed to have been applied by the Lenders, notwithstanding the fact that any Lender may have made a different application in its books and records) in the following order: first, to the payment of the principal amount of the Loans which is then due and payable, ratably among the Lenders in accordance with the aggregate principal amount owed to each Lender; second, to the payment of interest then due and payable on the Loans, ratably among the Lenders in accordance with the aggregate amount of interest owed to each Lender; third, to the payment of the facility fees payable under subsection 2.11(b), ratably among the Lenders in accordance with their respective Pro Rata Shares; and fourth, to the payment of any other amount payable under this Agreement, ratably among the Lenders in accordance with the aggregate amount owed to each Lender. (b) After the Administrative Agent has received a Payment Sharing Notice, and for so long thereafter as any Event of Default exists, all payments received by the Administrative Agent to be distributed to the Lenders shall be distributed to the Lenders (and for purposes of this Agreement shall be deemed to have been applied by the Lenders, notwithstanding the fact that any Lender may have made a different application in its books and records) in the following order: first, to the payment of amounts payable under Section 10.4, ratably among the Lenders in accordance with the aggregate amount owed to each Lender; second, to the payment of facility fees payable under subsection 2.11(b), ratably among the Lenders in accordance with their respective Pro Rata Shares; third, to the payment of the interest accrued on and the principal amount of all of the Loans, regardless of whether any such amount is then due and payable, ratably among the Lenders in accordance with the aggregate accrued interest plus the aggregate principal amount owed to each Lender; and fourth, to the payment of any other amount payable under this Agreement, ratably among the Lenders in accordance with the aggregate amount owed to each Lender. (c) If, other than as expressly provided elsewhere herein, any Lender shall obtain any payment or other recovery (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) on account of principal of or interest on any Loan, or any other amount payable hereunder, in excess of the share of payments and other recoveries such Lender would have received if such payment or other recovery had been distributed pursuant to the provisions of subsection 2.15(a) or (b) (whichever is applicable at the time of such payment or other recovery), such Lender shall immediately (i) notify the Administrative Agent of such fact and (ii) purchase from the other Lenders such participations in the Loans made by (or other Obligations owed to) them as shall be necessary to cause such purchasing Lender to share the excess payment or other recovery pro rata with each of them in accordance with the order of payments set forth in subsection 2.15(a) or (b), as the case may be; provided that if all or any portion of such excess payment or other recovery is thereafter recovered from the purchasing Lender, such purchase shall to that extent be rescinded and each other Lender shall repay to the purchasing Lender the purchase price paid therefor, together with an amount equal to such paying Lender's ratable share (according to the proportion of (A) the amount of such paying Lender's required repayment to (B) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered. The Company agrees that any Lender so purchasing a participation from another Lender may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off, but subject to Section 10.10) with respect to such participation as fully as if such Lender were the direct creditor of the Company in the amount of such participation. The Administrative Agent will keep records (which shall be conclusive and binding in the absence of manifest error) of participations purchased under this Section and will in each case notify the Lenders following any such purchases or repayments. ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY 3.1 Taxes. (a) Any and all payments by the Company to each Lender and each Agent under this Agreement and any Note shall be made free and clear of, and without deduction or withholding for, any Taxes. In addition, the Company shall pay all Other Taxes. Each Lender represents and warrants to the Company and the Administrative Agent that under applicable law and treaties as in effect on the date of this Agreement, no Taxes, Other Taxes or Further Taxes are required to be deducted or withheld by the Company or the Administrative Agent with respect to any payments to be made to such Lender under this Agreement or any Note. (b) If the Company shall be required by law to deduct or withhold any Taxes, Other Taxes or Further Taxes from or in respect of any sum payable hereunder to any Lender or any Agent, then: (i) the Company shall make such deductions and withholdings; (ii) the Company shall pay the full amount deducted or withheld to the relevant taxing authority or other authority in accordance with applicable law; and (iii) the Company shall also pay to the Administrative Agent for the account of any applicable Lender or Agent, at the time interest is paid, all additional amounts which such Lender or such Agent reasonably determines as necessary to preserve the after-tax yield such Lender or Agent would have received if such Taxes, Other Taxes or Further Taxes had not been imposed. (c) The Company agrees to indemnify and hold harmless each Lender and each Agent for the full amount of Taxes, Other Taxes and Further Taxes in the amount that such Lender or such Agent reasonably determines as necessary to preserve the after-tax yield such Lender would have received if such Taxes, Other Taxes or Further Taxes had not been imposed, and any liability (including penalties, interest, additions to tax and expenses) arising therefrom or with respect thereto, whether or not such Taxes, Other Taxes or Further Taxes were correctly or legally asserted. Payment under this indemnification shall be made within 30 days after the date such Lender or such Agent makes written demand therefor. (d) Within 30 days after the date of any payment by the Company of Taxes, Other Taxes or Further Taxes, the Company shall furnish to each Lender and the Administrative Agent the original or a certified copy of a receipt evidencing payment thereof, or other evidence of payment satisfactory to such Lender or the Administrative Agent. (e) If the Company is required to pay any amount to any Lender or any Agent pursuant to subsection (b) or (c) of this Section, then such Lender or such Agent shall use reasonable efforts (consistent with legal and regulatory restrictions) to change the jurisdiction of its Lending Office or other relevant office so as to eliminate any such additional payment by the Company which may thereafter accrue, if such change in the sole judgment of such Lender or such Agent is not otherwise disadvantageous to such Lender or such Agent. (f) Notwithstanding the foregoing provisions of this Section 3.1, if any Lender fails to notify the Company of any event or circumstance which will entitle such Lender to compensation pursuant to this Section 3.1 within 120 days after such Lender obtains knowledge of such event or circumstance, then such Lender shall not be entitled to compensation from the Company for any amount arising prior to the date which is 120 days before the date on which such Lender notifies the Company of such event or circumstance. (g) If any Lender determines in good faith that any deduction, withholding or payment pursuant to the foregoing provisions of this Section 3.1 in respect of Taxes, Other Taxes or Further Taxes can be used by such Lender (in a manner consistent with its overall tax policies) to reduce its otherwise payable tax liabilities, then such Lender shall promptly pay to the Company an amount equal to such reduction. 3.2 Illegality. (a) If any Lender determines that the introduction of any Requirement of Law, or any change in any Requirement of Law, or in the interpretation or administration of any Requirement of Law, has made it unlawful, or that any central bank or other Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to make Offshore Rate Loans, then, on notice thereof by the Lender to the Company through the Administrative Agent, any obligation of such Lender to make Offshore Rate Loans (including in respect of any LIBOR Bid Loan as to which the Company has accepted such Lender's Competitive Bid, but which has not yet been borrowed) shall be suspended until the Lender notifies the Administrative Agent and the Company that the circumstances giving rise to such determination no longer exist. (b) If a Lender determines that the introduction of any Requirement of Law, or any change in any Requirement of Law, or in the interpretation or administration of any Requirement of Law, has made it unlawful, or that any central bank or other Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to maintain any Offshore Rate Loan, the Company shall, upon its receipt of notice of such fact and demand from such Lender (with a copy to the Administrative Agent), prepay in full such Offshore Rate Loan of such Lender then outstanding, together with interest accrued thereon and any amount required under subsection 3.4(d), either on the last day of the Interest Period thereof or, if earlier, on the date on which such Lender may no longer lawfully continue to maintain such Offshore Rate Loan. If the Company is required to so prepay any Offshore Rate Committed Loan, then concurrently with such prepayment, the Company shall borrow from the affected Lender, in the amount of such repayment, a Base Rate Committed Loan. (c) If the obligation of any Lender to make or maintain Offshore Rate Committed Loans has been so terminated or suspended, all Loans which would otherwise be made by such Lender as Offshore Rate Committed Loans shall be instead Base Rate Committed Loans. (d) Before giving any notice to the Administrative Agent or demand upon the Company under this Section, the affected Lender shall designate a different Lending Office with respect to its Offshore Rate Loans if such designation will avoid the need for giving such notice or making such demand and will not, in the judgment of the Lender, be illegal or otherwise disadvantageous to the Lender. 3.3 Increased Costs and Reduction of Return. (a) If after the date hereof any Lender reasonably determines that, due to either (i) the introduction of or any change (other than any change by way of imposition of or increase in reserve requirements included in the calculation of the Offshore Rate pursuant to subsection 2.10(c)) in or in the interpretation of any law or regulation or (ii) the compliance by that Lender with any guideline or request from any central bank or other Governmental Authority (whether or not having the force of law), there shall be any increase in the cost to such Lender of agreeing to make or making, funding or maintaining any Offshore Rate Loan, then the Company shall be liable for, and shall from time to time, upon demand (with a copy of such demand to be sent to the Administrative Agent), pay to the Administrative Agent for the account of such Lender, additional amounts as are sufficient to compensate such Lender for such increased costs. (b) If after the date hereof any Lender shall have reasonably determined that (i) the introduction of any Capital Adequacy Regulation, (ii) any change in any Capital Adequacy Regulation, (iii) any change in the interpretation or administration of any Capital Adequacy Regulation by any central bank or other Governmental Authority charged with the interpretation or administration thereof, or (iv) compliance by the Lender (or its Lending Office) or any corporation controlling the Lender with any Capital Adequacy Regulation affects or would affect the amount of capital required or expected to be maintained by the Lender or any corporation controlling the Lender and (taking into consideration such Lender's or such corporation's policies with respect to capital adequacy) and such Lender reasonably determines that the amount of such capital is increased as a consequence of its Commitment, Loans, credits or obligations under this Agreement, then, upon demand of such Lender to the Company through the Administrative Agent, the Company shall pay to the Lender, from time to time as specified by the Lender, additional amounts sufficient to compensate the Lender for such increase. (c) Notwithstanding the foregoing provisions of this Section 3.3, if any Lender fails to notify the Company of any event or circumstance which will entitle such Lender to compensation pursuant to this Section 3.3 within 60 days after such Lender obtains knowledge of such event or circumstances, then such Lender shall not be entitled to compensation from the Company for any amount arising prior to the date which is 60 days before the date on which such Lender notifies the Company of such event or circumstance. 3.4 Funding Losses. The Company shall reimburse each Lender and hold each Lender harmless from any reasonable loss or expense which the Lender may sustain or incur as a consequence of: (a) the failure of the Company to make on a timely basis any payment of principal of any Offshore Rate Loan; (b) the failure of the Company to borrow, continue or convert a Loan after the Company has given (or is deemed to have given) a Notice of Committed Borrowing, a Notice of Conversion/ Continuation or accepted a Competitive Bid; (c) the failure of the Company to make any prepayment of a Committed Loan in accordance with any notice delivered under Section 2.8; (d) the prepayment or other payment (including after acceleration thereof) of an Offshore Rate Loan on a day that is not the last day of the relevant Interest Period; or (e) the automatic conversion under subsection 2.4(a) of any Offshore Rate Committed Loan to a Base Rate Committed Loan on a day that is not the last day of the relevant Interest Period; including any such reasonable loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain its Offshore Rate Loans or from fees payable to terminate the deposits from which such funds were obtained. For purposes of calculating amounts payable by the Company to the Lenders under this Section and under subsection 3.3(a), each Offshore Rate Loan made by a Lender (and each related reserve, special deposit or similar requirement) shall be conclusively deemed to have been funded at the Offshore Rate for such Offshore Rate Loan by a matching deposit or other borrowing in the interbank eurodollar market for a comparable amount and for a comparable period, whether or not such Offshore Rate Loan is in fact so funded. 3.5 Inability to Determine Rates. If (a) the Administrative Agent determines that for any reason adequate and reasonable means do not exist for determining the Offshore Rate for any requested Interest Period with respect to a proposed Offshore Rate Loan, or (b) the Required Lenders reasonably determine that the Offshore Rate applicable pursuant to subsection 2.10(a) for any requested Interest Period with respect to a proposed Offshore Rate Loan does not adequately and fairly reflect the cost to such Lenders of funding such Loan, the Administrative Agent will promptly so notify the Company and each Lender. Thereafter, the obligation of the Lenders to make LIBOR Bid Loans (in the case of clause (a) only) or to make or maintain Offshore Rate Committed Loans shall be suspended until the Administrative Agent revokes such notice in writing (at the request or with the consent of the Required Lenders in the case of a notice pursuant to clause (b)). Upon receipt of such notice, the Company may revoke any Notice of Committed Borrowing or Notice of Conversion/Continuation then submitted by it. If the Company does not revoke such Notice, the Lenders shall make, convert or continue the Committed Loans, as proposed by the Company, in the amount specified in the applicable notice submitted by the Company, but such Loans shall be made, converted or continued as Base Rate Committed Loans instead of Offshore Rate Committed Loans. 3.6 Certificates of Lenders. Any Lender claiming reimbursement or compensation under this Article III shall deliver to the Company (with a copy to the Administrative Agent) a certificate setting forth in reasonable detail the amount payable to the Lender hereunder and such certificate shall be conclusive and binding on the Company in the absence of manifest error. 3.7 Substitution of Lenders. Upon the receipt by the Company from any Lender (an "Affected Lender") of a claim for compensation under Section 3.1 or 3.3 or a notice of the type described in subsection 3.2(a) or 3.2(b) , the Company may: (i) request the Affected Lender to use its best efforts to obtain a replacement bank or financial institution satisfactory to the Company to acquire and assume all or a ratable part of all of such Affected Lender's Loans and Commitment (a "Replacement Lender"); (ii) request one or more of the other Lenders to acquire and assume all or part of such Affected Lender's Loans and Commitment; or (iii) designate a Replacement Lender. Any such designation of a Replacement Lender under clause (i) or (iii) shall be subject to the prior written consent of the Administrative Agent (which consent shall not be unreasonably withheld). 3.8 Survival. The agreements and obligations of the Company in this Article III shall survive the payment of all other Obligations. ARTICLE IV CONDITIONS PRECEDENT 4.1 Conditions of Initial Loans. The obligation of each Lender to make its initial Committed Loan, and to receive the initial Invitation for Competitive Bids, is, in addition to the conditions precedent set forth in Section 4.2, subject to the conditions that (i) the Company shall have submitted evidence reasonably satisfactory to the Administrative Agent and the Lenders that all existing obligations of the Company under the Credit Agreement dated as of December 17, 1990 (as amended) with various financial institutions and Chemical Bank (as successor to Manufacturers Hanover Trust Company) have been (or concurrently with the initial Borrowing will be) paid in full and that all "Commitments" under and as defined in such Credit Agreement have been terminated and (ii) the Administrative Agent shall have received all of the following, in form and substance satisfactory to the Administrative Agent and each Lender, and (except for the Notes) in sufficient copies for each Lender: (a) Credit Agreement and Notes. This Agreement executed by each party hereto and the Notes executed by the Company. (b) Resolutions; Incumbency. (i) Copies of the resolutions of the board of directors of the Company authorizing the execution and delivery of this Agreement and the Notes and the consummation of the transactions contemplated hereby, certified as of the Closing Date by the Secretary or an Assistant Secretary of the Company; and (ii) a certificate of the Secretary or Assistant Secretary of the Company certifying the names and true signatures of the officers of the Company authorized to execute and deliver this Agreement and the Notes and all other documents to be delivered by the Company hereunder. (c) Good Standing. A copy of a good standing certificate as of a recent date for the Company from the Secretary of State of Delaware. (d) Legal Opinions. (i) An opinion of Frank W. Bonvino, Vice President and General Counsel of the Company, substantially in the form of Exhibit G; and (ii) an opinion of Mayer, Brown & Platt, special counsel to the Administrative Agent substantially in the form of Exhibit H. (e) Payment of Fees. Evidence of payment by the Company of all accrued and unpaid fees, costs and expenses to the extent due and payable on the Closing Date, together with Attorney Costs of the Administrative Agent to the extent invoiced prior to or on the Closing Date, plus such additional amounts of Attorney Costs as shall constitute the Administrative Agent's reasonable estimate of Attorney Costs incurred or to be incurred by it through the closing proceedings (provided that such estimate shall not thereafter preclude final settling of accounts between the Company and the Administrative Agent), including any such costs, fees and expenses arising under or referenced in Sections 2.11 and 10.4. (f) Certificate. A certificate signed by a Responsible Officer, dated as of the Closing Date, stating that: (i) the representations and warranties contained in Article V are true and correct on and as of such date, as though made on and as of such date; (ii) no Event of Default or Unmatured Event of Default exists or would result from a Borrowing on such date; and (iii) since February 28, 1995, no event or circumstance has occurred that has resulted or could reasonably be expected to result in a Material Adverse Effect (except as described in the Form 10-K filed by the Company with the SEC for the fiscal year ended on such date or in any Form 10-Q or 8-K filed by the Company with the SEC after such date and prior to the Effective Date). (g) Other Documents. Such other approvals, opinions, documents or materials as the Administrative Agent or any Lender may reasonably request. 4.2 Conditions to All Loans. The obligation of each Lender to make any Committed Loan or any Bid Loan as to which the Company has accepted the relevant Competitive Bid, is subject to the satisfaction of the following conditions precedent on the relevant Borrowing Date: (a) Notice. As to any Committed Loan, the Administrative Agent shall have received a Notice of Committed Borrowing. (b) Continuation of Representations and Warranties. The representations and warranties in Article V (excluding the representations and warranties contained in Sections 5.3, 5.4 and 5.11) shall be true and correct on and as of such Borrowing Date with the same effect as if made on and as of such Borrowing Date (except to the extent such representations and warranties expressly refer to an earlier date, in which case they shall be true and correct as of such earlier date). (c) No Existing Default. No Event of Default or Unmatured Event of Default shall exist or shall result from such Borrowing. Each Notice of Committed Borrowing and Invitation for Competitive Bids submitted by the Company hereunder shall constitute a representation and warranty by the Company that, as of the date of such notice or request and as of the applicable Borrowing Date, the conditions in this Section 4.2 are satisfied. ARTICLE V REPRESENTATIONS AND WARRANTIES The Company represents and warrants to the Agents and each Lender that: 5.1 Organization and Existence. The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware. In all respects material to the Company and its Subsidiaries taken as a whole, the Company 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 Company is duly 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 Company makes such qualification necessary and where failure so to qualify could have a Material Adverse Effect. 5.2 Power and Authority; Authorization; Validity. (a) The Company has all power and authority necessary to execute, deliver and perform the terms and provisions of this Agreement and the Notes. All action on the part of the Company which is required for the execution, delivery and performance of this Agreement and the Notes has been duly taken. (b) This Agreement constitutes, and each Note when executed and delivered by the Company hereunder will constitute, a valid and binding obligation of the Company 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. 5.3 Financial Position. The Company has delivered to the Lenders the consolidated balance sheet of the Company and its Subsidiaries as of February 28, 1995, accompanied by related consolidated statements of operations and cash flows, for the fiscal year ended on such date and the related report of the Company's auditors, KPMG Peat Marwick LLP. Such financial statements, with the notes thereto, present fairly the consolidated financial position of the Company 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 generally accepted accounting principles. Since February 28, 1995 to the date of this Agreement, no event has occurred which has had or is reasonably likely to have a Material Adverse Effect (except as described in the Form 10-K filed by the Company with the SEC for the fiscal year ended on such date or in any Form 10-Q or 8-K filed by the Company with the SEC after such date and prior to the Effective Date). 5.4 Litigation. Except as disclosed in the notes to the Company's financial statements referred to in Section 5.3, no litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to the knowledge of the Company, threatened by or against the Company 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. 5.5 No Violation of Law or Instrument. The execution, delivery and performance of this Agreement, and, upon their execution, delivery and performance, the Notes, do not and, after giving effect to each borrowing hereunder, the borrowings then outstanding hereunder at the time of such borrowing will 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 Company or any of its Subsidiaries is a party, or under any order or decree to which the Company 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. 5.6 Federal Reserve Regulations. (a) The Company is not and will not be engaged principally in the business of extending credit for the purpose of "purchasing" or "carrying" (within the meaning of Regulation U or X of the FRB) any margin stock (as defined in Regulation U or X of the FRB). (b) No part of the proceeds of the Loans will be used for any purpose that violates, or which is inconsistent with, the provisions of Regulation U or X of the FRB. 5.7 No Default. No Event of Default or Unmatured Event of Default has occurred and remains in existence. 5.8 ERISA Compliance. (a) Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other federal or state law. The Company and each ERISA Affiliate has made all required contributions to any Pension Plan, and no application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect to any Pension Plan. (b) There is no pending or, to the best knowledge of the Company, threatened claim, action or lawsuit, or action by any Governmental Authority, with respect to any Pension Plan or Multiemployer Plan which has resulted or could reasonably be expected to result in a Material Adverse Effect. There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Pension Plan which has resulted or could reasonably be expected to result in a Material Adverse Effect. (c) Neither the Company nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability under Title IV of ERISA with respect to any Pension Plan or Multiemployer Plan (other than premiums due and not delinquent under Section 4007 of ERISA). 5.9 Environmental Matters. The Company is not in violation of any applicable Environmental Laws, except for any such violations which, individually or in the aggregate, have not had and would not reasonably be expected to have a Material Adverse Effect. No Environmental Claims have been made against the Company or any of its Subsidiaries which, individually or in the aggregate, have had or would reasonably be expected to have a Material Adverse Effect. 5.10 Regulated Entities. None of the Company, any Person controlling the Company, or any Subsidiary is an "Investment Company" within the meaning of the Investment Company Act of 1940. The Company is not subject to regulation under the Public Utility Holding Company Act of 1935, the Federal Power Act or any state public utilities code. 5.11 Subsidiaries. As of the Closing Date, the Company has no Restricted Subsidiaries other than those specifically disclosed in Schedule 5.11. 5.12 Full Disclosure. None of the representations or warranties made by the Company in this Agreement as of the date such representations and warranties are made or deemed made, and none of the statements contained in any exhibit, report, statement or certificate furnished by or on behalf of the Company in connection with this Agreement (including the offering and disclosure materials delivered by or on behalf of the Company to the Lenders prior to the Closing Date), contains any untrue statement of a material fact or omits any material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they are made, not misleading as of the time when made or deemed made. 5.13 Use of Proceeds. The proceeds of the Loans will be used by the Company for general corporate purposes, including, without limitation, stock repurchases and acquisitions, and the Commitments will be used as support for commercial paper issued by the Company. ARTICLE VI AFFIRMATIVE COVENANTS So long as any Lender shall have any Commitment hereunder, or any Loan or other Obligation shall remain unpaid or unsatisfied, unless the Required Lenders waive compliance in writing: 6.1 Corporate Existence. The Company will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and the rights (charter and statutory) of the Company. 6.2 Payment of Taxes and Claims. The Company and its Subsidiaries will pay or discharge or cause to be paid or discharged, or make adequate provision for, before the same shall become delinquent, (a) all taxes, assessments and governmental charges levied or imposed upon the Company or any Subsidiary or upon the income, profits or property of the Company or any Subsidiary and (b) all lawful claims for labor, materials and supplies which, if unpaid, might by law become a lien upon the property of the Company or any Subsidiary; provided, however, the Company and its Subsidiaries shall not be required to so pay or discharge or cause to be paid or discharged, or make adequate provision for, any such tax, assessment, charge or claim if the amount, applicability or validity thereof is being contested in good faith by appropriate proceedings, or if such failure would not be disadvantageous in any material respect to the Company and its Subsidiaries taken as a whole. 6.3 Financial Statements. (a) The Company will furnish to the Administrative Agent and each Lender: (i) within 95 days after the end of each fiscal year, a consolidated balance sheet of the Company and its Subsidiaries as at the close of such fiscal year and consolidated statements of earnings and cash flows of the Company and its Subsidiaries for such year, certified by independent public accountants of national standing selected by the Company, (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 Company with the SEC and (iii) promptly following any request therefor, such other financial data (excluding projections unless the then-current Rating Level is Level VI) as any Lender may reasonably request from time to time. (b) The Company will furnish to the Administrative Agent and each Lender 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, the unaudited consolidated condensed balance sheet of the Company 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 Company 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 GAAP (it being understood that delivery of a report on Form 10-Q filed by the Company with the SEC for the relevant quarter shall satisfy the requirements of this clause (b)). (c) All financial statements delivered hereunder shall be prepared in accordance with GAAP. 6.4 Compliance Certificate. The Company will deliver to the Administrative Agent and each Lender, at the time of the delivery of each set of financial statements furnished pursuant to subsection 6.3(a) or (b), a Compliance Certificate signed by a Responsible Officer. 6.5 Notice of Default. Within 15 Business Days after the occurrence of an Event of Default or Unmatured Event of Default shall have become known to the Company, the Company shall notify the Administrative Agent and each Lender of such event and provide a statement by a Responsible Officer setting forth the actions being taken by the Company to remedy such event. 6.6 Compliance with Laws. The Company will, and will cause each of its Subsidiaries to, comply with all Requirements of Law except to the extent that failure to comply therewith could not reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect. 6.7 Inspection of Property; Books and Records; Discussions. The Company will, and will cause each of its Subsidiaries to, keep proper books of records and account in which true and correct entries in conformity with GAAP and all Requirements of Law shall be made of all dealings and transactions in relation to its business and activities; and, after the occurrence and during the continuance of an Event of Default, permit representatives of the Administrative Agent and any Lender to visit and inspect any of its properties and examine any of its books and records at any reasonable time, upon reasonable notice and as often as may reasonably be desired, and to discuss the business, operations, properties and financial and other condition of the Company and its Subsidiaries with officers of the Company and its Subsidiaries and with their independent certified public accountants. All information obtained by the Agents and the Lenders and their representatives pursuant to this Section 6.7 shall be subject to and governed by the confidentiality provisions contained in Section 10.9. 6.8 Maintenance of Property. The Company will, and will cause each of its Subsidiaries to, keep all property, plant and equipment useful and necessary in its business in good working order and condition (ordinary wear and tear excepted). 6.9 Insurance. The Company will, and will cause each of its Subsidiaries to, maintain, with financially sound and reputable independent insurers, insurance of such types and in such amounts (and with such deductibles and self-insured retentions) as is customarily maintained by Persons engaged in the same or similar business. 6.10 Compliance with ERISA. The Company shall, and shall cause each of its ERISA Affiliates to, maintain each Pension Plan in compliance in all material respects with the applicable provisions of ERISA, the Code and other federal or state law. 6.11 Environmental Laws. The Company shall, and shall cause each Subsidiary to, conduct its operations and keep and maintain its property in compliance with all Environmental Laws, except to the extent that failure to so conduct such operations and keep and maintain such property could not reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect. 6.12 Notice of Ratings Change. The Company will promptly notify the Administrative Agent (which shall promptly notify each Lender) after any change in the rating of the Company's senior, unsecured non-credit-enhanced long term debt by Moody's or S&P. ARTICLE VII NEGATIVE COVENANTS So long as any Lender shall have any Commitment hereunder, or any Loan or other Obligation shall remain unpaid or unsatisfied, unless the Required Lenders waive compliance in writing: 7.1 Financial Condition Covenants. (a) Total Indebtedness to Total Capitalization. The Company will not permit the ratio of Total Indebtedness to Total Capitalization at any time to be greater than .55 to 1.0; provided that the Company 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 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 Total Indebtedness to Total Capitalization at any time be greater than .65 to 1.0. (b) Maintenance of Fixed Charge Coverage. The Company will not permit, as of the last day of any fiscal quarter during which a Ratings Downgrade exists (regardless of whether a Ratings Downgrade exists on such last day), the Fixed Charge Coverage for the period of four consecutive fiscal quarters ending on such last day to be less than 1.5. (c) Minimum Tangible Net Worth. The Company will at all times maintain Tangible Net Worth of not less than $80,000,000. 7.2 Limitation on Liens. (a) The Company will not, and will not permit any Restricted Subsidiary to, issue, assume or guaranty any obligation secured by any Lien upon any Operating Property of the Company or of a Restricted Subsidiary or upon any shares of stock or indebtedness of any Restricted Subsidiary (whether such Operating Property, shares of stock or indebtedness is now owned or hereafter acquired) or upon any of its or their property, assets or revenues without in any such case effectively securing the Obligations, concurrently with the issuance, assumption or guaranty of any such obligation (together with, if the Company shall so determine, any other indebtedness of or guarantied by the Company or such Restricted Subsidiary ranking equally with or prior to the Obligations and then existing or thereafter created) equally and ratably with such obligation; provided, however, that the foregoing restrictions shall not apply to: (i) Liens on any property acquired, constructed or improved by the Company or any Restricted Subsidiary after November 30, 1995 which are created or assumed contemporaneously with, or within 180 days after, such acquisition, or completion of such construction or improvement, or within six months thereafter pursuant to a firm commitment for financing arranged with a lender or investor within such 180-day period, to secure or provide for the payment of all or any part of the purchase price of such property or the cost of such construction or improvement incurred after November 30, 1995, provided that such Lien shall not apply to any property theretofore owned by the Company or any Restricted Subsidiary other than, in the case of any such construction or improvement, any theretofore unimproved real property on which the property so constructed, or the improvement, is located; (ii) Liens on any property existing at the time of acquisition thereof (including acquisition through merger or consolidation) and Liens on property of a corporation existing at the time such corporation becomes a Restricted Subsidiary, provided that each such Lien shall at all times be confined solely to the property subject to such Lien immediately prior to such acquisition or such corporation becoming a Restricted Subsidiary and shall not have been incurred at the request of or, if required, with the consent of the Company in contemplation of such event; (iii) Liens to secure obligations of a Restricted Subsidiary to the Company or to another Restricted Subsidiary; (iv) Liens in favor of the United States or any State thereof, or any department, agency or instrumentality or political subdivision of the United States or any State thereof, to secure partial progress, advance or other payments pursuant to any contract or statute or to secure any indebtedness incurred for the purpose of financing all or any part of the purchase price or the cost of constructing or improving the property subject to such Liens; and (v) Liens for the sole purpose of extending, renewing or replacing in whole or in part obligations secured by any Lien referred to in the foregoing clauses (i) to (iv), inclusive, or in this clause (v) or any Lien existing on the date of this Agreement, provided, however, that the principal amount of the obligations secured thereby shall not exceed the obligations so secured at the time of such extension, renewal or replacement and that the property securing such extension, renewal or replacement shall be limited to all or part of the property which secured the obligations so extended, renewed or replaced (plus improvements on such property). (b) The provisions of subsection 7.2(a) shall not apply to: (i) the issuance, assumption or guaranty by the Company or any Restricted Subsidiary of obligations secured by a Lien which would otherwise be subject to the foregoing restrictions up to an aggregate amount which, together with all other obligations of the Company and its Restricted Subsidiaries secured by Liens (other than Liens existing on November 30, 1995 and Liens permitted by subsection 7.2(a)) which would otherwise be subject to the foregoing restrictions, does not at the time exceed $30,000,000; (ii) any Lien arising pursuant to any order of attachment, execution, distraint or similar legal process arising in connection with any court proceeding being contested or appealed in good faith by appropriate proceedings, provided such Lien is released or dismissed or the judicial order relating thereto is revoked or stayed within a period of 60 days from the date of the creation thereof; (iii) Liens for taxes not yet due and payable or which are being contested in good faith and by appropriate proceedings if adequate reserves with respect thereto are maintained on the books of the Company or its Subsidiaries, as the case may be, in accordance with GAAP; (iv) carriers', warehousemen's, mechanics', material- men's, repairmen's or other like Liens arising in the ordinary course of business for obligations which are not overdue for a period of more than 30 days or which are being contested in good faith and by appropriate proceedings; (v) pledges or deposits in connection with workers' compensation, unemployment insurance and other social security legislation; (vi) deposits to secure the performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business; (vii) easements, rights-of-way, restrictions and other similar encumbrances incurred in the ordinary course of business which, in the aggregate, are not substantial in amount, and which do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the Company or its Subsidiaries; and (viii) inchoate Liens arising under ERISA to secure the contingent liability of the Company or other Liens arising out of trusts or otherwise designed to assist the Company in fulfilling the obligations of the Company under non-qualified employee benefit plans of the Company. 7.3 Consolidation, Merger and Sale of Assets. The Company will not consolidate or merge with or into any other corporation or sell or transfer all or substantially all of its property and assets (considered on a consolidated basis) to any other Person, except for any such merger or consolidation after giving effect to which (a) no Event of Default or Unmatured Event of Default exists and (b) the Company or, in the case of any transaction not involving the Company, a Subsidiary of the Company is the surviving entity. 7.4 Use of Proceeds. The Company shall not, and shall not permit any Subsidiary to, use any portion of the proceeds of any Loan, directly or indirectly, (a) to engage in any transaction having as its purpose the Acquisition of any Person if such Person (or its Board of Directors or equivalent governing body) has (i) announced that it will oppose such Acquisition or (ii) commenced any litigation which alleges that such Acquisition violates, or will violate, any Requirement of Law; or (b) to (i) knowingly purchase Ineligible Securities from the Arranger during any period in which the Arranger makes a market in such Ineligible Securities, (ii) knowingly purchase during the underwriting or placement period Ineligible Securities being underwritten or privately placed by the Arranger or (iii) make payments of principal or interest on Ineligible Securities underwritten or privately placed by the Arranger and issued by or for the benefit of the Company or any Affiliate of the Company. The Arranger is a registered broker-dealer and permitted to underwrite and deal in certain Ineligible Securities; and "Ineligible Securities" means securities which may not be underwritten or dealt in by member banks of the Federal Reserve System under Section 16 of the Banking Act of 1933 (12 U.S.C. Section 24, Seventh), as amended. 7.5 ERISA. The Company shall not, and shall not permit any of its ERISA Affiliates to: (a) knowingly engage in a prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan which has resulted or could reasonably be expected to result in liability of the Company in an aggregate amount in excess of $5,000,000; or (b) knowingly engage in a transaction that could be subject to Section 4069 or 4212(c) of ERISA. 7.6 Change in Business. The Company and its Subsidiaries, taken as a whole, shall not engage in any material line of business substantially different from those lines of business carried on by the Company and its Subsidiaries on the date hereof. ARTICLE VIII EVENTS OF DEFAULT 8.1 Event of Default. Any of the following shall constitute an "Event of Default": (a) Non-Payment. The Company fails to pay, (i) within one Business Day after the same becomes due, any amount of principal of any Loan, or (ii) within five Business Days after the same becomes due, any interest, fee or any other amount payable hereunder. (b) Representation or Warranty. Any representation or warranty by the Company made or deemed made herein, or which is contained in any certificate, document or financial or other statement by the Company or any Responsible Officer furnished at any time under or in connection with this Agreement, is incorrect in any material respect on or as of the date made or deemed made. (c) Consolidation, Merger and Sale of Assets. The Company fails to perform or observe any covenant or agreement contained in Section 7.3. (d) Other Defaults. The Company fails to perform or observe any other covenant contained in this Agreement, and such default shall continue unremedied for a period of 30 days. (e) Cross-Default. (i) The Company or any of its Restricted Subsidiaries shall default (subject to any applicable grace period) in the payment of any principal of or interest on or any other amount owing under any indebtedness for money borrowed of, or guarantied by, the Company or such Restricted Subsidiary or for the deferred purchase price of property or of a capitalized lease obligation, or (ii) there occurs a default in the observance or performance of any other agreement or material term or condition relating to any such indebtedness the effect of which default is to cause, or permit the holder or holders of such indebtedness to cause, such indebtedness to become due prior to its stated maturity; provided that no such default under clause (i) or (ii) shall constitute an Event of Default hereunder unless the aggregate amount of all such indebtedness in default is in the principal amount of at least $15,000,000. (f) Insolvency; Voluntary Proceedings. The Company or any Material Subsidiary (i) generally fails to pay, or admits in writing its inability to pay, its debts as they become due, subject to applicable grace periods, if any, whether at stated maturity or otherwise; (ii) voluntarily ceases to conduct its business in the ordinary course; (iii) commences any Insolvency Proceeding with respect to itself; or (iv) takes any action to effectuate or authorize any of the foregoing. (g) Involuntary Proceedings. (i) Any involuntary Insolvency Proceeding is commenced or filed against the Company or any Material Subsidiary, or any writ, judgment, warrant of attachment, execution or similar process is issued or levied against a substantial part of the Company's or any Material Subsidiary's properties, and any such proceeding or petition shall not be dismissed, or such writ, judgment, warrant of attachment, execution or similar process shall not be released, vacated or fully bonded, within 60 days after commencement, filing, issuance or levy; (ii) the Company or any Material Subsidiary admits in writing the material allegations of a petition against it in any Insolvency Proceeding, or an order for relief (or similar order under non-U.S. law) is ordered in any Insolvency Proceeding; or (iii) the Company or any Material Subsidiary acquiesces in the appointment of a receiver, trustee, custodian, conservator, liquidator, mortgagee in possession (or agent therefor), or other similar Person for itself or a substantial portion of its property or business. (h) Monetary Judgments. Final judgments for the payment of money aggregating in excess of $10,000,000 (which amount has not been paid or is not covered by insurance) shall be rendered against the Company or one of its Restricted Subsidiaries and remain undischarged for a period of more than 60 days during which execution shall not be stayed or contested in good faith. (i) Ownership of the Company. Any Person or group of Persons acting in concert acquires beneficial ownership of 40% or more of the outstanding shares of voting stock of the Company, unless such acquisition is approved by a majority of the Board of Directors of the Company comprised of (i) persons who are members of the Board of Directors of the Company on the Closing Date (the "Original Members") or (ii) persons thereafter endorsed for election to the Board of Directors of the Company by all of the then-current Original Members (the "Endorsed Members") and by all then-current Endorsed Members. (j) Change in Directors. At any time at least 51% of the members of the Board of Directors of the Company are not Original Members or Endorsed Members (as such terms are defined in subsection (j) above). (k) Environmental Matters. The Company or any of its Subsidiaries shall become liable for remediation and/or environmental compliance expenses and/or fines, penalties or other charges which, in the aggregate, are reasonably expected to result in payments by the Company and its Subsidiaries (other than with the proceeds of insurance) having a present value (based upon the then-applicable Base Rate) in excess of $15,000,000. (l) ERISA. (i) The Company or any ERISA Affiliate incurs liability under Title IV of ERISA to a Pension Plan, a Multiemployer Plan or the PBGC in an aggregate amount in excess of $5,000,000; or (ii) a contribution failure shall have occurred with respect to a Pension Plan sufficient to give rise to a Lien under Section 302(f) of ERISA. 8.2 Remedies. If any Event of Default occurs, the Administrative Agent shall, at the request of, or may, with the consent of, the Required Lenders, (a) declare the commitment of each Lender to make Committed Loans to be terminated, whereupon such Commitments shall be terminated; (b) declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Company; and (c) exercise on behalf of itself and the Lenders all rights and remedies available to it and the Lenders under this Agreement and applicable law; provided, however, that upon the occurrence of any event specified in subsection (f) or (g) of Section 8.1 (in the case of clause (i) of subsection (g) upon the expiration of the 60-day period mentioned therein), the obligation of each Lender to make Loans shall automatically terminate and the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable without further act of the Administrative Agent or any Lender. 8.3 Rights Not Exclusive. The rights provided for in this Agreement are cumulative and are not exclusive of any other rights, powers, privileges or remedies provided by law or in equity, or under any other instrument, document or agreement now existing or hereafter arising. ARTICLE IX THE AGENT 9.1 Appointment and Authorization; "Agent". Each Lender hereby irrevocably (subject to Section 9.9) appoints, designates and authorizes each Agent to take such action on its behalf under the provisions of this Agreement and to exercise such powers and perform such duties as are expressly delegated to it by the terms of this Agreement, together with such powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary contained elsewhere in this Agreement, no Agent shall have any duties or responsibilities, except those expressly set forth herein, nor shall any Agent have or be deemed to have any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or otherwise exist against any Agent. Without limiting the generality of the foregoing sentence, the use of the term "agent" in this Agreement with reference to any Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties. 9.2 Delegation of Duties. Each Agent may execute any of its duties under this Agreement by or through agents, employees or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. No Agent shall be responsible to any of the Lenders for the negligence or misconduct of any agent or attorney-in-fact that it selects with reasonable care. 9.3 Liability of Agents. None of the Agent-Related Persons shall (a) be liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or the transactions contemplated hereby (except for its own gross negligence or willful misconduct), or (b) be responsible in any manner to any of the Lenders for any recital, statement, representation or warranty made by the Company or any Subsidiary or Affiliate of the Company, or any officer thereof, contained in this Agreement or in any certificate, report, statement or other document referred to or provided for in, or received by any Agent under or in connection with, this Agreement, or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement, or for any failure of the Company or any other party hereto to perform its obligations hereunder or under any Note. No Agent-Related Person shall be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement, or to inspect the properties, books or records of the Company or any of the Company's Subsidiaries or Affiliates. 9.4 Reliance by Agents. (a) Each Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone message, statement or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons, and upon advice and statements of legal counsel (including counsel to the Company), independent accountants and other experts selected by such Agent. Each Agent shall be fully justified in failing or refusing to take any action under this Agreement unless it shall first receive such advice or concurrence of the Required Lenders as it deems appropriate and, if it so requests, it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. Each Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement in accordance with a request or consent of the Required Lenders and such request and any action taken or failure to act pursuant thereto shall be binding upon all of the Lenders. (b) For purposes of determining compliance with the conditions specified in Section 4.1, each Lender that has executed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter either sent by the Administrative Agent to such Lender for consent, approval, acceptance or satisfaction, or required thereunder to be consented to or approved by or acceptable or satisfactory to the Lender. 9.5 Notice of Default. No Agent shall be deemed to have knowledge or notice of the occurrence of any Event of Default or Unmatured Event of Default (except, in the case of the Administrative Agent, with respect to defaults in the payment of principal, interest and fees required to be paid to the Administrative Agent for the account of the Lenders) unless such Agent shall have received written notice from a Lender or the Company referring to this Agreement, describing such Event of Default or Unmatured Event of Default and stating that such notice is a "notice of default". If the Administrative Agent receives such a notice, the Administrative Agent will notify the Lenders of its receipt of such notice. The Administrative Agent shall take such action with respect to such Event of Default or Unmatured Event of Default as may be requested by the Required Lenders in accordance with Section 8.2; provided, however, that unless and until the Administrative Agent has received any such request, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Event of Default or Unmatured Event of Default as it shall deem advisable or in the best interest of the Lenders. 9.6 Credit Decision. Each Lender acknowledges that none of the Agent- Related Persons has made any representation or warranty to it, and that no act by any Agent hereafter taken, including any review of the affairs of the Company and its Subsidiaries, shall be deemed to constitute any representation or warranty by any Agent-Related Person to any Lender. Each Lender represents to each Agent that it has, independently and without reliance upon any Agent-Related Person and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of the Company and its Subsidiaries, and all applicable bank regulatory laws relating to the transactions contemplated hereby, and made its own decision to enter into this Agreement and to extend credit to the Company hereunder. Each Lender also represents that it will, independently and without reliance upon any Agent-Related Person and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of the Company. Except for notices, reports and other documents expressly herein required to be furnished to the Lenders by the Administrative Agent, no Agent shall have any duty or responsibility to provide any Lender with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of the Company which may come into the possession of any Agent-Related Person. 9.7 Indemnification of Agents. Whether or not the transactions contemplated hereby are consummated, the Lenders shall indemnify upon demand the Agent-Related Persons (to the extent not reimbursed by or on behalf of the Company and without limiting the obligation of the Company to do so), pro rata, from and against any and all Indemnified Liabilities; provided, however, that no Lender shall be liable for the payment to any Agent-Related Person of any portion of the Indemnified Liabilities resulting solely from such Person's gross negligence or willful misconduct. Without limitation of the foregoing, each Lender shall reimburse the Administrative Agent upon demand for its ratable share of any costs or out-of-pocket expenses (including Attorney Costs) incurred by the Administrative Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement or any document contemplated by or referred to herein, to the extent that the Administrative Agent is not reimbursed for such expenses by or on behalf of the Company. The undertaking in this Section shall survive the payment of all Obligations hereunder and the resignation or replacement of any Agent. 9.8 Agents in Individual Capacity. Each of BofA and its Affiliates, Bankers Trust Company ("BTCo") and its Affiliates and The First National Bank of Chicago ("FNBC") and its Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory, underwriting or other business with the Company and its Subsidiaries and Affiliates as though BofA, BTCo and FNBC were not Agents hereunder and without notice to or consent of the Lenders. The Lenders acknowledge that, pursuant to such activities, any of BofA, BTCo or FNBC, or its respective Affiliates, may receive information regarding the Company or its Affiliates (including information that may be subject to confidentiality obligations in favor of the Company or such Affiliates) and acknowledge that no Agent shall be under any obligation to provide such information to them. With respect to their respective Loans, BofA, BTCo and FNBC, and any of their respective Affiliates, shall have the same rights and powers under this Agreement as any other Lender and may exercise the same as though BofA, BTCo and FNBC were not Agents hereunder. 9.9 Resignation; Removal; Successor Administrative Agent. Any Agent may, and at the request of the Required Lenders shall, resign as an Agent upon 30 days' notice to the Lenders. If the Administrative Agent resigns, the Required Lenders shall appoint from among the Lenders a successor administrative agent for the Lenders. If no successor administrative agent is appointed prior to the effective date of the resignation of the Administrative Agent, the Administrative Agent may appoint, after consulting with the Lenders and the Company, a successor administrative agent from among the Lenders. Upon the acceptance of its appointment as successor administrative agent hereunder, such successor administrative agent shall succeed to all the rights, powers and duties of the retiring Administrative Agent and the term "Administrative Agent" shall mean such successor administrative agent, and the retiring Administrative Agent's appointment, powers and duties as Administrative Agent shall be terminated. After any retiring Administrative Agent's resignation hereunder as Administrative Agent, the provisions of this Article IX and Sections 10.4 and 10.5 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement. If no successor administrative agent has accepted appointment as Administrative Agent by the date which is 30 days following a retiring Administrative Agent's notice of resignation, the retiring Administrative Agent's resignation shall nevertheless thereupon become effective and the Lenders shall perform all of the duties of the Administrative Agent hereunder until such time, if any, as the Required Lenders appoint a successor agent as provided for above. 9.10 Withholding Tax. (a) If any Lender is a "foreign corporation, partnership or trust" within the meaning of the Code and such Lender claims exemption from, or a reduction of, U.S. withholding tax under Sections 1441 or 1442 of the Code, such Lender agrees with and in favor of the Administrative Agent, to deliver to the Administrative Agent: (i) if such Lender claims an exemption from, or a reduction of, withholding tax under a United States tax treaty, properly completed IRS Forms 1001 and W-8 before the payment of any interest in the first calendar year and before the payment of any interest in each third succeeding calendar year during which interest may be paid under this Agreement; (ii) if such Lender claims that interest paid under this Agreement is exempt from United States withholding tax because it is effectively connected with a United States trade or business of such Lender, two properly completed and executed copies of IRS Form 4224 before the payment of any interest is due in the first taxable year of such Lender and in each succeeding taxable year of such Lender during which interest may be paid under this Agreement, and IRS Form W-9; and (iii) such other form or forms as may be required under the Code or other laws of the United States as a condition to exemption from, or reduction of, United States withholding tax. Each such Lender agrees to promptly notify the Administrative Agent of any change in circumstances which would modify or render invalid any claimed exemption or reduction. (b) If any Lender claims exemption from, or reduction of, withholding tax under a United States tax treaty by providing IRS Form 1001 and such Lender sells, assigns, grants a participation in, or otherwise transfers, all or part of the Obligations owed by the Company to such Lender, such Lender agrees to notify the Administrative Agent of the percentage amount in which it is no longer the beneficial owner of Obligations owed by the Company to such Lender. To the extent of such percentage amount, the Administrative Agent will treat such Lender's IRS Form 1001 as no longer valid. (c) If any Lender claiming exemption from United States withholding tax by filing IRS Form 4224 with the Administrative Agent sells, assigns, grants a participation in, or otherwise transfers, all or part of the Obligations owed by the Company to such Lender, such Lender agrees to undertake sole responsibility for complying with the withholding tax requirements imposed by Sections 1441 and 1442 of the Code. (d) If any Lender is entitled to a reduction in the applicable withholding tax, the Administrative Agent may withhold from any interest payment to such Lender an amount equivalent to the applicable withholding tax after taking into account such reduction. If the forms or other documentation required by subsection (a) of this Section are not delivered to the Administrative Agent, then the Administrative Agent may withhold from any interest payment to such Lender not providing such forms or other documentation an amount equivalent to the applicable withholding tax without deduction. (e) If the IRS or any other Governmental Authority of the United States or other jurisdiction asserts a claim that the Administrative Agent did not properly withhold tax from amounts paid to or for the account of any Lender (because the appropriate form was not delivered or was not properly executed, or because such Lender failed to notify the Administrative Agent of a change in circumstances which rendered the exemption from, or reduction of, withholding tax ineffective, or for any other reason) such Lender shall indemnify the Administrative Agent fully for all amounts paid, directly or indirectly, by the Administrative Agent as tax or otherwise, including penalties and interest, and including any taxes imposed by any jurisdiction on the amounts payable to the Administrative Agent under this Section, together with all costs and expenses (including Attorney Costs). The obligation of the Lenders under this subsection shall survive the payment of all Obligations and the resignation or replacement of the Administrative Agent. ARTICLE X MISCELLANEOUS 10.1 Amendments and Waivers. No amendment or waiver of any provision of this Agreement, and no consent with respect to any departure by the Company or any applicable Subsidiary therefrom, shall be effective unless the same shall be in writing and signed by the Required Lenders (or by the Administrative Agent at the written request of the Required Lenders) and the Company and acknowledged by the Administrative Agent, and then any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided that no such waiver, amendment or consent shall, unless in writing and signed by all of the Lenders and the Company and acknowledged by the Administrative Agent, do any of the following: (a) increase or extend the Commitment of any Lender (or reinstate any Commitment terminated pursuant to Section 8.2); (b) postpone or delay any date fixed by this Agreement for any payment of principal, interest, fees or other amounts due to the Lenders (or any of them) hereunder or under any Note; (c) reduce the principal of, or the rate of interest specified herein on, any Loan, or reduce any fees (other than fees referred to in subsection 2.11(a)) or other amounts payable hereunder; (d) change the percentage of the Commitments or of the aggregate unpaid principal amount of the Loans which is required for the Lenders or any of them to take any action hereunder; or (e) amend this Section, or Section 2.15, or any provision herein providing for consent or other action by all Lenders; and provided, further, that no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Required Lenders or all Lenders, as the case may be, affect the rights or duties of the Administrative Agent under this Agreement. 10.2 Notices. (a) All notices, requests and other communications shall be in writing (including, unless the context expressly otherwise provides, by facsimile transmission, provided that any matter transmitted by the Company by facsimile (i) shall be immediately confirmed by a telephone call to the recipient at the number specified on Schedule 10.2 and (ii) shall be followed promptly by delivery of a hard copy original thereof) and mailed, faxed or delivered to the address or facsimile number specified for notices on Schedule 10.2; or, as directed to the Company or the Administrative Agent, to such other address as shall be designated by such party in a written notice to the other parties, and as directed to any other party, at such other address as shall be designated by such party in a written notice to the Company and the Administrative Agent. (b) All such notices, requests and communications shall, when transmitted by overnight delivery, or faxed, be effective when delivered or transmitted in legible form by facsimile machine, respectively, or if mailed, upon the third Business Day after the date deposited into the U.S. mail; except that notices pursuant to Article II or IX to the Administrative Agent shall not be effective until actually received by the Administrative Agent. (c) Any agreement of the Administrative Agent and the Lenders herein to receive certain notices by telephone or facsimile is solely for the convenience and at the request of the Company. The Administrative Agent and the Lenders shall be entitled to rely on the authority of any Person purporting to be a Person authorized by the Company to give such notice and the Administrative Agent and the Lenders shall not have any liability to the Company or any other Person on account of any action taken or not taken in good faith by the Administrative Agent or the Lenders in reliance upon such telephonic or facsimile notice. The obligation of the Company to repay the Loans shall not be affected in any way or to any extent by any failure by the Administrative Agent and the Lenders to receive written confirmation of any telephonic or facsimile notice or the receipt by the Administrative Agent and the Lenders of a confirmation which is at variance with the terms understood by the Administrative Agent and the Lenders to be contained in the telephonic or facsimile notice. 10.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of the Administrative Agent or any Lender, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. 10.4 Costs and Expenses. The Company shall: (a) whether or not the transactions contemplated hereby are consummated, pay or reimburse the Administrative Agent and the Arranger within five Business Days after demand (subject to subsection 4.1(f)) for all reasonable costs and expenses incurred by the Administrative Agent and the Arranger in connection with the development, preparation, delivery, administration and execution of, and any amendment, supplement, waiver or modification to (in each case, whether or not consummated), this Agreement, the Notes and any other document prepared in connection herewith, and the consummation of the transactions contemplated hereby, including Attorney Costs incurred by the Administrative Agent and the Arranger with respect thereto; and (b) pay or reimburse each Agent, the Arranger and each Lender within five Business Days after demand for all reasonable costs and expenses (including Attorney Costs) incurred by them in connection with the enforcement, attempted enforcement or preservation of any rights or remedies under this Agreement or any Note during the existence of an Event of Default or after acceleration of the Loans (including in connection with any "workout" or restructuring regarding the Loans, any Insolvency Proceeding or any appellate proceeding). 10.5 Company Indemnification. Whether or not the transactions contemplated hereby are consummated, the Company shall indemnify and hold harmless the Agent-Related Persons, and each Lender and each of their respective officers, directors, employees, counsel, agents and attorneys-in-fact (each an "Indemnified Person"), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, charges, expenses and disbursements (including Attorney Costs) of any kind or nature whatsoever which may at any time (including at any time following repayment of the Loans and the termination, resignation or replacement of the Administrative Agent or replacement of any Lender) be imposed on, incurred by or asserted against any such Person in any way relating to or arising out of this Agreement or any document contemplated by or referred to herein, or the transactions contemplated hereby or thereby, or any action taken or omitted by any such Person under or in connection with any of the foregoing, including with respect to any investigation, litigation or proceeding (including any Insolvency Proceeding or appellate proceeding) related to or arising out of this Agreement or the Loans or the use of the proceeds thereof, whether or not any Indemnified Person is a party thereto (all the foregoing, collectively, the "Indemnified Liabilities"); provided that (a) the Company shall have no obligation hereunder to any Indemnified Person with respect to Indemnified Liabilities to the extent incurred by reason of the gross negligence or willful misconduct of such Indemnified Person and (b) the Company shall not be liable to any Indemnified Person for any such loss, claim, damage, liability or expense to the extent caused by or relating to any legal proceedings commenced against any Indemnified Person by any security holder, depositor or creditor of such Indemnified Person or his or her employer arising out of and based upon rights afforded any such security holder, depositor or creditor solely in its capacity as such. The agreements in this Section shall survive payment of all other Obligations. 10.6 Payments Set Aside. To the extent that the Company makes a payment to any Agent or any Lender, or any Agent or any Lender exercises its right of set-off, and such payment or the proceeds of such set-off or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by such Agent or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any Insolvency Proceeding or otherwise, then (a) to the extent of such recovery the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such set-off had not occurred and (b) each Lender severally agrees to pay to the Administrative Agent upon demand its pro rata share of any amount so recovered from or repaid by the Administrative Agent. 10.7 Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that the Company may not assign or transfer any of its rights or obligations under this Agreement without the prior written consent of the Administrative Agent and each Lender. 10.8 Assignments, Participations, etc. (a) Any Lender may, with the prior written consent of the Company and the Administrative Agent (which consents shall not be unreasonably withheld), at any time assign and delegate to one or more Eligible Assignees (provided that no written consent of the Company or the Administrative Agent shall be required in connection with any assignment and delegation by a Lender to an Eligible Assignee that is an Affiliate of such Lender) (each an "Assignee") all, or any ratable part of all, of the Committed Loans, the Commitment and the other rights and obligations of such Lender hereunder, in a minimum amount of $10,000,000 (or, in the case of an assignment and delegation to an Affiliate of such Lender or another Lender, $5,000,000); provided that no Lender may (without the consent of the Company, which may be withheld for any reason) make any assignment (other than to an Affiliate of such Lender) which would result in the amount of such Lender's Commitment being less than the product of (x) $15,000,000 and (y) the quotient (but not more than one) of the then-current amount of the combined Commitments divided by $200,000,000; and provided, further, that the Company and the Administrative Agent may continue to deal solely and directly with such Lender in connection with the interest so assigned to an Assignee until (i) written notice of such assignment, together with payment instructions, addresses and related information with respect to the Assignee, shall have been given to the Company and the Administrative Agent by such Lender and the Assignee; (ii) such Lender and its Assignee shall have delivered to the Company and the Administrative Agent an Assignment and Acceptance in the form of Exhibit I ("Assignment and Acceptance") together with any Note or Notes subject to such assignment and (iii) the assignor Lender or Assignee has paid to the Administrative Agent a processing fee in the amount of $2,500. (b) From and after the date that the Administrative Agent notifies the assignor Lender that it has received and provided its consent (and received, if applicable, the consent of the Company) with respect to an executed Assignment and Acceptance and payment of the above-referenced processing fee, (i) the Assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, shall have the rights and obligations of a Lender hereunder and (ii) the assignor Lender shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations hereunder. (c) Any Lender may at any time, with the prior written consent of the Company (which consent shall not be unreasonably withheld) sell to one or more commercial banks or other Persons not Affiliates of the Company (a "Participant") participating interests in any Loans, the Commitment of such Lender and the other interests of such Lender (the "originating Lender") hereunder, in a minimum amount of $5,000,000; provided that no Lender may (without the consent of the Company, which may be withheld for any reason) sell any participation which would result in the amount of such Lender's Commitment minus the amount of all participating interests sold by such Lender being less than the product of (x) $15,000,000 and (y) the quotient (but not more than one) of the then-current amount of the combined Commitments divided by $200,000,000; and provided, further, that (i) the originating Lender's obligations under this Agreement shall remain unchanged, (ii) the originating Lender shall remain solely responsible for the performance of such obligations, (iii) the Company and the Administrative Agent shall continue to deal solely and directly with the originating Lender in connection with the originating Lender's rights and obligations under this Agreement and (iv) no Lender shall transfer or grant any participating interest under which the Participant has rights to approve any amendment to, or any consent or waiver with respect to, this Agreement, except to the extent such amendment, consent or waiver would require unanimous consent of the Lenders as described in the first proviso to Section 10.1. In the case of any such participation, the Participant shall be entitled to the benefit of Sections 3.1, 3.3, 3.4, 10.4 and 10.5 as though it were also a Lender hereunder (provided that no Participant shall be entitled to receive any greater amount pursuant to such Sections than the originating Lender would have been entitled to receive if no such participation had been sold), and if amounts outstanding under this Agreement are due and unpaid, or shall have been declared or shall have become due and payable upon the occurrence of an Event of Default, each Participant shall be deemed to have the right of set-off in respect of its participating interest in amounts owing under this Agreement to the same extent as if the amount of its participating interest were owing directly to it as a Lender under this Agreement. (d) Notwithstanding any other provision in this Agreement, any Lender may at any time (i) sell, assign or grant participations in any Bid Loan made by such Lender or (ii) create a security interest in, or pledge, all or any portion of its rights under and interest in this Agreement and any Note held by it in favor of any Federal Reserve Bank in accordance with Regulation A of the FRB or U.S. Treasury Regulation 31 CFR Section 203.14, and such Federal Reserve Bank may enforce such pledge or security interest in any manner permitted under applicable law. 10.9 Confidentiality. Each Lender agrees that all information concerning the Company or its Subsidiaries that is furnished or has previously been furnished to such Lender by or on behalf of the Company or any Subsidiary, or by the Administrative Agent or the Arranger on the Company's or such Subsidiary's behalf, in connection with this Agreement will be held in confidence and treated as confidential by such Lender and its Affiliates and will not, except as hereinafter provided, without the prior written consent of the Company, be disclosed by such Lender or its Affiliates in any manner whatsoever, in whole or in part, or be used by such Lender or its Affiliates other than in connection with or in enforcement of this Agreement and the Notes or in connection with other business now or hereafter existing or contemplated by such Lender or any of its Affiliates with the Company or any Subsidiary; except to the extent such information (i) was or becomes generally available to the public other than as a result of disclosure by such Lender or any of its Affiliates, or (ii) was or becomes available on a non-confidential basis from a source other than the Company, provided that, insofar as known to such Lender, such source is not prohibited from providing such information by any contractual, legal or fiduciary obligation to the Company; provided, however, that any Lender may disclose such information (A) at the request or pursuant to any requirement of any Governmental Authority to which such Lender is subject or in connection with an examination of such Lender by any such authority; (B) pursuant to subpoena or other court process; (C) when required to do so in accordance with the provisions of any applicable Requirement of Law; (D) to the extent reasonably required in connection with any litigation or proceeding relating to this Agreement to which the Administrative Agent or any Lender or any of their respective Affiliates may be party; (E) to the extent reasonably required in connection with the exercise of any remedy hereunder or under any Note; (F) to such Lender's independent auditors and other professional advisors (each of which shall be required to keep such information confidential to the extent provided in this Section 10.9); (G) to any Participant or Assignee, actual or prospective provided that such Person agrees in writing to keep such information confidential to the same extent required of the Lenders hereunder; (H) as to any Lender or its Affiliate, as expressly permitted under the terms of any other document or agreement regarding confidentiality to which the Company or any Subsidiary is party with such Lender or such Affiliate; and (I) to its Affiliates (each of which shall be required to keep such information confidential to the extent provided in this Section 10.9). 10.10 Set-off. In addition to any rights and remedies of the Lenders provided by law, each Lender shall have the right, without prior notice to the Company, any such notice being expressly waived by the Company to the extent permitted by applicable law, upon the occurrence of any Insolvency Proceeding with respect to the Company, the issuance of any execution against any of the property of the Company, the issuance of a subpoena or order, in supplementary proceedings, against or with respect to any of the property of the Company, or the issuance of a warrant of attachment against any of the property of the Company, to set-off and apply against any indebtedness, whether matured or unmatured, of the Company to such Lender, any amount owing from such Lender to the Company, at or at any time after the happening of any of the above-mentioned events, and the aforesaid right of set-off may be exercised by such Lender against the Company or against any trustee in bankruptcy, debtor in possession, assignee for the benefit of creditors, receiver or executor, judgment or attachment creditor of the Company, or against anyone else claiming through or against the Company or such trustee in bankruptcy, debtor in possession, assignee for the benefit of creditors, receiver, or executor, judgment or attachment creditor, notwithstanding the fact that such right of set-off shall not have been exercised by such Lender prior to the making, filing or issuance, or service upon such Lender of, or of notice of, any such Insolvency Proceeding or the issuance of such execution, subpoena, order or warrant. Each Lender agrees promptly to notify the Company and the Administrative Agent after any such set-off and application made by such Lender, provided that the failure to give such notice shall not affect the validity of such set-off and application. 10.11 Notification of Addresses, Lending Offices, Etc. Each Lender shall notify the Administrative Agent in writing of any change in the address to which notices to such Lender should be directed, of addresses of any Lending Office, of payment instructions in respect of all payments to be made to it hereunder and of such other administrative information as the Administrative Agent shall reasonably request. 10.12 Counterparts; Effective Date and Closing Date. This Agreement may be executed in any number of separate counterparts, each of which, when so executed, shall be deemed an original, and all of which taken together shall be deemed to constitute but one and the same instrument. The Administrative Agent shall advise the Company and each Lender promptly upon the occurrence of each of the Effective Date and the Closing Date. 10.13 Severability. The illegality or unenforceability of any provision of this Agreement or any instrument or agreement required hereunder shall not in any way affect or impair the legality or enforceability of the remaining provisions of this Agreement or such instrument or agreement. 10.14 No Third Parties Benefited. This Agreement is made and entered into for the sole protection and legal benefit of the Company, the Lenders, the Agents and the Agent-Related Persons, and their permitted successors and assigns, and no other Person shall be a direct or indirect legal beneficiary of, or have any direct or indirect cause of action or claim in connection with, this Agreement or any Note. 10.15 Governing Law and Jurisdiction. (a) THIS AGREEMENT AND ANY NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF ILLINOIS; PROVIDED THAT THE ADMINISTRATIVE AGENT AND THE LENDERS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW. (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY NOTE MAY BE BROUGHT IN THE COURTS OF THE STATE OF ILLINOIS OR OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF ILLINOIS, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE COMPANY, THE ADMINISTRATIVE AGENT AND THE LENDERS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF SUCH COURTS. EACH OF THE COMPANY, THE ADMINISTRATIVE AGENT AND THE LENDERS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE COMPANY, THE ADMINISTRATIVE AGENT AND THE LENDERS EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY ILLINOIS LAW. 10.16 Waiver of Jury Trial. THE COMPANY, THE LENDERS AND THE ADMINISTRATIVE AGENT EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, ANY NOTE, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE COMPANY, THE LENDERS AND THE ADMINISTRATIVE AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR ANY NOTE OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENT, RENEWAL, SUPPLEMENT OR MODIFICATION TO THIS AGREEMENT AND ANY NOTE. 10.17 Entire Agreement. This Agreement, together with the Notes, embodies the entire agreement and understanding among the Company, the Lenders and the Administrative Agent, and supersedes all prior or contemporaneous agreements and understandings of such Persons, verbal or written, relating to the subject matter hereof and thereof (except for the fee letter dated December 19, 1995 among the Company, the Administrative Agent and the Arranger). IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written. INTERNATIONAL MULTIFOODS CORPORATION By: /S/ DUNCAN H. COCROFT Title: VICE PRESIDENT - FINANCE CHIEF FINANCIAL OFFICER AND TREASURER BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Administrative Agent By: /S/ ALICE ZANE Title: VICE PRESIDENT BANK OF AMERICA ILLINOIS, as a Lender By: /S/ BARRY WATTERS Title: MANAGING DIRECTOR BANKERS TRUST COMPANY, as Syndication Agent and as Lender By: /S/ KATHERINE A. JUDGE Title: VICE PRESIDENT THE FIRST NATIONAL BANK OF CHICAGO, as Documentation Agent and as a Lender By: /S/ MARGARET H. HARPER Title: VICE PRESIDENT CIBC INC. By: /S/ PATRICIA WETZEL Title: DIRECTOR MORGAN GUARANTY TRUST COMPANY OF NEW YORK By: /S/ PATRICIA MERRITT Title: VICE PRESIDENT BOATMEN'S NATIONAL BANK OF ST. LOUIS By: /S/ JOHN LUBUS Title: VICE PRESIDENT FIRST BANK NATIONAL ASSOCIATION By: /S/ CYNTHIA A. BERGQUIST Title: VICE PRESIDENT NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION By: /S/ MOLLY S. VAN METRE Title: VICE PRESIDENT SCHEDULE 1.1 PRICING SCHEDULE The Applicable Margin for Offshore Rate Committed Loans and Facility Fee Rate shall be determined based on the then-current Rating Level as set forth below. Applicable Margin for Facility Fee Rating Level Offshore Rate Committed Loans Rate I 0.1700% 0.0800% II 0.1850% 0.0900% III 0.2125% 0.1125% IV 0.2375% 0.1375% V 0.3000% 0.1500% VI 0.4750% 0.2250% SCHEDULE 2.1 COMMITMENTS AND PRO RATA SHARES Pro Rata Lender Commitment Share Bank of America Illinois $35,000,000 17.5% Bankers Trust Company 30,000,000 15.0% The First National Bank 30,000,000 15.0% of Chicago CIBC Inc. 25,000,000 12.5% Morgan Guaranty Trust 25,000,000 12.5% Company of New York Boatmen's National Bank 20,000,000 10.0% of St. Louis First Bank National 20,000,000 10.0% Association Norwest Bank Minnesota, 15,000,000 7.5% National Association TOTAL $200,000,000 100% SCHEDULE 5.11 RESTRICTED SUBSIDIARIES Jurisdiction of Name of Subsidiary Incorporation The Boston Sea Party Restaurants, Inc. Delaware Davenport Industrial Supply Co. Delaware Damca International Corporation Delaware Robin Hood Multifoods Inc. Ontario Multifoods Inc. Ontario Gourmet Baker Inc. Ontario 980964 Ontario Limited Ontario Fantasia Confections, Inc. California MINETCO - Minnesota International Export Trading Company, Inc. Minnesota Multifoods Bakery Distributors, Inc. Delaware Multifoods Bakery International, Inc. Delaware Multifoods Specialty Distribution, Inc. Delaware VSA, Inc. Colorado Vendors Supply of America Corporation Delaware SCHEDULE 10.2 OFFSHORE AND DOMESTIC LENDING OFFICES; ADDRESSES FOR NOTICES BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Administrative Agent Bank of America National Trust and Savings Association Agency Management Services #69596 231 South LaSalle Street Chicago, Illinois 60697 Attention: Senior Agency Officer Telephone: Facsimile: (312) 974-9102 BANK OF AMERICA ILLINOIS, as a Lender Domestic and Offshore Lending Office: 231 South LaSalle Street Chicago, Illinois 60697 Attention: Raju Patel Telephone: (312) 828-7255 Facsimile: (312) 987-5833 Notices (other than Borrowing notices and Notices of Conversion/Continuation): Bank of America Illinois 231 South LaSalle Street Chicago, Illinois 60697 Attention: Raju Patel Telephone: (312) 828-7225 Facsimile: (312) 987-5833 BANKERS TRUST COMPANY, as a Lender Domestic and Offshore Lending Office: 130 Liberty Street New York, New York 10006 Attention: Jim Cullen Telephone: (212) 250-7343 Facsimile: (212) 250-7351 Notices (other than Borrowing notices and Notices of Conversion/Continuation): Bankers Trust Company 130 Liberty Street New York, New York 10006 Attention: Katherine A. Judge Telephone: (212) 250-4969 Facsimile: (212) 669-1570 THE FIRST NATIONAL BANK OF CHICAGO, as a Lender Domestic and Offshore Lending Office: One First National Plaza Suite 0634, 1-10 Chicago, Illinois 60670 Attention: Mattie Reed Telephone: (312) 732-5219 Facsimile: (312) 732-4840 Notices (other than Borrowing notices and Notices of Conversion/Continuation): The First National Bank of Chicago One First National Plaza Suite 0634, 1-10 Chicago, Illinois 60670 Attention: Peggy Harper Telephone: (312)-732-1673 Facsimile: (312)-732-5435 CIBC INC., as a Lender Domestic and Offshore Lending Office: CIBC-Atlanta Two Paces West 2727 Paces Ferry Road Suite 1200 Atlanta, Georgia 30339 Attention: Ken Auchter Telephone: (770) 319-4841 Facsimile: (770) 319-4950 Notices (other than Borrowing notices and Notices of Conversion/Continuation): CIBC Inc. 200 West Madison Suite 2300 Chicago, Illinois 60606 Attention: Patrice Wetzel Telephone: (312) 750-8743 Facsimile: (312) 726-8884 MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as a Lender Domestic and Offshore Lending Office: c/o J.P. Morgan Services, Inc. 500 Stanton Christiana Road P.O. Box 6070 Newark, Delaware 19713-2107 Attention: Betty Patterson Telephone: (302) 634-1892 Facsimile: (302) 634-1091 Notices (other than Borrowing notices and Notices of Conversion/Continuation): Morgan Guaranty Trust Company of New York 60 Wall Street New York, New York 10260-0060 Attention: Patricia Merritt Telephone: (212) 648-6744 Facsimile: (212) 648-5336 THE BOATMEN'S NATIONAL BANK OF ST. LOUIS, as a Lender Domestic and Offshore Lending Office: One Boatmen's Plaza 800 Market Street St. Louis, Missouri 63101 Attention: Sharron D. Kovach Telephone: (314) 466-6944 Facsimile: (314) 466-6499 Notices (other than Borrowing notices and Notices of Conversion/Continuation): The Boatmen's National Bank of St. Louis One Boatmen's Plaza 800 Market Street St. Louis, Missouri 63101 Attention: John D. Lubus Telephone: (314) 466-6112 Facsimile: (314) 466-6499 FIRST BANK NATIONAL ASSOCIATION, as a Lender Domestic and Offshore Lending Office: 601 Second Avenue South Minneapolis, MN 55402-4302 Attention: Sharon A. Miller Telephone: (612) 973-0535 Facsimile: (612) 973-0824 Notices (other than Borrowing notices and Notices of Conversion/Continuation): First Bank National Association 601 Second Avenue South Minneapolis, MN 55402-4302 Attention: Cynthia A. Bergquist Telephone: (612) 973-0534 Facsimile: (612) 973-0824 NORWEST BANK MINNESOTA NATIONAL ASSOCIATION, as a Lender Domestic and Offshore Lending Office: Sixth & Marquette Minneapolis, MN 55479 Attention: Kathy Sposito Telephone: (612) 667-5196 Facsimile: (612) 667-4145 Notices (other than Borrowing notices and Notices of Conversion/Continuation): Norwest Bank Minnesota, National Association Sixth & Marquette Minneapolis, MN 55479 Attention: Molly S. Van Metre Telephone: (612) 667-9147 Facsimile: (612) 667-4145 INTERNATIONAL MULTIFOODS CORPORATION 33 South 6th Street P.O. Box 2942 Minneapolis, MN 55402-0942 Attention: Treasurer Telephone: (612) 340-3307 Facsimile: (612) 340-3486 with (except in the case of notices pursuant to Article II) a copy to: Frank W. Bonvino Vice President and General Counsel International Multifoods Corporation 33 South 6th Street P.O. Box 2942 Minneapolis, Minnesota 55402-0942 Facsimile: (612) 340-6502 EXHIBIT A FORM OF NOTICE OF COMMITTED BORROWING Date: To: Bank of America National Trust and Savings Association, as Administrative Agent under the Credit Agreement, dated as of March 22, 1996 (as amended or otherwise modified from time to time, the "Credit Agreement"), 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. Ladies and Gentlemen: The undersigned, International Multifoods Corporation (the "Company"), refers to the Credit Agreement (terms defined therein being used herein as therein defined) and hereby gives you notice irrevocably, pursuant to Section 2.3 of the Credit Agreement, of the Committed Borrowing specified below: 1. The Business Day of the proposed Committed Borrowing is , . 2. The Committed Borrowing is to be comprised of [Base Rate] [Offshore Rate] Loans. 3. The aggregate amount of the proposed Committed Borrowing is $ . [ 4. The duration of the Interest Period for the Offshore Rate Loans included in the Committed Borrowing shall be _____ months.] The Company certifies that the following statements are true on the date hereof, and will be true on the date of the proposed Committed Borrowing, before and after giving effect thereto and to the application of the proceeds therefrom: (a) the representations and warranties contained in Article V of the Credit Agreement (excluding the representations and warranties contained in Sections 5.3, 5.4 and 5.11) are true and correct in all material respects as though made on and as of such date (except to the extent such representations and warranties expressly relate to an earlier date, in which case they are true and correct as of such date); (b) no Event of Default or Unmatured Event of Default has occurred and is continuing or will result from such proposed Committed Borrowing; and (c) the proposed Committed Borrowing will not cause the aggregate principal amount of all outstanding Loans (whether Bid Loans or Committed Loans) to exceed the combined Commitments of the Lenders. INTERNATIONAL MULTIFOODS CORPORATION By: Title: EXHIBIT B FORM OF NOTICE OF CONVERSION/CONTINUATION Date: To: Bank of America National Trust and Savings Association, as Administrative Agent under the Credit Agreement, dated as of March 22, 1996 (as amended or otherwise modified from time to time, the "Credit Agreement"), 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. Ladies and Gentlemen: The undersigned, International Multifoods Corporation (the "Company"), refers to the Credit Agreement (terms defined therein being used herein as therein defined) and hereby gives you notice irrevocably, pursuant to Section 2.4 of the Credit Agreement, with respect to the [conversion] [continuation] of the Committed Loans specified herein, that: 1. The Conversion/Continuation Date is , . 2. The aggregate amount of the Committed Loans to be [converted] [continued] is $ . 3. The Committed Loans are to be [converted into] [continued as] [Offshore Rate] [Base Rate] Committed Loans. [ 4. The duration of the Interest Period for the Offshore Rate Committed Loans included in the [conversion] [continuation] shall be months.] The Company certifies that on the date hereof, and on the proposed Conversion/Continuation Date both before and after giving effect thereto: (a) solely in the case of conversion into a continuation of an Offshore Rate Committed Loan, no Event of Default or Unmatured Event of Default has occurred and is continuing, or would result from such proposed [conversion] [continuation]; and (b) the proposed continuation/conversion will not cause the aggregate principal amount of all outstanding Loans to exceed the combined Commitments of the Lenders. INTERNATIONAL MULTIFOODS CORPORATION By: Title: EXHIBIT C FORM OF INVITATION FOR COMPETITIVE BIDS Via Facsimile Date: To: The Lenders Listed on Schedule A attached hereto. Ladies and Gentlemen: Reference is made to the Credit Agreement, dated as of March 22, 1996 (as amended or otherwise modified from time to time, the "Credit Agreement"), 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. Capitalized terms used herein have the meanings specified in the Credit Agreement. This is an Invitation for Competitive Bids pursuant to Section 2.6 of the Credit Agreement as follows: 1. The Business Day of the proposed Bid Borrowing is , . 2. The aggregate amount of the proposed Bid Borrowing is $ , comprised of [$ as Absolute Rate Bid Loans] [and] [$ as LIBOR Bid Loans]. 3. The Interest Period[s] for the Bid Loans comprising the Borrowing shall be [, and ]. The Company certifies that the following statements are true on the date hereof, and will be true on the date of the proposed Bid Borrowing, before and after giving effect thereto and to the application of the proceeds therefrom: (a) the representations and warranties contained in Article V of the Credit Agreement (excluding the representations and warranties contained in Sections 5.3, 5.4 and 5.11) are true and correct in all material respects as though made on and as of such date (except to the extent such representations and warranties expressly relate to an earlier date, in which case they are true and correct as of such date); (b) no Event of Default or Unmatured Event of Default has occurred and is continuing or will result from such proposed Bid Borrowing; and (c) the proposed Bid Borrowing will not cause the aggregate principal amount of all outstanding Loans (whether Bid Loans or Committed Loans) to exceed the combined Commitments of the Lenders. All Competitive Bids must be in the form of Exhibit D to the Credit Agreement and must be received by the undersigned no later than 8:30 a.m. (Chicago time) [on , , in the case of a LIBOR Auction] [and] [on , , in the case of an Absolute Rate Auction]. INTERNATIONAL MULTIFOODS CORPORATION By: Title: Facsimile: Schedule A List of Lenders EXHIBIT D FORM OF COMPETITIVE BID Date: To: International Multifoods Corporation Ladies and Gentlemen: Reference is made to the Credit Agreement, dated as of March 22, 1996 (as amended or otherwise modified from time to time, the "Credit Agreement"), 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. Capitalized terms used herein have the meanings specified in the Credit Agreement. In response to the Invitation for Competitive Bids of International Multifoods Corporation, dated , , and in accordance with subsection 2.6(b) of the Credit Agreement, the undersigned Lender offers to make [a] Bid Loan[s] thereunder in the following principal amount[s] at the following interest rates for the following Interest Period[s]: Borrowing Date: ____________________, ____ Aggregate Maximum Bid Amount: $______________________ Principal Principal Principal Amount $_______ Amount $_______ Amount $_______ Absolute Absolute Absolute Rate __% Rate __% Rate __% LIBOR LIBOR LIBOR Bid Margin __% Bid Margin __% Bid Margin __% Interest Interest Interest Period __________ Period __________ Period __________ [NAME OF LENDER] By:________________________ Name:______________________ Title:_____________________ EXHIBIT E FORM OF NOTE _______, 199_ FOR VALUE RECEIVED, the undersigned, International Multifoods Corporation (the "Company"), hereby promises to pay to the order of (the "Lender") the aggregate unpaid principal amount of all Committed Loans and Bid Loans made by the Lender to the Company pursuant to the Credit Agreement, dated as of March 22, 1996 (as amended or otherwise modified from time to time, the "Credit Agreement"), among the Company, 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, on the dates and in the amounts provided in the Credit Agreement. The Company further promises to pay interest on the unpaid principal amount of the Loans evidenced hereby from time to time at the rates, on the dates, and otherwise as provided in the Credit Agreement. The Lender is authorized to endorse the amount and the date on which each Loan is made and each payment of principal with respect thereto on the schedules annexed hereto and made a part hereof, or on continuations thereof which shall be attached hereto and made a part hereof; provided that any failure to endorse such information on such schedule or continuation thereof shall not in any manner affect any obligation of the Company under the Credit Agreement and this Promissory Note (this "Note"). This Note is one of the Notes referred to in, and is entitled to the benefits of, the Credit Agreement, which Credit Agreement, among other things, contains provisions for acceleration of the maturity hereof upon the happening of certain stated events and also for prepayments on account of principal hereof prior to the maturity hereof upon the terms and conditions therein specified. Terms defined in the Credit Agreement are used herein with their defined meanings therein unless otherwise defined herein. This Note shall be governed by, and construed and interpreted in accordance with, the laws of the State of Illinois applicable to contracts made and to be performed entirely within such State. INTERNATIONAL MULTIFOODS CORPORATION By: Title: Schedule A to Note BASE RATE COMMITTED LOANS AND REPAYMENTS OF BASE RATE COMMITTED LOANS (2) (3) Amount Amount of Base Rate of Base Rate (4) (1) Committed Committed Notation Date Loan Loan Repaid Made By ----------- ------------ ------------- ------------ ----------- ------------ ------------- ------------ ----------- ------------ ------------- ------------ ----------- ------------ ------------- ------------ ----------- ------------ ------------- ------------ ----------- ------------ ------------- ------------ ----------- ------------ ------------- ------------ ----------- ------------ ------------- ------------ ----------- ------------ ------------- ------------ ----------- ------------ ------------- ------------ ----------- ------------ ------------- ------------ ----------- ------------ ------------- ------------ ----------- ------------ ------------- ------------ ----------- ------------ ------------- ------------ ----------- ------------ ------------- ------------ ----------- ------------ ------------- ------------ ----------- ------------ ------------- ------------ ----------- ------------ ------------- ------------ Schedule B to Note OFFSHORE RATE LOANS AND REPAYMENTS OF OFFSHORE RATE LOANS (2) (3) (4) Amount Interest Amount of of Period for Offshore (5) (1) Offshore Offshore Rate Notation Date Rate Loan Rate Loan Loan Repaid Made By - ----------- ------------ ------------- ------------ ---------- - ----------- ------------ ------------- ------------ ---------- - ----------- ------------ ------------- ------------ ---------- - ----------- ------------ ------------- ------------ ---------- - ----------- ------------ ------------- ------------ ---------- - ----------- ------------ ------------- ------------ ---------- - ----------- ------------ ------------- ------------ ---------- - ----------- ------------ ------------- ------------ ---------- - ----------- ------------ ------------- ------------ ---------- - ----------- ------------ ------------- ------------ ---------- - ----------- ------------ ------------- ------------ ---------- - ----------- ------------ ------------- ------------ ---------- - ----------- ------------ ------------- ------------ ---------- - ----------- ------------ ------------- ------------ ---------- - ----------- ------------ ------------- ------------ ---------- - ----------- ------------ ------------- ------------ ---------- - ----------- ------------ ------------- ------------ ---------- - ----------- ------------ ------------- ------------ ---------- - ----------- ------------ ------------- ------------ ---------- Schedule C to Note ABSOLUTE RATE BID LOANS AND REPAYMENTS OF ABSOLUTE RATE BID LOANS (3) (2) Interest (4) Amount Rate for Amount of of Absolute Absolute Absolute (5) (1) Rate Bid Rate Bid Rate Bid Notation Date Loan Loan Loan Repaid Made By - ----------- ------------ ----------- ------------ ---------- - ----------- ------------ ----------- ------------ ---------- - ----------- ------------ ----------- ------------ ---------- - ----------- ------------ ----------- ------------ ---------- - ----------- ------------ ----------- ------------ ---------- - ----------- ------------ ----------- ------------ ---------- - ----------- ------------ ----------- ------------ ---------- - ----------- ------------ ----------- ------------ ---------- - ----------- ------------ ----------- ------------ ---------- - ----------- ------------ ----------- ------------ ---------- - ----------- ------------ ----------- ------------ ---------- - ----------- ------------ ----------- ------------ ---------- - ----------- ------------ ----------- ------------ ---------- - ----------- ------------ ----------- ------------ ---------- - ----------- ------------ ----------- ------------ ---------- - ----------- ------------ ----------- ------------ ---------- - ----------- ------------ ----------- ------------ ---------- EXHIBIT F FORM OF COMPLIANCE CERTIFICATE To: Bank of America National Trust and Savings Association, as Administrative Agent, Bankers Trust Company, as Syndication Agent, The First National Bank of Chicago, as Documentation Agent, and the Lenders which are party to the Credit Agreement referred to below Reference is made to the Credit Agreement dated as of March 22, 1996 (as amended or otherwise modified from time to time, the "Credit Agreement") among International Multifoods Corporation (the "Company"), 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. Terms used but not otherwise defined herein are used herein as defined in the Credit Agreement. I. Reports. Pursuant to Section 6.3 of the Credit Agreement, enclosed herewith [are copies of (i) the Annual Report of the Company containing the consolidated balance sheet of the Company and its subsidiaries as at the close of the fiscal year of the Company ended February , and consolidated statements of earnings and cash flows of the Company and its subsidiaries for such year, certified by the Company's independent public accountants, and (ii) the Company's most recent Form 10-K filed with the SEC.] [is a copy of the Company's most recent Form 10-Q filed with the SEC.] II. Financial Tests. The Company hereby certifies and warrants to you that the following is a true and correct computation as at the Computation Date of the following ratios and/or financial restrictions contained in the Credit Agreement: A. Subsection 7.1(a) Total Indebtedness to Total Capitalization Long-term Debt (net of current portion) $ Current portion of long-term debt $ Notes payable $ Less: Excess Working Capital* $ Total Indebtedness $ Common Stockholders' Equity $ Preferred stock $ Other** $ Net Worth $ Plus: Non-recurring write-offs of $ goodwill and other intangibles since November 30, 1995. Total Capitalization $ Total Indebtedness to Total Capitalization % Maximum permitted ratio 0.55% Maximum permitted temporary ratio 0.65% - ------------------------- * For every Computation Date other than the August 31 Computation Date, subtract the excess, if any, of Working Capital as of such Computation Date (excluding increases in Working Capital due to acquisitions since the preceding August 31) over Working Capital as of the previous August 31 (reduced by any decreases in Working Capital due to dispositions since the preceding August 31). ** "Other" equals the lesser of (i) the outstanding amount of any guaranty of an obligation given by the Company or any Subsidiary of the Company to a lender to a trust holding assets of any employee benefit plan of the Company or any Subsidiary of the Company for the purpose of allowing such trust to borrow monies, which amount has been reflected on the consolidated balance sheet of the Company 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 7.1(b) Maintenance of 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 Company and its consolidated subsidiaries 3. 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 Company 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 7.1(c) Minimum Tangible Net Worth Net Worth $ ---------- Less: Goodwill, debt discount and $ other like intangibles ---------- Tangible Net Worth $ ---------- Required Minimum Tangible Net Worth $80,000,000 III. Defaults. The Company hereby further certifies and warrants to you that no Event of Default or Unmatured Event of Default has occurred and is continuing. IN WITNESS WHEREOF, the Company has caused this Certificate to be executed and delivered by its duly authorized officer this _________________ day of _______________________, ____. INTERNATIONAL MULTIFOODS CORPORATION By: ______________________________ Title:____________________________ EXHIBIT G FORM OF LEGAL OPINION OF COUNSEL TO THE COMPANY March , 1996 (612) 340-3579 Bank of America National Trust and Savings Association, as Administrative Agent, and the Lenders under the Credit Agreement referred to below Agency Management Services #69596 231 South LaSalle Street Chicago, Illinois 60697 Ladies and Gentlemen: I am Vice President, General Counsel and Secretary of International Multifoods Corporation, a Delaware corporation (the "Company"), and I have acted as counsel to the Company in connection with the execution and delivery of the Credit Agreement (the "Agreement") dated as of March , 1996 among the Company, 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. This opinion is being delivered pursuant to Section 4.1 of the Agreement. Capitalized terms used in this opinion shall have the meanings attributed to them in the Agreement. For purposes of this opinion, I have examined the following: 1. The Restated Certificate of Incorporation, as amended, of the Company; 2. The Bylaws of the Company, as amended; 3. Resolutions of the Board of Directors of the Company adopted on December 15, 1995; 4. An executed copy of the Agreement; and 5. The notes issued by the Company pursuant to the Agreement on the date hereof (the "Notes"). I have also examined such other documents and reviewed such questions of law as I have considered necessary and appropriate for the purposes of this opinion. In rendering my opinions set forth below, I have assumed the authenticity of all documents submitted to me as originals, the genuineness of all signatures and the conformity to authentic originals of all documents submitted to me as copies. I have also assumed the legal capacity for all purposes relevant hereto of all natural persons and, with respect to all parties to agreements or instruments relevant hereto other than the Company, that such parties had the requisite power and authority (corporate or otherwise) to execute, deliver and perform such agreements or instruments, that such agreements or instruments have been duly authorized by all requisite action (corporate or otherwise), executed and delivered by such parties and that such agreements or instruments are the valid, binding and enforceable obligations of such parties. As to certain questions of fact material to my opinion, I have relied upon certificates or representations of officers of the Company and of public officials. Based on the foregoing, and subject to the assumptions and qualifications set forth below, I am of the opinion that: 1. The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware and has the power and authority (corporate and other) to own its properties and carry on its business as now being conducted. 2. The Company has the corporate power and authority to execute and deliver the Agreement and the Notes and to perform its obligations thereunder. The execution, delivery and performance by the Company of the Agreement and the Notes have been duly authorized by all necessary corporate action on the part of the Company. 3. The Agreement and the Notes are valid and binding obligations of the Company enforceable in accordance with their 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. 4. To the best of my knowledge, there is no litigation, investigation or proceeding of or before any arbitrator or Governmental Authority pending or threatened by or against the Company 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 consolidated financial position of the Company and its Subsidiaries, taken as a whole. 5. The execution, delivery and performance by the Company of the Agreement and the Notes (a) do not require any action or consent of, or any registration with, any Governmental Authority, or of any other party under any contract or agreement known to me to which the Company or any of its Subsidiaries is a party, or under any order or decree known to me to which the Company or any of its Subsidiaries is a party or to which any of their properties or assets are subject and (b) will not conflict with the terms and conditions of, or constitute a default under, any contract, agreement, order or decree known to me to which the Company or any of its Subsidiaries is a party or to which any of their properties or assets are subject. I express no opinion as to (a) indemnification or contribution obligations which contravene public policy, (b) any provision of the Credit Agreement purporting to convey rights to Persons other than parties to the Credit Agreement or (c) any waiver of (i) the right to a jury trial, (ii) any objection to venue or (iii) any right to bring legal proceedings in any court having jurisdiction. My opinions expressed above are limited to the laws of the State of Minnesota, the Delaware General Corporation Law and the federal laws of the United States of America, in each case as in effect on the date hereof, and no opinion is expressed herein as to the laws of any other jurisdiction. In rendering the opinions set forth in paragraph 3 above, I have assumed that the laws of the State of Minnesota would apply notwithstanding the selection of Illinois law as the governing law in the Agreement and with respect to the Notes. In the event that the Agreement and the Notes were sought to be enforced against the Company in the State of Minnesota, the courts of competent jurisdiction in Minnesota, subject to public policy, would give effect to the choice of Illinois law as the governing law with respect to the Agreement and the Notes. I am not aware of any reason as to why the recognition and application of Illinois 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 being furnished to you solely for the benefit of the Agents and the Lenders under the Agreement and may not be relied upon by any other person, or used for any other purpose, without my prior written consent. Very truly yours, Frank W. Bonvino EXHIBIT H FORM OF OPINION OF SPECIAL COUNSEL TO THE ADMINISTRATIVE AGENT [Letterhead of Mayer, Brown & Platt] , 1996 ------------ --- Bank of America National Trust and Savings Association, as Administrative Agent, and the other financial institutions which are parties to the Credit Agreement referred to below Re: International Multifoods Corporation Ladies and Gentlemen: We have acted as special counsel to Bank of America National Trust and Savings Association, as Administrative Agent (in such capacity, the "Administrative Agent"), in connection with the Credit Agreement (the "Credit Agreement") dated as of March 22, 1996 among International Multifoods Corporation (the "Company"), various financial institutions from time to time party thereto, Bankers Trust Company, as Syndication Agent, The First National Bank of Chicago, as Documentation Agent, and the Administrative Agent. Capitalized terms used herein and not otherwise defined shall have the meanings attributed to them in the Credit Agreement. In connection herewith, we have examined (i) counterparts of the Credit Agreement executed by the Company, each of the Lenders and the Administrative Agent; and (ii) the Notes issued by the Company on the date hereof pursuant to the Credit Agreement (the "Notes"). In connection with such examination, we have assumed the genuineness of all signatures, the authority of the persons signing such documents and the authenticity of such documents. We also have assumed, without any independent investigation, that (a) the Credit Agreement and the Notes have been duly authorized, executed and delivered by each of the parties thereto and (b) the Credit Agreement is the legal, valid and binding obligation of each party thereto other than the Company, enforceable against each such party in accordance with its terms. Based upon the foregoing, and subject to the qualifications set forth below, we are of the opinion that, under the laws of the State of Illinois: (1) The Credit Agreement is the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms. (2) The Notes are the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms. Our opinions are subject to the following qualifications: (a) Our opinions are subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar law affecting creditors' rights generally and to the effect of general principles of equity (regardless of whether considered in a proceeding in equity or at law), including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing. (b) We express no opinion as to indemnification or contribution obligations which contravene public policy. (c) We express no opinion as to any provision of the Credit Agreement purporting to convey rights to Persons other than parties to the Credit Agreement. (d) We express no opinion as to any waiver of (i) the right to a jury trial, (ii) any objection to venue or (iii) any right to bring legal proceedings in any court having jurisdiction. (e) Our opinions are limited to the laws of the State of Illinois, and we express no opinion as to the laws of any other jurisdiction. This opinion letter is solely for the benefit of the addressees hereof (and their respective successors and assigns) in connection with the transactions contemplated by the Credit Agreement, and this opinion letter may not be relied upon by any other Person or for any other purpose. Very truly yours, MAYER, BROWN & PLATT RCB EXHIBIT I FORM OF ASSIGNMENT AND ACCEPTANCE This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "Assignment and Acceptance") dated as of , is made between (the "Assignor") and (the "Assignee"). RECITALS The Assignor is party to the Credit Agreement dated as of March 22, 1996 (as amended or otherwise modified from time to time, the "Credit Agreement") among International Multifoods Corporation (the "Company"), 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 the several financial institutions from time to time party thereto (including the Assignor, the "Lenders"). Terms defined in the Credit Agreement and not defined in this Assignment and Acceptance are used herein as defined in the Credit Agreement. The Assignor wishes to assign to the Assignee [part of the] [all] rights and obligations of the Assignor under the Credit Agreement in respect of the Committed Loans, the Commitment and the other rights and obligations of the Assignor in connection therewith, and the Assignee wishes to accept assignment of such rights and to assume such obligations from the Assignor, in each case on the terms and subject to the conditions of this Assignment and Acceptance. NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, the parties hereto agree as follows: (1) Assignment and Acceptance. (a) Subject to the terms and conditions of this Assignment and Acceptance, (i) the Assignor hereby sells, transfers and assigns to the Assignee, and (ii) the Assignee hereby purchases, assumes and undertakes from the Assignor, without recourse and without representation or warranty (except as provided in this Assignment and Acceptance), __% of the Assignor's Commitment, together with a corresponding portion of the Assignor's outstanding Committed Loans and all related rights, benefits, obligations, liabilities and indemnities of the Assignor under and in connection with the Credit Agreement (all of the foregoing being herein called the "Assigned Rights and Obligations"). (b) With effect on and after the Effective Date (as defined in Section 5 hereof), the Assignee shall be a party to the Credit Agreement and succeed to all of the rights and be obligated to perform all of the obligations of a Lender under the Credit Agreement, including the requirements concerning confidentiality and the payment of indemnification. The Assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender. It is the intent of the parties hereto that the Assignor shall relinquish its rights and be released from its obligations under the Credit Agreement to the extent such obligations have been assumed by the Assignee; provided, however, that the Assignor shall not relinquish its rights under Article III or Sections 10.4 or 10.5 of the Credit Agreement in respect of the Assigned Rights and Obligations to the extent such rights relate to the time prior to the Effective Date. (c) After giving effect to the assignment and assumption set forth herein, on the Effective Date the Assignee's Commitment will be $__________ and the Assignor's Commitment will be $__________. (d) After giving effect to the assignment and assumption set forth herein, on the Effective Date the Assignee's outstanding Committed Loans will be $__________ and the Assignor's outstanding Committed Loans will be $__________. 2. Payments. (a) As consideration for the sale, assignment and transfer contemplated in Section 1 hereof, the Assignee shall pay to the Assignor on the Effective Date in immediately available funds an amount equal to $__________, representing the principal amount of all outstanding and funded Loans and participations included within the Assigned Rights and Obligations. (b) The [Assignor] [Assignee] further agrees to pay to the Administrative Agent a processing fee in the amount specified in Section 10.8(a) of the Credit Agreement. 3. Reallocation of Payments. Any interest, fees and other payments accrued to the Effective Date with respect to the Assigned Rights and Obligations shall be for the account of the Assignor. Any interest, fees and other payments accrued on and after the Effective Date with respect to the Assigned Rights and Obligations shall be for the account of the Assignee. Each of the Assignor and the Assignee agrees that it will hold in trust for the other party any interest, fees and other amounts which it may receive to which the other party is entitled pursuant to the preceding two sentences and pay to the other party any such amounts which it may receive promptly upon receipt. 4. Independent Credit Decision. The Assignee (a) acknowledges that it has received a copy of the Credit Agreement and the Schedules and Exhibits thereto, together with copies of the most recent financial statements referred to in Section 6.3 of the Credit Agreement, and such other documents and information as it has deemed appropriate to make its own credit and legal analysis and decision to enter into this Assignment and Acceptance; and (b) agrees that it will, independently and without reliance upon the Assignor, the Administrative Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit and legal decisions in taking or not taking action under the Credit Agreement. 5. Effective Date; Notices. (a) As between the Assignor and the Assignee, the effective date for this Assignment and Acceptance shall be __________, 19__ (the "Effective Date"); provided that the following conditions precedent have been satisfied on or before the Effective Date: (i) this Assignment and Acceptance shall be executed and delivered by the Assignor and the Assignee; (ii) the consent of the Company and the Administrative Agent, if required for an effective assignment of the Assigned Rights and Obligations by the Assignor to the Assignee under Section 10.8(a) of the Credit Agreement, shall have been duly obtained and shall be in full force and effect as of the Effective Date; (iii) the Assignee shall pay to the Assignor all amounts due to the Assignor under this Assignment and Acceptance; and (iv) the processing fee referred to in Section 2(b) hereof shall have been paid to the Administrative Agent. (b) Promptly following the execution of this Assignment and Acceptance, the Assignor shall deliver to the Company and the Administrative Agent, for acknowledgement and consent by the Company and the Administrative Agent, a Notice of Assignment substantially in the form attached hereto as Schedule 1. [6. Administrative Agent. INCLUDE ONLY IF ASSIGNOR IS ADMINISTRATIVE AGENT (a) The Assignee hereby appoints and authorizes the Assignor to take such action as Administrative Agent on its behalf and to exercise such powers under the Credit Agreement as are delegated to the Administrative Agent by the Lenders pursuant to the terms of the Credit Agreement. (b) The Assignee shall assume no duties or obligations held by the Assignor in its capacity as Administrative Agent under the Credit Agreement.] 7. Representations and Warranties. (a) The Assignor represents and warrants that (i) it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any Lien or other adverse claim; (ii) it is duly organized and existing and it has the full power and authority to take, and has taken, all action necessary to execute and deliver this Assignment and Acceptance and any other documents required or permitted to be executed or delivered by it in connection with this Assignment and Acceptance and to fulfill its obligations hereunder; (iii) no notices to, or consents, authorizations or approvals of, any Person are required (other than any already given or obtained) for its due execution, delivery and performance of this Assignment and Acceptance, and apart from any agreements or undertakings or filings required by the Credit Agreement, no further action by, or notice to, or filing with, any Person is required of it for such execution, delivery or performance; and (iv) this Assignment and Acceptance has been duly executed and delivered by it and constitutes the legal, valid and binding obligation of the Assignor, enforceable against the Assignor in accordance with the terms hereof, subject, as to enforcement, to bankruptcy, insolvency, moratorium, reorganization and other laws of general application relating to or affecting creditors' rights and to general equitable principles. (b) The Assignor makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Credit Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement or any other instrument or document furnished pursuant thereto. The Assignor makes no representation or warranty in connection with, and assumes no responsibility with respect to, the solvency, financial condition or statements of the Company, or the performance or observance by the Company of any of its obligations under the Credit Agreement or any other instrument or document furnished in connection therewith. (c) The Assignee represents and warrants that (i) it is duly organized and existing and it has full power and authority to take, and has taken, all action necessary to execute and deliver this Assignment and Acceptance and any other documents required or permitted to be executed or delivered by it in connection with this Assignment and Acceptance, and to fulfill its obligations hereunder; (ii) no notices to, or consents, authorizations or approvals of, any Person are required (other than any already given or obtained) for its due execution, delivery and performance of this Assignment and Acceptance; and apart from any agreements or undertakings or filings required by the Credit Agreement, no further action by, or notice to, or filing with, any Person is required of it for such execution, delivery or performance; (iii) this Assignment and Acceptance has been duly executed and delivered by it and constitutes the legal, valid and binding obligation of the Assignee, enforceable against the Assignee in accordance with the terms hereof, subject, as to enforcement, to bankruptcy, insolvency, moratorium, reorganization and other laws of general application relating to or affecting creditors' rights and to general equitable principles; and (iv) it is an Eligible Assignee. 8. Further Assurances. The Assignor and the Assignee each hereby agree to execute and deliver such other instruments, and take such other action, as either party may reasonably request in connection with the transactions contemplated by this Assignment and Acceptance, including the delivery of any notices or other documents or instruments to the Company or the Administrative Agent which may be required in connection with the assignment and assumption contemplated hereby. 9. Miscellaneous. (a) Any amendment or waiver of any provision of this Assignment and Acceptance shall be in writing and signed by the parties hereto. No failure or delay by either party hereto in exercising any right, power or privilege hereunder shall operate as a waiver thereof and any waiver of any breach of the provisions of this Assignment and Acceptance shall be without prejudice to any rights with respect to any other or further breach thereof. (b) All payments made hereunder shall be made without any set-off or counterclaim. (c) The Assignor and the Assignee shall each pay its own costs and expenses incurred in connection with the negotiation, preparation, execution and performance of this Assignment and Acceptance. (d) This Assignment and Acceptance may be executed in any number of counterparts and all of such counterparts taken together shall be deemed to constitute one and the same instrument. (e) THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF ILLINOIS. The Assignor and the Assignee each irrevocably submits to the non-exclusive jurisdiction of any State or Federal court sitting in Chicago, Illinois over any suit, action or proceeding arising out of or relating to this Assignment and Acceptance and irrevocably agrees that all claims in respect of such action or proceeding may be heard and determined in such Illinois State or Federal court. Each party to this Assignment and Acceptance hereby irrevocably waives, to the fullest extent it may effectively do so, the defense of an inconvenient forum to the maintenance of such action or proceeding. (f) THE ASSIGNOR AND THE ASSIGNEE EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS ASSIGNMENT AND ACCEPTANCE, THE CREDIT AGREEMENT, ANY RELATED DOCUMENT OR AGREEMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING OR STATEMENT (WHETHER ORAL OR WRITTEN). IN WITNESS WHEREOF, the Assignor and the Assignee have caused this Assignment and Acceptance to be executed and delivered by their duly authorized officers as of the date first above written. [ASSIGNOR] By: ----------------------------- Title: -------------------------- Address: ------------------------ [ASSIGNEE] By: ----------------------------- Title: -------------------------- Address: ------------------------ SCHEDULE 1 NOTICE OF ASSIGNMENT AND ACCEPTANCE , --------------- ------- Bank of America National Trust and Savings Association, as Administrative Agent 231 South LaSalle Street Chicago, Illinois 60697 Attn: Agency Management Services Illinois #69596 International Multifoods Corporation 33 South 6th Street P.O. Box 2942 Minneapolis, MN 55402-0942 Attention: Treasurer Ladies and Gentlemen: We refer to the Credit Agreement, dated as of March 22, 1996 (as amended or otherwise modified from time to time, the "Credit Agreement"), among International Multifoods Corporation (the "Company"), 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. Terms defined in the Credit Agreement are used herein as therein defined. 1. We hereby give you notice of, and request your consent to, the assignment by (the "Assignor") to (the "Assignee") of [all][part of] the right, title and interest of the Assignor in and to the Credit Agreement, (including, without limitation, [all][part of] the right, title and interest of the Assignor in and to the Assignor's Commitment and all outstanding Committed Loans of the Assignor pursuant to the Assignment and Acceptance Agreement attached hereto (the "Assignment and Acceptance"). Before giving effect to such assignment (assuming no repayments, new fundings or new issuances after ), the Assignor's Pro Rata Share is % and the outstanding principal amount of the Assignor's Committed Loans is $ . After giving effect to such assignment (assuming no repayments, new fundings or new issuances after ), the Assignor's Pro Rata Share is %, the outstanding principal amount of the Assignor's Committed Loans is $ , the Assignee's Pro Rata Share is %, and the outstanding principal amount of the Assignee's Committed Loans is $ . 2. The Assignee agrees that, upon receiving the consent, if applicable, of the Administrative Agent and the Company to such assignment, the Assignee will be bound by the terms of the Credit Agreement as fully and to the same extent as if the Assignee were the Lender originally holding such interest in the Credit Agreement. 3. The following administrative details apply to the Assignee: (A) Notice Address: Assignee name: Address: Attention: Telephone: ( ) Telecopier: ( ) Telex (Answerback): (B) Payment Instructions: Account No.: At: Reference: Attention: 4. You are entitled to rely upon the representations, warranties and covenants of each of the Assignor and the Assignee contained in the Assignment and Acceptance. IN WITNESS WHEREOF, the Assignor and the Assignee have caused this Notice of Assignment and Acceptance to be executed by their respective duly authorized officials, officers or agents as of the date first above mentioned. Very truly yours, [NAME OF ASSIGNOR] By: ----------------------------- Title: -------------------------- By: ---------------------------- Title: ------------------------- [NAME OF ASSIGNEE] By: ----------------------------- Title: -------------------------- By: ----------------------------- Title: -------------------------- ACKNOWLEDGED AND ASSIGNMENT CONSENTED TO: INTERNATIONAL MULTIFOODS CORPORATION By: ------------------------------- Its: ------------------------------ BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Administrative Agent By: ------------------------------ Its: ------------------------------ EX-10.11 3 EXHIBIT 10.11 MULTIFOODS Division Long-Term Incentive Program Overall Objective * Create a long-term incentive (LTI) opportunity for division presidents and other key division executives tied to long-term division financial performance. Incentive Opportunity * A performance cash plan and stock option grants comprise the elements of the total long term incentive reward opportunity for key division management. * The total payout opportunity has been structured to be competitive with executives at similar levels of responsibility and ranges from 25% to 50% of base salary annually. Participation * Participation will be limited to division presidents and other key division executives. * Participation will be determined by the Chairman and CEO and approved by the Compensation Committee of the Multifoods Board of Directors. Performance Period * Divisional performance will be measured over a three (3) year period (FY '96 - FY '98). Performance Measures and Standards * There will be three performance measures used to assess divisional performance over the three-year period: - Cumulative three-year operating earnings - Distribution companies = 3rd year Return on Sales Manufacturing companies = 3-year Compound Sales Growth Rates (NAB, CC) Monaca = 3-year Cumulative Sales in U.S. $ - Cumulative three-year R.O.A.E (all except Monaca) * Financial objectives established as targets must be met for the payout to be earned. There are no threshold or above target level payment opportunities. However, the earned payout may be reduced or increased based on Return On Average Equity performance. * Performance standards have been established for each division. * The program is self-financing. The division must earn the incentive funds. Plan Mechanics * The plan will be a performance cash plan and stock option grants.. * The payments will be made: - 1/3 immediately (FY '98) - 1/3 after one year (FY '99) - 1/3 after two years (FY 2000) * The Compensation Committee maintains the right to alter or terminate the plans at any time and will determine the form of payment, i.e. cash or stock. EX-10.19 4 EXHIBIT 10.19 MULTIFOODS LOGO 33 South 6th Street P.O. Box 2942 Minneapolis, MN 55402-0942 612-340-3621 PERSONAL & CONFIDENTIAL July 10, 1995 Mr. Robert S. Wright [address] Dear Bob: We are pleased to confirm the verbal understanding and agreement we reached regarding your employment with Multifoods. 1. Your position will be President, Bakery. 2. In this position you will report directly to Tony Luiso, Chairman, President and Chief Executive Officer, International Multifoods, and you will have the direct operating responsibility for the present North America Bakery and Canada Consumer divisions. Confirming our conversation, this is not a staff or group vice president position but will be considered an operating position directly managing the business operations of these two divisions. This assignment could have an impact on the way in which the two businesses are structured and we will discuss those changes with you as they arise. 3. Your primary office will be in Minneapolis, Minnesota, and will be located with the present North America Bakery facility. The effective date of your re-employment with Multifoods will be no later than August 14, 1995. 4. Your starting salary will be $260,000 annually, and as you know, salary reviews at this level of the Company are conducted every 15-18 months. 5. Multifoods' fiscal year is from March 1 to February 28. Your annual incentive opportunity at business plan level will be 50% of base salary with a maximum of 65% and a threshold of 15%. We will include you in the corporate incentive plan for the full Fiscal Year 1996 even though you are joining us in August 1995. At target level, the bonus opportunity therefore for FY 1996 is $130,000, which will be guaranteed and will count toward the MBP plan. 6. We will also guarantee an employment bonus of $60,000 to offset the remaining annual bonus you likely would have received from your present employer and to offset other perquisites which you are relinquishing with your present employer. You agree to return $30,000 of the full amount to Multifoods if within a one year period you voluntarily terminate your employment with the Company. 7. A recommendation will be made to the Compensation Committee at its meeting on September 15, 1995, for the following: a. A 10,000 share restricted stock grant, which will fully vest at the end of seven years. We will provide an acceleration based on the achievement of certain Corporate financial goals during the period FY '96 - FY '98. A separate agreement will be prepared for you following the grant at the Compensation Committee Meeting. This is the current cycle of the Corporate Long Term Incentive Plan in which all corporate senior executives are participating. b. A 15,000 stock option share grant which will be valued as of the average of Multifoods stock price on that date. You will also subsequently be considered for a stock option grant when the Compensation Committee meets in March at which time grants are considered for all senior executives. c. You will be recommended for participation in the Corporation's Management Benefit Plan (MBP). The recommendation will be to include your prior service of two years and the two prior bonuses which you received with Multifoods as listed below: 1993 = $61,200 1994 = $136,939 In addition, the Company will grant you five years of credited service toward vesting. I have attached a description of the MBP plan for your information. 8. You will be immediately eligible for the Company's Employee's Retirement Plan with your prior service restored, and from your rehire date we will grant you an additional year of service credit in ERP for each year of actual service. In other words, going forward from your rehire date you will have twice the service credit you would normally have based on actual service. I have reviewed the financial impact of this arrangement with you and have attached the calculations under the present ERP formula assuming your retirement at age 55 and also at age 62. Under the ERP qualified plan, you must work for five years to be vested. Since you have two years of credited service restored, you need only 1- 1/2 additional years (since we are doubling each year) to be vested in ERP. 9. We will also recommend to the Compensation Committee at the September meeting that you receive a Change of Control severance agreement similar to that of other executives in the corporation. 10. You will be protected in a case of involuntary termination, except for cause, for a period of two years, and if this involuntary termination should occur during the first year, we will pay you 24 months' salary. If the termination should occur during the second year, we will pay you 18 months' salary. After that you will be covered by the normal severance practices of the corporation. Any severance arrangement will require a release prepared by Multifoods and signed by you as well as an agreement not to compete with Multifoods for a period of one year. 11. Multifoods will provide temporary housing in Minneapolis for you for a period of up to one year, and then the Multifoods' relocation policy will apply with the home purchase provision. This is in recognition of your family circumstance in which you are unable to move for at least one year because of a child in school. It is possible that some portion of the temporary housing will be taxable income to you; however, we have taken that into account by providing the employment bonus to you. The Company will guarantee you up to $300,000 on loss on the sale of your house. Your investment is $1,015,000 and the appraised value is approximately $800,000. Therefore, a minimum sale price of $715,000 will cause you to receive full value for your house. 12. Multifoods has revised its benefit programs, and a new health care benefit program will be in effect as of September 1, 1995. I have attached copies of the new programs for your information. Since you will be joining us in August 1995, we recommend you maintain coverage under COBRA continuation with your present employer. We will reimburse you for your cost of COBRA until September 1, 1995. 13. You will be immediately eligible for participation in the company's 401(k) plan. As you know, the Company match is 50% of the first 7% of the employee's contribution. 14. In accordance with our conversation, you will be entitled to four weeks' vacation. Our vacation year is from January 1 to December 31. Bob, will you please let me know if you have any questions following your review of this offer. The offer is contingent upon your completion of an executive type physical examination. If you have had a recent physical exam, then written assurance from your doctor, followed by a written summary of the condition of your health, will constitute "satisfactory completion". Bob, we are extremely pleased with the prospect of having you rejoin Multifoods. We are counting on your contribution and strongly believe you will have a significant impact on the corporation. We also believe that Multifoods can offer you a challenge and growth opportunities in the years ahead. Will you please indicate your acceptance of our offer by signing and dating the original of this letter and returning it to me at your earliest convenience. Best regards, /s/ Robert F. Maddocks Robert F. Maddocks Vice President, Human Resources RFM:rg cc: A. Luiso Accepted by: /s/ Robert S. Wright Robert S. Wright July 11, 1995 Date EX-10.20 5 EXHIBIT 10.20 MULTIFOODS LOGO 33 South 6th Street P.O. Box 2942 Minneapolis, MN 55402-0942 612-340-3621 March 29, 1996 Mr. Robert S. Wright President, Bakery Segment Dear Bob: SUBJECT: Supplemental Benefits and Service Credit Under Pension Equity Plan The intent of this memorandum is to provide you with an additional explanation, and to obtain your agreement, as to how Paragraph eight of your Employment Offer Letter dated July 10, 1995 (relating to service credit under the Employees' Retirement Plan) will be implemented, and also to set forth certain additional benefits which will be paid to you if you terminate employment prior to becoming eligible for benefits under the Management Benefit Plan. The Employees' Retirement Plan was renamed as the "Pension Equity Plan" or "PEP" and was significantly restructured effective January 1, 1996. Employees with sufficient age and service as of January 1, 1996, are eligible to continue under the same benefit formula that was in effect prior to the restructuring. You do not satisfy the age and service requirements to be "grandfathered" under the prior benefit formula. Thus, in order to provide you with the grandfathered benefit formula, as contemplated under paragraph eight of your employment offer letter, it is necessary to do so through a "nonqualified" arrangement. A nonqualified arrangement also is necessary in order to implement the service crediting provisions of paragraph eight in a way that is permitted under law. As you know, a qualified plan is subject to strict rules requiring that its terms and provisions not discriminate in favor of officers and highly-paid employees. The service credit provisions of paragraph eight would not be permitted under a qualified plan. For the above reasons, we would like your agreement that paragraph eight will be implemented in the following manner: (i) your service prior to June 1, 1994, will be reinstated under the Employees' Retirement Plan effective as of August 15, 1995, for eligibility, vesting and benefit accrual purposes (and that service will be carried over to the Pension Equity Plan); and (ii) you will be entitled to a Supplemental Retirement Benefit under the terms and conditions described below as a general obligation of the Company. SUPPLEMENTAL RETIREMENT BENEFIT (a) Definitions. The following terms are used herein: "Actuarial Equivalent" means a benefit of equivalent value when computed on the basis of mortality and interest rate assumptions recommended by an actuary and approved by the Vice President - Finance and Chief Financial Officer or the Vice President and Controller of the Company. "Code" means the Internal Revenue Code of 1986, as amended. "Company" means International Multifoods Corporation, and any successor thereto. "ERP" means the Employees' Retirement Plan of International Multifoods Corporation, as in effect on December 31, 1995. "Grandfathered Formula" means the benefit formula set forth in Appendix C of the PEP, which is a continuation of the benefit formula in effect under the ERP as of December 31, 1995. "MBP" means the Management Benefit Plan of the Company, as it may be amended from time to time. "PEP" means the Multifoods Pension Equity Plan, as adopted January 1, 1996 (as a continuation of the ERP), as it may be amended from time to time. "Supplemental Retirement Benefit" means the benefit payable to you under the terms of this memorandum. (b) Vesting Service. For purposes of determining your Supplemental Retirement Benefit, your vesting service under this memorandum will be equal to the sum of your vesting service earned under the PEP as of August 15, 1995 (as reinstated from your prior employment), plus two times (2x) your vesting service earned under the PEP after August 15, 1995. (c) Supplemental Retirement Benefit. You will be eligible for the following Supplemental Retirement Benefit, expressed as a monthly benefit payable in the form of a single life annuity starting on the first day of the month after age 65: (1) Less Than Five Years of Service. If you have less than 5 years of vesting service at your termination of employment, then the monthly benefit will be equal to 50% of your Bonus Base (calculated under the terms of the MBP) divided by 12. (2) Five or More Years of Service, But Not Eligible for MBP. If you have 5 or more years of vesting service at your termination of employment, but you are not eligible for a benefit under the MBP, then your monthly benefit will be equal to "A" plus "B" minus "C" below: A = 50% of your Bonus Base (calculated under the terms of the MBP) divided by 12. plus B = The monthly benefit to which you would have been entitled under the PEP if (i) you were eligible to and did elect to have your benefit calculated under the Grandfathered Formula, (ii) that benefit was paid in the form of a single life annuity, (iii) your Credited Service under the Grandfathered Formula was equal to the sum of your Credited Service earned as of August 15, 1995 (as reinstated from your prior employment), and two times (2x) your Credited Service earned after August 15, 1995, and (iv) the limits imposed under Code sections 401(a)(17) and 415 did not apply to your benefit under the PEP. minus C = The monthly benefit payable to you under the PEP. (3) Five or More Years of Service and Eligible for MBP. If you have 5 or more years of vesting service at your termination of employment and you are eligible for a benefit under the MBP, then your monthly benefit will equal to "D" minus "E" minus "F" below: D = The monthly benefit to which you would have been entitled under the PEP if (i) you were eligible to and did elect to have your benefit calculated under the Grandfathered Formula, (ii) that benefit was paid in the form of a single life annuity, (iii) your Credited Service under the Grandfathered Formula was equal to the sum of your Credited Service earned as of August 15, 1995 (as reinstated from your prior employment), and two times (2x) your Credited Service earned after August 15, 1995, and (iv) the limits imposed under Code sections 401(a)(17) and 415 did not apply to your benefit under the PEP. minus E = The monthly benefit payable to you under the MBP because of the limits imposed under Code sections 401(a)(17) and 415. minus F = The monthly benefit payable to you under the PEP. All monthly benefits described above will be computed as of the date of your termination of employment and each will be expressed in the form of a single life annuity starting as of the first day of the month after age 65 (or as of the first day of the month after your termination of employment, if your termination of employment occurs after age 65). If your Supplemental Retirement Benefit starts prior to age 65, the benefit payable to you will be reduced in the same manner as would a benefit payable under Appendix B of the PEP (that is, in the same manner as a benefit calculated using the Grandfathered Formula under the PEP). For purposes of determining the early commencement reduction factors that apply to you under Appendix B, your vesting service will be deemed to be your vesting service calculated under this memorandum. (d) Form of Benefit. The Supplemental Retirement Benefit will be paid to you in the form of a single life annuity with monthly benefit payments. However, at the sole discretion of the Company, it may be paid in any other form. If it is paid in any form other than a single life annuity, the benefit will be adjusted so that it is the Actuarial Equivalent of the benefit that would have been paid as a single life annuity. (e) Commencement of Benefit. The Supplemental Retirement Benefit will start as of the same day as the benefit paid to you under the PEP. If you have less than 5 years of vesting service under the PEP at your termination of employment (and thus are not entitled to a benefit), the Supplemental Retirement Benefit will start on the same day as the benefit would have been paid to you if you had exactly five years of vesting service under the PEP. (f) Spouse Benefit. If you die before your Supplemental Retirement Benefit is paid or starts to be paid to you, and you are survived by a spouse, that spouse will be entitled to a monthly benefit payable in the form of a single life annuity as follows: (i) If you die at or after age 55, the benefit will start as of the first day of the month after your death, and the monthly amount of the benefit will equal the monthly amount of the survivor annuity that would have been paid to your spouse if you had retired and started to receive your Supplemental Retirement Benefit in the form of a joint and 100% survivor annuity, and then died. (ii) If you die before age 55, the benefit will start as of the first day of the month after you would have reached age 55, and the monthly amount of the benefit will equal the monthly amount of the survivor annuity that would have been paid to your spouse if you had retired on the date of your death, survived to age 55 and started to receive your Supplemental Retirement Benefit in the form of a joint and 100% survivor annuity, and then died. (g) No Effect on Employment Rights. This memorandum is not an employment agreement and nothing in this memorandum will confer on you the right to be retained in the employ of the Company, or limit any right of the Company to discharge you or otherwise deal with you without regard to the existence of this memorandum. (h) FICA Taxes/Withholding. To the extent that benefit accruals hereunder are taken into account as amounts deferred under a nonqualified deferred compensation plan under Code section 3121(v), and thus are subject to tax under Code section 3101 ("FICA"), the Company may calculate the amount deferred and withhold against other compensation paid to you in any manner determined by it to be appropriate under Code section 3121(v). Please indicate your receipt and acceptance of the terms of this memorandum by signing one of the enclosed copies and returning it at your earliest convenience. INTERNATIONAL MULTIFOODS CORPORATION /s/ Robert F. Maddocks By: Robert F. Maddocks Its: Vice President - Human Resources cc: A. Luiso J. G. Traver ____________________________________________ ACCEPTANCE I, Robert S. Wright, hereby acknowledge receipt of this memorandum and hereby agree to the manner in which Paragraph eight of my Offer Letter, dated July 10, 1995, is to be implemented as set forth in this memorandum. Dated: April 2, 1996 /s/ Robert S. Wright ROBERT S. WRIGHT EX-10.21 6 EXHIBIT 10.21 MULTIFOODS LOGO 33 South 6th Street P.O. Box 2942 Minneapolis, MN 55402-0942 612-340-3621 July 29, 1994 Mr. Devendra Mishra [address] Dear Devendra: We are pleased to confirm the verbal understanding and agreement we reached regarding your employment with Multifoods as President, VSA. 1. In this position you will report directly to Tony Luiso, Chairman, President and Chief Executive Officer, Multifoods. 2. Your primary office will be in Denver, Colorado, and the effective date of employment with Multifoods will be August 15, 1994. 3. The starting salary will be $260,000 annually, with a guaranteed adjustment to the base salary of $25,000 no later than December 1, 1995, if the fiscal year 1996 business plan earnings for the first three quarters of fiscal year 1996 have been achieved. The third quarter ends on November 30, 1995 and a determination will be made at that time regarding performance against plan, and therefore, your entitlement to this base salary adjustment. 4. Multifoods' fiscal year is from March 1 to February 28. Your annual incentive opportunity at business plan level will be 50% of base salary with a maximum of 65%. Since you will be joining us on August 15, 1994, we will guarantee $70,000 for the balance of fiscal year 1995, a six and one-half month period. If, however, the VSA threshold level of business plan earnings is achieved, an additional $20,000 will be added to the bonus; and if the FY 1995 business plan earnings number is achieved, an additional $25,000 will be added to the guaranteed bonus. 5. A recommendation will be made to the Compensation Committee at its meeting on September 16, 1994, for the following: a. A stock option grant of 10,000 shares. The options will be priced at the average of the high and low of Multifoods' stock traded on September 16, 1994. These are ten-year options and vest at the end of one year. A recommendation will also be made at the March 1995 Compensation Committee meeting for a regular grant of 7,500 stock options. b. A restricted stock grant of 6,000 shares which at today's stockprice will equal approximately $100,000. The restriction will be for a period of three years and will be available to you at the end of this period. In addition, you will receive the dividends on the restricted stock during the three-year period. The restriction is time only. 6. A long term incentive opportunity will be available to you for the fiscal period 1996-1998 as the first cycle of the long term program. This is a performance unit plan and will have three financial measurements. - aggregate earnings for the three-year period, - sales volume at the end of the third year, and - Return on Investment at the end of the third year. You will receive a number of performance units valued at the beginning of the fiscal year. The target level payout for the three- year period, if business plan level financial goals are achieved, should equal $300,000 and could go to a maximum of $600,000. One third of the value earned will be paid at the end of FY '98, one third at the end of FY '99 and one third at the end of FY 2000. This long term plan requires an agreement with you and Tony Luiso at the beginning of FY '96 as to the three-year financial targets. All of the targets will be VSA financial targets. 7. The Company will pay you a $75,000 employment bonus following your August 15, 1994 employment date. This full amount will be returned to Multifoods if within a one-year period you voluntarily terminate your employment with the company. A second $75,000 employment bonus will be paid in FY '96, 50% of which will be paid in September 1995 if VSA has met at least 90% of its business plan for the first six months of the fiscal year and the second 50% in March 1996 if VSA has achieved at least 90% of the full year's business plan. 8. The Company will provide you severance protection in the amount of one year's base salary ($260,000) in the event of your involuntary termination for any reason other than cause. The company will also recommend a change-of-control agreement to the Compensation Committee at its September 16, 1994 meeting. 9. The Company provides a comprehensive benefit program including medical, dental, life, long-term disability, etc. We also have a 401(k) program called VISA and a salaried employees' retirement plan (ERP). Summary information describing these plans is attached for your review. I should note, however, that all of the benefit plans are under review and will most likely be modified in FY 1996. 10. The Company's relocation program will apply. It is a comprehensive program and includes home marketing assistance, house hunting visits to the new location, transportation of household goods, fees, reasonable closing costs, etc. As we discussed, the Company is prepared to assist you in the sale of your home, and we agreed that as a first step you will determine the market value and an estimate of the time required to sell your home. We are prepared to protect your investment in your home at some reasonable level to be determined once you determine the market value. An apartment will be provided for you in Denver for a minimum of one year, and we will review your needs for continued housing assistance during this period. A copy of the relocation policy is attached. 11. In accordance with our verbal understanding, you will be entitled to four weeks' vacation. Our vacation year is from January 1 to December 31. Devendra, will you please let me know if you have any questions following your review of this offer. The offer is contingent upon your completion of an executive type physical examination. If you have had a recent physical exam, then written assurance from your doctor, followed by a written summary of the condition of your health, will constitute "satisfactory completion". This offer is also contingent upon responses from further reference checking which will be done by Don Hykes, VP & Managing Director of A. T. Kearney, and the results of interviews with members of our Board of Directors. Devendra, we are extremely pleased with the prospect of having you in this key executive role with Multifoods. We are counting on your contribution. We know you will make a significant difference to the corporation and will also enjoy the association with Multifoods. As Tony has expressed, we believe Multifoods can offer you significant growth opportunities in the years ahead. Will you please indicate your acceptance of our offer by signing and dating the original of this letter and returning it to me at your earliest convenience. Thanks again and welcome. Best regards, /s/ Robert F. Maddocks Robert F. Maddocks Vice President, Human Resources cc: A. Luiso Accepted by: /s/Devendra Mishra Devendra Mishra August 2, 1994 Date EX-11 7
Exhibit 11 INTERNATIONAL MULTIFOODS CORPORATION AND SUBSIDIARIES Computation of Earnings (Loss) Per Common Share (dollars in thousands, except per share amounts) Years Ended February 29, February 28, February 28, February 28, February 29, 1996 1995 1994 1993 1992 Average shares of common stock outstanding 17,964,688 17,974,156 18,910,748 19,281,578 19,493,251 Common stock equivalents 81,630 17,446 104,338 245,973 386,992 Total common stock and equivalents assuming full dilution 18,046,318 17,991,602 19,015,086 19,527,551 19,880,243 Earnings (loss) before cumulative effect of accounting change $24,075 $57,021 $(13,438) $41,210 $ 39,100 Less dividends on preferred stock 260 167 174 180 184 Earnings (loss) before cumulative effect of accounting change applicable to common stock $23,815 $56,854 $(13,612) $41,030 $ 38,916 Cumulative effect of accounting change, net of taxes $ - $ - $ - $ - $(17,133) Earnings (loss) per share of common stock: Primary Before cumulative effect of accounting change $ 1.33 $ 3.16 $ (.72) $ 2.13 $ 2.00 Cumulative effect of accounting change, net of taxes - - - - (.88) $ 1.33 $ 3.16 $ (.72) $ 2.13 $ 1.12 Fully diluted Before cumulative effect of accounting change $ 1.32 $ 3.16 $ (.72) $ 2.10 $ 1.96 Cumulative effect of accounting change, net of taxes - - - - (.86) $ 1.32 $ 3.16 $ (.72) $ 2.10 $ 1.10
Primary earnings (loss) per share have 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 year. 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 have been computed assuming issuance of all shares for stock options deemed to be common stock equivalents, using the treasury stock method. EX-12 8 Exhibit 12
INTERNATIONAL MULTIFOODS CORPORATION AND SUBSIDIARIES Computation of Ratio of Earnings to Fixed Charges (dollars in thousands) Years Ended February 29, February 28, February 28, February 28, February 29, 1996 1995 1994 1993 1992 Earnings (loss) before income taxes and cumulative effect of accounting change (1) $27,754 $71,739 $(12,717) $64,331 $ 69,477 Plus: Fixed charges (2) 30,153 25,490 22,604 24,550 32,228 Less: Capitalized interest (128) (317) (746) (1,144) (1,294) Earnings available to cover fixed charges $57,779 $96,912 $ 9,141 $87,737 $100,411 Ratio of earnings to fixed charges(3) 1.92 3.80 .40 3.57 3.12
(1) Earnings (loss) before income taxes have been adjusted to reflect income received (but not undistributed amounts) from less-than-fifty-percent- owned persons. Earnings (loss) before income taxes have also been adjusted to exclude losses from less-than-fifty-percent-owned persons. (2) Fixed charges consist of the following:
Years Ended February 29, February 28, February 28, February 28, February 29, 1996 1995 1994 1993 1992 ----------- ----------- ----------- ----------- ----------- Interest expense, gross $20,452 $16,287 $13,181 $14,592 $21,573 Rentals (Interest factor) 9,701 9,203 9,423 9,958 10,655 Total $30,153 $25,490 $22,604 $24,550 $32,228
(3) For the year ended February 28, 1994, earnings were inadequate to cover fixed charges. The deficiency was $13,463 for fiscal 1994. The deficiency was the result of unusual items which are described in Note 4 to the consolidated financial statements. Exclusive of these unusual items, the ratio of earnings to fixed charges would have been 3.50 for the year ended February 28, 1994. EX-13 9 Exhibit 13 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations Overview Fiscal 1996 net earnings were $24.1 million, or $1.33 per share, compared with net earnings of $57 million, or $3.16 per share, in fiscal 1995 and a net loss of $13.4 million, or $.72 per share, in fiscal 1994. Exclusive of unusual items, fiscal 1996 net earnings were $23.6 million, or $1.31 per share, compared with $28 million, or $1.55 per share, in fiscal 1995 and $35.5 million, or $1.86 per share, in fiscal 1994. Unusual items in fiscal 1996 resulted in a net benefit of $0.5 million after tax, or $.02 per share. Included in unusual items was a gain from the divestiture of the Company's surimi seafood business, a charge related to the write-down of vending distribution software costs and a charge for a corporate restructuring plan. The Company also recognized a benefit with respect to a tax settlement. The aggregate pre-tax benefit from the write- down of software costs and the corporate restructuring plan was approximately $1.5 million in fiscal 1996 and is expected to be approximately $3 million in fiscal 1997. Unusual items in fiscal 1995 resulted in a net benefit of $29 million after tax, or $1.61 per share. Included in unusual items was a gain from the divestiture of the Company's Frozen Specialty Foods business and a charge for the integration of the Company's limited-menu foodservice distribution businesses. The integration of the limited-menu foodservice distribution business of Leprino Foods Company, acquired by the Company in fiscal 1995, with the Company's former Pueringer business has occurred more slowly than originally anticipated. The pre-tax benefit from the integration was approximately $1 million in fiscal 1996 and is expected to be approximately $2 million in fiscal 1997. The Company previously disclosed that the integration was expected to provide pre-tax benefits of up to $3 million in fiscal 1996 and $6 million in fiscal 1997. Unusual items in fiscal 1994 reduced after-tax earnings by $48.9 million, or $2.58 per share. Included in fiscal 1994 unusual items were the disposition of certain underperforming assets and an investment in an unconsolidated affiliate, the write-down of certain assets and the reorganization of remaining operations. Segment Results Net sales and operating results by business segment are included in Note 19 to the consolidated financial statements. Fiscal 1996 compared with fiscal 1995. Consolidated net sales increased 10% to $2.52 billion. Net sales increased from revenues of the limited-menu distribution business of Leprino Foods Company which was acquired in August 1994. Consolidated operating earnings were $50.1 million in fiscal 1996 as compared to $86.5 million in fiscal 1995. Continuing businesses operating earnings before unusual items were $53.3 million in fiscal 1996 as compared to $48.4 million in fiscal 1995. Net Sales from Continuing Businesses (in billions) [Graphic Material Omitted] 1994 1995 1996 Foodservice Distribution $1.1 $1.4 $1.7 Bakery .4 .5 .5 Venezuela Foods .3 .3 .3 $1.8 $2.2 $2.5 Operating Earnings from Continuing Businesses* [Graphic Material Omitted] 1995 1996 Foodservice Distribution 29% 36% Bakery 38% 33% Venezuela Foods 33% 31% *Before unusual items Foodservice Distribution net sales increased 23% to $1.7 billion. The increase was primarily from a full year of sales of the acquired limited- menu distribution business of Leprino Foods Company. The increase in sales was partially offset by a 1% decline in net sales of the Company's vending distribution business as a result of lower volumes to independent customers. The lower volumes were the result of service-related difficulties, which the Company is addressing. Operating earnings before unusual items increased 27% to $22.3 million compared with $17.5 million in fiscal 1995. Earnings improved with the full-year benefit of earnings from the acquired limited- menu distribution business of Leprino Foods Company, higher earnings in the Company's food exporting business and that certain businesses had a 53 week reporting period. Earnings also benefited as the Company's vending distribution business was able to purchase certain inventories at favorable prices. Earnings were adversely impacted by the lower volumes and from higher selling costs in vending distribution. In addition, the Company has experienced delays in the integration of the acquired distribution business of Leprino Foods Company, the former Pueringer business and the Alum Rock Foodservice business, which was acquired in fiscal 1996. Fiscal 1996 unusual items of $9.4 million consisted of $8.9 million for the write-down of certain software costs of the vending distribution business information system and a $0.5 million charge for the write-down of a lease commitment. The software write-down was the result of the Company's decision to limit the scope of applications being implemented as part of its business information system. Accordingly, the Company determined that certain software applications would not be used. Fiscal 1995 unusual items of $6.2 million were for costs associated with the integration of the limited-menu distribution businesses. The Company's food exporting business sells branded and commodity food products worldwide. During the Company's fourth quarter, Russian authorities announced a ban to be effective in March 1996 on U.S. poultry products, one of the Company's major commodity exports. In March 1996 Russian and U.S. officials reached a preliminary agreement which provided for a lifting of the ban. Although the Company expects its exports of poultry to Russia will continue, future sales and earnings would be adversely affected if final resolution is not reached or if the final resolution impacts the ability to competitively sell such poultry products. Bakery net sales were $459.7 million in fiscal 1996 compared with $459.2 million in fiscal 1995. Sales improved on higher volumes in commercial bakery products in Canada and were offset by lower volumes in U.S. bakery and North American frozen products. Operating earnings declined 7% to $20.8 million compared with $22.4 million in fiscal 1995. The earnings decline was the result of the lower volumes partially offset by improved earnings in consumer and commercial bakery products in Canada. Earnings benefited from reduced trade spending and a 53 week reporting period in fiscal 1996. Venezuela Foods net sales increased 3% to $328.5 million. The increase was the result of higher volumes in bakery, consumer and agricultural products along with the benefit in the first-half of fiscal 1996 of a stable exchange rate as a result of government imposed foreign exchange controls. The increase was partially offset by the impact of a significant devaluation in the free-market exchange rate during the second half of fiscal 1996, as described below. Higher volumes in bakery products resulted primarily from business obtained from the addition of two wheat flour mills which the Company had leased beginning in October 1994 and subsequently purchased in August 1995. Increased volumes in consumer products were principally from increased market share and the impact of a corn flour business acquisition. Operating earnings declined 4% to $19.1 million compared with $19.9 million in fiscal 1995. The decline was partially the result of the significant devaluation in the free-market exchange rate. Earnings were also adversely impacted by a $3.9 million charge associated with the December 1995 change in the official exchange rate from 170 to 290 Venezuelan bolivars per U.S. dollar. The charge resulted from the Company having to settle certain U.S. dollar obligations, principally from wheat imports, at the new official exchange rate. These adverse effects were partially offset by the benefit of a stable exchange rate in the first-half of fiscal 1996 and the higher volumes. In June 1994, the Venezuelan government implemented foreign exchange controls and established an official exchange rate of 170 Venezuelan bolivars per U.S. dollar. The official exchange rate was subsequently changed to 290 bolivars per U.S. dollar in December 1995. Until the second quarter of fiscal 1996, the only legal way of exchanging bolivars for U.S. dollars was from the government at the official rate. In the second quarter, the Venezuelan government began allowing certain bonds denominated in U.S. dollars to be traded on local exchanges. This provided a legal mechanism for exchanging bolivars to U.S. dollars and established a free- market exchange rate. Accordingly, effective August 31, 1995, the Company began using the free-market exchange rate for translating into U.S. dollars all bolivar-denominated balances not expected to be settled at the official exchange rate by the Venezuelan government. The Company used the official exchange rate for translation of certain transactions, principally payments for raw material imports. In the last half of fiscal 1996, there was a significant devaluation in the free-market exchange rate. In the Company's opinion, the significant devaluation was caused by continued high inflation, limits on U.S. dollars available at the official exchange rate and uncertainty regarding the Venezuelan government's negotiations with the International Monetary Fund for a U.S. dollar loan. At February 29, 1996, the free-market exchange rate was 478 bolivars per U.S. dollar compared to 229 bolivars per U.S. dollar at August 31, 1995. The Company expects that the currency devaluation which occurred in the last half of the fiscal year will have a significant adverse effect on the Company's Venezuela Foods operating results in the first half of fiscal 1997. In June 1994, the Venezuelan government also implemented price controls which affect most of Venezuela Foods' products. Although the government has allowed price increases for the Company's products, gross profit margins stated in U.S. dollars were reduced in the second half of fiscal 1996 as the impact of the significant devaluation of the bolivar in the free market exceeded allowed price increases. During the fourth quarter of fiscal 1996, price controls on all but a few products were eliminated. However, many of the Company's products continue to be impacted by remaining price controls. There can be no assurance that the Company will be able to obtain sufficient price increases in the future to offset the effect of additional devaluations. In April 1996, the Venezuelan government announced it would implement significant measures in order to address the country's economic problems and to take the actions believed necessary to receive approval from the International Monetary Fund for a loan agreement. The measures include the removal of controls on foreign exchange and interest rates, an increase in the wholesale tax and an increase in gasoline prices. On April 22, 1996, the government allowed the exchange rate to be determined by market supply and demand and eliminated the official exchange rate. The Venezuelan Central Bank, however, has the authority to buy and sell foreign currency in the open market as it deems necessary. The Company is unable to determine the extent or timing of future devaluations or recoveries in the exchange rate, as well as the impact, if any, of Venezuelan Central Bank transactions in the foreign currency market. At April 23, 1996, the exchange rate was 471 bolivars per U.S. dollar. The removal of controls over interest rates has resulted in a significant increase in the interest rate for local currency borrowings. Although the Company expects the higher interest rates to negatively impact fiscal 1997 earnings, the Company may be able to limit the impact of the increased interest rates with various financing strategies. As of February 29, 1996, net monetary liabilities of the Company's Venezuelan operations totaled the U.S.-dollar equivalent of $6 million. The Company anticipates that its Venezuelan operations may be in a net monetary asset position during part of fiscal 1997. If the bolivar were to decline in value versus the U.S. dollar and the Company was in a net monetary asset position, there would be foreign exchange losses, the amount of which will depend upon the size of the net monetary position and the magnitude of the currency devaluation. In addition, the Company may be unable to immediately increase selling prices to maintain then-current gross profit margins. The Company's strategies for management of currency risk include product pricing strategies and management of its net monetary asset exposure. Divested businesses net sales were $18.1 million in fiscal 1996 compared with $122.3 million in fiscal 1995. Operating earnings before unusual items were $2.5 million compared with $11.9 million in fiscal 1995. Fiscal 1996 results consisted of the Company's surimi seafood business, which was divested in June 1995. In addition to the surimi seafood business, fiscal 1995 results included the Frozen Specialty Foods and Meats businesses which were divested in June and May 1994, respectively. The unusual gain of $9.9 million in fiscal 1996 was from the divestiture of the surimi seafood business. Unusual items of $34.2 million in fiscal 1995 were primarily from the gain on the divestiture of the Frozen Specialty Foods business. Fiscal 1995 compared with fiscal 1994. Consolidated net sales increased 6% to $2.3 billion. Consolidated operating earnings before unusual items declined 11% to $60.3 million from $67.8 million in fiscal 1994. As a result of unusual items, consolidated operating earnings were $86.5 million in fiscal 1995 as compared to an operating loss of $2.2 million in fiscal 1994. Foodservice Distribution net sales increased 26% to $1.4 billion. Excluding the effect of acquisitions, net sales increased 3%. Operating earnings before unusual items declined 2% to $17.5 million compared with $17.8 million in fiscal 1994. A significant decrease in vending distribution earnings resulted primarily from costs associated with delays in the implementation timetable of a business information system. Fiscal 1995 operating earnings benefited from the earnings of the acquired Leprino Distribution business and improved earnings from the Company's former Pueringer business as a result of higher volumes. Fiscal 1994 unusual items of $9.1 million were for organizational changes in vending distribution. Bakery net sales increased 4% to $459.2 million principally as a result of higher volumes in frozen bakery products, commercial flour and consumer flour, partially offset by a 3% impact from a decline in the average Canadian exchange rate. Operating earnings before unusual items increased 15% to $22.4 million compared with $19.5 million in fiscal 1994. The increase was primarily the result of the benefits from the reorganization of operations and improved volumes. The earnings improvement was partially offset by the unfavorable Canadian exchange rate and costs related to the introduction of consumer salsa products in Canada and consumer condiments in the southern United States. Fiscal 1994 unusual items of $29.4 million consisted of closing and downsizing certain facilities and organizational changes. Venezuela Foods net sales increased 19% to $317.7 million primarily on volume increases in bakery, consumer and agricultural products. Volumes in bakery products benefited from additional business obtained in connection with the lease of two wheat flour mills beginning in October 1994. Improved volumes in consumer products were partially due to the impact of a corn flour business acquired in May 1994. Operating earnings declined 18% to $19.9 million, compared with $24.3 million in fiscal 1994. The earnings decline was primarily the result of difficult economic conditions including rising inflation, which resulted in the change to the U.S. dollar as the functional currency for translation purposes in the fourth quarter of fiscal 1994. These unfavorable impacts were partially offset by the effects of higher volumes and the short-term stability realized from government-imposed foreign exchange controls. Divested businesses net sales were $122.3 million in fiscal 1995 as compared with $340 million in fiscal 1994. Operating earnings before unusual items were $11.9 million compared with $18.5 million in fiscal 1994. Sales and earnings declined as a result of the fiscal 1995 divestitures of the Frozen Specialty Foods and Meats businesses. Unusual items totaling $30.7 million in fiscal 1994 included the write-down of the Company's Meats business net assets to net realizable value and the loss on the sale of a regional bakery distribution business. Non-operating Expense and Income In fiscal 1996, net interest expense increased from $12.1 million to $18.7 million, primarily as a result of higher interest rates in the United States and Canada and lower interest income in Venezuela. Increased interest expense was also the result of higher debt levels in Venezuela and the United States. In fiscal 1995, net interest expense increased from $10.7 million to $12.1 million, principally as a result of higher interest rates in the United States and Canada, partially offset by higher interest income in Venezuela. Income Taxes The effective tax rates on earnings before unusual items were 29.4% and 38.5% in fiscal 1996 and 1995, respectively. The decline was the result of a lower effective tax rate in Venezuela. The Company's overall effective tax rate was 13.3% in fiscal 1996 compared to 20.5% in fiscal 1995 and 46.0% in fiscal 1994. The low tax rate in fiscal 1996 was the result of a benefit from a tax settlement. The fiscal 1995 effective tax rate was impacted by the low tax rate on the Frozen Specialty Foods divestiture. The Company's overall tax rate benefited in each fiscal year by a low effective tax rate in Venezuela. Financial Condition Capital Resources and Liquidity The Company's balance sheet and overall financial condition reflect the impact of business acquisitions and a divestiture during fiscal 1996. Common shareholders' equity increased to $299.6 million while the debt-to- total capitalization ratio was unchanged at 45%. Debt to Total Capitalization (in millions) [Graphic Material Omitted] 1994 1995 1996 Total Debt $258 $241 $242 Total Capitalization $511 $536 $542 Ratio 50% 45% 45% Short-term financing is provided by the use of commercial paper, Canadian bankers' acceptances and short-term bank borrowings. Approximately $291 million in U.S. and Canadian revolving credit agreements and lines of credit are maintained to ensure availability of funds. As of February 29, 1996, approximately $136 million of debt obligations were at variable interest rates. The Company has a medium-term note program under its shelf registration statement filed with the Securities and Exchange Commission, which provides for the issuance of up to $150 million in medium-term notes in various amounts. As of February 29, 1996, $140 million remained available under the medium-term note program. See Notes 9 and 10 to the consolidated financial statements for additional information on capital resources. In fiscal 1996, operating working capital increased $43.5 million, exclusive of the impact of acquisitions, a disposition and foreign exchange. The increase was partially the result of higher accounts receivable resulting from high sales volume in Foodservice Distribution during February and from the effects of inflation in Venezuela. In addition, other current liabilities decreased as a result of payments associated with the Company's integration of businesses and reorganization of operations as well as timing of payroll disbursements and a reduction in the Company's income tax liability. The balance sheet impact from acquisitions is summarized in Note 2 to the consolidated financial statements. Capital Expenditures by Continuing Businesses (in millions) [Graphic Material Omitted] 1994 1995 1996 Foodservice Distribution $20.8 $ 8.4 $13.9 Bakery 18.3 15.2 12.0 Venezuela Foods 8.7 5.5 5.0 $47.8 $29.1 $30.9 Capital expenditures by continuing businesses totaled $30.9 million in fiscal 1996 compared to $29.1 million in fiscal 1995. Approximately 45% of the fiscal 1996 capital expenditures was attributable to projects focused on increasing earnings through volume improvements, new business or cost savings. The remaining capital expenditures related to projects that were required to maintain existing facilities and equipment. During fiscal 1996, business acquisitions totaled $29.9 million. In addition to the acquisition of the Alum Rock Foodservice business, the Company acquired a corn flour business and two wheat flour mills in Venezuela. The Company also completed the divestiture of its surimi seafood business at a sale price of approximately $48 million. On September 1, 1995, the Company redeemed all of its outstanding shares of Cumulative Redeemable Sinking Fund First Preferred Capital Stock at a redemption price of $105 per share. The Company funded the redemption, which was approximately $3.7 million, with borrowings. The Company believes that cash flows from operations together with available external financing will be sufficient to fund operations, dividend payments and capital expenditures anticipated for fiscal 1997. Commodity Risk Management The Company's Canadian operations minimize risks associated with wheat market price fluctuations by hedging its wheat and flour inventories, open wheat purchase contracts and open flour sales contracts with wheat futures contracts. The Company also enters into futures contracts to reduce the risk of price increases on certain anticipated raw material purchases. See Note 7 to the consolidated financial statements for further discussion. Independent Auditors' Report The Board of Directors and Shareholders International Multifoods Corporation: We have audited the accompanying consolidated balance sheets of International Multifoods Corporation and subsidiaries as of February 29, 1996 and February 28, 1995, and the related consolidated statements of operations and cash flows for each of the years in the three-year period ended February 29, 1996. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of International Multifoods Corporation and subsidiaries as of February 29, 1996 and February 28, 1995, and the results of their operations and their cash flows for each of the years in the three-year period ended February 29, 1996 in conformity with generally accepted accounting principles. /s/KPMG Peat Marwick LLP KPMG Peat Marwick LLP Minneapolis, Minnesota April 9, 1996, except as to Note 18, which is as of April 23, 1996 Management's Responsibility for Financial Statements The consolidated financial statements have been prepared by management in conformity with generally accepted accounting principles and include, where required, amounts based on management's best estimates and judgments. Management continues to be responsible for the integrity and objectivity of data in these consolidated financial statements, which it seeks to assure through an extensive system of internal controls. Such controls are designed to provide reasonable, but not absolute, assurance that assets are safeguarded from unauthorized use or disposition and that financial records are sufficiently reliable to permit the preparation of consolidated financial statements. It is recognized that estimates and judgments are required to assess and balance the relative cost and expected benefits of any system of internal controls. The system of internal accounting controls is designed to provide reasonable assurance that the books and records reflect the Company's transactions and that its established policies and procedures are carefully followed. The system includes written policies and procedures, a financial reporting system, an internal audit department and careful selection and training of qualified personnel. /s/Anthony Luiso /s/Duncan H. Cocroft Anthony Luiso Duncan H. Cocroft Chairman, President and Vice President-Finance, Chief Executive Officer Chief Financial Officer and Treasurer INTERNATIONAL MULTIFOODS CORPORATION and SUBSIDIARIES Consolidated Statements of Operations Fiscal year ended the last day of February (in thousands,except per share data) 1996 1995 1994 Net sales $2,523,197 $2,295,119 $2,158,354 Cost of sales (2,135,707) (1,901,932) (1,743,892) Gross profit 387,490 393,187 414,462 Delivery and distribution (162,870) (146,220) (141,838) Selling, general and administrative (168,825) (186,616) (204,852) Unusual items (5,700) 26,240 (70,007) Operating earnings (loss) 50,095 86,591 (2,235) Interest, net (18,747) (12,105) (10,685) Foreign exchange gains (losses) on cash and equivalents (3,594) (2,747) 203 Loss from unconsolidated affiliates - - (12,187) Earnings (loss) before income taxes 27,754 71,739 (24,904) Income taxes (3,679) (14,718) 11,466 Net earnings (loss) $ 24,075 $ 57,021 $ (13,438) Net earnings (loss) per share of common stock $ 1.33 $ 3.16 $ (.72) Average shares of common stock outstanding 17,965 17,974 18,911 See accompanying notes to consolidated financial statements. INTERNATIONAL MULTIFOODS CORPORATION and SUBSIDIARIES Consolidated Balance Sheets February 29, 1996 and February 28, 1995 (in thousands) 1996 1995 Assets Current assets: Cash and equivalents $ 7,508 $ 10,792 Trade accounts receivable, net of allowance 165,527 142,474 Inventories 230,626 256,878 Deferred income taxes 10,792 18,506 Other current assets 44,582 43,047 Total current assets 459,035 471,697 Property, plant and equipment, net 226,498 228,025 Goodwill, net 99,999 108,636 Other assets 36,725 38,347 Total assets $822,257 $846,705 Liabilities and Shareholders' Equity Current liabilities: Notes payable $ 28,541 $ 47,149 Current portion of long-term debt 11,000 11,083 Accounts payable 170,884 167,114 Other current liabilities 61,870 90,646 Total current liabilities 272,295 315,992 Long-term debt 202,937 183,087 Deferred income taxes 12,975 15,767 Employee benefits and other liabilities 34,487 37,193 Total liabilities 522,694 552,039 Redeemable preferred stock, redemption value $3,784 - 3,604 Shareholders' equity: Preferred capital stock - - Common stock, authorized 50,000 shares; issued 21,844 shares 2,184 2,184 Capital in excess of par value 88,316 88,862 Retained earnings 404,813 395,406 Equity adjustment from foreign currency translation (108,170) (108,884) Equity adjustment from minimum pension liability (2,674) (1,641) Treasury stock, 3,864 and 3,835 shares, at cost (83,948) (83,417) Unearned restricted stock (958) (1,448) Total shareholders' equity 299,563 291,062 Commitments and contingencies Total liabilities and shareholders' equity $822,257 $846,705 See accompanying notes to consolidated financial statements. INTERNATIONAL MULTIFOODS CORPORATION and SUBSIDIARIES Consolidated Statements of Cash Flows Fiscal year ended the last day of February (in thousands) 1996 1995 1994 Cash flows from operations: Net earnings (loss) $ 24,075 $ 57,021 $(13,438) Adjustments to reconcile net earnings (loss) to cash provided by operations: Depreciation and amortization 29,772 27,045 29,892 Provision for unusual charges 15,493 5,413 70,007 Equity in losses of unconsolidated affiliates - - 12,187 Gain on major business dispositions (9,900) (33,581) - Deferred income tax expense (benefit) 4,544 4,483 (12,504) Provision for losses on receivables 5,783 4,477 3,783 Changes in operating assets and liabilities, net of business acquisitions and dispositions* (43,456) (49,351) (49,573) Other, net (730) 6,372 (4,137) Cash provided by operations 25,581 21,879 36,217 Cash flows from investing activities: Acquisitions of businesses, net of cash acquired (29,904) (115,847) (18,476) Capital expenditures (31,181) (30,776) (51,904) Proceeds from business dispositions 48,009 156,367 4,862 Proceeds from other property disposals 1,707 823 1,482 Cash provided by (used for) investing activities (11,369) 10,567 (64,036) Cash flows from financing activities: Net increase (decrease) in notes payable (12,203) (7,231) 40,095 Additions to long-term debt 85,945 4,973 40,000 Reductions in long-term debt (65,165) (7,038) (8,735) Dividends paid (14,471) (14,560) (15,423) Proceeds from issuance of common stock 1,470 355 1,579 Purchase of treasury stock (2,877) (5,877) (27,490) Redemption of preferred stock (3,732) - - Other, net (712) (19) (209) Cash provided by (used for) financing activities (11,745) (29,397) 29,817 Effect of exchange rate changes on cash and equivalents (5,751) (2,764) (2,535) Net increase (decrease) in cash and equivalents (3,284) 285 (537) Cash and equivalents at beginning of year 10,792 10,507 11,044 Cash and equivalents at end of year $ 7,508 $ 10,792 $ 10,507 *Cash flows from changes in operating assets and liabilities, net of business acquisitions and dispositions: Accounts receivable $(45,993) $ (441) $(18,410) Inventories 19,172 (47,866) (23,032) Other current assets (4,759) (9,089) (1,889) Accounts payable 16,871 16,643 1,989 Other current liabilities (28,747) (8,598) (8,231) Net change $(43,456) $(49,351) $(49,573) See accompanying notes to consolidated financial statements. Notes to Consolidated Financial Statements Note 1: Summary of Significant Accounting Policies Basis of statement presentation. The accompanying consolidated financial statements include the accounts of International Multifoods Corporation and all of its subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation. The Company's fiscal year ends the last day of February. 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 certain Venezuelan borrowings, as a component of cost of sales. Accordingly, cost of sales was reduced by $7.8 million in fiscal 1996 and $0.4 million in fiscal 1995 and was increased by $2.8 million in fiscal 1994. Foreign currency translation and transactions. For the Company's Canadian operations, the functional currency is the local currency. Assets and liabilities are translated at current exchange rates and results of operations are translated using the weighted average exchange rate in effect during the fiscal year. The gains or losses resulting from translation are included in a separate component of shareholders' equity. Effective December 1, 1993, the functional currency for the Company's Venezuelan operations changed from the local currency to the U.S. dollar. Nonmonetary assets and liabilities, principally inventory and fixed assets, are translated at historical exchange rates while monetary assets and liabilities are translated at current exchange rates. Results of operations are translated using the weighted average exchange rate in effect during the fiscal year, except that cost of sales and depreciation are translated at historical rates. The gains or losses resulting from translation are included in the determination of net earnings. The Company recognized in its results of operations net foreign exchange gains of $2.4 million in fiscal 1996, principally from translation of Venezuelan monetary assets and liabilities. The Company also recognized in its results of operations net foreign exchange losses of $3.0 million in fiscal 1995 and $2.3 million in fiscal 1994. Income taxes. Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial statement carrying amount and tax basis of assets and liabilities. Earnings per share. Earnings per share of common stock has been determined by dividing net earnings, after deduction of preferred stock dividends, by the average number of shares of common stock outstanding during the year. Common stock options and other common stock equivalents are not included in earnings per share computations since their effect is not significant. Cash and equivalents. The Company considers all highly liquid short-term investments purchased with a maturity of three months or less to be cash equivalents. Inventories. Inventories, excluding grain in Canada, are valued principally at the lower of cost (first-in, first-out) or market (replacement or net realizable value). In Canada, inventories of grain are valued on the basis of replacement market prices prevailing at fiscal year-end. The Company generally minimizes risks associated with market price fluctuations by hedging those inventories with futures contracts. Therefore, included in inventories is the amount of gain or loss on open grain contracts, including futures contracts, which generally has the effect of adjusting those inventories to cost. The Company also enters into futures contracts to reduce the risk of price increases with respect to certain anticipated raw material purchases. The futures contracts are accounted for as hedges, with gains and losses deferred in inventory and subsequently included in cost of sales as the inventory is sold. Property, plant and equipment. Property, plant and equipment is stated at cost and depreciation is computed using the straight-line method for determining financial statement income. When permitted, accelerated depreciation methods are used to calculate depreciation for income tax purposes. Goodwill and other intangibles. Goodwill represents the excess of cost of businesses acquired over the fair market value of net tangible and identifiable intangible assets. Goodwill and other intangibles are amortized on a straight-line basis over not more than a 40-year period. Other intangibles are included in other assets on the consolidated balance sheets. Accumulated amortization of goodwill and other intangibles at February 29, 1996 and February 28, 1995 was $19.4 million and $16.8 million, respectively. In March 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" (SFAS 121), which is required to be adopted by the Company on or before the fiscal year ending February 28, 1997. The standard generally requires recognition of impairment in the carrying value of goodwill and other long-lived assets if the undiscounted expected future net cash flows is less than the carrying amount of the assets. If SFAS 121 had been adopted in fiscal 1996, management believes it would not have had a material effect on the Company's financial condition or results of operations. Use of estimates. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from these estimates. Note 2: Businesses Acquired The Company acquired, with cash and notes, several businesses during the three years ended February 29, 1996. All acquisitions have been accounted for as purchases and, accordingly, their results of operations have been included since their respective dates of acquisition. The most significant acquisitions were as follows: Fiscal Year Business Segment Name Date Acquired 1996 Venezuela Foods Two wheat flour mills in Puerto Cabello, VZ August 1995 Foodservice Distribution Alum Rock Foodservice July 1995 Venezuela Foods Corn flour business in Ciudad Bolivar, VZ April 1995 1995 Foodservice Distribution business Distribution of Leprino Foods Co. August 1994 1994 Foodservice Distribution Bevmatic August 1993 Bakery JAMCO June 1993 Components of cash used for acquisitions, as reflected in the consolidated statements of cash flows, were as follows: (in thousands) 1996 1995 1994 Fair value of current assets, net of cash acquired $ 7,252 $ 46,298 $ 4,738 Fair value of noncurrent assets, excluding goodwill 21,266 39,003 12,276 Goodwill 2,626 51,478 5,778 Liabilities assumed, principally current (740) (20,932) (1,816) Purchase contract liabilities (500) - (2,500) Cash paid at closing, net of cash acquired $29,904 $115,847 $18,476 Assuming the Company's acquisitions had been completed on March 1, 1994, the beginning of fiscal 1995, pro forma net sales of the Company would have been approximately $2.55 billion for each of fiscal 1996 and 1995. The pro forma effect on net earnings and net earnings per share of common stock is not significant. The pro forma information is not necessarily indicative of the combined results of operations that would have occurred had the acquisitions been completed as of the beginning of fiscal 1995. Note 3: Interest, Net Interest, net consisted of the following: (in thousands) 1996 1995 1994 Interest expense $20,452 $16,287 $13,181 Capitalized interest (128) (317) (746) Non-operating interest income (1,577) (3,865) (1,750) Interest, net $18,747 $12,105 $10,685 Cash payments for interest, net of amounts capitalized, totaled $21.5 million in fiscal 1996, $14.6 million in fiscal 1995 and $12.0 million in fiscal 1994. Total interest income was $2.5 million in fiscal 1996, $4.9 million in fiscal 1995 and $2.3 million in fiscal 1994. Note 4: Unusual Items In fiscal 1996, the Company recognized unusual items that resulted in a net pre-tax charge of $5.7 million, with a net after-tax benefit of $0.5 million ($.02 per share). The unusual items resulted from the Company's decision to limit the scope of software applications being implemented in its vending distribution business information system, management's approval and commitment to a plan of reducing the cost of corporate administrative operations, and the Company's divestiture of its surimi seafood business. The net pre-tax charge consisted of $8.9 million for the write-down of vending distribution computer software costs and $2.0 million for other asset write-downs; $4.7 million for termination benefits covering corporate administrative employees and a lease commitment write-down; and a $9.9 million gain from the business divestiture. All significant actions are expected to be completed by the first half of fiscal year 1997. The lease commitment write-down liability will be amortized to income over the life of the related lease agreement. The Company also recognized a $5.0 million tax benefit which resulted from an agreement with the IRS regarding proposed disallowances of certain deductions taken during fiscal years 1985 through 1991 and the benefit of the closure by the IRS of its examinations of the Company's fiscal 1992 and 1993 tax returns. In fiscal 1995, the Company recognized unusual items that resulted in a net pre-tax benefit of $26.2 million, with a net after-tax benefit of $29.0 million ($1.61 per share). The net pre-tax benefit included a $33.6 million gain from the divestiture of the Company's Frozen Specialty Foods business; a $0.6 million benefit related to previously divested businesses; a $6.2 million charge for the integration of the Company's limited-menu foodservice distribution businesses ("Business Integration"); and $1.8 million for costs associated with business acquisition activities. The Business Integration charge included $3.7 million for write-down of lease commitments; $1.4 million for termination benefits paid to 125 warehouse, delivery and administrative employees and $1.1 million for asset write-downs. The liability for lease commitments is being amortized to income over the life of the related lease agreements. The Company also recognized a benefit from a tax settlement on proposed disallowances of certain deductions in connection with business acquisitions. In fiscal 1994, the Company recognized unusual items that resulted in pre-tax charges of $70.0 million and a $12.5 million charge related to its investments in Mexican unconsolidated affiliates. The total after-tax loss for these unusual items was $48.9 million ($2.58 per share). The unusual items resulted from the Company's decision to dispose of certain underperforming assets and reorganize its remaining operations, as well as to divest a regional bakery distribution business. The net pre-tax charge included $28.4 million for termination benefits and write-down of lease commitments and $41.6 million principally for asset write-downs. The liability for lease commitments is being amortized to income over the life of the related lease agreements. The following table summarizes the changes in the Company's reorganization and integration reserves for the year ended February 29, 1996:
Foodservice Distribution Bakery Corporate ------------------------ ------------------ --------- Consoli- Organi- Organi- dation/ Organi- zational Business zational Closing zational (in thousands) Changes Integration Changes Facilities Changes Total Accrued costs at February 28, 1995 $ 792 $4,406 $4,310 $2,997 $ - $12,505 Reserves additions 500 - - - 4,200 4,700 Reserves utilized (1,292) (2,149) (2,845) (2,560) (2,108) (10,954) Exchange rate effect - - 85 47 - 132 Accrued costs at February 29, 1996 $ - $2,257 $1,550 $ 484 $2,092 $ 6,383
Note 5: Income Taxes Income tax expense was as follows: U.S. Operations Non-U.S. (in thousands) Federal Other Operations Total 1996: Current expense (benefit) $ (4,336) $ (442) $ 3,913 $ (865) Deferred expense (benefit) 2,501 (922) 2,965 4,544 Total tax expense (benefit) $ (1,835) $(1,364) $ 6,878 $ 3,679 1995: Current expense $ 1,785 $ 2,340 $ 6,110 $ 10,235 Deferred expense (benefit) 603 (151) 4,031 4,483 Total tax expense $ 2,388 $ 2,189 $10,141 $ 14,718 1994: Current expense (benefit) $ (2,571) $ 666 $ 2,943 $ 1,038 Deferred benefit (9,028) (2,021) (1,455) (12,504) Total tax expense (benefit) $(11,599) $(1,355) $ 1,488 $(11,466) Temporary differences which give rise to deferred tax assets and liabilities as of February 29, 1996 and February 28, 1995 were as follows: 1996 1995 ------------------- -------------------- Deferred Deferred Deferred Deferred Tax Tax Tax Tax (in thousands) Assets Liabilities Assets Liabilities Depreciation and amortization $ 1,489 $25,884 $15,154 $28,141 Accrued expenses 21,913 10,131 23,306 7,346 Inventory valuation methods 2,175 - 8,973 - Reorganization and divestiture reserves 5,014 - 8,723 - Provision for losses on receivables 5,149 - 2,738 12 Foreign net operating loss carryforwards 6,115 - 9,383 - Foreign earnings repatriation - 4,207 - 4,273 Other 4,350 2,479 3,537 1,865 Subtotal 46,205 42,701 71,814 41,637 Valuation allowance (8,945) - (31,760) - Total deferred taxes $37,260 $42,701 $40,054 $41,637 At February 29, 1996, the Company's Venezuelan operations had a net operating loss carryforward of approximately $5.9 million which will expire in fiscal 1998. The financial statement benefit of the net operating loss carryforward has been offset by the valuation allowance due to the limited carryforward period. The remainder of the valuation allowance also relates to the Company's Venezuelan operations. In fiscal 1996, the valuation allowance decreased $22.8 million. The decrease primarily resulted from the effect of the devaluation of the Venezuelan local currency on the valuation allowance offset by a corresponding decline in the related Venezuelan deferred tax assets and as such had no effect on tax expense. The decrease in the valuation allowance also resulted from the utilization of Venezuelan net operating loss carryforwards which have been reflected below in the effect of taxes on non-U.S. earnings. The effective tax rate varied from the U.S. federal statutory tax rate as follows: 1996 1995 1994 U.S. federal statutory tax rate 35.0% 35.0% (35.0)% Differences: Effect of taxes on non-U.S. earnings (7.4) (1.9) .1 State and local income taxes (3.2) 2.0 (3.5) Effect of intangibles .7 (2.5) 1.7 Basis difference for business disposals 1.3 (12.6) (12.2) Resolution of tax examinations (18.0) - - Other 4.9 .5 2.9 Effective tax rate 13.3% 20.5% (46.0)% Provision has been made for U.S. income taxes applicable to anticipated remittances of earnings from non-U.S. affiliates. No deferred tax liability has been recognized for temporary differences related to investments in non- U.S. affiliates as it is not practicable to estimate such deferred tax liability. Earnings before income taxes resulting from non-U.S. affiliates were $28.4 million in fiscal 1996, $33.0 million in fiscal 1995 and $3.5 million in fiscal 1994. Net income taxes paid (refunded) totaled $4.8 million in fiscal 1996, $5.9 million in fiscal 1995 and $(1.0) million in fiscal 1994. Note 6: Supplemental Balance Sheet Information (in thousands) 1996 1995 Accounts receivable, net: Trade $179,504 $149,132 Allowance for doubtful accounts (13,977) (6,658) Total accounts receivable, net $165,527 $142,474 Inventories: Raw materials, excluding grain $ 17,529 $ 25,683 Grain 46,331 65,402 Finished and in-process goods 159,077 158,497 Packages and supplies 7,689 7,296 Total inventories $230,626 $256,878 Property, plant and equipment, net: Land $ 12,045 $ 11,635 Buildings and improvements 90,001 87,739 Machinery and equipment 217,567 212,262 Transportation equipment 9,188 9,042 Improvements in progress 13,157 13,381 341,958 334,059 Accumulated depreciation (115,460) (106,034) Total property, plant and equipment, net $226,498 $228,025 Accounts payable: Trade $142,812 $131,754 Other 28,072 35,360 Total accounts payable $170,884 $167,114 Other current liabilities: Wages and benefits $ 10,524 $ 16,163 Income taxes 10,890 18,177 Reorganization reserves 6,383 12,505 Other accrued expenses 34,073 43,801 Total other current liabilities $ 61,870 $ 90,646 Note 7: Financial Instruments Fair value of financial instruments. The carrying value of cash and equivalents, accounts receivable, accounts payable and debt approximate fair value. Other financial instruments. The Company's Canadian operations minimize the risk associated with wheat market price fluctuations by hedging its wheat and flour inventories, open wheat purchase contracts, and open flour sales contracts with wheat futures contracts. In the United States, the Company has entered into futures contracts to reduce the risk of price increases on anticipated flour and soybean oil purchases. The U.S. dollar-denominated futures contracts are traded on U.S. regulated exchanges. The amount of deferred losses, measured by using quoted market prices, as of February 29, 1996 was insignificant. At February 29, 1996, the Company held futures contracts to purchase wheat and soybean oil with an aggregate contract value of $11.0 million and to sell wheat with contract values of $8.8 million. The open futures contracts mature in the period March 1996 through December 1996 and substantially coincide with the maturities of the open wheat purchase contracts, open flour sales contracts and the anticipated timing of flour and soybean oil purchases. Since the Canadian operations' inventories, purchase contracts and sales contracts are generally denominated in Canadian dollars, the Company enters into foreign exchange forward contracts that have the effect of converting the U.S. dollar-denominated futures contracts into Canadian dollar equivalents. At February 29, 1996, the Company held foreign exchange forward contracts totaling $7.6 million. The foreign exchange forward contracts are purchased through major Canadian banking institutions. Management believes the credit risk of these exchange-traded futures contracts and foreign exchange forward contracts due to nonperformance of the counterparties is insignificant. Note 8: Accounts Receivable As of February 29, 1996 and February 28, 1995, the Company had sold with limited recourse $13.1 million and $11.5 million of accounts receivable, respectively. Collections received on these accounts may be replaced by new receivables in order to maintain the aggregate outstanding balance. The credit risk of uncollectible accounts has been substantially transferred to the purchaser. Fees associated with these transactions are included in interest expense in the consolidated statements of operations. The Company also sold, with recourse, certain accounts receivable related to food export sales to Russia in fiscal 1996 and 1995. The related credit facilities limit the outstanding balance at any point in time to a total of $24 million and are subject to recourse in that the Company is obligated to pay amounts due to participating financial institutions in the event the customer fails to pay. The Company reduces its credit risk by requiring standby letters of credit and a security deposit and by maintaining title to the inventory until payment has been made. The outstanding balances on such receivables at February 29, 1996 and February 28, 1995 were $10.8 million and $13.2 million, respectively. Fees associated with these transactions are paid directly by the customer. Note 9: Notes Payable Notes payable consisted of the following: (in thousands) 1996 1995 U.S. commercial paper $ 61,750 $ 50,455 Canadian bankers' acceptances 58,003 57,504 Notes payable, principally to banks 15,332 96,694 Amounts reclassified to long-term debt (106,544) (157,504) Total notes payable $ 28,541 $ 47,149 In March 1996, the Company entered into a $200 million U.S. revolving credit agreement which expires March 15, 2001. In conjunction with the new U.S. credit facility, the Company terminated its $150 million U.S. revolving credit agreement. The Company also has an $84 million revolving credit agreement in Canada which expires March 15, 1997 and a $7 million short-term line of credit in Canada which expires in fiscal 1997. The interest rate on borrowings under these agreements is variable and based on current market factors. There are no restrictions on the use of these facilities for general corporate purposes and support for commercial paper issued by the Company. The credit agreements contain certain restrictive covenants that include maintenance of minimum tangible net worth, a fixed charge coverage ratio and an indebtedness to capitalization ratio. None of the restrictive covenants are expected to affect the payment of dividends based on the Company's present dividend guideline. The Company had available $109 million under credit agreements as of February 29, 1996, and an additional $50 million was available in March 1996 under the new U.S. revolving credit agreement. Related commitment and facility fees were $0.6 million in each of fiscal 1996 and 1995. Notes payable totaling $106.5 million have been classified as long-term debt as a result of the Company's intent to refinance this debt on a long- term basis and the availability of such financing under the terms of the revolving credit agreements. The weighted average interest rate on U.S. commercial paper, Canadian bankers' acceptances and notes payable outstanding at February 29, 1996 was 5.6% and at February 28, 1995 was 6.7%. At February 29, 1996, the Company had available uncommitted lines of credit from banks in Venezuela of approximately $30 million. No compensating balances were required for any of these credit lines. Note 10: Long-term Debt Long-term debt, net of current portion of $11.0 million in fiscal 1996 and $11.1 million in fiscal 1995, was as follows: (in thousands) 1996 1995 Medium-term notes $ 95,000 $ 20,000 Industrial revenue bond financing - 3,500 Other, due in varying amounts through fiscal 2003 1,393 2,083 Notes payable, reclassified 106,544 157,504 Total long-term debt $202,937 $183,087 During fiscal 1996 the Company issued the remaining $70 million of its medium-term notes, Series A. In addition, during fiscal 1996, the Company filed a shelf registration statement with the Securities and Exchange Commission for the issuance of $150 million of debt securities. The Company may issue up to the entire amount as medium-term notes, Series B, in varying amounts, rates and maturities. In fiscal 1996, the Company issued $10 million of its medium-term notes, Series B. Medium-term notes outstanding at February 29, 1996 mature in fiscal 1997 to 2007 and had a weighted average interest rate of 6.4%. Minimum principal payments totaling $202.9 million are due as follows: $61.7 million in fiscal 1998, $23.3 million in fiscal 1999, $2.3 million in fiscal 2000, $20.3 million in fiscal 2001, $50.3 million in fiscal 2002 and $45.0 million in fiscal 2003 and beyond. Note 11: Preferred Capital Stock The Company has authorized 10,000,000 shares of Preferred Capital Stock, par value $1.00 per share, which may be designated and issued as convertible into common shares. The Company has created a series of such Preferred Capital Stock, designated as Series 1990 Junior Participating Capital Preferred Stock, consisting of 500,000 shares, par value $1.00 per share. No Preferred Capital Stock was outstanding during the three years ended February 29, 1996. Note 12: Leases The Company leases certain plant, office space and equipment for varying periods. Management expects that in the normal course of business, leases will be renewed or replaced by other leases. The following is a schedule of future minimum lease payments for operating leases that had initial or remaining noncancelable lease terms in excess of one year as of February 29, 1996: Operating (in thousands) leases 1997 $21,636 1998 17,710 1999 14,840 2000 12,518 2001 8,303 2002 and beyond 8,616 Total minimum lease payments * $83,623 *Minimum payments do not include contingent rentals or vehicle lease payments based on mileage. Total net rent expense for operating leases, including those with terms of less than one year, consisted of the following: (in thousands) 1996 1995 1994 Minimum rentals $29,104 $27,608 $28,270 Contingent rentals 79 246 1,009 Sublease rentals (8) (44) (286) Total net rent expense $29,175 $27,810 $28,993 Note 13: Commitments and Contingencies There were no contingencies or litigation as of February 29, 1996 that, in the opinion of management, would have had a material adverse effect on the Company's consolidated financial condition, results of operations or cash flows. At February 29, 1996, the estimated cost to complete improvements in progress totaled approximately $6 million. Note 14: Shareholders' Equity The following summarizes the changes in shareholders' equity for the three years ended February 29, 1996:
Equity Adjustment from: $.10 par value Capital in Foreign Minimum Unearned Common Treasury Excess of Retained Currency Pension Restricted (in thousands) Stock Stock Par Value Earnings Translation Liability Stock Total ------ -------- --------- -------- ----------- --------- ---------- -------- Balance at February 28, 1993 $2,184 $(55,150) $88,880 $378,030 $ (87,066) $(3,673) $(1,243) $321,962 Net loss - - - (13,438) - - - (13,438) Translation adjustments - - - - (20,298) - - (20,298) Dividends declared: Common stock - - - (15,120) - - - (15,120) Preferred stock - - - (174) - - - (174) 1,200 shares purchased for treasury - (27,490) - - - - - (27,490) 194 shares issued for employee benefit plans - 4,276 278 - - - (2,844) 1,710 Amortization of unearned restricted stock - - - - - - 1,480 1,480 Adjustment associated with recognition of minimum pension liability - - - - - 1,372 - 1,372 Balance at February 28, 1994 2,184 (78,364) 89,158 349,298 (107,364) (2,301) (2,607) 250,004 Net earnings - - - 57,021 - - - 57,021 Translation adjustments - - - - (1,520) - - (1,520) Dividends declared: Common stock - - - (10,746) - - - (10,746) Preferred stock - - - (167) - - - (167) 366 shares purchased for treasury - (5,877) - - - - - (5,877) 37 shares issued for employee benefit plans - 824 (296) - - - (222) 306 Amortization of unearned restricted stock - - - - - - 1,381 1,381 Adjustment associated with recognition of minimum pension liability - - - - - 660 - 660 Balance at February 28, 1995 2,184 (83,417) 88,862 395,406 (108,884) (1,641) (1,448) 291,062 Net earnings - - - 24,075 - - - 24,075 Translation adjustments - - - - 714 - - 714 Dividends declared: Common stock - - - (14,408) - - - (14,408) Preferred stock - - - (260) - - - (260) 137 shares purchased for treasury - (2,877) - - - - - (2,877) 108 shares issued for employee benefit plans - 2,346 (277) - - - (311) 1,758 Amortization of unearned restricted stock - - - - - - 532 532 Adjustment associated with long-term incentive program amendment - - (269) - - - 269 - Adjustment associated with recognition of minimum pension liability - - - - - (1,033) - (1,033) Balance at February 29, 1996 $2,184 $(83,948) $88,316 $404,813 $(108,170) $(2,674) $ (958) $299,563
The Company's 1989 stock-based plan permits awards of restricted stock and incentive units to key employees subject to the provisions of the plan and as determined by the Compensation Committee of the Board of Directors. In fiscal 1996, grants of 31,935 shares of restricted stock were awarded with varying performance criteria and vesting periods. At February 29, 1996, the total number of restricted shares outstanding was 158,815. The market value of shares issued under the plan, as of the date of grant, has been recorded as unearned restricted stock and is shown as a separate component of shareholders' equity. Unearned restricted stock is expensed over the period restrictions lapse. The Company has a shareholder rights plan that entitles one preferred share purchase right for each outstanding share of common stock. The rights become exercisable only after a person or group (with certain exceptions) becomes the beneficial owner of 10% or more of the Company's outstanding common stock or announces a tender offer, the consummation of which would result in beneficial ownership by a person or group of 10% or more of the Company's outstanding common stock. Each right will entitle its holder to purchase one one-hundredth share of Series 1990 Junior Participating Preferred Capital Stock (consisting of 500,000 shares, par value $1.00 per share) at an exercise price of $100, subject to adjustment. If a person or group acquires beneficial ownership of 10% or more of the Company's outstanding common stock, each right will entitle its holder (other than such person or group) to purchase, at the then-current exercise price of the right, a number of shares of the Company's common (or, in certain circumstances, preferred) stock having a market value of twice the then-current exercise price of the right. In addition, if the Company is acquired in a merger or other business combination transaction or 50% or more of its consolidated assets or earnings power are acquired, each right will entitle its holder to purchase, at the then-current exercise price of the right, a number of the acquiring company's common shares having a market value of twice the then-current exercise price of the right. Following the acquisition by a person or group of beneficial ownership of 10% or more of the Company's outstanding common stock and prior to an acquisition by any person or group of 50% or more of the Company's outstanding common stock, the Board of Directors may exchange the outstanding rights (other than rights owned by such person or group), in whole or in part, for common (or, in certain circumstances, preferred) stock of the Company. Prior to the acquisition by a person or group of beneficial ownership of 10% or more of the Company's outstanding common stock, the rights are redeemable for $.01 per right at the option of the Board of Directors. Note 15: Stock Options A total of 470,431 common shares are available for grants of stock options or restricted stock under the Company's 1986 and 1989 stock plans. Stock options are granted to directors, officers and key management employees to purchase shares of Company common stock at not less than fair market value at dates of grant for incentive stock options and at not less than 75% of fair market value at dates of grant for non-qualified stock options. Options generally become exercisable one year after the date of grant and expire ten years after the date of grant. The following table contains information on stock options: Option Price Shares Per Share-Range Outstanding at February 28, 1993 1,805,707 $11.28 - 29.00 Granted 85,019 19.25 - 25.75 Exercised (86,375) 11.28 - 23.21 Expired or canceled (82,236) 19.21 - 28.06 Outstanding at February 28, 1994 1,722,115 $11.28 - 29.00 Granted 72,077 16.06 - 18.00 Exercised (26,100) 11.28 - 14.97 Expired or canceled (200,263) 11.28 - 29.00 Outstanding at February 28, 1995 1,567,829 $14.97 - 29.00 Granted 220,513 18.69 - 22.69 Exercised (83,545) 14.97 - 20.17 Expired or canceled (137,975) 16.50 - 28.06 Outstanding at February 29, 1996 1,566,822 $16.06 - 29.00 Options exercisable at: February 28, 1994 1,443,027 $11.28 - 29.00 February 28, 1995 1,424,844 $14.97 - 29.00 February 29, 1996 1,383,422 $16.06 - 29.00 Note 16: Retirement Plans The Company sponsors two defined contribution plans and several defined benefit retirement plans. The defined contribution plans cover salaried, sales and certain hourly employees in the United States and Canada. The Company makes contributions equal to 50% of the employee's contribution subject to certain limitations. Employer contributions were $1.8 million in fiscal 1996, $1.7 million in fiscal 1995 and $2.1 million in fiscal 1994. In the United States and Canada, defined benefit plans cover substantially all employees. Benefits are based primarily on years of credited service and average compensation or stated amounts for each year of service. These plans are generally funded by contributions to tax-exempt trusts in amounts sufficient to provide assets to cover the plans' obligations. Plan assets consist principally of listed equity securities, fixed income securities and cash equivalents. Net pension cost (credit) for the defined benefit plans was as follows: (in thousands) 1996 1995 1994 Service costs $ 1,946 $ 2,483 $ 2,769 Interest costs 12,767 12,102 12,277 Actual return on plan assets (39,431) 2,337 (22,813) Net amortization and deferral 23,891 (16,760) 8,272 Net pension cost (credit) $ (827) $ 162 $ 505 The funded status of the defined benefit plans and the amounts recognized in the balance sheets were as follows: 1996 1995 -------------------- -------------------- Assets Benefit Assets Benefit Exceed Obli- Exceed Obli- Benefit gations Benefit gations Obli- Exceed Obli- Exceed (in thousands) gations Assets gations Assets Actuarial present value of benefit obligations: Vested $152,786 $ 10,022 $131,952 $ 8,183 Nonvested 5,522 1,844 4,142 1,014 Accumulated benefit obligations 158,308 11,866 136,094 9,197 Effect of future salary increases 3,064 548 3,185 810 Projected benefit obligations 161,372 12,414 139,279 10,007 Plan assets at fair value 185,095 - 157,284 - Plan assets in excess of (less than) projected benefit obligations 23,723 (12,414) 18,005 (10,007) Unamortized prior service cost 5,601 - 6,080 - Unrecognized effect from past experience different from that assumed 5,758 4,932 9,390 3,500 Unrecognized transition (assets) obligations, net of amortization (11,013) 428 (12,511) 802 Adjustment required to recognize minimum pension liability - (4,812) - (3,492) Prepaid (accrued) pension costs $ 24,069 $(11,866) $20,964 $(9,197) The Company amortizes prior service costs and unrecognized gains and losses on a straight-line basis over not more than 16 years. Other assumptions used, which reflect weighted averages of the U.S. and Canadian defined benefit plans, were as follows: 1996 1995 Discount rate 7.4% 8.6% Expected long-term return rate on assets 9.5% 9.5% Rate of increase in future compensation 4.0% 4.0% In Venezuela, all employees are entitled to certain severance indemnities based on compensation and cause of separation. This post- employment arrangement qualifies as a defined benefit plan under the provisions of Statement of Financial Accounting Standards No. 87, "Employers' Accounting for Pensions." The Company has elected to define the vested benefit obligation for this arrangement as the actuarial present value of vested benefits the employee is entitled to if immediately separated at the measurement date. This arrangement has not been funded and the corresponding expense recognized was $3.8 million in fiscal 1996, $3.8 million in fiscal 1995 and $3.7 million in fiscal 1994. Note 17: Post-retirement Health and Life Insurance Benefits The Company provides post-retirement health and life insurance benefits for retirees in the United States and Canada who meet minimum age and service requirements. The costs of the U.S. life insurance benefits are funded over the employees' active working lives through contributions to an insurance continuation fund maintained by an insurance company. Life insurance benefits for Canadian retirees are funded on a pay-as-you-go basis through an insurance company. Health care benefits for U.S. and Canadian retirees are provided under a self-insured program administered by an insurance company. The net periodic post-retirement benefit cost (credit) was as follows: (in thousands) 1996 1995 1994 Service costs $ 222 $ 296 $ 458 Interest costs 999 1,134 1,492 Net amortization and deferral (1,785) (1,689) (1,944) Net post-retirement benefits cost (credit) $ (564) $ (259) $ 6 The actuarial present value of benefit obligations and the amounts recognized in the consolidated balance sheets were as follows: (in thousands) 1996 1995 Actuarial present value of benefit obligations: Retirees $ 8,740 $11,718 Fully eligible active plan participants 1,242 539 Other active plan participants 2,719 2,535 Accumulated benefit obligations 12,701 14,792 Unrecognized effect from past experience different from that assumed 3,894 3,178 Unrecognized effect from plan amendments 2,291 3,747 Accrued post-retirement cost $18,886 $21,717 The assumed annual rate of future increases in per capita cost of health care benefits ranged from 4% to 10.25% for each of the next 8 years and 4% thereafter. These trend rates reflect the Company's prior experience, plan provisions and management's expectation of future rates. Increasing the health care cost trend by 1% in each year would result in an insignificant change to the accumulated benefit obligation and the service and interest costs. The weighted average discount rates used were 7.5% and 8.6% in fiscal 1996 and 1995, respectively. The fiscal 1995 divestitures of the Frozen Specialty Foods and Meats businesses resulted in curtailment gains totaling $2.4 million. The curtailment gains are reflected in the gain and loss, respectively, on these transactions. Note 18: Business and Credit Concentrations The Company's Venezuelan operations had net assets of $86 million at February 29, 1996 and accounted for 34% of fiscal 1996 consolidated operating earnings before unusual items. The Company's operations in Venezuela are subject to risks inherent in operating under a different legal and political system along with a difficult economic environment. The inflation rate in Venezuela for fiscal 1996 was 73% and the local currency experienced significant devaluation, as measured by both the official rate, under a foreign exchange control system, and the free-market exchange rate. Effective April 22, 1996, the Venezuelan government removed the foreign exchange controls and eliminated the official exchange rate. At April 23, 1996, the free-market exchange rate was 471 bolivars to the U.S. dollar compared to 478 bolivars to the U.S. dollar at February 29, 1996. The Company has implemented product pricing strategies and manages its net monetary asset exposure in order to mitigate currency risks. During fiscal 1996, the Company also operated under price controls, which affected most of the Venezuelan operations' products. In addition, the Company's Venezuelan operations are dependent on raw material imports for many of its products. The Company's food exporting business sells food products to Russia. The Company's continued ability to do business in this region may be affected by political events or the economic stability of that region. Note 19: Multifoods' Business Segments 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 principally of the frozen specialty foods and meats businesses which were divested in fiscal 1995 and the surimi seafood business which was divested in fiscal 1996. Operating Net Operating Unusual Earnings (in millions) Sales Costs Items (Loss) 1996: Foodservice Distribution $1,716.9 $(1,694.6) $ (9.4) $ 12.9 Bakery 459.7 (438.9) - 20.8 Venezuela Foods 328.5 (309.4) - 19.1 Divested Businesses 18.1 (15.6) 9.9 12.4 Corporate Expenses - (8.9) (6.2) (15.1) Total $2,523.2 $(2,467.4) $ (5.7) $ 50.1 1995: Foodservice Distribution $1,395.9 $(1,378.4) $ (6.2) $ 11.3 Bakery 459.2 (436.8) - 22.4 Venezuela Foods 317.7 (297.8) - 19.9 Divested Businesses 122.3 (110.4) 34.2 46.1 Corporate Expenses - (11.4) (1.8) (13.2) Total $2,295.1 $(2,234.8) $ 26.2 $ 86.5 1994: Foodservice Distribution $1,110.3 $(1,092.5) $ (9.1) $ 8.7 Bakery 440.3 (420.8) (29.4) (9.9) Venezuela Foods 267.8 (243.5) - 24.3 Divested Businesses 340.0 (321.5) (30.7) (12.2) Corporate Expenses - (12.3) (.8) (13.1) Total $2,158.4 $(2,090.6) $(70.0) $ (2.2)
1996 1995 1994 ---------------------------------- ---------------------------------- ---------------------------------- Depreciation Depreciation Depreciation Capital and Capital and Capital and (in millions) Expenditures Amortization Assets Expenditures Amortization Assets Expenditures Amortization Assets Foodservice Distribution $13.9 $13.3 $415.9 $ 8.4 $10.2 $371.9 $20.8 $ 6.1 $248.8 Bakery 12.0 10.0 241.8 15.2 9.1 251.0 18.3 8.9 238.4 Venezuela Foods 5.0 5.2 125.8 5.5 3.1 147.1 8.7 2.3 104.3 Divested Businesses .1 .8 - 1.5 3.9 39.6 3.6 11.9 183.9 Corporate .2 .5 38.8 .2 .7 37.1 .5 .7 39.4 Total $31.2 $29.8 $822.3 $30.8 $27.0 $846.7 $51.9 $29.9 $814.8
Amounts expended for business acquisitions are not considered as part of capital expenditures. Assets are identifiable to business segments either by their direct use or by allocations when used jointly by two or more segments. Note 20: Quarterly Summary (unaudited) Operating Net Operating Unusual Earnings (in millions) Sales Costs Items (Loss) First Quarter - 1996 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 First Quarter - 1995 Foodservice Distribution $293.3 $(288.3) $ - $ 5.0 Bakery 104.1 (103.0) - 1.1 Venezuela Foods 76.7 (74.2) - 2.5 Divested Businesses 73.8 (69.3) - 4.5 Corporate Expenses - (2.6) - (2.6) Total $547.9 $(537.4) $ - $ 10.5 Second Quarter - 1996 Foodservice Distribution $400.3 $(396.5) $ (9.4) $ (5.6) Bakery 110.1 (105.4) - 4.7 Venezuela Foods 106.3 (97.8) - 8.5 Divested Businesses 4.6 (3.7) 9.9 10.8 Corporate Expenses - (2.5) (6.2) (8.7) Total $621.3 $(605.9) $ (5.7) $ 9.7 Second Quarter - 1995 Foodservice Distribution $275.2 $(272.3) $ (6.2) $ (3.3) Bakery 113.8 (109.2) - 4.6 Venezuela Foods 70.2 (66.0) - 4.2 Divested Businesses 17.1 (14.4) 32.9 35.6 Corporate Expenses - (3.0) - (3.0) Total $476.3 $(464.9) $ 26.7 $ 38.1 Third Quarter - 1996 Foodservice Distribution $440.8 $(432.9) $ - $ 7.9 Bakery 126.1 (117.9) - 8.2 Venezuela Foods 65.2 (64.8) - .4 Corporate Expenses - (1.5) - (1.5) Total $632.1 $(617.1) $ - $ 15.0 Third Quarter - 1995 Foodservice Distribution $423.3 $(417.3) $ - $ 6.0 Bakery 132.7 (122.6) - 10.1 Venezuela Foods 81.0 (74.8) - 6.2 Divested Businesses 16.4 (14.2) - 2.2 Corporate Expenses - (3.3) - (3.3) Total $653.4 $(632.2) $ - $ 21.2 Fourth Quarter - 1996 Foodservice Distribution $459.4 $(454.4) $ - $ 5.0 Bakery 115.5 (109.2) - 6.3 Venezuela Foods 60.3 (56.6) - 3.7 Corporate Expenses - (1.7) - (1.7) Total $635.2 $(621.9) $ - $ 13.3 Fourth Quarter - 1995 Foodservice Distribution $404.1 $(400.5) $ - $ 3.6 Bakery 108.6 (102.0) - 6.6 Venezuela Foods 89.8 (82.8) - 7.0 Divested Businesses 15.0 (12.5) 1.3 3.8 Corporate Expenses - (2.5) (1.8) (4.3) Total $617.5 $(600.3) $ (.5) $ 16.7
(in millions, First Quarter Second Quarter Third Quarter Fourth Quarter Total Year except per share data) 1996 1995 1996 1995 1996 1995 1996 1995 1996 1995 ----- ----- ------ ----- ----- ------ ----- ----- ------ ------ Gross profit $99.9 $98.9 $100.5 $82.7 $95.8 $112.4 $91.3 $99.2 $387.5 $393.2 Net earnings 4.6 3.0 7.0(b) 31.4(c) 6.7 10.9 5.8 11.7(d) 24.1 57.0 Per share (a) .25 .17 .38(b) 1.74(c) .38 .61 .32 .65(d) 1.33 3.16 Dividends paid per share of common stock .20 .20 .20 .20 .20 .20 .20 .20 .80 .80 Market price of common stock: Close 21 1/8 16 1/8 22 1/2 16 3/4 22 3/8 15 7/8 18 5/8 18 5/8 18 5/8 18 5/8 High 21 7/8 18 3/8 23 16 7/8 23 7/8 18 3/8 23 7/8 19 5/8 23 7/8 19 5/8 Low 18 1/8 15 1/8 20 5/8 15 3/8 20 1/4 15 3/4 17 1/4 15 7/8 17 1/4 15 1/8
(a) Earnings per share is computed independently for each period presented. As a result of the effect of common shares purchased for treasury, the total of the per share results for the four quarters does not equal the annual net earnings per share in fiscal 1995. (b) Includes a net after-tax benefit of $0.5 million, or $.02 per share from unusual items. Unusual items included a gain from the divestiture of the Company's surimi seafood business, a write-down of vending distribution computer software, a charge for a corporate restructuring plan and a benefit from a tax settlement. (c) Includes a net after-tax benefit of $25.9 million, or $1.44 per share from unusual items. The net benefit is the result of a gain from the divestiture of the Company's Frozen Specialty Foods business and a charge for the integration of the Company's limited-menu foodservice distribution businesses. (d) Includes a net after-tax benefit from unusual items of $3.1 million, or $.17 per share. Unusual items included a benefit from a tax settlement and costs associated with acquisition activities. International Multifoods and Subsidiaries Six-Year Comparative Summary
Fiscal year ended the last day of February (dollars and shares in millions, except per share data) 1996 1995 1994 1993 1992 1991 -------- -------- -------- -------- -------- -------- Consolidated Summary of Operations Net sales $2,523.2 $2,295.1 $2,158.4 $2,199.2 $2,264.8 $2,175.7 Cost of sales (2,135.7) (1,901.9) (1,743.9) (1,783.4) (1,817.8) (1,744.2) Delivery and distribution (162.9) (146.2) (141.8) (141.7) (138.0) (128.3) Selling, general and administrative (168.8) (186.7) (204.9) (199.0) (224.1) (217.6) Unusual items (5.7) 26.2 (70.0) - 3.4 1.0 Interest, net (18.7) (12.1) (10.7) (11.9) (18.8) (20.7) Foreign exchange gains (losses) on cash and equivalents (3.6) (2.7) .2 1.1 - - Earnings (losses) from unconsolidated affiliates - - (12.2) 1.8 (2.1) .3 Earnings (loss) before income taxes and cumulative effect of accounting change 27.8 71.7 (24.9) 66.1 67.4 66.2 Income taxes (3.7) (14.7) 11.5 (24.9) (28.3) (31.0) Earnings (loss) before cumulative effect of accounting change 24.1 57.0 (13.4) 41.2 39.1 35.2 Cumulative effect of accounting change, net of taxes - - - - (17.1) - Net earnings (loss) $ 24.1 $ 57.0 $ (13.4) $ 41.2 $ 22.0 $ 35.2 Earnings (loss) per share of common stock: Before cumulative effect of accounting change $ 1.33 $ 3.16 $ (.72) $ 2.13 $ 2.00 $ 1.81 Cumulative effect of accounting change - - - - (.88) - Net earnings (loss) per share of common stock $ 1.33 $ 3.16 $ (.72) $ 2.13 $ 1.12 $ 1.81 Year-End Financial Position Current assets $ 459.0 $ 471.7 $ 439.3 $ 415.9 $ 413.3 $ 427.6 Current liabilities 272.3 316.0 301.7 243.5 285.4 312.5 Working capital 186.7 155.7 137.6 172.4 127.9 115.1 Property, plant and equipment, net 226.5 228.0 245.9 245.7 221.3 239.2 Long-term debt 202.9 183.1 195.1 167.0 103.9 115.0 Shareholders' equity 299.6 291.1 250.0 322.0 313.1 320.6 Total assets 822.3 846.7 814.8 803.5 767.7 805.6 Dividends Paid Preferred stock $ .1 $ .2 $ .2 $ .2 $ .2 $ .2 Common stock 14.4 14.4 15.2 15.4 15.4 15.2 Per share of common stock .80 .80 .80 .80 .80 .79 Other Financial Data Current ratio 1.7:1 1.5:1 1.5:1 1.7:1 1.4:1 1.4:1 Equity per share of common stock $ 16.66 $ 16.16 $ 13.63 $ 16.64 $ 16.19 $ 16.41 Debt to total capitalization 45% 45% 50% 37% 33% 34% Depreciation $ 25.3 $ 22.8 $ 24.9 $ 23.8 $ 24.7 $ 24.1 Capital expenditures, excluding acquisitions $ 31.2 $ 30.8 $ 51.9 $ 45.7 $ 51.2 $ 57.3 Average common shares outstanding 18.0 18.0 18.9 19.3 19.5 19.4 Number of common shareholders 4,930 5,234 4,939 5,097 5,113 5,008 Number of employees 7,115 7,495 8,390 8,341 8,231 9,140 Market price per share of common stock: At year-end $ 18 5/8 $ 18 5/8 $ 17 3/8 $ 25 3/4 $ 26 3/8 $ 25 5/8 Range for year $ 23 7/8- $ 19 5/8- $ 26 3/8- $ 28 7/8- $ 31 1/2- $ 26 1/2- 17 1/4 15 1/8 16 3/4 23 1/4 23 7/8 16 3/8
EX-21 10 Exhibit 21 SUBSIDIARIES OF INTERNATIONAL MULTIFOODS CORPORATION The following is a list of the Company's subsidiaries as of March 1, 1996, except for unnamed subsidiaries which, considered in the aggregate as a single subsidiary, would not constitute a significant subsidiary. Jurisdiction of Name of Subsidiary Incorporation - ------------------ -------------- Damca International Corporation Delaware Inversiones MONACA, C.A. Venezuela Molinos Nacionales, C.A. (MONACA) Venezuela Robin Hood Multifoods Inc. Ontario Multifoods Inc. Ontario Gourmet Baker Inc. Ontario 980964 Ontario Limited Ontario Fantasia Confections, Inc. California MINETCO - Minnesota International Export Trading Company, Inc. Minnesota Multifoods Bakery Distributors, Inc. Delaware Multifoods Bakery International, Inc. Delaware Multifoods Specialty Distribution, Inc. Delaware VSA, Inc. Colorado Vendors Supply of America Corporation Delaware EX-23 11 Exhibit 23 Independent Auditors' Consent The Board of Directors International Multifoods Corporation: We consent to incorporation by reference in Registration Statements No. 33- 48073 on Form S-8 relating to the Employees' Voluntary Investment and Savings Plan of International Multifoods Corporation, No. 2-99818 on Form S-8 relating to the Stock Purchase Plan of Robin Hood Multifoods Inc., No. 2-84236 on Form S-8 relating to the 1983 Stock Option Incentive Plan of International Multifoods Corporation, No. 33-6223 on Form S-8 relating to the 1986 Stock Option Incentive Plan of International Multifoods Corporation, No. 33-30979 on Form S-8 relating to the Amended and Restated 1989 Stock-Based Incentive Plan of International Multifoods Corporation and No. 33-65221 on Form S-3 relating to certain debt securities of International Multifoods Corporation of our reports dated April 9, 1996, except as to note 18, which is as of April 23, 1996, relating to the consolidated balance sheets of International Multifoods Corporation and subsidiaries as of February 29, 1996 and 1995 and the related consolidated statements of operations and cash flows and related financial statement schedule for each of the fiscal years in the three-year period ended February 29, 1996, which reports appear or are incorporated by reference in the Annual Report on Form 10-K for the fiscal year ended February 29, 1996, of International Multifoods Corporation. /s/ KPMG Peat Marwick LLP KPMG Peat Marwick LLP Minneapolis, Minnesota May 10, 1996 EX-27 12
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED 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. 0000051410 INTERNATIONAL MULTIFOODS CORPORATION 1,000 YEAR FEB-29-1996 FEB-29-1996 7,508 0 179,504 13,977 230,626 459,035 341,958 115,460 822,257 272,295 202,937 0 0 2,184 297,379 822,257 2,523,197 2,523,197 2,135,707 2,135,707 162,870 5,783 20,324 27,754 3,679 24,075 0 0 0 24,075 1.33 0.00
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