SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended February 28, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OF 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-16130
NORTHLAND CRANBERRIES, INC.
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(Exact name of registrant as specified in its charter)
Wisconsin 39-1583759
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(State or other jurisdiction (I.R.S. Employer
of Incorporation or organization) Identification No.)
800 First Avenue South
P.O. Box 8020
Wisconsin Rapids, Wisconsin 54495-8020
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(Address of principal executive offices)
Registrant's telephone number, including area code (715)-424-4444
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Former name, former address and former fiscal year, if changed since last
report.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15 (d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the issuer's classes of common stock, as of the latest
practicable date:
Class A Common Stock March 31, 1999 19,721,686
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Class B Common Stock March 31, 1999 636,202
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<PAGE>
NORTHLAND CRANBERRIES, INC.
FORM 10-Q INDEX
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements
Condensed Consolidated Balance Sheets..........................3
Condensed Consolidated Statements of Operations..............4-5
Condensed Consolidated Statements of Cash Flow.................6
Notes to Condensed Consolidated
Financial Statements....................................7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations..................8-10
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders...........11
Item 6. Exhibits and Reports on Form 8-K..............................12
SIGNATURE.....................................................13
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NORTHLAND CRANBERRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
ASSETS
(Unaudited)
February 28, August 31,
1999 1998
------------ -------------
Current assets:
Cash and cash equivalents $ 972 $ 633
Accounts and notes receivable 30,104 22,422
Inventories 88,462 43,811
Other 4,144 1,942
Deferred income taxes 2,490 2,490
------------ -------------
Total current assets 126,172 71,298
------------ -------------
Property and equipment - at cost 199,300 181,994
Less accumulated depreciation 33,481 29,795
Net property and equipment 165,819 152,199
Investments and other assets 2,222 2,151
Goodwill and trademarks 37,436 25,224
------------ -------------
Total assets $ 331,649 $ 250,872
============ =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 18,507 $ 9,995
Accrued liabilities 13,612 7,924
Current portion of long-term debt 3,942 3,892
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Total current liabilities 36,061 21,811
Long-term debt 131,581 64,276
Deferred income taxes 10,929 10,915
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Total liabilities 178,571 97,002
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Shareholders' equity:
Common stock - Class A 192 191
Common stock - Class B 6 6
Additional paid-in capital 145,074 144,477
Retained earnings 7,806 9,196
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Total shareholders' equity 153,078 153,870
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Total liabilities and shareholders' equity $ 331,649 $ 250,872
============ =============
See accompanying notes to condensed consolidated financial statements
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<PAGE>
NORTHLAND CRANBERRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
(Unaudited)
For the 3 months
ended February 28,
1999 1998
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Revenues $ 54,955 $ 30,296
Cost of sales 34,730 17,203
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Gross profit 20,225 13,093
Costs and expenses:
Selling, general and administrative 18,108 10,971
Interest 1,987 1,910
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Total costs and expenses 20,095 12,881
Income before income taxes 130 212
Income taxes 63 97
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Net income $ 67 $ 115
========= =========
Basic income per share $ 0.00 $ 0.01
========= =========
Diluted income per share $ 0.00 $ 0.01
========= =========
See accompanying notes to condensed consolidated financial statements
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<PAGE>
NORTHLAND CRANBERRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
(Unaudited)
For the 6 months
ended February 28,
1999 1998
--------- ---------
Revenues $ 89,337 $ 48,727
Cost of sales 55,234 26,017
--------- ---------
Gross profit 34,103 22,710
Costs and expenses:
Selling, general and administrative 30,470 18,975
Interest 3,290 3,342
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Total costs and expenses 33,760 22,317
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Income before income taxes 343 393
Income taxes 155 176
--------- ---------
Net income $ 188 $ 217
========= =========
Basic income per share $ 0.01 $ 0.02
========= =========
Diluted income per share $ 0.01 $ 0.02
========= =========
See accompanying notes to condensed consolidated financial statements
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<PAGE>
NORTHLAND CRANBERRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(Unaudited)
<TABLE>
<CAPTION>
For the 6 months
ended February 28,
1999 1998
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Cash flows from operating activities:
<S> <C> <C>
Net income $ 188 $ 217
Adjustments to reconcile net income to net cash
provided by (used for) operating activities:
Depreciation and amortization 4,174 3,158
Changes in assets and liabilities:
Receivables and other current assets (9,835) (9,281)
Inventories (28,397) (10,960)
Accounts payable and accrued expenses 1,821 4,468
Deferred income taxes 187 128
--------- ---------
Net cash used for operating
activities (31,862) (12,270)
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Investing activities:
Acquisition of business (29,281) 0
Property and equipment additions, net (3,737) (4,265)
Other (518) (120)
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Net cash used for investing
activities (33,536) (4,385)
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Financing activities:
Increase in debt 66,990 17,851
Dividends paid (1,577) (1,104)
Exercise of stock options 359 57
Other (35) (173)
Net cash provided by financing
activities 65,737 16,631
Net increase (decrease) in cash and cash equivalents 339 (24)
Cash and cash equivalents:
Beginning of period 633 231
--------- ---------
End of period $ 972 $ 207
========= =========
Supplemental disclosures of cash flow information: Cash paid for:
Interest (net of amount capitalized) $ 3,178 $ 3,385
========= =========
See accompanying notes to condensed consolidated financial statements
</TABLE>
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<PAGE>
NORTHLAND CRANBERRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 BASIS OF PRESENTATION
The condensed consolidated financial statements included herein have been
prepared by the Company without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. In the opinion of the Company, the
foregoing statements contain all adjustments necessary to present fairly the
financial position of the Company as of February 28, 1999, and its results of
operations and cash flows for the three- and six-month periods ended February
28, 1999 and 1998, respectively. The Company's consolidated balance sheet as of
August 31, 1998 included herein has been taken from the Company's audited
financial statements of that date included in the Company's latest annual
report.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been omitted pursuant to such rules and regulations, although
the Company believes that the disclosures are adequate to make the information
presented not misleading. It is suggested that these condensed financial
statements can be read in conjunction with the financial statements and the
notes thereto included in the Company's latest annual report.
The Company periodically reviews long-lived assets to assess
recoverability and impairments will be recognized in operating results if a
permanent diminution in value were to occur.
NOTE 2 ACQUISITIONS
On December 29, 1998, the Company completed the acquisition of the juice
division of Seneca Foods Corporation. The purchase included bottling and
packaging facilities located in New York, North Carolina and Wisconsin;
warehousing in Michigan; and a grape receiving station in New York. The
preliminary purchase price for the acquisition was approximately $29.3 million
in cash based on the value of "net assets" purchased.
On March 1, 1999, in the Company's fiscal third quarter, the Company
acquired from Congress Financial Corporation (Northwest) certain assets formerly
owned by Clermont, Inc., a producer and seller of cranberry and other fruit
concentrates, for $6.9 million in cash and 367,287 shares of the Company's Class
A Common Stock with a value of $3.0 million on the date of closing.
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Total revenues for the three months ended February 28, 1999 were $55.0
million, an 81.5% increase over revenues of $30.3 million in the prior year's
second quarter. Revenues for the six-month period ended February 28, 1999
increased 83.4% to $89.3 million from $48.7 million during the same period in
fiscal 1998. The increased fiscal 1999 revenues were primarily due to private
label sales generated by our recently acquired subsidiary, Minot Food Packers,
Inc., and the business activity associated with the former eastern juice
division of Seneca Foods Corporation, which we acquired on December 29, 1998.
Sales of our Northland brand 100% juice products also contributed to the
increased revenues. Trade industry data for the 12-week period ended February
28, 1999, shows that our Northland brand 100% juice products achieved a 12.8%
market share of supermarket shelf-stable cranberry beverages on a national
basis, up slightly from a 12.7% market share for the same period last year. We
continue to experience intense competition in our efforts to develop private
label accounts and sales of concentrate and bulk frozen fruit.
Cost of sales for the second quarter of fiscal 1999 was $34.7 million
compared to $17.2 million for the second quarter of fiscal 1999, resulting in
gross margins of 36.8% and 43.2% in each respective period. Cost of sales for
the six-month period ended February 28, 1999 was $55.2 million compared to $26.0
million in the same period in fiscal 1998 with gross margins of 38.2% and 46.6%,
respectively. The decrease in gross margin in fiscal 1999 was primarily due to
our changing product mix. Fiscal 1999 revenues included a significant amount of
lower margin private label sales due to the acquisition of Minot Food Packers,
Inc. compared to minimal private label sales in fiscal 1998. Our gross margins
during the remainder of fiscal 1999 will be dependent upon our product mix and
existing market conditions.
Selling, general and administrative expenses were $18.1 million, or 33.0%
of total revenues, for the three-month period ended February 28, 1999 compared
to $11.0 million, or 36.2%of total revenues in the prior year's second fiscal
quarter. Selling, general and administrative expenses were $30.5 million, or
34.1% of total revenues, for the six-month period ended February 28, 1999,
compared to $19.0 million, or 38.9% of total revenues, during the same period in
the prior fiscal year. This increase in selling, general and administrative
expenses was primarily attributable to (i) costs related to our aggressive
marketing campaign to support the development and growth of our Northland brand
100% juice products; (ii) expenses to support private label sales generated by
our recently acquired subsidiary, Minot Food Packers, Inc.; and (iii) expenses
to support our newly acquired Seneca brand. We plan to continue to aggressively
promote our juice products throughout the fiscal year.
Interest expense was $2.0 million and $3.3 million for the three- and
six-month periods ended February 28, 1999 compared to $1.9 million and $3.3
million during the same periods in fiscal 1998. Consistent with expectations
given our aggressive promotional activity in support of our branded juice
products, net income and per share earnings for the three- and six-month periods
ended February 28, 1999 were $67,000, or
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONT.)
$0.00 per share, and $188,000, or $0.02 per share, respectively, from fiscal
1998 second quarter and first half net income and per share earnings of
$115,000, or $0.01 per share, and $217,000, or $0.02 per share, respectively.
FINANCIAL CONDITION
Net cash used for operating activities was $31.9 million in the first six
months of fiscal 1999 compared to $12.3 million used for operating activities in
the same period in fiscal 1998. Net cash used for operating activities during
the first six months of fiscal 1999 was the result of increases in current
assets and liabilities in the ordinary course of business during the period.
Inventory increased $28.4 million due to the fall harvest of the Company's crop,
the purchase of raw cranberries from other independent cranberry growers and
increased raw materials and finished goods inventories to support increased
branded juice sales. Accounts receivable and other current assets increased $9.8
million primarily due to accounts receivable generated from operating the
recently acquired Seneca juice business. Working capital increased $40.6 million
to $90.1 million at February 28, 1999 compared to working capital of $49.5
million at August 31, 1998. Our current ratio increased to 3.5 to 1.0 from 3.3
to 1.0 at August 31, 1998.
Net cash used for investing activities increased during the six-month
period ended February 28, 1999 to $33.5 million from $4.4 million during the
same period in the prior fiscal year. The increase was principally the result of
the acquisition of the eastern juice division of Seneca Foods Corporation on
December 29, 1998 for approximately $29.3 million.
Net cash provided by financing activities was $65.7 million in the
six-month period ended February 28, 1999, compared to $16.6 million during the
same period in the prior fiscal year. Our debt increased $67.0 million in the
first six months of fiscal 1999 primarily due to financing the acquisition of
the Seneca juice business, and seasonal and growth working capital needs.
Working capital was $90.1 million at February 28, 1999 compared to working
capital of $49.5 million at August 31, 1998. Our total debt (including current
portion) was $135.5 million at February 28, 1999 for a total debt-to-equity
ratio of 0.89 to 1.00 compared to total debt of $68.2 million and a total
debt-to-equity ratio of 0.44 to 1.00 at August 31, 1998. We utilize our
revolving bank credit facility, together with cash generated from operations, to
fund our working capital requirements throughout the fiscal year. On March 15,
1999, we entered into a new credit facility with a syndicate of regional banks
to refinance our existing bank credit facility and increase our revolving line
of credit availability to $140 million until March 2002. As of February 28,
1999, the principal amount outstanding under our new revolving credit facility
was $112.3 million, with an additional $27.7 million available under our credit
facilities. We believe our credit facilities, together with cash generated from
operations, are sufficient to fund our ongoing operational needs over the
remainder of fiscal 1999.
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONT.)
On December 29, 1998 we completed the acquisition of the juice division
of Seneca Foods Corporation. The purchase included bottling and packaging
facilities located in New York, North Carolina and Wisconsin; a warehouse
facility in Michigan; and a grape receiving station in New York. The purchase
price for the acquisition was approximately $29.3 million in cash, based on the
value of the "net assets" we acquired. The preliminary purchase price was
borrowed under our revolving credit facility.
On March 1, 1999 we acquired certain assets from Congress Financial
Corporation (Northwest) which were formerly owned by Clermont, Inc., a producer
and seller of cranberry and other fruit concentrates, for $6.9 million in cash
and 367,287 shares of Northland's Class A Common Stock with a value of $3.0
million on the date of closing. The assets acquired include a concentrating
facility in Cornelius, Oregon; certain equipment; and inventory consisting of
cranberry and other fruit concentrates.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
-------------------------------------------------
Certain matters discussed in this Form 10Q are "forward-looking
statements," including statements about the Company's future plans, goals
and other events which have not yet occurred. These statements are
intended to qualify for the safe harbors from liability established by
the Private Securities Litigation Reform Act of 1995. They can generally
be identified because the context of such statements will include words
such as "believes," "anticipates," "expects," or words of similar import.
Whether or not these forward-looking statements will be accurate in the
future will depend on certain risks and factors including risks
associated with (I) development, market share growth and continued
consumer acceptance of the Company's branded juice products; (ii)
integration of the operations of Minot Food Packers, Inc., acquired in
fiscal 1998, and the juice division of Seneca Foods Corporation, acquired
on December 29, 1998; (iii) strategic actions of Northland's competitors
in pricing, marketing and advertising; and (iv) agricultural factors
affecting Northland's crop and the crop of other North American growers.
These and other risks and factors that should be considered are further
set forth in the Company's Form S-3 Registration Statement (No. 333-
53173) filed with the Securities and Exchange Commission on May 20, 1998.
Readers should consider these risks and factors and the impact they may
have when evaluating these forward-looking statements. These statements
are based only on management's knowledge and expectations on the date of
this Form 10-Q. The Company will not necessarily update these statements
or other information in this Form 10-Q based on future events or
circumstances.
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<PAGE>
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Company's annual meeting of shareholders held on January 6, 1999,
John C. Seramur, Jeffrey J. Jones, John Swendrowski, Patrick F. Brennan, Robert
E. Hawk, LeRoy J. Miles and Pat Richter were elected as directors of the Company
for terms expiring at the 2000 annual meeting of shareholders and until their
successors are duly qualified and elected. As of the November 25, 1998 record
date for the annual meeting, 19,115,484 shares of Class A Common Stock and
636,202 shares of Class B Common Stock were outstanding and eligible to vote. Of
these, 17,807,827 shares of Class A Common Stock and all shares of Class B
Common Stock voted at the meeting in person or by proxy. Class A shares are
entitled to one vote each, while Class B shares are entitled to three votes
each. The following table sets forth certain information with respect to the
election of directors at the annual meeting:
Shares
Name of Nominee Shares Voted For Withholding Authority
--------------- ---------------- ---------------------
John C. Seramur 19,662,016 54,417
Jeffrey J. Jones 19,665,966 50,467
John Swendrowski 19,661,461 54,972
Patrick F. Brennan 19,662,316 54,117
Robert E. Hawk 19,667,270 49,163
LeRoy J. Miles 19,666,816 49,617
Pat Richter 19,659,386 57,117
The tabulation votes for the election of directors resulted in no broker
non-votes or abstentions.
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<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
Exhibits filed with this Form 10-Q report are incorporated herein by
reference to the Exhibit Index accompanying this report.
b. Form 8-K
We filed the following Current Reports on Form 8-K with the Securities
and Exchange Commission during the second quarter of fiscal 1999 and the third
quarter of fiscal 1999 through the date of this Quarterly Report on Form 10-Q:
<TABLE>
<CAPTION>
DATE FILED DATE OF REPORT ITEM
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<S> <C> <C>
March 15, 1999 December 30, 1998 Item 7 - Financial Statements
related to the Acquisition of Juice
Division of Seneca Foods
Corporation
January 13, 1999 December 30, 1998 Item 2 - Acquisition of Juice
Division of Seneca Foods
Corporation
</TABLE>
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<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned Chief Financial Officer thereunto duly authorized.
NORTHLAND CRANBERRIES, INC.
DATE: April 14, 1999 By: /s/ John Pazurek
John Pazurek
Chief Financial Officer
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<PAGE>
EXHIBIT INDEX
Exhibit No. Description
(10) Credit Agreement, dated as of March 15, 1999, by and among
Northland Cranberries, Inc., various financial institutions and
Firstar Bank Milwaukee, N.A. as Agent.
(27) Financial Data Schedule
Execution Copy
CREDIT AGREEMENT
among
NORTHLAND CRANBERRIES, INC.,
VARIOUS FINANCIAL INSTITUTIONS
and
FIRSTAR BANK MILWAUKEE, N. A.,
as Agent
Dated as of March 15, 1999
<PAGE>
NORTHLAND CRANBERRIES, INC.
CREDIT AGREEMENT
Firstar Bank Milwaukee, N. A., as Agent
Milwaukee, Wisconsin
and
The Financial Institutions Identified Herein
Gentlemen:
The undersigned, NORTHLAND CRANBERRIES, INC., a Wisconsin corporation
(the "Company") requests that the undersigned financial institutions (together
with their respective successors and assigns, collectively, the "Banks") make a
revolving credit facility available to the Company upon the terms and conditions
set forth in this Credit Agreement (the "Agreement"). Capitalized terms used
herein and not defined shall have the meanings assigned thereto in Section 9,
below.
SECTION 1. THE CREDITS.
Section 1.1. The Revolving Credit. Subject to all of the terms and
conditions hereof, each Bank, severally and for itself alone, agrees to extend
such Bank's Percentage (as reflected on the signatures pages hereto) of a
revolving credit facility to the Company which may be availed of by the Company
in its discretion from time to time, be repaid and used again, during the period
from the date hereof to and including the Revolving Credit Termination Date. The
revolving credit facility may be utilized by the Company in the form of (i)
revolving credit loans (individually a "Revolving Credit Loan" and collectively
the "Revolving Credit Loans") from the Banks according to their respective
Percentages, (ii) swing line loans (individually a "Swing Line Loan" and
collectively, the "Swing Line Loans") from the Swing Line Lender, pursuant to
Section 1.2 hereof, and (iii) L/Cs issued by the Issuer upon request of the
Company and in which each Bank shall have purchased a participation, provided
that the aggregate amount of the Revolving Credit Loans, Swing Line Loans,
Reimbursement Obligations and the maximum amount available to be drawn under all
L/Cs outstanding at any one time shall not exceed One Hundred Forty Million
Dollars ($140,000,000) (the "Revolving Credit Commitment"). All Revolving Credit
Loans shall be evidenced by Revolving Credit Notes of the Company (the
"Revolving Credit Notes") payable to the order of each of the Banks in the
amounts of their respective Percentages of the Revolving Credit Commitment, such
Revolving Credit Notes to be in substantially the form attached hereto as
Exhibit 1.1. Without regard to the face principal amounts of each of the
Revolving Credit Notes, the actual principal amount at any time outstanding and
owing by the Company on account thereof during the period ending on the
Revolving Credit Termination Date shall be the sum of all Revolving Credit Loans
then or theretofore made thereon less all principal payments actually received
thereon during such period.
<PAGE>
Section 1.2. Swing Line. Subject to all of the terms and conditions
hereof, the Swing Line Lender agrees to extend a swing line facility to the
Company which may be availed of by the Company in its discretion from time to
time, be repaid and used again, during the period from the date hereof to and
including the Revolving Credit Termination Date. The aggregate amount of Swing
Line Loans outstanding at any one time shall not exceed Five Million Dollars
($5,000,000) (the "Swing Line Commitment"). Each Swing Line Loan may be in any
amount selected by the Company. The Swing Line Loans shall be evidenced by a
Swing Line Note of the Company (the "Swing Line Note") payable to the order of
the Swing Line Lender in the amount of the Swing Line Commitment, such Swing
Line Note to be in substantially the form attached hereto as Exhibit 1.2.
Without regard to the face principal amount of the Swing Line Note, the actual
principal amount at any time outstanding and owing by the Company on account
thereof during the period ending on the Revolving Credit Termination Date shall
be the sum of all Swing Line Loans then or theretofore made thereon, less all
principal payments actually received thereon during such period. Upon the
occurrence and during the continuation of a Default or an Event of Default, the
Swing Line Lender may, in its discretion, require that each of the Banks make a
Revolving Credit Loan in an amount equal to its Percentage of the outstanding
Swing Line Loans and all accrued and unpaid interest thereon, the proceeds of
which Revolving Credit Loans will be paid to the Agent for the account of the
Swing Line Lender to pay the outstanding Swing Line Loans. Effective on the days
such Revolving Credit Loans are made, the portion of the Swing Line Loans so
paid shall no longer be outstanding as Swing Line Loans and shall no longer be
due under the Swing Line Note. The Company shall pay to the Swing Line Lender,
promptly following the Swing Line Lender's demand, the amount of its outstanding
Swing Line Loans to the extent amounts received from such Revolving Credit Loans
are not sufficient to repay in full the outstanding Swing Line Loans.
Section 1.3. Obligations Several and Not Joint. The failure of one or
more Banks to lend in accordance with its Percentage shall not relieve the other
Banks of their obligations to the Company (including without limitation their
obligation to lend), but none of the Banks shall be obligated to lend in excess
of its Percentage.
Section 1.4. Manner of Borrowing for Domestic Rate Portions. The Company
shall notify the Agent (which may be written or oral, but which must be given
prior to 11:00 a.m. (Milwaukee time)) of the date (which may, subject to the
immediately preceding parenthetical, be the date on which such notice is given)
upon which it requests that any Domestic Rate Portion be created under the
Revolving Credit Commitment or any advance be made to it under the Swing Line
Commitment, specifying the amount of each such loan. Except to the extent such
request is for a Swing Line Loan, the Agent shall promptly give notice of such
request to each of the Banks and each Bank shall, before 1:00 p.m. (Milwaukee
time) on the date of such borrowing make available to the Agent at its office,
in immediately available funds, such Bank's Percentage of such loan. Subject to
all of the terms and conditions hereof, the proceeds of each loan shall be made
available to the Company on the date requested by the Company at the office of
the Agent in Milwaukee and in funds there current. Each Revolving Credit Loan
shall initially constitute part of the Domestic Rate Portion except to the
extent the Company has otherwise timely elected, all as provided in Section 2
hereof. Each Swing Line Loan shall constitute part of the Domestic Rate Portion.
2
<PAGE>
Section 1.5. Letters of Credit.
(a) Generally. Subject to all the terms and conditions hereof, at
the Company's request the Issuer may in its discretion issue letters of
credit (each an "L/C" and, collectively, the "L/Cs") for the account of
the Company subject to availability under the Revolving Credit
Commitment. Each L/C shall be issued pursuant to an Application for
Commercial Letter of Credit and Commercial Letter of Credit Agreement
(the "L/C Agreement") substantially in the form of Exhibit 1.5 hereto.
The L/Cs shall consist of standby and trade letters of credit; provided
that the aggregate undrawn face amount of the L/Cs plus the amount of all
unpaid Reimbursement Obligations shall not at any time exceed Ten Million
Dollars ($10,000,000). Each L/C shall have an expiry date not more than
one (1) year from the date of issuance thereof (but in no event later
than the Revolving Credit Termination Date). The amount available to be
drawn under each L/C issued pursuant hereto shall be deducted from the
credit otherwise available under the Revolving Credit.
(b) Participation by the Banks. Upon issuance of any L/C, the
Issuer shall promptly notify the Banks of the amount and terms of each
such L/C and each Bank (other than the Issuer) agrees that it shall be
deemed to have purchased a pro rata participation therein from the Issuer
in an amount equal to that Bank's Percentage of the face amount of such
L/C. Promptly after payment by the Issuer of any amount drawn upon any
L/C, which amount is not otherwise paid or reimbursed by the Company or
funded with the proceeds of a Revolving Credit Loan in accordance with
Section 1.6, the Agent shall, without notice to or the consent of the
Company direct each Bank (other than the Issuer) to make payment to the
Issuer, pro rata in accordance with their respective Percentages, with
respect to the amount so paid by the Issuer to fund such Bank's
participation in the payment made by the Issuer under such L/C. If for
any reason or under any circumstance the Company does not pay a
Reimbursement Obligation, the Company shall nonetheless be obligated to
pay such Reimbursement Obligation together with interest in accordance
with Section 1.6. Until such Reimbursement Obligation is satisfied, each
Bank shall have an undivided participation interest in an amount equal to
such Bank's Percentage of the Reimbursement Obligation and shall be
entitled to the interest accruing on such participation interest until
paid in full by the Company.
(c) Fees. In consideration of the issuance of L/Cs, the Company
agrees to pay to the Issuer (i) a fee (the "L/C Issuance Fee") in the
amount equal to one-eighth of one percent (0.125%) of the face amount of
each L/C issued hereunder, payable on the date of issuance of each L/C
hereunder and on the date of each extension, if any, of the expiry date
of each L/C, (ii) a participation fee (the "L/C Participation Fee") in an
amount per annum equal to the Applicable Margin for LIBOR Portions of the
undrawn face amount of each L/C issued hereunder, payable quarterly in
arrears on the last day of each quarter and at maturity for the pro rata
accounts of the Banks, and (iii) such drawing, negotiation, amendment and
other administrative fees in connection with each L/C as may be
established by the Issuer from time to time and applicable generally to
letters of credit issued by the Issuer (the "L/C Administrative Fee"),
payable on any other date or dates of issuance of each L/C hereunder and
on the date required by the Issuer upon notice of to
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the Company. The Issuer will use its best efforts to provide the Company
thirty (30) days' prior notice of any changes to the L/C Administrative
Fees; provided, however, the Issuer's failure to provide such notice to
the Company shall in no way relieve the Company of its obligation to pay
such L/C Administrative Fees.
(d) Funding, Reimbursement, Etc. Notwithstanding anything
contained in any L/C Agreement to the contrary: (i) except for the
Collateral and as otherwise provided in Section 3.4 hereof, in the
absence of an Event of Default, the Issuer will not call for the funding
by the Company of any amount under an L/C issued for the Company's
account, or for any other form of collateral security for the Company's
obligations in connection with such L/C, before being presented with a
drawing thereunder, and (ii) if the Issuer is not timely reimbursed for
the amount of any drawing under an L/C on the date such drawing is paid,
the Company's obligation to reimburse the Issuer for the amount of such
drawing shall bear interest at the default rate specified in Section 2.2
hereof. If the Issuer issues any L/C with an expiration date that is
automatically extended unless the Issuer gives notice that the expiration
date will not so extend beyond its then scheduled expiration date, the
Issuer will give such notice of non-renewal before the time necessary to
prevent such automatic extension if before such required notice date (i)
the expiration date of such L/C if so extended would be after the
Revolving Credit Termination Date, or (ii) the Revolving Credit
Commitment has been terminated.
Section 1.6. Reimbursement Obligation. The Company is obligated, and
hereby unconditionally agrees, to pay in immediately available funds to the
Issuer each draft drawn and presented under an L/C issued by the Issuer
hereunder not later than the date such draft is presented for payment to the
Issuer (the obligation of the Company under this Section 1.6 with respect to any
L/C is a "Reimbursement Obligation"). The Issuer's determination of whether a
draft or other request for payment under an L/C complies with the terms of such
L/C shall be made in a commercially reasonable manner. If at any time the
Company fails to pay any Reimbursement Obligation when due, the Company shall be
deemed to have automatically requested a Revolving Credit Loan from the Banks
hereunder, as of the maturity date of such Reimbursement Obligation, the
proceeds of which loan shall be used to repay such Reimbursement Obligation.
Such loan shall only be made if no Default or Event of Default shall exist and
the other conditions set forth in Section 6 hereof are satisfied, and shall be
subject to availability under the Revolving Credit Commitment. If such loan is
not made by the Banks pursuant to this Agreement, the unpaid amount of such
Reimbursement Obligation shall be due and payable to the Issuer upon demand and
shall bear interest at the default rate of interest specified in Section 2.2
hereof.
SECTION 2. INTEREST.
Section 2.1. Options. Subject to all of the terms and conditions of this
Section 2, portions of the principal indebtedness evidenced by the Notes (all of
the indebtedness evidenced by the Notes bearing interest at the same rate for
the same period of time being hereinafter referred to as a "Portion") may, at
the option of the Company, bear interest with reference to the Domestic Rate
(the "Domestic Rate Portions"), or with reference to the Adjusted LIBOR Rate
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("LIBOR Portions"), and Portions may be converted from time to time from one
basis to the other. All of the indebtedness evidenced by the Notes which is not
part of a LIBOR Portion shall constitute a single Domestic Rate Portion. All of
the indebtedness evidenced by the Notes which bears interest with reference to a
particular Adjusted LIBOR Rate for a particular Interest Period shall constitute
a single LIBOR Portion. The Company promises to pay interest on each Portion at
the rates and times specified in this Section 2.
Section 2.2. Domestic Rate Portion. The Domestic Rate Portion shall bear
interest (which the Company promises to pay at the times herein provided), at
the rate per annum equal to the Domestic Rate as in effect from time to time,
provided that if the Domestic Rate Portion is not paid when due, after giving
effect to any grace periods, (whether by lapse of time, acceleration or
otherwise), such Portion shall bear interest (which the Company promises to pay
at the times hereinafter provided), whether before or after judgment, for the
period from the date such Portion became due and until payment in full thereof,
at the rate per annum determined by adding two percent (2%) to the interest rate
which would otherwise be applicable thereto from time to time. Interest on the
Domestic Rate Portion shall be payable on the last day of each month in each
year and at maturity of the Notes and interest after maturity shall be due and
payable upon demand.
Section 2.3. LIBOR Portions. Each LIBOR Portion shall bear interest
(which the Company promises to pay at the times herein provided) for each
Interest Period selected therefor at a rate per annum equal to the Adjusted
LIBOR Rate for such Interest Period plus the Applicable Margin, provided that if
any LIBOR Portion is not paid when due, after giving effect to any grace periods
(whether by lapse of time, acceleration or otherwise) such Portion shall bear
interest (which the Company promises to pay at the times hereinafter provided)
whether before or after judgment, for the period from the date such Portion
became due and until payment in full thereof, through the end of the Interest
Period then applicable thereto at the rate per annum determined by adding two
percent (2%) to the interest rate otherwise applicable thereto, and effective at
the end of such Interest Period such LIBOR Portion shall automatically be
converted into and added to the Domestic Rate Portion and shall thereafter bear
interest at the interest rate applicable to the Domestic Rate Portion after
Default. Interest on each LIBOR Portion shall be due and payable on the last day
of each Interest Period applicable thereto, and interest after maturity shall be
due and payable upon demand.
Section 2.4. Computation. All interest on the indebtedness evidenced by
the Notes and all fees, charges and commissions due hereunder shall be computed
on the basis of a year of three hundred sixty (360) days for the actual number
of days elapsed.
Section 2.5. Minimum Amounts. Each Revolving Credit Loan constituting a
Domestic Rate Portion shall be in a minimum amount of One Hundred Thousand
Dollars ($100,000) or any greater amount that is an integral multiple of Fifty
Thousand Dollars ($50,000). Each LIBOR Portion shall be in a minimum amount of
One Million Dollars ($1,000,000) or any greater amount that is an integral
multiple of Two Hundred Fifty Thousand Dollars ($250,000). The Company shall not
have more than ten (10) LIBOR Portions of the Revolving Credit Commitment
outstanding at any time.
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Section 2.6. Manner of Rate Selection. The Company shall notify the Agent
on or before 11:00 a.m. (Milwaukee time) at least three (3) Business Days (a)
prior to the date upon which it requests that any LIBOR Portion be created or
(b) preceding the end of an Interest Period applicable to a LIBOR Portion
whether such LIBOR Portion is to continue as a LIBOR Portion or whether any part
of the Domestic Rate Portion is to be converted into a LIBOR Portion. In either
case the Company shall notify the Agent of the amount of the LIBOR Portion to be
created, converted or continued and the Interest Period selected for such LIBOR
Portion. If the Company shall fail to notify the Agent of any continuation of a
LIBOR Portion, such LIBOR Portion shall automatically be converted into and
added to the Domestic Rate Portion as of and on the last day of such Interest
Period. Upon receipt of any such notice, the Agent shall promptly notify the
Banks thereof. If any request is made to create a LIBOR Portion, not later than
1:00 p.m. (Milwaukee time) on the date of the funding of the LIBOR Portion, each
Bank shall make available to the Agent at its office, in immediately available
funds, such Bank's Percentage of such LIBOR Portion. If any request is made to
convert a LIBOR Portion into a Domestic Rate Portion, such conversion shall only
be made so as to become effective as of the last day of the Interest Period
applicable thereto. Anything contained herein to the contrary notwithstanding,
the obligation of the Agent and the Banks to create, continue or effect by
conversion any LIBOR Portion shall be conditioned upon the fact that at the time
no Default or Event of Default shall have occurred and be continuing. All
requests for the creation, continuance or conversion of Portions under this
Agreement shall be irrevocable. Such requests may be written or oral and the
Agent is hereby authorized to honor telephonic requests for creations,
continuances and conversions received by it from any person identifying
themselves as a person who the Agent's records reflect is authorized to act on
behalf of the Company hereunder, the Company hereby indemnifies the Agent and
the Banks from any liability or loss ensuing from the Agent so acting.
Section 2.7. Change of Law. Notwithstanding any other provisions of this
Agreement or the Notes, if at any time the Agent or any Bank shall determine in
good faith that any change in applicable laws, treaties or regulations or in the
interpretation thereof makes it unlawful for the Agent or any Bank to create or
continue to maintain any LIBOR Portion, it shall promptly so notify the Company
and the obligation of the Agent or such Bank to create, continue or maintain
such LIBOR Portion under this Agreement shall terminate until it is no longer
unlawful for the Agent or such Bank to create, continue or maintain such LIBOR
Portions. The Company, on demand, shall, if the continued maintenance of a LIBOR
Portion is unlawful, thereupon prepay the outstanding principal amount of the
LIBOR Portions, together with all interest accrued thereon and all other amounts
payable to the Agent or such Bank with respect thereto under this Agreement;
provided, however, that the Company may instead elect to convert the principal
amount of the affected Portion into a part of the Domestic Rate Portion, subject
to the terms and conditions of this Agreement.
Section 2.8. Unavailability of Deposits or Inability to Ascertain the
Adjusted LIBOR Rate. Notwithstanding any other provision of this Agreement or
the Notes, if prior to the commencement of any Interest Period, the Agent is
advised that U. S. dollar deposits in the amount of any LIBOR Portion scheduled
to be outstanding during such Interest Period are not readily available to it in
the offshore interbank market, the Agent shall promptly give notice thereof to
the Company and the obligations of the Agent and the Banks to create, continue
or
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effect by conversion any LIBOR Portion in such amount and for such Interest
Period shall terminate until U. S. dollar deposits in such amount and for the
Interest Period selected by the Company shall again be readily available in the
offshore interbank market.
Section 2.9. Taxes and Increased Costs. With respect to this Agreement
the LIBOR Portions, the Revolving Credit Loans, the Swing Line Loans, any L/C,
any L/C Agreement or any commitments of the Banks hereunder, if any Bank shall
determine in good faith that any change after the date hereof in any applicable
law, treaty, regulation or guideline (including, without limitation, Regulation
D of the Board of Governors of the Federal Reserve System) or any new law,
treaty, regulation or guideline, or any interpretation of any of the foregoing
by any governmental authority charged with the administration thereof or any
central bank or other fiscal, monetary or other authority having jurisdiction
over such Bank or its lending branch or the Portions contemplated by this
Agreement (whether or not having the force of law) shall:
(a) impose, increase, or deem applicable any reserve, special
deposit or similar requirement against assets held by, or deposits in or
for the account of, or loans by, or any other acquisition of funds or
disbursements by, such Bank which is not in any instance already
accounted for in computing the interest rate applicable to any such
Portions;
(b) subject such Bank, any Portion or L/C, to any tax (including,
without limitation, any United States of America interest equalization
tax or similar tax however named applicable to the acquisition or holding
of debt obligations and any interest or penalties with respect thereto),
duty, charge, stamp tax, fee, deduction or withholding in respect of this
Agreement, any Portion or L/C, except such taxes as may be measured by
the overall net income or gross receipts of such Bank or its lending
branches and imposed by the jurisdiction, or any political subdivision or
taxing authority thereof, in which such Bank's principal executive office
or its lending branch is located;
(c) change the basis of taxation of payments of principal or
interest due from the Company to such Back hereunder, under a Note to the
extent it evidences any Portion or an L/C (other than by a change in
taxation of the overall net income or gross receipts of such Bank); or
(d) impose on such Bank any penalty with respect to the foregoing
or any other condition regarding this Agreement, its disbursement, any
Portion or L/C;
and such Bank shall determine that the result of any of the foregoing is to
increase the cost (whether by incurring a cost or adding to a cost) to such Bank
of creating or maintaining any Portion, commitment or L/C hereunder or to reduce
the amount of principal or interest received or receivable by such Bank (without
benefit of, or credit for, any prorations, exemption, credits or other offsets
available under any such laws, treaties, regulations, guidelines or
interpretations thereof), then the Company shall pay on demand to such Bank from
time to time as specified by such Bank such additional amounts as such Bank
shall reasonably determine are sufficient to compensate and indemnify it for
such increased cost or reduced amount; provided, however, that (i) such Bank
shall promptly notify the Company of an event which might cause it to seek
compensation, and the Company shall be obligated to pay only such compensation
which is
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incurred or which arises after the date sixty (60) days prior to the date such
notice is given, and (ii) the Company shall have no obligation to pay any amount
that would otherwise be payable under this Section solely as a result of such
Bank being in a regulatory classification that is lower than such Bank's
regulatory classification on the date of this Agreement. If such Bank makes such
a claim for compensation, it shall provide to the Company a written explanation
of the circumstances giving rise to such claim and a certificate setting forth
the computation of the increased cost or reduced amount as a result of any event
mentioned herein in reasonable detail and such certificate shall be conclusive
if reasonably determined.
Section 2.10. Funding Indemnity. In the event any Bank shall incur any
loss, cost or expense (including, without limitation, any loss (including loss
of profit), cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired or contracted to be acquired by
such Bank to fund or maintain its part of any LIBOR Portion or the relending or
reinvesting of such deposits or other funds or amounts paid or prepaid to such
Bank), as a result of:
(i) any payment of a LIBOR Portion on a date other than the last
day of the then applicable Interest Period for any reason, whether before
or after Default, and whether or not such payment is required by any
provisions of the Agreement; or
(ii) any failure by the Company to create, borrow, continue or
effect by conversion any LIBOR Portion on the date specified in a notice
given pursuant to this Agreement;
then upon the demand of such Bank, the Company shall pay to such Bank such
amount as will reimburse the Bank for such loss, cost or expense. If such Bank
requests such a reimbursement it shall provide the Company with a certificate
setting forth the computation of the loss, cost or expense giving rise to the
request for reimbursement in reasonable detail and such certificate shall be
conclusive if reasonably determined.
Section 2.11. Lending Branches. Each of the Banks may, at its option,
elect to make, fund or maintain its loans hereunder at such of its branches or
offices as such Bank may from time to time elect.
Section 2.12. Discretion of Banks as to Manner of Funding.
Notwithstanding any provision of this Agreement to the contrary, each of the
Banks shall be entitled to fund and maintain its funding of all or any part of
its Note in any manner it sees fit, it being understood, however, that for the
purposes of this Agreement all determinations hereunder (including
determinations under Sections 2.8, 2.9 and 2.10 hereof) shall be made as if the
subject Bank had actually funded and maintained each LIBOR Portion during the
Interest Period applicable thereto through the purchase of deposits in the
offshore interbank market in the amount of its share of such LIBOR Portion,
having a maturity corresponding to such Interest Period and bearing an interest
rate equal to the interest rate applicable to such LIBOR Portion for such
Interest Period.
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SECTION 3. FEES, PAYMENTS, REDUCTIONS, APPLICATIONS AND NOTATIONS.
Section 3.1. Unused Fees. For the period from the date hereof to and
including the Revolving Credit Termination Date, the Company shall pay to the
Agent for the pro rata account of the Banks, an unused fee at the rate per annum
equal to the Unused Fee Rate from time to time in effect on the average daily
unused amount of each Bank's Percentage of the Revolving Credit Commitment
hereunder, such fee to be payable quarterly in arrears on the last day of each
quarter to and including, and on, the Revolving Credit Termination Date.
Section 3.2. Voluntary Prepayments. Subject to the further provisions of
this Section 3.2, the Company shall have the privilege of prepaying the Notes in
whole or in part (but if in part then in an aggregate minimum amount of Fifty
Thousand Dollars ($50,000)) at any time upon notice to the Agent (such notices,
if received subsequent to 11:00 a.m. (Milwaukee time) on a given day, to be
treated as though received at the opening of business on the next Business Day),
by paying to the Agent (i) the principal amount to be prepaid, (ii) if such
prepayment prepays the Notes in full, accrued interest thereon to the date fixed
for prepayment, and (iii) any amount due the Banks under Section 2.10 hereof.
Section 3.3. Mandatory Prepayments. In the event that the sum of the
outstanding principal amount of the Revolving Credit Loans plus the outstanding
amount of the Swing Line Loans plus the unpaid Reimbursement Obligations plus
the amount available to be drawn under all outstanding L/Cs shall at any time
and for any reason exceed the Revolving Credit Commitment, the Company shall
immediately and without notice or demand pay over the amount of the excess to
the Agent for the pro rata account of the Banks as and for a mandatory
prepayment on the Revolving Credit Notes, Swing Line Note and unpaid
Reimbursement Obligations and, if necessary, as cash collateral for then
outstanding L/Cs. The Company shall, not later than 5:00 p.m. (Milwaukee time)
on the Business Day following the closing of the issuance and sale of the Senior
Notes (if any), pay to the Agent for the pro rata account of the Banks as and
for a mandatory prepayment on the Revolving Credit Notes, the sum of Thirty
Million Dollars ($30,000,000).
Section 3.4. Termination. The Company may at any time and from time to
time upon notice to the Agent received on or before 11:00 a.m. (Milwaukee time)
at least three (3) Business Days before the Revolving Credit Termination Date
terminate the Revolving Credit Commitment in whole or in part (but if in part
then in a minimum amount of Five Hundred Thousand Dollars ($500,000) or any
greater amount that is an integral multiple of One Hundred Thousand Dollars
($100,000)). The Company shall, on the date the Revolving Credit Commitment is
terminated in whole or in part, prepay the Revolving Credit Notes, the Swing
Line Note, unpaid Reimbursement Obligations (if any) and the amount available to
be drawn under all outstanding L/Cs by the amount necessary to reduce the
outstanding aggregate principal balance of the Revolving Credit Loans, the Swing
Line Loans, the unpaid Reimbursement Obligations and the amount available to be
drawn under all outstanding L/Cs to the amount to which the Revolving Credit
Commitment has been reduced. On the date of the closing of the issuance and sale
of the Senior Notes (if any), the Revolving Credit Commitment shall be reduced,
without any action by or notice on the part of the Company, to the difference
between One Hundred Twenty-Five
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Million Dollars ($125,000,000) and the aggregate amount of any partial
terminations of the Revolving Credit Commitment pursuant to this Section prior
to the date thereof. No termination of the Revolving Credit Commitment pursuant
to this Section 3.4 may be reinstated.
Section 3.5. Place and Application. All payments of principal, interest,
fees and other amounts due hereunder shall be made to the Agent at its office at
777 East Wisconsin Avenue, Milwaukee, Wisconsin (or at such other place within
the continental United States of America as the Agent may specify) in
immediately available and freely transferable funds at the place of payment. All
such payments shall be made without setoff or counterclaim and without reduction
for, and free from, any and all present or future taxes, levies, imposts,
duties, fees, charges, deductions, withholdings, restrictions or conditions of
any nature imposed by any government or political subdivision or taxing
authority thereof. Payments received by the Agent after 11:00 a.m. (Milwaukee
time) shall be deemed received as of the opening of business on the next
Business Day. Unless the Company otherwise directs, payments applicable to the
principal of the Notes shall be deemed first applied to the Domestic Rate
Portion until payment in full thereof, with any balance applied to the LIBOR
Portions in the order in which their Interest Periods expire. All payments
(whether voluntary or required) shall be accompanied by any amount due the Banks
under Section 2.10 hereof, but no acceptance of such a payment without requiring
payment of amounts due under Section 2.10 shall preclude a later demand by any
of the Banks for any amount due them under Section 2.10 in respect of such
payment.
Section 3.6. Notations and Requests. All advances made against the Notes,
the status of all amounts evidenced by the Notes as constituting part of the
Domestic Rate Portion, or a LIBOR Portion and the rates of interest and Interest
Periods applicable to such Portions shall be recorded by each of the Banks on
its books or, at its option in any instance, endorsed on the reverse side of its
Note and the unpaid principal balances and status, rates and Interest Periods so
recorded or endorsed by the Banks shall be prima facie evidence in any court or
other proceeding brought to enforce the Notes or the principal amount remaining
unpaid thereon, the status of the borrowings evidenced thereby and the interest
rates and Interest Periods applicable thereto. Prior to any negotiation of any
Note the applicable Bank shall endorse thereon the status of all amounts
evidenced thereby as constituting part of the Domestic Rate Portion or a LIBOR
Portion and the rates of interest and Interest Periods applicable thereto.
Section 3.7. Capital Adequacy. If any Bank shall determine that the
adoption after the date hereof of any applicable law, rule or regulation
regarding capital adequacy, or any change in any existing law, rule or
regulation, or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof or compliance by such Bank (or its
lending office) with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on such Bank's capital as a consequence of its obligations hereunder or credit
extended by it hereunder to a level below that which such Bank could have
achieved but for such adoption, change or compliance (taking into consideration
such Bank's policies with respect to capital adequacy) by an amount deemed by
such Bank to be material, then from time to time as specified by such Bank the
Company shall pay such additional amount or amounts as will
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compensate such Bank for such reduction; provided, however, that (i) such Bank
shall promptly notify the Company of an event which might cause it to seek
compensation, and the Company shall be obligated to pay only such compensation
which is incurred or which arises after the date sixty (60) days prior to the
date such notice is given, and (ii) the Company shall have no obligation to pay
any amount that would otherwise be payable under this Section solely as a result
of such Bank being in a regulatory classification that is lower than such Bank's
regulatory classification on the date of this Agreement. A certificate of such
Bank claiming compensation under this Section 3.7 and setting forth the
additional amount or amounts to be paid to it hereunder in reasonable detail
shall be conclusive if reasonably determined. In determining such amount, such
Bank may use any reasonable averaging and attribution methods.
SECTION 4. THE COLLATERAL.
Section 4.1. Collateral. The Revolving Credit Notes, the Swing Line Note,
the Reimbursement Obligations and the other obligations of the Company hereunder
relating thereto shall be secured by (i) valid and perfected first priority
liens (subject to any Permitted Liens) on inventories, accounts receivable,
machinery and equipment, farm products and certain crops and other assets of the
Company pursuant to the terms of a Security Agreement of even date herewith by
and between the Company and the Agent for itself and for the benefit of the
Banks, as the same may be amended or restated from time to time; (ii) valid and
perfected first priority liens (subject to any Permitted Liens) on the fixtures
and real properties of the Company and Minot described on Schedule 4.1(a)
attached hereto; (iii) valid and perfected first priority liens (subject to any
Permitted Liens) on the inventories, accounts receivable, machinery and
equipment, farm products and certain crops and other assets of Minot pursuant to
the terms of a Security Agreement of even date herewith by and between Minot and
the Agent for itself and for the benefit of the Banks, as the same may from time
to time be amended or restated; (iv) valid and perfected first priority liens
(subject to any Permitted Liens) on any assets of Cranberry Businesses acquired
by the Company pursuant to Section 7.13(f) hereof (other than real property of
the Cranberry Business acquired constituting a cranberry marsh, if any, and
related fixtures (including cranberry vines that have not been severed from the
real estate) and bog equipment and subject to the Agent's agreement to limit or
subordinate the liens of the Banks on the crops grown or to be grown on the
cranberry marshes and the proceeds thereof other than during the growing season
for which the Banks have extended credit to the Company on terms substantially
similar to those set forth in those certain Subordination and Intercreditor
Agreements by and between The Equitable Life Assurance Society of the United
States and Harris; (v) valid and perfected first priority liens (subject to any
Permitted Liens) on the fixtures and real properties of the Company described on
Schedule 4.1(b) attached hereto (the "Company Marshes"); (vi) the Minot
Guaranty; and (vii) Grants of Security Interests in Trademarks and Grants of
Security Interests in Copyrights, each to be executed by the Company and Minot
in favor of the Agent for itself and for the benefit of the Banks (collectively,
the "IP Grants"). The Agent and the Banks hereby agree that upon the Company's
receipt of funds from the issuance and sale of the Senior Notes and the
application of not less than Thirty Million Dollars ($30,000,000) of the
proceeds from the issuance and sale of the Senior Notes to the repayment of
Revolving Credit Loans, the Agent shall (x) release the liens of the Banks on
the Company Marshes and related fixtures (including cranberry vines that have
not been severed from the Cranberry Marshes) and bog
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equipment, (y) provide such mortgage satisfactions and UCC termination
statements as the Company may reasonably request and (z) limit or subordinate
the liens of the Banks on the crops grown or to be grown on the Cranberry
Marshes and the proceeds thereof other than during the growing season for which
the Banks have extended credit to the Company on terms substantially similar to
those set forth in those certain Subordination and Intercreditor Agreements by
and between The Equitable Life Assurance Society of the United States and
Harris.
Section 4.2. Further Assurances. The Company agrees that it will from
time to time at the request of the Agent or the Banks execute and deliver such
documents and do such acts and things as the Agent or the Banks may reasonably
request in order to provide for or perfect such liens.
SECTION 5. REPRESENTATIONS AND WARRANTIES.
The Company represents and warrants to the Agent and the Banks as
follows:
Section 5.1. Organization; Authority; Non-Contravention. Each of the
Company and its Subsidiaries is a corporation duly organized and validly
existing under the laws of the jurisdiction of its incorporation, has full and
adequate power to carry on its business as now conducted, is duly licensed or
qualified in all jurisdictions wherein the nature of its activities requires
such licensing or qualifying and where the failure to be so licensed or
qualified would have a material adverse effect on the Properties, business or
operations of the Company and its Subsidiaries taken as a whole. The Company and
Minot have full right and authority to enter into the Loan Documents to which
they are a party, to encumber their assets as collateral security therefor, and
to perform each and all of the matters and things herein and therein provided
for, and, in the case of the Company, to make the borrowing herein provided for
and to issue the Notes in evidence thereof. This Agreement does not, nor does
the performance or observance by the Company or Minot of any of the matters or
things provided for in the Loan Documents to which they are a party, contravene
any provision of law or any charter or by-law provision or any indenture or
material agreement of or affecting the Company or Minot or any of their
respective Properties.
Section 5.2. Subsidiaries. The Company has no Subsidiaries except
Wildhawk, Inc., a Wisconsin corporation, W.S.C. Water Management Corp., a
Wisconsin corporation, Northland Cranberries Foreign Sales Corp., a Virgin
Islands corporation, Minot, Northland Insurance Center Inc., a Wisconsin
corporation, and PFVA Acquisition Corp., a Virginia corporation (the
"Acquisition Subsidiary").
Section 5.3. Financial Statements. The Company has heretofore delivered
to the Agent a copy of the audit report as of August 31, 1998, of the Company
and unaudited consolidated financial statements (including a balance sheet and
profit and loss statement) of the Company and its Subsidiaries as of, and for
the period ending November 30, 1998. Such consolidated financial statements have
been prepared in accordance with generally accepted accounting principles on a
basis consistent, except as otherwise noted therein and except that the interim
consolidated financial statements are subject to audit and year-end adjustments
and for the absence of footnotes, with that of the previous fiscal year or
period and fairly reflect the financial
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position of the Company as of the dates thereof, and the results of their
operations for the periods covered thereby. The Company has no significant
contingent liabilities other than as disclosed to the Agent or as indicated on
said consolidated financial statements and since said date of November 30, 1998,
there has been no material adverse change in the condition, financial or
otherwise, of the Company or its Subsidiaries.
Section 5.4. Litigation; Taxes; Consents. Except as disclosed on Schedule
5.4, there is no litigation or governmental proceeding pending, nor to the
knowledge of the Company, threatened against the Company or any Subsidiary which
if adversely determined would result in any material adverse change in the
Properties, business or operations of the Company and its Subsidiaries taken as
a whole. All United States of America federal income tax returns for the Company
and its Subsidiaries required to be filed have been filed on a timely basis
(after giving effect to any extensions), and all amounts required to be paid as
shown by said returns have been paid. There are no pending or threatened
objections to or controversies in respect of the United States of America
federal income tax returns of the Company for any fiscal year which, if
adversely determined, would have a material adverse effect on the Company's
condition, financial or otherwise. No authorization, consent, license, exemption
or filing or registration with any court or governmental department, agency or
instrumentality, is or will be necessary to the valid execution, delivery or
performance by the Company and Minot of the Loan Documents to which they are a
party, except for filings required to perfect the Agent's liens in the
Collateral.
Section 5.5. Regulation U. Neither the Company nor any Subsidiary is
engaged in the business of extending credit for the purpose of purchasing or
carrying "margin stock" (within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System) and no part of the proceeds of any loan
hereunder will be used to purchase or carry any margin stock or to extend credit
to others for such a purpose.
Section 5.6. No Default. No Event of Default is existing under this
Agreement.
Section 5.7. ERISA. Each of the Company and its Subsidiaries is in
compliance in all material respects with ERISA to the extent applicable to it
and has received no notice to the contrary from the PBGC or any other
governmental entity or agency.
Section 5.8. Security Interests and Debt. There are no security
interests, liens or encumbrances on any of the Property of the Company or any
Subsidiary except such as are permitted by Section 7.11 of this Agreement, and
the Company and its Subsidiaries have no Total Debt except such as is permitted
by Section 7.12 of this Agreement.
Section 5.9. Accurate Information. No information, exhibit or report
furnished by the Company or any Subsidiary to the Agent or any Bank in
connection with the negotiation of the Loan Documents contained any material
misstatement of fact or omitted to state a material fact or any fact necessary
to make the statements contained therein not misleading in light of the
circumstances in which made. The financial projections furnished by the Company
to the Agent and the Banks contain to the Company's knowledge and belief,
reasonable projections as of the date thereof of future results of consolidated
operations and financial position of the Company.
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Section 5.10. Enforceability. This Agreement and the other Loan Documents
are legal, valid and binding agreements of each of the Company and Minot (to the
extent Minot is a party thereto), enforceable against it in accordance with
their terms, except as may be limited by (a) bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium or other similar laws or
judicial decisions for the relief of `debtors or the limitation of creditors'
rights generally; and (b) any equitable principles relating to or limiting the
rights of creditors generally.
Section 5.11. No Default Under Other Agreements. Neither the Company nor
any Subsidiary is in default with respect to any note, indenture, loan
agreement, mortgage, lease, deed, or other agreement to which it is a party or
by which it or its Property is bound, which default might reasonably be expected
to materially and adversely affect the Collateral, the repayment of the
indebtedness, obligations and liabilities under the Loan Documents, the Agent's
and the Banks' rights under the Loan Documents or the Property, business,
operations or condition (financial or otherwise) of the Company and its
Subsidiaries taken as a whole.
Section 5.12. Status Under Certain Laws. Neither the Company nor any of
its Subsidiaries is an "investment company" or a person directly or indirectly
controlled by or acting on behalf of an "investment company" within the meaning
of the Investment Company Act of 1940, as amended, or a "holding company," or a
"subsidiary company" of a "holding company," or an "affiliate" of a "holding
company" or a "subsidiary company" of a "holding company," within the meaning of
the Public Utility Holding Company Act of 1935, as amended.
Section 5.13. Compliance with Laws. The Company and its Subsidiaries each
are in compliance with the requirements of all federal, state and local laws,
rules and regulations applicable to or pertaining to their Properties or
business operations (including, without limitation, the Occupational Safety and
Health Act of 1970, the Americans with Disabilities Act of 1990, and laws and
regulations establishing quality criteria and standards for air, water, land and
toxic or hazardous wastes and substances), non-compliance with which could
reasonably be expected to have a material adverse effect on the financial
condition, Properties, business or operations of the Company and its
Subsidiaries taken as a whole. Neither the Company nor any Subsidiary has
received notice to the effect that its operations are not in compliance with any
of the requirements of applicable federal, state or local environmental, health
and safety statutes and regulations or are the subject of any governmental
investigation evaluating whether any remedial action is needed to respond to a
release of any toxic or hazardous waste or substance into the environment, which
noncompliance or remedial action would have a material adverse effect on the
financial condition, Properties, business or operations of the Company and its
Subsidiaries taken as a whole.
Section 5.14. Year 2000. The Company has reviewed the areas within its
business and operations which could be adversely affected by, and has developed
or is developing a program to address on a timely basis, the "Year 2000 Issue"
(that is, the risk that computer applications used by the Company may be unable
to recognize and perform properly date-sensitive functions involving certain
dates prior to and any date on or after December 31, 1999), and has made or will
make related appropriate inquiry of material suppliers and vendors. Based on
such review and program, the Company believes that the "Year 2000 Issue" will
not have a material adverse
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effect on the business, operations, assets, condition (financial or other) or
results of operations of the Company and its Subsidiaries taken as a whole. From
time to time, at the request of the Agent, the Company shall provide to the
Banks such updated information or documentation as is requested regarding the
status of its efforts to address the Year 2000 Issue.
SECTION 6. CONDITIONS PRECEDENT.
Section 6.1. Initial Advances. The several obligations of the Banks to
make the initial Revolving Credit Loans, the parties hereto agreeing that the
initial Revolving Credit Loans shall be Domestic Rate Portions, shall be subject
to the following conditions precedent and this Agreement shall not become
effective unless and until the following conditions precedent have been
satisfied:
(a) The Company, the Agent and each of the Banks a party hereto as
of the date hereof shall have executed this Credit Agreement (such
execution may be in several counterparts and the several parties hereto
may execute on separate counterparts);
(b) The Agent shall have received the following (each to be
properly executed and completed) and the same shall have been approved as
to form and substance by the Agent:
(i) the Revolving Credit Notes;
(ii) the Swing Line Note;
(iii) each of the Collateral Documents described in Section
4.1, hereof;
(iv) title reports with respect to the real property of the
Company and Minot listed on Schedule 4.1(a) attached hereto;
(v) commitments for mortgagees' policies of title insurance
for each of the real properties of the Company and Minot listed on
Schedule 4.1(a) attached hereto in minimum amounts acceptable to
the Agent;
(vi) such mortgages, deeds of trust, assignments and
financing statements as the Agent may require;
(vii) the Minot Guaranty; and
(viii) copies (executed or certified, as may be
appropriate) of all legal documents or proceedings taken in
connection with the execution and delivery of this Credit
Agreement and the other instruments and documents contemplated
hereby to the extent the Agent or its counsel may reasonably
request;
(c) Legal matters incident to the execution and delivery of this
Credit Agreement and the other instruments and documents contemplated
hereby shall be satisfactory to the
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Agent and its counsel; and the Agent shall have received the favorable
written opinion of counsel for the Company in form and substance
satisfactory to the Agent and its counsel;
(d) Each of the representations and warranties set forth in
Section 5 of this Agreement and in the other Loan Documents shall be true
and correct;
(e) The Company shall have purchased all insurance required by the
Loan Documents and the Agent shall have received certificates of
insurance naming the Agent as lender's loss payee and additional insured
for the insurance policies required pursuant to the terms of the Loan
Documents, and evidence of the payment of all premiums therefor;
(f) The Agent shall have received a payoff letter satisfactory to
it from Harris Trust and Savings Bank ("Harris") along with either
executed termination statements, satisfactions, assignments or other
documents in form sufficient for filing or recording, or a commitment to
provide the same, evidencing the termination of such creditor's security
interests in the Collateral;
(g) The Agent shall have received good standing certificates or
certificates of status, as the case may be, certified by the appropriate
secretaries of state or other appropriate parties relating to the Company
or Minot for each of the states in which the Company or Minot is
incorporated or qualified to do business;
(h) The Company shall have paid to the Agent the fees contemplated
by the fee letter between the Company and the Agent dated prior to the
date hereof; and
(i) The Company shall be in full compliance with all of the terms
and conditions of this Credit Agreement and no Event of Default or
Default shall have occurred and be continuing thereunder or shall result
after giving effect to this Credit Agreement.
Section 6.2. All Advances. The several obligations of the Banks to make
any advance under the Revolving Credit Commitment (including the first advance),
the obligation of the Swing Line Lender to make any Swing Line Loan, and the
obligation of the Issuer to issue any L/C shall also be subject to the
conditions precedent that as of the time of the making of each Revolving Credit
Loan, Swing Line Loan or the issuance of any L/C:
(a) each of the representations and warranties set forth herein or
in the Collateral Documents shall be and remain true and correct in all
material respects as of said time except that the representations and
warranties made in Section 5.3 hereof shall be deemed to refer to the
most recent financial statements delivered to the Agent pursuant to
Section 7.4 hereof;
(b) no change in the financial condition or business prospects of
the Company shall have occurred which the is materially adverse; and
(c) no Default or Event of Default shall have occurred and be
continuing.
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Any request made by the Company to the Agent for any extension of credit
hereunder shall be deemed to constitute a representation and warranty that the
foregoing statements are true and correct in all material respects.
SECTION 7. COMPANY COVENANTS.
The Company agrees that, so long as any credit is available to or in use
by the Company hereunder, except to the extent compliance in any case or cases
is waived in writing by the Required Banks:
Section 7.1. Maintenance of Property. The Company shall and shall cause
each of its Subsidiaries to keep and maintain all of their Properties necessary
or useful in their businesses in good condition, and make all necessary
renewals, replacements, additions, betterments and improvements thereto;
provided, however, that nothing in this Section shall prevent the Company or any
Subsidiary from discontinuing the operation and maintenance of any of their
Properties if such discontinuance is, in the judgment of the Company, desirable
in the conduct of their business and not disadvantageous in any material respect
to the Banks as holders of the Notes.
Section 7.2. Taxes. The Company shall and shall cause each of its
Subsidiaries to duly pay and discharge all taxes, rates, assessments, fees and
governmental charges upon or against the Company or any Subsidiary or against
their respective Properties in each case before the same becomes delinquent and
before penalties accrue thereon unless and to the extent that the same is being
contested in good faith and by appropriate proceedings.
Section 7.3. Maintenance of Insurance. The Company shall and shall cause
each of its Subsidiaries to maintain insurance with insurers recognized as
financially sound and reputable by prudent business persons in such forms and
amounts and against such risks as is usually carried by companies engaged in
similar business and owning similar Properties in the same general areas in
which the Company and the Subsidiaries operate. The Agent, for itself and the
benefit of the Banks, shall be named as lender's loss payee and mortgagee under
any insurance policies which relate to the Collateral and additional insured
with respect to the Company's and its Subsidiaries' liability insurance
policies. The Company shall, at the Agent's request, provide copies to the Agent
of all insurance policies and other material related thereto maintained by the
Company or any Subsidiary from time to time.
Section 7.4. Financial Reports. The Company will maintain a standard and
modern system of accounting in accordance with sound accounting practice and
will furnish with reasonable promptness to the Agent and its duly authorized
representatives such information respecting the business and financial condition
of the Company and its Subsidiaries as may be reasonably requested and, without
any request, will furnish to the Agent:
(a) as soon as available, and in any event within forty five (45)
days after the close of each quarterly fiscal period of the Company a
copy of the Quarterly Report on Form 10-Q filed with the Securities and
Exchange Commission (the "SEC"); and
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(b) as soon as available, and in any event within ninety (90) days
after the close of each fiscal year, a copy of the audit report for such
year and accompanying consolidated financial statements, including
balance sheet, reconciliation of change in stockholders' equity, profit
and loss statement and statement of source and application of funds for
the Company and its Subsidiaries showing in comparative form the figures
for the previous fiscal year of the Company, all in reasonable detail,
prepared and certified by Deloitte & Touche or other independent public
accountants of nationally recognized standing selected by the Company and
reasonably acceptable to the Agent; and
(c) each of the consolidated financial statements furnished to the
Agent pursuant to paragraphs (a) and (b) above shall be accompanied by a
Compliance Certificate in the form of Exhibit 7.4 attached hereto signed
by its Vice President-Finance; and
(d) promptly upon their becoming available, copies of all
registration statements and regular periodic reports, if any, which the
Company shall have filed with the SEC or any governmental agency
substituted therefor, or any national securities exchange, including
copies of the Company's Annual Report on Form 10-K, including financial
statements audited by Deloitte & Touche or other independent public
accountants of nationally recognized standing selected by the Company and
reasonably acceptable to the Agent;
(e) promptly upon the mailing thereof to the shareholders of the
Company generally, copies of all consolidated financial statements,
reports (including the Company's Annual Report to Shareholders) and proxy
statements so mailed; and
(f) as soon as available, and in any event within thirty (30) days
prior to the end of each fiscal year of the Company, a copy of the
Company's consolidated business plan and operating projections for the
following fiscal year, such plan to be in reasonable detail prepared by
the Company and in form reasonably satisfactory to the Agent.
Section 7.5. Inspection. The Company shall permit the Agent, by its
representatives and agents, and after an Event of Default, any of the Banks, to
inspect any of its Properties and those of the Subsidiaries, corporate books and
financial records of the Company, to examine and make copies of the books of
accounts and other financial records of the Company, and to discuss the affairs,
finances and accounts of the Company with, and to be advised as to the same by,
its officers at such reasonable times and intervals as the Agent (or any of the
Banks, after an Event of Default) may designate upon reasonable advance notice
to the Company.
Section 7.6. Consolidation and Merger. Neither the Company nor any
Subsidiary will consolidate with or merge into any Person, without the prior
written consent of the Required Banks, unless in the case of a consolidation or
merger involving the Company or a Subsidiary (a) the Company or the Subsidiary,
as the case may be, is the surviving entity, (b) the other party to such
transaction is in the same or a related line of business as the Company, and (c)
both before and after giving effect to such merger or consolidation, no Default
or Event of Default shall have occurred and be continuing, and except that any
Subsidiary may consolidate with or merge into
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<PAGE>
the Company (provided that the Company shall be the continuing or surviving
corporation) and except for any Permitted Acquisitions.
Section 7.7. Transactions with Affiliates. The Company will not enter
into any transaction, including without limitation, the purchase, sale, lease or
exchange of any Property, or the rendering of any service, with any Affiliate of
the Company except in the ordinary course of and pursuant to the reasonable
requirements of the Company's business and upon fair and reasonable terms no
less favorable to the Company than would be obtained in a comparable
arm's-length transaction with a Person not an Affiliate of the Company.
Section 7.8. Minimum Tangible Net Worth. From and after the date hereof,
the Company will at all times maintain Tangible Net Worth in an amount not less
than One Hundred Ten Million Dollars ($110,000,000), plus, during each fiscal
quarter of the Company after the date hereof commencing with the fiscal quarter
ending May 31, 1999, the sum of (i) 50% of the Company's Net Income for the
fiscal quarter of the Company then ended (but only to the extent Net Income is a
positive number), (ii) 75% of Net Cash Proceeds and (iii) 75% of Stock Proceeds.
Section 7.9. Fixed Charge Coverage Ratio. The Company will not, as of the
last day of the fiscal quarter ending May 31, 1999, permit its Fixed Charge
Coverage Ratio to be less than 1.50 to 1 and will not, as of the last day of
each fiscal quarter thereafter, permit its Fixed Charge Coverage Ratio to be
less than 1.75 to 1.
Section 7.10. Funded Debt to Capitalization. The Company will not, as of
the last day of each fiscal quarter, permit the ratio of its (i) Funded Debt to
(ii) the sum of Funded Debt plus Net Worth, to exceed .5 to 1.
Section 7.11. Liens. Neither the Company nor any Subsidiary will pledge,
mortgage or otherwise encumber or subject to or permit to exist upon or be
subjected to any lien, charge or security interest of any kind (including any
conditional sale or other title retention agreement and any lease in the nature
thereof excluding operating leases), on any of its Properties of any kind or
character at any time owned by the Company or any Subsidiary other than (all of
the following being hereinafter referred to as "Permitted Liens"):
(a) liens, pledges or deposits for workmen's compensation,
unemployment insurance, old age benefits or social security obligations,
taxes, assessments, statutory obligations or other similar charges, good
faith deposits made in connection with tenders, contracts or leases to
which the Company or any Subsidiary is a party or other deposits required
to be made in the ordinary course of business, provided in each case the
obligation secured is not overdue or, if overdue, is being contested in
good faith by appropriate proceedings and adequate reserves have been
provided therefor in accordance with generally accepted accounting
principles and that the obligation is not for borrowed money, customer
advances, trade payables, or obligations to agricultural producers;
(b) the pledge of Property for the purpose of securing an appeal
or stay or discharge in the course of any legal proceedings, provided
that the aggregate amount of
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liabilities of the Company and its Subsidiaries so secured by a pledge of
Property permitted under this subsection (b) including interest and
penalties thereon, if any, shall not be in excess of Five Hundred
Thousand Dollars ($500,000) at any one time outstanding;
(c) liens, pledges, mortgages, security interests, or other
charges granted to the Agent for the benefit of the Agent and the Banks;
(d) liens, pledges, mortgages, security interests or other charges
existing on real property or fixtures to the extent they secure
indebtedness incurred to finance the purchase or construction of
improvements;
(e) liens on property existing at the time of their acquisition or
liens to secure the payment of all or any part of the purchase price of
such property or to secure any indebtedness incurred for the purpose of
financing all or any part of the purchase price thereof; provided such
liens encumber only the property being acquired, purchased or financed
and do not extend to any other property or secure any other obligations;
(f) liens on Permitted Property of a corporation existing at the
time such corporation is purchased by, merged into or consolidated with
the Company or any Subsidiary or at the time of a sale, lease or other
disposition of the land, buildings and/or equipment of a corporation or
firm as an entirety or substantially as an entirety to the Company or any
Subsidiary;
(g) mortgages, pledges, security interests or other encumbrances
existing on the date hereof and disclosed on the financial statements
referred to in Section 5.3 hereof or in Schedule 7.11 attached hereto and
other than the pledge of the stock of W.S.C. Water Management Corp. to
The Equitable Assurance Society of the United States;
(h) liens for taxes, assessments or governmental charges and liens
incident to construction, which are either not delinquent or are being
contested in good faith by appropriate proceedings which prevent
foreclosure of such liens and for which adequate reserves have been
provided, and easements, restrictions, minor title irregularities and
similar matters which have no adverse effect upon the ownership and use
of the affected Property by the Company or any Subsidiary; and
(i) liens on Permitted Property securing indebtedness permitted
under Section 7.12 hereof.
Section 7.12. Borrowings and Guaranties. Neither the Company nor any
Subsidiary will issue, incur, assume, create or have outstanding any
indebtedness for borrowed money (including as such all indebtedness representing
the deferred purchase price of Property and all obligations of the Company and
its Subsidiaries with respect to letters of credit and banker's acceptances) or
customer advances, nor be or remain liable, whether as endorser, surety,
guarantor or otherwise, for or in respect of any liability or indebtedness of
any other Person other than:
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(a) indebtedness of the Company arising under or pursuant to this
Agreement or the other Loan Documents;
(b) the liability of the Company or any Subsidiary arising out of
the endorsement for deposit or collection of commercial paper received in
the ordinary course of business;
(c) indebtedness of the Company existing on the date hereof and
disclosed to the Banks in the August 31, 1998 financial statements
referred to in Section 5.3 hereof;
(d) indebtedness not otherwise permitted by this Section 7.12
which is incurred, directly or indirectly, to finance the acquisition of
Property;
(e) Total Debt;
(f) pursuant to the Minot Guaranty; and
(g) renewals, extensions and refinancings of and amendments to
each of the foregoing.
Section 7.13. Investments, Loans, Advances and Acquisitions. Neither the
Company nor any Subsidiary will make or retain any investment (whether through
the purchase of stock, obligations or otherwise) in or make any loan or advance
to, any other Person or acquire substantially as an entirety the Property or
business of any other Person, other than:
(a) investments in certificates of deposit having a maturity of
one year or less issued by any of the Banks;
(b) investments, loans and advances in or to any existing
wholly-owned Subsidiary, provided that the respective amounts thereof
shall not exceed the amounts disclosed to the Banks in the August 31,
1998 financial statements referred to in Section 5.3 hereof;
(c) travel advances, entertainment and moving expenses and
directors fees to officers, directors and employees of the Company or any
Subsidiary in the ordinary course of business;
(d) receivables arising in the ordinary course of the Company's
and the Subsidiaries' businesses;
(e) full faith and credit obligations of the United States of
America and securities the payment of principal of and interest on is
unconditionally guaranteed by the United States of America; provided that
all such obligations and securities shall have a maturity of one year or
less;
(f) acquisitions of Cranberry Businesses, provided, that (i) such
acquisition has the effective written consent or prior approval of the
board of directors (or equivalent governing body) of the Person being
acquired, and (ii) the Company grants to the Agent
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for the benefit of itself and the Banks a first priority lien (subject to
Permitted Liens) on the assets of the Cranberry Business acquired
excluding real property constituting a cranberry marsh and related
fixtures (including cranberry vines that have not been severed from the
real property) and bog equipment (a "Permitted Acquisition");
(g) loans and advances to Minot, and loans and advances to
Wildhawk, Inc. in an aggregate principal amount outstanding at any time
not to exceed Five Hundred Thousand Dollars ($500,000);
(h) investments in entities engaged in the Cranberry Business
(other than a Permitted Acquisition which shall be governed by Section
7.13(f))) provided that the aggregate amount of such investments
outstanding at any one time does not exceed Five Million Dollars
($5,000,000);
(i) investments in an amount not to exceed One Million Dollars
($1,000,000) in a Subsidiary or joint venture engaged in developing
cranberry growing properties in the Republic of Ireland; and
(j) the acquisition of Potomac Foods of Virginia, Inc., a Virginia
corporation engaged in the business of brokering juice concentrate and
flavors ("PFVA"), pursuant to a merger of PFVA with and into the
Acquisition Subsidiary (with the Acquisition Subsidiary as the surviving
corporation in the merger), provided that (i) the aggregate cash
consideration paid in such merger for PFVA does not exceed One Million
Five Hundred Sixty Thousand Dollars ($1,560,000), and (ii) the Company
grants to the Agent for the benefit of itself and the Banks a first
priority lien (subject to Permitted Liens) on the assets of PFVA.
Section 7.14. Sale of Property. Neither the Company nor any Subsidiary
will sell, lease, assign, transfer or otherwise dispose of (whether in one
transaction or in a series of transactions) its Property to any other Person;
provided, however, that so long as no Event of Default or Default has occurred
and is continuing, this Section shall not prohibit:
(a) sales of inventory (including crops and severed vines) in the
ordinary course of business;
(b) sales or leases of surplus, obsolete or worn-out machinery and
equipment; and
(c) sales of any other asset of the Company or any Subsidiary
having a fair market value of less than Five Million Dollars ($5,000,000)
in the aggregate during any fiscal year of the Company.
Section 7.15. [intentionally left blank]
Section 7.16. Notice of Suit or Adverse Change in Business. The Company
shall, as soon as possible, and in any event within five (5) Business Days after
the Company learns of the following, give written notice to the Agent of (a) any
material proceeding(s) being instituted or
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threatened to be instituted by or against the Company or any Subsidiary in any
federal, state, local or foreign court or before any commission or other
regulatory body (federal, state, local or foreign), (b) any material adverse
change in the business, Property or condition, financial or otherwise,
(including, without limitation, any material loss or depreciation in the value
of the Collateral) of the Company or any Subsidiary and (c) the occurrence of
any Default or Event of Default hereunder.
Section 7.17. ERISA. The Company and each Subsidiary will promptly pay
and discharge all obligations and liabilities arising under ERISA of a character
which if unpaid or unperformed would result in the imposition of a lien against
any of their respective Properties and will promptly notify the Agent of (a) the
occurrence of any "reportable event" (as defined in ERISA) which might result in
the termination by the PBGC of any Plan, (b) receipt of any notice from the PBGC
of its intention to seek termination of any such Plan or appointment of a
trustee therefor, and (c) its intention to terminate or withdraw from any Plan.
Neither the Company nor any Subsidiary will terminate any such Plan or withdraw
therefrom unless the Company shall be in compliance with all of the terms and
conditions of this Agreement after giving effect to any liability to the PBGC
resulting from such termination or withdrawal.
Section 7.18. Use of Proceeds. The Company shall use the proceeds of the
Revolving Credit Loans and the Swing Line Loans made hereunder to repay all
indebtedness outstanding under that certain Amended and Restated Credit
Agreement dated as of October 3, 1997 by and between the Company and Harris, as
the same shall have been amended through the date hereof (as so amended, the
"Harris Credit Agreement") and solely for lawful corporate purposes. The Company
agrees to take such steps as may be requested by the Agent to terminate and
cancel the Harris Credit Agreement and all notes, security agreements, and other
loan documents executed and delivered in connection therewith.
Section 7.19. Subsidiaries. The Company will not after the date hereof,
directly or indirectly, create or acquire any Subsidiaries unless prior to such
acquisition or creation of a Subsidiary (a) the Company shall have given prior
written notice thereof to the Agent, (b) the Company shall have made
arrangements, satisfactory to the Agent, to grant security interests and
mortgages on the assets of any such Subsidiary for itself and for the benefit of
the other Banks, and (c) if requested by the Agent, the Company shall have
caused the Subsidiary to guaranty the obligations of the Company under this
Agreement to the Banks.
Section 7.20. Minot Merger. The Company agrees to merge Minot with and
into itself (with the Company as the surviving corporation in such merger) on or
before June 30, 1999.
Section 7.21. Senior Note Financing. The Company agrees to use its best
efforts to consummate the issuance and sale of the Senior Notes on or before
June 30, 1999 substantially on the terms and conditions described in the Terms
Sheet. Notwithstanding the foregoing, the Company shall not be obligated to
issue and sell the Senior Notes if the Board of Directors of the Company
determines in good faith that the issuance and sale of the Senior Notes is not
in the Company's best interests.
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SECTION 8. EVENTS OF DEFAULT AND REMEDIES.
Section 8.1. Events of Default Defined. Any one or more of the following
shall constitute an Event of Default:
(a) Default in the payment within three (3) days when due of any
principal of or interest on any Note or Reimbursement Obligation, or in
the payment within five (5) days when due of any costs, expenses or fees
under this Agreement or any of the other Loan Documents, whether on
demand or at the stated due date thereof or as required by Section 2.3
hereof or at any other time provided in this Agreement;
(b) Default in the observance or performance of any covenant,
condition, agreement or provision in Sections 7.3, 7.4, 7.6, 7.8, 7.9,
7.10, 7.11, 7.12, 7.13, 7.14, 7.16, 7.18, or 7.19 of this Agreement, or
of any provision of the Collateral Documents requiring the maintenance of
insurance on the Collateral subject thereto or dealing with the use or
remittance of proceeds of such Collateral;
(c) Default in the observance or performance of any other
covenant, condition, agreement or provision in this Agreement or in any
of the other Loan Documents and such default shall continue for thirty
(30) days after written notice thereof to the Company by the Agent;
(d) Default shall occur under any evidence of indebtedness for
borrowed money in an aggregate principal amount in excess of One Million
Dollars ($1,000,000) issued or assumed or guaranteed by the Company or
any Subsidiary or under any mortgage, agreement or other similar
instrument under which the same may be issued or secured and such default
shall continue for a period of time sufficient to permit the acceleration
of maturity of any indebtedness evidenced thereby or outstanding
thereunder;
(e) Any representation or warranty made by the Company herein or
in any of the other Loan Documents or in any statement or certificate
furnished by it pursuant hereto or thereto proves untrue in any material
respect as of the date of the issuance or making thereof;
(f) Any judgment or judgments, writ or writs, or warrant or
warrants of attachment, or any similar process or processes in an
aggregate amount in excess of Five Hundred Thousand Dollars ($500,000)
shall be entered or filed against the Company, any Subsidiary or against
any of their respective Property or assets and remains unpaid, unvacated,
unbended or unstayed for a period of thirty (30) days from the date of
its entry;
(g) The Company or any Subsidiary (other than Wildhawk, Inc. and
W.S.C. Water Management Corp.) shall (i) have entered involuntarily
against it an order for relief under the Bankruptcy Code of 1978, as
amended, (ii) not pay, or admit in writing its inability to pay, its
debts generally as they become due or suspend payment of its obligations,
(iii) make an assignment for the benefit of creditors, (iv) apply for,
seek,
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consent to, or acquiesce in, the appointment or a receiver, custodian,
trustee, conservator, liquidator or similar official for it or any
substantial part of its Property, (v) institute any proceeding seeking to
have entered against it an order for relief under the Bankruptcy Code of
1978, as amended, to adjudicate it insolvent, or seeking dissolution,
winding up, liquidation, reorganization, arrangement, marshalling of
assets, adjustment or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors
or fail to file an answer or other pleading denying the material
allegations of any such proceeding filed against it, (vi) fail to contest
in good faith any appointment or proceeding described in Section 8.1(h)
hereof, or (vii) take any action in furtherance of any of the foregoing
purposes; or
(h) A custodian, receiver, trustee, conservator, liquidator or
similar official shall be appointed for the Company, any Subsidiary
(other than Wildhawk, Inc. and W.S.C. Water Management Corp.) or any
substantial part of their respective Property, or a proceeding described
in Section 8.1(g)(v) shall be instituted against the Company and such
appointment continues undischarged or any such proceeding continues
undismissed or unstayed for a period of sixty (60) days.
Section 8.2. Remedies for Non-Bankruptcy Defaults. When any Event of
Default, other than an Event of Default described in subsections (g) or (h) of
Section 8.1 hereof, has occurred and is continuing, the Agent upon instruction
of the Required Banks shall, by notice to the Company, take either or both of
the following actions: (i) terminate the commitments of the Banks hereunder on
the date (which may be the date thereof) stated in such notice, and (ii) declare
the principal of and the accrued interest on the Notes and Reimbursement
Obligations then outstanding to be forthwith due and payable and thereupon said
Notes and Reimbursement Obligations, including both principal and interest,
shall be and become immediately due and payable together with all other amounts
payable under this Agreement without further demand, presentment, protest or
notice of any kind.
Section 8.3. Remedies for Bankruptcy Defaults. When any Event of Default
described in subsections 8.1(g) or 8.1(h) has occurred and is continuing, then
the then unpaid balance of the Notes and Reimbursement Obligations, including
both principal and interest, and all fees, charges and commissions payable
hereunder, shall immediately become due and payable without presentment, demand,
protest or notice of any kind, the obligation of the Banks to extend further
credit pursuant to any of the terms hereof shall immediately terminate and the
Bank may exercise all remedies available to it under the Collateral Documents.
Section 8.4. Collateral for Undrawn L/Cs. Promptly following the
acceleration of the maturity of the Notes pursuant to Section 8.2 or 8.3 hereof,
the Company shall immediately pay to the Issuer the full amount available to be
drawn under all outstanding L/Cs. The Issuer shall hold all such funds and
proceeds thereof as additional collateral security for the obligations of the
Company to the Issuer and the Banks under the Loan Documents. The Company
acknowledges and agrees that the Issuer would not have an adequate remedy at law
for failure of the Company to honor any of its obligations under this Section
8.4 and that the Issuer shall have the right to
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require the Company to specifically perform such undertaking whether or not any
draws have been made under any such L/Cs.
SECTION 9. DEFINITIONS.
The following terms when used herein shall have the following meanings;
such terms to be equally applicable to both the singular and plural of the terms
defined (capitalized terms defined elsewhere in this Agreement to have the
meanings so ascribed to them in all provisions of this Agreement).
"Acquisition Subsidiary" shall have the meaning set forth in Section 5.2
hereof.
"Adjusted LIBOR Rate" shall mean a rate per annum determined pursuant to
the following formula:
Adjusted LIBOR Rate = LIBOR Rate
100% - Reserve Percentage
"Adjustment Date" shall have the meaning set forth in Section 10.14
hereof.
"Affiliate" shall mean any person, firm, corporation or entity (herein
collectively called a "Person") directly or indirectly controlling or controlled
by, or under direct or indirect common control with, another Person. A Person
shall be deemed to control another Person for the purposes of this definition if
such first Person possesses, directly or indirectly, the power to direct, or
cause the direction of, the management and policies of the second Person,
whether through the ownership of voting securities, common directors, trustees
or officers, by contract or otherwise.
"Agreement" shall mean this Credit Agreement, as the same may be
supplemented and amended from time to time.
"Amortization" shall mean consolidated amortization expense determined in
accordance with generally accepted accounting principles consistently applied.
"Applicable Margin" shall mean, at any date, the applicable percentage in
the following table under the column "Applicable Margin" set forth opposite the
Senior Debt to EBITDA Ratio as of the most recently ended quarter for which
financial statements have been delivered to the Agent:
Senior Debt to EBITDA Applicable Margin
< 1.50:1 1.00%
=> 1.50:1 but < 2.00:1 1.25%
=> 2.00:1 but < 2.50:1 1.50%
=> 2.50:1 but < 3.00:1 2.00%
=> 3.00:1 but < 3.50:1 2.25%
=> 3.50 2.50%
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Not later than five (5) Business Days after receipt by the Agent of
financial statements called for by Sections 7.4(a) and (b) hereof for each
fiscal quarter of the Company (such date being referred to herein as the "Test
Date"), the Agent shall (i) determine the Senior Debt to EBITDA Ratio for the
applicable period and (ii) promptly notify the Company and the Banks of such
determination and of any change in the Applicable Margin resulting therefrom.
Any such change in the Applicable Margin shall be effective as of the date the
Agent so notifies the Company and the Banks with respect to all LIBOR Portions
outstanding on such date, and such new Applicable Margin shall continue in
effect until the effective date of the next quarterly redetermination in
accordance with the terms hereof; provided, however, that if the Company is late
in delivering such financial statements, and upon receipt of such financial
statements the Agent determines that a higher pricing level is applicable, then
such new Applicable Margin (at said higher level) shall be retroactively
effective as of the related Test Date. Each determination of the Senior Debt to
EBITDA Ratio and Applicable Margin by the Agent in accordance with the terms
hereof shall be conclusive and binding on the Company and the Banks absent
manifest error. The Applicable Margin shall first be adjusted upon receipt of
the financial statements for the fiscal year ending August 31, 1999. From the
date hereof until the Applicable Margin is first adjusted pursuant hereto, the
Applicable Margin shall be two percent (2.00%).
"Applicant" shall have the meaning set forth in Section 10.14 hereof.
"Assignment Certificate" shall have the meaning set forth in Section
10.14 hereof.
"Average Total Debt" shall mean the arithmetic average of the Total Debt
outstanding at the end of each of the fifteen (15) Business Days following, and
each of the fifteen (15) days preceding (or such fewer number of days to the
date hereof) the Funded Debt Determination Date.
"Business Day" shall mean any day (other than a Saturday or Sunday) on
which banks are generally open for business in Milwaukee, Wisconsin and, when
used with respect to LIBOR Portions, a day on which banks generally are also
dealing in U. S. dollar deposits in London, England.
"Collateral" shall mean all property and rights that may from time to
time secure the payment of any of the Company's indebtedness, obligations and
liabilities to the Bank under any of the Loan Documents.
"Collateral Documents" shall mean all mortgages, deeds of trust, security
agreements, assignments, financing statements and other documents as shall from
time to time secure any of the Notes and other obligations of the Company to the
Bank.
"Commitments" shall mean the Revolving Credit Commitment and the Swing
Line Commitment.
"Company Marshes" shall have the meaning set forth in Section 4.1 hereof.
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"Cranberry Businesses" shall mean the operation of cranberry bogs (and
the development thereof) and the production, distribution, processing, marketing
and brokering of cranberries, cranberry products and other fresh fruit or juice
products.
"Depreciation" shall mean consolidated depreciation expense, determined
in accordance with generally accepted accounting principles, consistently
applied.
"Domestic Rate" shall mean a fluctuating interest rate per annum at all
times equal to the rate of interest announced by the Agent from time to time as
its prime commercial rate with any change in such rate resulting from a change
in said prime commercial rate to be effective as of the date of the relevant
change in said prime commercial rate. The Agent may lend at rate higher or lower
than or the same as the Domestic Rate.
"Domestic Rate Portion" shall have the meaning specified in Section 2.1.
"EBITDA" shall mean, with reference to any period, Net Income for such
period plus all amounts deducted in arriving at such Net Income amount in
respect of (a) Interest Expense of such period, plus (b) federal, state and
local income taxes for such period, plus (c) all amounts properly charged for
Depreciation and Amortization during such period, plus (d) Required Lease
Payments during such period; provided, however, that if the Company has
completed a Permitted Acquisition of a Cranberry Business, the calculation of
EBITDA shall include the financial results of such Cranberry Business acquired
on a pro forma basis for the relevant period.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as the same may, from time to time, be supplemented or amended.
"Event of Default" shall mean any event or condition specified as such in
Section 8.1 hereof and "Default" shall mean any event or condition which with
the lapse of time, the giving of notice or both would constitute an Event of
Default.
"Federal Funds" shall mean overnight federal funds traded among members
of the Federal Reserve System and arranged by federal funds brokers.
"Federal Funds Rate" shall mean the rate determined by the Agent in good
faith to be the prevailing rate per annum (not necessarily the arithmetic
average, and in any event rounded upward, if necessary, to the next higher 1/100
of 1%) quoted to the Agent at approximately 10:00 a.m. (Milwaukee time) (or as
soon thereafter as is practicable) on such day (or, if such day is not a
Business Day, on the immediately preceding Business Day) by two (2) or more
Federal Funds brokers selected by the Agent for the sale to the Agent at face
value of Federal Funds in an amount equal or comparable to the principal amount
owed to the Agent for which rate is being determined.
"Firstar" shall mean Firstar Bank Milwaukee, N.A.
"Fixed Charge Coverage Ratio" shall mean, as of the date of
determination, the ratio of: (a) the sum of (i) Net Income, (ii) Interest
Expense, (iii) income tax expense (as determined in
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accordance with generally accepted accounting principles consistently applied),
and (iv) Required Lease Payments (in each case, for the four (4) fiscal quarters
then ended) to (b) the sum of (i) Interest Expense and (ii) Required Lease
Payments (for the same four (4) fiscal quarters then ended).
"Funded Debt" shall mean as of the date of determination, (a) during the
period from the date hereof until the first anniversary of the date hereof (the
"Initial Year"), the Average Total Debt since the date hereof, and (b) at any
time after the first anniversary of the date hereof, the Average Total Debt
during the twelve (12) month period ending on the date of determination.
"Funded Debt Determination Date" shall mean (a) during the Initial Year,
the date preceding the date of determination of Funded Debt on which Total Debt
was the lowest and (b) thereafter, the date during the twelve-month period
preceding the date of determination of Funded Debt on which Total Debt was the
lowest.
"Harris" shall have the meaning specified in Section 6.1 hereof.
"Harris Credit Agreement" shall have the meaning specified in Section
7.18 hereof.
"IP Grants" shall have the meaning specified in Section 4.1 hereof.
"Interest Expense" shall mean for any period all consolidated interest
expense during such period, all determined in accordance with generally accepted
accounting principles consistently applied.
"Initial Year" shall have the meaning specified in the definition of
"Funded Debt".
"Interest Period" means the period commencing on, as the case may be, the
creation, continuation or conversion date with respect to such LIBOR Portion and
ending one (1), two (2) or three (3) months thereafter as selected by the
Company in its notice as provided herein; provided that, all of the foregoing
provisions relating to Interest Periods are subject to the following:
(i) if any Interest Period would otherwise end on a day which is
not a Business Day, that Interest Period shall be extended to the next
succeeding Business Day, unless in the case of an Interest Period for a
LIBOR Portion 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 immediately preceding Business Day;
(ii) no Interest Period may extend beyond the final maturity date
of the Note; and
(iii) the interest rate to be applicable to each LIBOR Portion for
each Interest Period shall apply from and including the first day of such
Interest Period to but excluding the last day thereof.
For purposes of determining an Interest Period, a month means a period starting
on one day in a calendar month
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and ending on a numerically corresponding day in the next calendar month,
provided, however, if an Interest Period begins on the last day of a month or if
there is no numerically corresponding day in the month in which an Interest
Period is to end, then such Interest Period shall end on the last Business Day
of such month.
"Issuer" shall mean Firstar, in its capacity as the issuer of the L/C's
hereunder and any successor thereto in such capacity.
"L/C" shall have the meaning specified in Section 1.5 hereof.
"L/C Administrative Fee" shall have the meaning specified in Section 1.5
hereof.
"L/C Agreement" shall have the meaning specified in Section 1.5 hereof.
"L/C Issuance Fee" shall have the meaning specified in Section 1.5
hereof.
"L/C Participation Fee" shall have the meaning specified in Section 1.5
hereof.
"LIBOR Portion" shall have the meaning specified in Section 2.1 hereof.
"LIBOR Rate" shall mean, with respect to each Interest Period, the rate
per annum equal to the rate (rounded up to the nearest one-thirty-second of one
percent (1/32%)) determined by the Agent in accordance with this Credit
Agreement to be a rate at which U. S. dollar deposits are offered to major banks
in the London interbank eurodollar market for funds to be made available on the
first day of such Interest Period for the number of days comprised therein and
in an amount equal to the amount of the LIBOR Portion to be outstanding during
such Interest Period.
"Loan Documents" shall mean this Agreement, the L/C Agreements, the
Collateral Documents, the Minot Guaranty and the Notes.
"Minot" shall mean Minot Food Packers, Inc., a New Jersey corporation.
"Minot Guaranty" shall mean that certain Guaranty of even date herewith
executed by Minot for the benefit of the Agent and the Banks.
"Net Cash Proceeds" shall mean, in connection with any issuance or sale
of equity securities, the cash proceeds received from such issuance or
incurrence, net of attorneys' fees, investment banking fees, accountants' fees,
underwriting discounts and commissions and other customary fees and expenses
actually incurred in connection therewith.
"Net Income" shall mean consolidated net income determined in accordance
with generally accepted accounting principles, consistently applied.
"Net Worth" shall mean the excess of the Company's consolidated assets
over the Company's consolidated liabilities as of the date of determination.
"Notes" shall mean the Revolving Credit Notes and the Swing Line Note and
"Note" shall mean any of the Notes.
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"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Percentage" shall mean as to any Bank the percentage set forth opposite
such Bank's name on Schedule 1, as adjusted by assignments pursuant to Section
10.14 hereof.
"Permitted Liens" shall have the meaning specified in Section 7.11
hereof.
"Permitted Property" shall mean all Property except receivables, crops,
inventory and the Collateral.
"Person" shall mean any individual, sole proprietorship, partnership,
limited liability company, joint venture, trust, unincorporated organization,
association, corporation, institution, entity, party or government (whether
national, federal, state, provincial, county, city, municipal or otherwise,
including, without limitation, any instrumentality, division, agency, body or
department thereof).
"Plan" shall mean any employee benefit plan covering any officers or
employees of the Company, any benefits of which are, or are required to be,
guaranteed by the PBGC.
"Portion" shall have the meaning specified in Section 2.1 hereof.
"Property" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"Reimbursement Obligation" shall have the meaning specified in Section
1.6 hereof.
"Required Banks" shall mean, as of any date of determination, Banks
holding at least sixty-six and 2/3 percent (66-2/3%) of the Percentages.
"Required Lease Payments" shall mean, for any period, consolidated rental
payments required to be paid by the Company with respect to capitalized leases.
"Reserve Percentage" shall mean, for the purpose of computing the
Adjusted LIBOR Rate, the maximum rate of all reserve requirements (including,
without limitation, any marginal emergency, supplemental or other special
reserves) imposed by the Board of Governors of the Federal Reserve System (or
any successor) under Regulation D on Eurocurrency liabilities (as such term is
defined in Regulation D) for the applicable Interest Period as of the first day
of such Interest Period, but subject to any amendments to such reserve
requirement by such Board or its successor, and taking into account any
transitional adjustments thereto becoming effective during such Interest Period.
For purposes of this definition, LIBOR Portions shall be deemed to be
Eurocurrency liabilities as defined in Regulation D without benefit of or credit
for prorations, exemptions or offsets under Regulation D.
"Revolving Credit Commitment" shall have the meaning specified in Section
1.1 hereof.
"Revolving Credit Loan" shall have the meaning specified in Section 1.1
hereof.
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"Revolving Credit Note" shall have the meaning specified in Section 1.1
hereof.
"Revolving Credit Termination Date" shall mean February 28, 2002 or such
earlier date on which the Revolving Credit Commitment is terminated in whole or
in part pursuant to Sections 3.4, 8.2 or 8.3 hereof.
"SEC" shall have the meaning specified in Section 7.4 hereof.
"Senior Debt to EBITDA Ratio" shall mean, as of any time the same is to
be determined, the ratio of the aggregate outstanding principal amount of the
Company's Total Debt at such time to the Company's EBITDA for the four fiscal
quarters of the Company most recently ended.
"Senior Notes" shall mean those certain secured notes of the Company
(designated as the Series 1999 - A Notes) to be issued and sold to certain
institutional investors in an aggregate principal amount equal to Fifty Million
Dollars ($50,000,000) for which NationsBanc Montgomery Securities is acting as
private placement agent pursuant to the Terms Sheet.
"Set-off" shall have the meaning set forth in Section 10.13 hereof.
"Stock Proceeds" shall mean, in connection with any Permitted Acquisition
with respect to which all or any portion of the consideration is paid in shares
of the Company's Common Stock, an amount equal to the product obtained by
multiplying the number of shares issued in connection with the Permitted
Acquisition by the price per share reflected in the Company's financial
statements for the shares issued in the Permitted Acquisition.
"Subsidiary" shall mean collectively any corporation or other entity at
least a majority of the outstanding voting shares or other equity interests of
which is at the time owned directly or indirectly by the Company and/or its
Subsidiaries.
"Swing Line Commitment" shall have the meaning specified in Section 1.2
hereof.
"Swing Line Lender" shall mean Firstar, in its capacity as the provider
of the Swing Line Loans.
"Swing Line Loan" shall have the meaning specified in Section 1.1 hereof.
"Swing Line Note" shall have the meaning specified in Section 1.2 hereof.
"Tangible Net Worth" "shall mean, as of any date of determination, the
sum of (a) the stated amount of the capital stock of the Company plus (or minus
in the case of a deficit) (b) all additional paid in capital, surplus and
retained earnings of the Company, plus (c) the outstanding principal amount of
subordinated debt, if any, minus (i) the cost of shares of capital stock
(including common and preferred stock) of the Company held by the Company as
treasury stock and (ii) the net book value after deducting any reserves
applicable thereto, of goodwill, licenses, patents, copyrights, trademarks,
tradenames, and other intangibles.
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"Terms Sheet" shall mean the Summary of Proposed Terms submitted by
NationsBanc Montgomery Securities to the Company relating to the issuance and
sale of the Senior Notes designated as a Confidential Draft dated March 5, 1999,
a copy of which has previously been provided to the Agent.
"Total Debt" shall mean (without duplication) all consolidated
indebtedness for borrowed money of the Company and its Subsidiaries, and shall
include indebtedness for borrowed money created, assumed or guaranteed by the
Company either directly or indirectly, including the Senior Notes and all
amounts outstanding under this Agreement, including the aggregate principal
amount of Revolving Credit Loans and Swing Line Loans outstanding, the aggregate
face amount of outstanding L/Cs and the aggregate amount of unreimbursed
Reimbursement Obligations as of the date of determination.
"UCC" shall mean the Uniform Commercial Code as the same may from time to
time be in effect in the State of Wisconsin.
"Unused Fee Rate" shall mean, at any date, the applicable percentage in
the following table under the column "Unused Fee Rate" set forth opposite the
Senior Debt to EBITDA Ratio as of the most recently ended quarter for which
financial statements have been delivered to the Agent
Senior Debt to EBITDA Unused Fee Rate
< 2.50:1 .25%
=> 2.50:1 but < 3.00:1 .375%
=> 3.00:1 .50%
On the Test Date, the Agent shall (i) determine the Senior Debt to EBITDA
Ratio for the applicable period and (ii) promptly notify the Company and the
Banks of such determination and of any change in the Unused Fee Rate resulting
therefrom. Any such change in the Unused Fee Rate shall be effective as of the
date the Agent so notifies the Company and the Banks, and such new Unused Fee
Rate shall continue in effect until the effective date of the next quarterly
redetermination in accordance with the terms hereof; provided, however, that if
the Company is late in delivering such financial statements, and upon receipt of
such financial statements the Agent determines that a higher fee level is
applicable, then such new Unused Fee Rate (at said higher level) shall be
retroactively effective as of the related Test Date. Each determination of the
Senior Debt to EBITDA Ratio and Unused Fee Rate by the Agent in accordance with
the terms hereof shall be conclusive and binding on the Company and the Banks
absent manifest error. The Unused Fee Rate shall first be adjusted upon receipt
of the financial statements for the fiscal year ending August 31, 1999. From the
date hereof until the Unused Fee Rate is first adjusted pursuant hereto, the
Unused Fee Rate shall be three-eights of one percent (.375%).
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SECTION 10. MISCELLANEOUS.
Section 10.1. Holidays. If any principal of any of the Notes shall fall
due on a Saturday, Sunday or on another day which is a legal holiday for lenders
in the State of Wisconsin, interest at the rates such Notes bear for the period
prior to maturity shall continue to accrue on such principal from the stated due
date thereof to and including the next succeeding Business Day on which the same
is payable.
Section 10.2. No Waiver, Cumulative Remedies. No delay or failure on the
part of the Agent or the Banks in the exercise of any power or right shall
operate as a waiver thereof, nor as an acquiescence in any Default or Event of
Default nor preclude any other or further exercise thereof, or the exercise of
any other power or right, and the rights and remedies hereunder of the Agent and
the Banks are cumulative to, and not exclusive of, any rights or remedies which
any of them would otherwise have.
Section 10.3. Waivers, Modifications and Amendments. The Required Banks
and the Company may, from time to time, enter into written amendments,
supplements or modifications hereto for the purpose of adding provisions to any
Loan Document or for the purpose of changing in any manner the rights of the
Banks or of the Company thereunder, and the Required Banks may execute and
deliver to the Company a written instrument waiving, on such terms and
conditions as the Required Banks may specify in such instrument, any of the
requirements of any Loan Document or any Default or Event of Default and its
consequences; provided, however, that no amendment, modification, termination,
waiver or consent shall do any of the following unless the same shall be in
writing and signed by all Banks: (a) increase the Revolving Credit Commitment;
(b) reduce the amount of any payment of principal of or interest on any loan or
the Unused Fees payable to the Banks hereunder; (c) postpone any date fixed for
any payment of principal of or interest on any outstanding loan or the Unused
Fees payable to the Banks hereunder; (d) change the definition of "Required
Banks;" (e) amend this Section 10.3 or any other provision of this Agreement
requiring the consent or other action of the Required Banks or all of the Banks;
(f) release any guaranty; (g) release all or substantially all of the
Collateral; or (h) consent to the assignment or transfer by the Company of any
of its rights and obligations under this Agreement. In the case of any waiver,
the Company and the Banks shall be restored to their former position and rights
under the Loan Documents, and any Default or Event of Default waived shall be
deemed to be cured and not continuing. However, no waiver of a Default or Event
of Default shall extend to any subsequent or other Default or Event of Default,
or impair any right consequent thereon. No amendment, supplement, modification,
or waiver shall be effective except if in writing and duly executed by the
Required Banks or each Bank, as applicable, the Agent and the Company.
Section 10.4. Costs and Expenses. The Company agrees to pay on demand all
reasonable out-of-pocket costs and expenses of the Agent in connection with the
negotiation, preparation, execution, delivery, recording and/or filing and/or
release of this Agreement, the Notes and the Collateral Documents and the other
instruments and documents to be delivered hereunder or thereunder or in
connection with the transactions contemplated hereby or thereby or in connection
with any consents hereunder or thereunder or waivers or amendments hereto or
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thereto, including the fees and expenses of counsel for the Agent with respect
to all of the foregoing, and all recording, filing, title insurance or other
fees, costs and taxes incident to perfecting a lien upon the collateral security
for the Notes, and all reasonable costs and expenses (including reasonable
attorneys' fees), incurred by the Agent, any security trustee for the Banks or
any of the Banks in connection with a Default or the enforcement of this
Agreement, the Notes or the Collateral Documents and the other instruments and
documents to be delivered hereunder or thereunder. The Company agrees to
indemnify and save the Agent and the Banks and any security trustee for the
Banks harmless from any and all liabilities, losses, costs and expenses incurred
by the Banks in connection with any action, suit or proceeding brought against
the Banks or security trustee by any person which arises out of the transactions
contemplated or financed hereby or by the Notes or Collateral Documents or out
of any action or inaction by any of the Banks or any security trustee hereunder
or thereunder, except for such thereof as is caused by the gross negligence or
willful misconduct of the party indemnified. The provisions of this Section 10.4
and the protective provisions of Section 2 hereof shall survive payment of the
Notes and the termination of the Commitments hereunder, subject, in the case of
the protective provisions contained in Section 2 hereof, to the limitations set
forth therein.
Section 10.5. Survival of Representations. All representations and
warranties made herein or in the Collateral Documents or in certificates given
pursuant hereto shall survive the execution and delivery of this Agreement, the
Collateral Documents and the Notes, and shall continue in full force and effect
with respect to the date as of which they were made as long as any credit is in
use or available hereunder.
Section 10.6. Construction. The parties hereto acknowledge and agree that
this Agreement shall not be construed more favorably in favor of one than the
other based upon which party drafted the same, it being acknowledged that all
parties hereto contributed substantially to the negotiation and preparation of
this Agreement.
Section 10.7. Accounting Principles. All computations of compliance with
the terms hereof shall be made on the basis of generally accepted principles of
accounting applied in a manner consistent with those used in the preparation of
the audit report of the Company referred to in the first sentence of Section 5.3
hereof.
Section 10.8. Addresses for Notices. All communications provided for
herein shall be in writing and shall be deemed to have been given or made when
served personally or three days after being deposited in the United States of
America mail addressed, if to the Company, at 800 First Avenue South, Wisconsin
Rapids, Wisconsin 54495-8020, Attention: John Swendrowski; if to the Agent at
777 East Wisconsin Avenue, Milwaukee, Wisconsin 53202, Attention: Stephen E.
Carlton; or, if to any of the Banks, at their addresses set forth on the
signature pages hereto, or at such other address as shall be designated by any
party hereto in a written notice given to each party pursuant to this Section
10.8.
Section 10.9. Headings. Article and Section headings used in this
Agreement are for convenience of reference only and are not a part of this
Agreement for any other purpose.
35
<PAGE>
Section 10.10. Severability of Provisions. Any provision of this
Agreement which is unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction. All rights, remedies
and powers provided in this Agreement and the Notes may be exercised only to the
extent that the exercise thereof does not violate any applicable mandatory
provisions of law, and all the provisions of this Agreement and the Notes are
intended to be subject to all applicable mandatory provisions of law which may
be controlling and to be limited to the extent necessary so that they will not
render this Agreement or the Notes invalid or unenforceable.
Section 10.11. Counterparts. This Agreement may be executed in any number
of counterparts, and by different parties hereto on separate counterparts, and
all such counterparts taken together shall be deemed to constitute one and the
same instrument.
Section 10.12. Binding Nature, Governing Law, Etc. This Agreement shall
be binding upon the Company and its successors and assigns, and shall inure to
the benefit of the Agent and each of the Banks and the benefit of their
respective successors and assigns, including any subsequent holder of an
interest in the Notes. This Agreement, together with the Notes and Collateral
Documents constitutes the entire understanding of the parties with respect to
the subject matter hereof and any prior agreements, whether written or oral,
with respect thereto are superseded hereby except for prior understandings
related to fees payable to the Banks. This Agreement, the Loan Documents and the
rights and obligations of the parties thereto shall be governed by, and
construed and interpreted in accordance with the internal laws of the State of
Wisconsin. Venue for the settlement of disputes under this Agreement shall be in
the United States District Court for the Eastern District of Wisconsin or the
Circuit Court of Milwaukee County, Wisconsin. The Company consents to the
exercise of jurisdiction by these courts and the vesting of venue therein. THE
COMPANY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS TO
ALL SUCH SERVICE OF PROCESS MADE BY MAIL OR BY MESSENGER DIRECTED TO IT AT THE
ADDRESS SPECIFIED IN SECTION 10.8 HEREOF.
Section 10.13. Rights of Banks.
(a) The Company authorizes the Agent to disclose to any Bank any
financial or other information pertaining to the Company.
(b) If any Bank (each, a "Replaceable Bank") requests compensation
pursuant to Sections 2.7, 2.8, 2.9, 2.10 or 3.7 hereof at a rate
materially in excess of that requested by any other Bank, the Company
may, with the consent of the Agent, which consent shall not be
unreasonably withheld, propose that another lender (a "Replacement Bank")
which lender may be an existing Bank, be substituted for and replace the
Replaceable Bank for purposes of this Agreement. In the event a
Replacement Bank is so substituted for the Replaceable Bank, then such
substitution shall take place on a date acceptable to the Company, the
Replaceable Bank and the Replacement Bank, as the case may be, but in no
event later than the latest maturity date of any financial accommodations
then
36
<PAGE>
outstanding hereunder, and such substitution shall take place through the
execution of such instruments and documents as are required under Section
10.14(a) and (b) hereof. All expenses of the Bank incurred in connection
with the foregoing shall be paid by the Company.
(c) In the event the Bank or any Participant shall receive and
retain any payment, whether by set-off or application of deposit balances
or otherwise ("Set-off"), on or in respect of any loan or other
obligation outstanding under this Agreement or the other Loan Documents
in excess of its ratable share of payments on all such loans and other
Obligations then outstanding, then such Bank shall purchase for cash at
face value, but without recourse, ratably from each of the other Banks
such amount of such loans and other obligations held by each such other
party (or interest therein) as shall be necessary to cause such Bank to
share such excess payment ratably with all the other Banks; provided,
however, that if any such purchase is made by any Bank, and if such
excess payment or part thereof is thereafter recovered from such
purchasing party, the related purchases from the other Banks shall be
rescinded ratably and the purchase price restored as to the portion of
such excess payment so recovered, but without interest.
Section 10.14. Addition of Banks. Any Bank, at any time upon at least two
(2) Business Days prior written notice to the Agent and the Company, may assign
all or a portion (provided such portion is not less than Five Million Dollars
($5,000,000) in the aggregate) of such Bank's Notes and loans to a domestic or
foreign bank (having a branch office in the United States of America), an
insurance company or other financial institution (an "Applicant") on any date
(the "Adjustment Date") selected by such Bank, but only so long as the Company
and the Agent shall have provided their prior written approval of such proposed
Applicant, which prior written approval will not be unreasonably withheld.
Notwithstanding the foregoing, no such consent of the Company shall be required
subsequent to thirty (30) days after the occurrence and during the continuance
of an Event of Default. Upon receipt of such approval and to confirm the status
of each additional Bank as a party to this Agreement and to evidence the
assignment in accordance herewith:
(a) The Agent, the Company, the assigning bank and such Applicant
shall, on or before the Adjustment Date, execute and deliver to the Agent
an Assignment Certificate in substantially the form of Exhibit 10.14 (an
"Assignment Certificate");
(b) The assigning bank or the Applicant shall pay the Agent a
processing fee of Three Thousand Five Hundred Dollars ($3,500);
(c) The Company will execute and deliver to the Agent, for
delivery by the Agent in accordance with the terms of the Assignment
Certificate, (i) a new Revolving Credit Note payable to the order of the
Applicant in amounts corresponding to the Percentage of the Revolving
Credit Commitment acquired by such Applicant, and (ii) a new Revolving
Credit Note payable to the order of the assigning Bank in an amount
corresponding to the retained Percentage of the Revolving Credit
Commitment. Such new Notes shall be in aggregate principal amounts equal
to the aggregate principal amounts of the Note to be
37
<PAGE>
replaced, shall be dated the effective date of such assignment and shall
otherwise be in the form of the Revolving Credit Note to be replaced
thereby. Such new Notes shall be issued in substitution for, but not in
satisfaction or payment of, the Notes being replaced thereby and such new
Revolving Credit Note shall be treated as a Revolving Credit Note for
purposes of this Agreement.
Upon the execution and delivery of such Assignment Certificate and such
new Notes and the payment of the processing fee: (a) this Agreement shall be
deemed to be amended to the extent, and only to the extent, necessary to reflect
the addition of such additional Bank and the resulting adjustment of the
Percentages arising therefrom; (b) the assigning Bank shall be relieved of all
obligations hereunder to the extent of a reduction of the assigning Bank's
Percentage; and (c) the additional Bank shall become a party hereto and shall be
entitled to all rights, benefits and privileges accorded to a Bank herein and in
each other Loan Document or other document or instrument executed pursuant
hereto and subject to all obligations of a Bank hereunder, including, without
limitation, the right to approve or disapprove actions which, in accordance with
the terms hereof, require the approval of the Required Banks or all Banks.
Promptly after the execution of any Assignment Certificate, a copy thereof shall
be delivered by the Agent to each Bank and to the Company. In order to
facilitate the addition of additional Banks hereto, the Company and the Banks
shall cooperate fully with the Agent in connection therewith and shall provide
all reasonable assistance requested by the Agent relating thereto, including,
without limitation, the furnishing of such written materials and financial
information regarding the Company as the Agent may reasonably request, the
execution of such documents as the Agent may reasonably request with respect
thereto, and the participation by officers of the Company, and the Banks in a
meeting or teleconference call with any Applicant upon the request of the Agent.
Section 10.15. WAIVER OF JURY TRIAL. THE COMPANY AND THE BANKS HEREBY
IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY LOAN DOCUMENT OR
ANY INSTRUMENT OR DOCUMENT DELIVERED HEREUNDER.
10.16. Confidentiality. Each of the Agent and the Banks agrees to keep
confidential all non-public information provided to it by the Company or any
Subsidiary pursuant to this Agreement that is designated by the Company or any
Subsidiary as confidential; provided; however, that nothing contained herein
shall prevent the Agent or any Bank from disclosing any such information (a) to
the Agent, any other Bank or any affiliate of any Bank, (b) to any Applicant or
prospective Applicant which agrees to comply with the provisions of this
Section, (c) any of its employees, directors, agents, attorneys, accountants and
other professional advisors, (d) upon request or demand of any governmental
authority having jurisdiction over it, (e) in response to any order of any court
or other governmental authority or as may otherwise be required pursuant to any
law, rule or regulation, (f) if requested or required to do so in connection
with any litigation or similar proceeding, (g) which has been publicly disclosed
other than in breach of this Section, or (h) in connection with the exercise of
any remedy hereunder or under any other Loan Document.
38
<PAGE>
SECTION 11. THE AGENT.
Section 11.1. Appointment and Authorization. Each Bank hereby irrevocably
appoints Firstar as Agent for the Banks under this Agreement and hereby
authorizes the Agent to take such action as Agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Agent by the terms
hereof, together with such powers as are reasonably incident thereto. The
relationship between the Agent and the Banks is and shall be that of Agent and
principal only, and nothing contained in this Agreement or any other Loan
Document shall be construed to constitute the Agent as a trustee or fiduciary
for any Bank or the Company.
Section 11.2. Agent and Affiliates. In its capacity as a Bank hereunder,
the Agent shall have the same rights and powers under this Agreement as any
other Bank and may exercise or refrain from exercising the same as though it
were not an Agent, and the agent and its affiliates may accept deposits from,
lend money to, and generally engage in any kind of business with the Company or
any Subsidiary or Affiliate of the Company as if it were not the Agent
hereunder. The terms Bank and Banks as used in the Loan Documents, unless the
context otherwise clearly requires, include the Agent in its individual capacity
as a Bank.
Section 11.3. Action by Agent. Except for action expressly required of
the Agent hereunder, the Agent shall in all cases be fully justified in failing
or refusing to act hereunder unless the Agent shall be indemnified to its
reasonable satisfaction by the Banks against any and all liability and expense
which may be incurred by it by reason of taking or continuing to take any such
action. In all cases in which this Agreement does not require the Agent to take
certain actions, the Agent shall be fully justified in using its discretion in
failing to take or in taking any action hereunder. Without limiting the
generality of the foregoing, the agent shall not be required to take any action
with respect to any Event of Default, except as expressly provided in Section
8.2. The Agent shall be acting as an independent contractor hereunder and
nothing herein shall be deemed to impose on the Agent any fiduciary obligations
to the Banks or the Company.
Section 11.4. Consultation with Experts. The Agent may consult with legal
counsel, independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken by it in good
faith in accordance with the advice of such counsel, accountants or experts.
Section 11.5. Liability of Agent. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable for any action taken or
not taken by it in connection herewith (i) with the consent or at the request of
the Required Banks or (ii) in the absence of its own gross negligence or willful
misconduct. Neither the Agent nor any of its directors, officers, agents or
employees shall be responsible for or have any duty to ascertain, inquire into
or verify (i) any statement, warranty or representation made in connection with
this Agreement or any borrowing hereunder; (ii) the performance or observance of
any of the covenants or agreements of the Borrowers; (iii) the satisfaction of
any condition specified in Section 6, except receipt of items required to be
delivered to the Agent; or (iv) the validity, effectiveness or genuineness of
this Agreement, the Notes or any other instrument or writing furnished in
connection herewith. The
39
<PAGE>
Agent shall not incur any liability by acting in reliance upon any notice,
consent, certificate, request or statement (whether written or oral) or other
document believed by it to be genuine or to be signed or sent by the proper
party or parties and, in the case of legal matters, in relying on the advice of
counsel (including counsel for the Company). The Agent may treat the Banks that
are named herein as the holders of the Notes and the indebtedness contemplated
herein unless and until the Agent receives notice of the assignment of the Note
and the indebtedness held by a Bank hereunder pursuant to an assignment
contemplated by Section 10.14 hereof.
Section 11.6. Indemnification. Each Bank shall, ratably in accordance
with its Percentage, indemnify the Agent (to the extent not reimbursed by the
Company) against any cost, expenses (including reasonable counsels' fees and
disbursements) , claims, demands, actions, losses, obligations, damages,
penalties, judgments, suits or liability (except such as result from the Agent's
gross negligence or willful misconduct) that the Agent may suffer or incur in
connection with this Agreement or any action taken or omitted by the Agent
hereunder.
Section 11.7. Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank, and based
on such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Bank also
acknowledges that it will, independently and without reliance upon the Agent or
any other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking any action under this Agreement.
Section 11.8. Resignation or Removal of Agent and Successor Agent.
Subject to the appointment and acceptance of a successor Agent as provided
below, the Agent may resign at any time by giving written notice thereof to the
Banks and the Company at any time. Upon any such resignation of the Agent, the
Required Banks shall have the right to appoint, with the consent of the Company,
a successor Agent. If no successor Agent shall have been so appointed by the
Required Banks, and shall have accepted such appointment, within thirty (30)
days after, as the case may be, the retiring Agent's giving of notice of
resignation, then the retiring Agent may, on behalf of the Banks, appoint a
successor Agent, which shall be a commercial bank organized under the laws of
the United States of America or of any state thereof that has a combined capital
and surplus of at least Two Hundred Million Dollars ($200,000,000). Upon the
acceptance of its appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the rights
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations hereunder. After any retiring Agent's
resignation hereunder as Agent, the provisions of this Section 11 shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent.
Section 11.9. Payments. Unless the Agent shall have been notified by a
Bank prior to the date on which such bank is scheduled to make payments to the
Agent of the proceeds of a Loan (which notice shall be effective upon receipt)
that such Bank does not intend to make such payment, the Agent may assume that
such Bank has made such payment when due and the Agent may in reliance upon such
assumption (but shall not be required to) make available to the Company the
proceeds of the Loan to be made by such Bank and, if any Bank has not in fact
40
<PAGE>
made such payment to the Agent, such Bank shall, on demand, pay to the Agent the
amount made available to the Company attributable to such Bank together with
interest thereon in respect of each day during the period commencing on the date
such amount was made available to the Company and ending on (but excluding) the
date such Bank pays such amount to the Agent at a rate per annum equal to the
Federal Funds Rate. If such amount is not received from such Bank by the Agent
immediately upon demand, the Company will, on demand, repay to the Agent the
proceeds of the Loan attributable to such Bank with interest thereon at a rate
per annum equal to the interest rate applicable to the relevant Loan, but
without such payment being considered a payment or prepayment of a Loan, so that
the Company will have no liability under Section 2.10 hereof with respect to
such payment. If any Bank shall fail to fund a Loan which it is obligated
hereunder to fund, such Bank shall pay the reasonable attorneys' fees incurred
by the Company in enforcing its right to borrow such a Loan. However, if it is
determined that such Bank was not obligated to fund such Loan, the Company shall
pay to such Bank any reasonable attorneys' fees incurred by such Bank in
defending such an action.
[Signatures on next page]
41
<PAGE>
Upon your acceptance hereof in the manner hereinafter set forth, this
Agreement shall be a contract between us for the purposes hereinabove set forth.
Dated as of March 15, 1999.
NORTHLAND CRANBERRIES, INC.
By: /s/John A. Pazurek
John A. Pazurek, Chief Financial Officer,
Vice President-Finance and Treasurer
Accepted and agreed to at Milwaukee, Wisconsin as of the day and year
last above written.
FIRSTAR BANK MILWAUKEE, N. A.
By: /s/
Its:
Percentage: 21.42857143%
NORWEST BANK MINNESOTA, N.A.
By: /s/
Its:
Percentage: 17.85714286%
Address:
Sixth and Marquette
Minneapolis, Minnesota 55479-0091
Attention: Kenneth E. LaChance,
Portfolio Banking Officer
42
<PAGE>
MERCANTILE BANK NATIONAL ASSOCIATION
By: /s/
Its:
Percentage: 14.28571429%
Address:
Mercantile Tower
721 Locust Street, Tram 12-3
St. Louis, Missouri 63101
Attention: John Stichnoth, Assistant
Vice President
U.S. BANK NATIONAL ASSOCIATION
By: /s/
Its:
Percentage: 14.28571429%
Address:
201 West Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attention: John P. Hankerd
BANK OF AMERICA, NATIONAL TRUST & SAVINGS
ASSOCIATION
By: /s/
Its:
Percentage: 10.71428571%
Address:
231 South LaSalle Street
Chicago, Illinois 606097
Attention: Edward L. Cooper III,
Vice President
43
<PAGE>
ST. FRANCIS BANK, F.S.B.
By: /s/
Its:
Percentage: 7.14285714%
Address:
13400 Bishops Lane, Suite 190
Brookfield, Wisconsin 53005-6203
Attention: John Tans, Vice President/
Commercial Banking
M&I MARSHALL & ILSLEY BANK
By: /s/
Its:
Percentage: 7.14285714%
Address:
770 North Water Street
Milwaukee, Wisconsin 53202
Attention: Dennis D. Finnigan, Vice
President
BANKBOSTON, N.A.
By: /s/
Its:
Percentage: 7.14285714%
Address:
100 Federal Street
MA BOS 01-09-06
Boston, Massachusetts 02110
Attention:Paul R. Crimlisk, Vice
President
44
<PAGE>
LIST OF EXHIBITS
Exhibit 1.1 Form of Revolving Credit Note
Exhibit 1.2 Form of Swing Line Note
Exhibit 1.5 Form of L/C Agreement
Exhibit 7.4 Form of Compliance Certificate
Exhibit 10.14 Form of Assignment Certificate
<PAGE>
LIST OF SCHEDULES
Schedule 4.1(a) Company Real Property and Improvements
Schedule 4.1(b) Company Marshes
Schedule 5.4 Litigation; Taxes; Consents
Schedule 7.11 Existing Liens
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS OF NORTHLAND CRANBERRIES, INC. AS OF AND FOR
THE 6 MONTHS ENDED FEBRUARY 28, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1998
<PERIOD-END> FEB-28-1999
<CASH> 972
<SECURITIES> 0
<RECEIVABLES> 30,104
<ALLOWANCES> 0
<INVENTORY> 93,492
<CURRENT-ASSETS> 131,202
<PP&E> 196,421
<DEPRECIATION> 33,481
<TOTAL-ASSETS> 329,191
<CURRENT-LIABILITIES> 33,553
<BONDS> 131,631
0
0
<COMMON> 198
<OTHER-SE> 145,074
<TOTAL-LIABILITY-AND-EQUITY> 329,191
<SALES> 88,246
<TOTAL-REVENUES> 89,337
<CGS> 55,234
<TOTAL-COSTS> 30,470
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,290
<INCOME-PRETAX> 343
<INCOME-TAX> 155
<INCOME-CONTINUING> 188
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 188
<EPS-PRIMARY> 0.01
<EPS-DILUTED> 0.01
</TABLE>
