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)
<TABLE>
<CAPTION>
Additions
----------------------
Balance at Net charges Balance
beginning to costs and at end
Description of year expenses Other Deductions of year
- ------------ ---------- ------------ ------ ---------- ---------
<S> <C> <C> <C> <C> <C>
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)
</TABLE>
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.
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
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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
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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
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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:
------------------------------
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.
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
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
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
<TABLE>
<CAPTION>
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
<S> <C> <C> <C> <C> <C>
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
</TABLE>
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.
Exhibit 12
<TABLE>
<CAPTION>
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
<S> <C> <C> <C> <C> <C>
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
</TABLE>
(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:
<TABLE>
<CAPTION>
Years Ended
February 29, February 28, February 28, February 28, February 29,
1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
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
</TABLE>
(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.
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:
<TABLE>
<CAPTION>
Foodservice Distribution Bakery Corporate
------------------------ ------------------ ---------
Consoli-
Organi- Organi- dation/ Organi-
zational Business zational Closing zational
(in thousands) Changes Integration Changes Facilities Changes Total
<S> <C> <C> <C> <C> <C> <C>
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
</TABLE>
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:
<TABLE>
<CAPTION>
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
------ -------- --------- -------- ----------- --------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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
</TABLE>
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)
<TABLE>
<CAPTION>
1996 1995 1994
---------------------------------- ---------------------------------- ----------------------------------
Depreciation Depreciation Depreciation
Capital and Capital and Capital and
(in millions) Expenditures Amortization Assets Expenditures Amortization Assets Expenditures Amortization Assets
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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
</TABLE>
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
<TABLE>
<CAPTION>
(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
----- ----- ------ ----- ----- ------ ----- ----- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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
</TABLE>
(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
<TABLE>
<CAPTION>
Fiscal year ended the last day of February
(dollars and shares in millions, except per share data) 1996 1995 1994 1993 1992 1991
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
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
</TABLE>
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
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
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
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.
</LEGEND>
<CIK> 0000051410
<NAME> INTERNATIONAL MULTIFOODS CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-END> FEB-29-1996
<CASH> 7,508
<SECURITIES> 0
<RECEIVABLES> 179,504
<ALLOWANCES> 13,977
<INVENTORY> 230,626
<CURRENT-ASSETS> 459,035
<PP&E> 341,958
<DEPRECIATION> 115,460
<TOTAL-ASSETS> 822,257
<CURRENT-LIABILITIES> 272,295
<BONDS> 202,937
0
0
<COMMON> 2,184
<OTHER-SE> 297,379
<TOTAL-LIABILITY-AND-EQUITY> 822,257
<SALES> 2,523,197
<TOTAL-REVENUES> 2,523,197
<CGS> 2,135,707
<TOTAL-COSTS> 2,135,707
<OTHER-EXPENSES> 162,870
<LOSS-PROVISION> 5,783
<INTEREST-EXPENSE> 20,324
<INCOME-PRETAX> 27,754
<INCOME-TAX> 3,679
<INCOME-CONTINUING> 24,075
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 24,075
<EPS-PRIMARY> 1.33
<EPS-DILUTED> 0.00
</TABLE>
