FORBEARANCE AGREEMENT
THIS FORBEARANCE AGREEMENT (the "Agreement") is made this 13th day of
December, 2000, by and among NORTHLAND CRANBERRIES, INC., a Wisconsin
corporation, (the "Company"), NCI FOODS, LLC, a Wisconsin limited liability
company (the "Guarantor"), various financial institutions which are signatories
hereto (together with their respective successors and assigns, collectively, the
"Banks") and FIRSTAR BANK, N. A., a national banking association formerly known
as Firstar Bank Milwaukee, N. A., for itself and as Agent (the "Agent").
Capitalized terms used herein and not otherwise defined herein have the meanings
assigned to such terms in that certain Credit Agreement by and among the
Company, the Banks and the Agent, dated as of March 15, 1999, as amended as of
May 1, 1999, December 29, 1999, April 13, 2000 and July 17, 2000 (the "Credit
Agreement").
R E C I T A L S:
WHEREAS, the Company is obligated to the Banks pursuant to (i) the
Credit Agreement, (ii) the Revolving Credit Notes and (iii) various other
documents executed by the Company in favor of the Banks and/or the Agent (the
foregoing and any and all documents and agreements evidencing and/or securing
any debts, obligations and liabilities of the Company to any of the Banks or the
Agent heretofore, now or hereafter made, incurred, or created, arising out of
credit previously granted, credit contemporaneously granted, or granted in the
future, whether for principal, interest, fees or any other amount shall be
hereinafter referred to as the "Obligations"); and
WHEREAS, the Obligations are secured by, among other things, the
personal property described in that certain Security Agreement dated as of March
15, 1999, executed by the Company in favor of the Agent (the "Company Security
Agreement") and perfected by various financing statements executed by the
Company and filed with the appropriate filing offices as described on Exhibit A
attached hereto (the property described in the Company Security Agreement and
the financing statements on Exhibit A are hereinafter collectively referred to
as the "Company Collateral"); and
WHEREAS, the Obligations are further secured by, among other things,
the fixtures and real properties described in those certain Real Estate
Mortgages and those certain Real Estate Mortgages, Security Agreements and
Financing Statements (collectively, the "Company Mortgages") granted by the
Company in favor of the Agent, each dated as of March 15, 1999, unless otherwise
stated on Exhibit B attached hereto, and recorded with the appropriate recording
offices as described on Exhibit B (the "Company Real Estate Collateral"); and
WHEREAS, the Obligations are further secured by, among other things,
the intellectual property described in that certain Notice of Grant of Security
Interest in Trademarks granted by the Company in favor of the Agent (the
"Company IP Grant"), and perfected by (i) financing statements executed by the
Company and filed with the appropriate filing office as described on Exhibit A
and (ii) recordation with the United States Patent and Trademark Office on April
8, 1999, at Reel 1882, Frame 0794 (the intellectual property described in the
Company IP Grant
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and the financing statements on Exhibit A are hereinafter collectively referred
to as the "Company Trademark Collateral"); and
WHEREAS, the Obligations are further secured by, among other things,
the personal property described in that certain Collateral Pledge Agreement
dated as of April 13, 2000, granted by the Company in favor of the Agent (the
"Collateral Pledge Agreement") (the personal property described in the
Collateral Pledge Agreement is hereinafter referred to as the "Cliffstar
Collateral"); and
WHEREAS, the Obligations have been guaranteed pursuant to a continuing
Guaranty dated March 15, 1999, executed by Minot Food Packers, Inc. ("Minot"),
in favor of the Banks and the Agent (the "Minot Guaranty"); and
WHEREAS, the Minot Guaranty and the Credit Agreement are secured by,
among other things, (i) the personal property described in that certain Security
Agreement dated March 15, 1999, granted by Minot in favor of the Agent (the
"Minot Security Agreement") and perfected by various financing statements
executed by Minot and filed with the appropriate filing offices as described on
Exhibit C attached hereto (the property described in the Minot Security
Agreement and the financing statements on Exhibit C are hereinafter collectively
referred to as the "Minot Collateral"), and (ii) the intellectual property
described in that certain Notice of Grant of Security Interest in Trademarks
granted by Minot in favor of the Agent (the "Minot IP Grant") and perfected by
(a) financing statements executed by Minot and filed with the appropriate filing
office as described on Exhibit C and (b) recordation with the United States
Patent and Trademark Office on April 8, 1999, at Reel 1882, Frame 0785 (the
intellectual property described in the Minot IP Grant and the financing
statements on Exhibit C are hereinafter collectively referred to as the "Minot
Trademark Collateral"); and
WHEREAS, the Credit Agreement is further secured by, among other
things, the fixtures and real property described in that certain Real Estate
Mortgage Security Agreement and Financing Statement dated March 15, 1999 ("the
Minot Mortgage"), granted by Minot in favor of the Agent and recorded on April
1, 1999, at Book 2292, Page 131 with the Cumberland County, New Jersey, Register
of Deeds Office (the "Minot Real Estate Collateral"). The Minot Collateral, the
Minot Real Estate Collateral and the Minot Trademark Collateral are hereinafter
collectively referred to as the "Minot Property"; and
WHEREAS, Minot has merged into the Company by virtue of the Articles of
Merger filed on June 28, 1999, with the New Jersey State Treasury (the
"Merger"); and
WHEREAS, by virtue of the Merger, the Minot Property has become
property of the Company and the Agent has a continuing validly perfected
security interest in the Minot Property, and, accordingly, as used in this
Agreement, the term "Collateral" shall include the Company Collateral and the
Minot Collateral, the term "Real Estate Collateral" shall include the Company
Real Estate Collateral and the Minot Real Estate Collateral, and the term
"Trademark Collateral" shall include the Company Trademark Collateral and the
Minot Trademark Collateral, the term "Security Agreement" shall include the
Company Security Agreement and the Minot Security Agreement, the term
"Mortgages" shall include the Company Mortgages and
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the Minot Mortgage, and the term "IP Grant" shall include the Company IP Grant
and the Minot IP Grant; and
WHEREAS, in connection with the sale of the Company's "Private Label
Juice Business" to Cliffstar Corporation ("Cliffstar") and various other sales
of parcels of real estate by the Company, various partial releases of financing
statements and partial satisfactions of mortgages were provided to the Company
as described on Exhibit D. By virtue of such partial releases and satisfactions,
the references to "Collateral," "Real Estate Collateral" and "Trademark
Collateral" do not include the property which was the subject of such partial
releases and satisfactions; and
WHEREAS, the Obligations have been guaranteed pursuant to that certain
Guaranty dated as of May 1, 1999, executed by the Guarantor in favor of the
Banks and the Agent (the "Guaranty"); and
WHEREAS, the Guaranty is secured by, among other things, the
intellectual property described in that certain Grant of Security Interest in
Trademarks dated as of May 1, 1999, granted by Guarantor in favor of the Agent
(the "Guarantor IP Grant") and perfected by (i) a financing statement executed
by Guarantor and filed on September 8, 1999, with the Wisconsin Department of
Financial Institutions as Document No. 01879666 (the "Guarantor Financing
Statement") and (ii) recordation of that certain Notice of Grant of Security
Interest in Trademark (the "Guarantor Trademark Notice") with the United States
Patent and Trademark Office (the property described in the Guarantor IP Grant,
the Guarantor Financing Statement and the Guarantor Trademark Notice are
hereinafter collectively referred to as the "Guarantor Trademark Collateral");
and
WHEREAS, by virtue of the occurrence of certain Events of Default under
the Credit Agreement, including those described in the Agent's letter to the
Company dated August 23, 2000, and the Company's failure to pay interest due on
September 25, 2000, and each day that interest became due thereafter through the
date of this Agreement, together with the failure to pay principal that became
due on November 30, 2000 (collectively, the "Current Defaults"), the Company is
in default of the Obligations and the Obligations are, at the option of the
Banks and the Agent, immediately due and payable; and
WHEREAS, the Company has requested that the Banks and the Agent forbear
from taking action with respect to the Current Defaults in order to allow the
Company time to refinance or repay the Obligations; and
WHEREAS, the Company has provided the Banks and the Agent with certain
information regarding the Company; and
WHEREAS, in reliance upon the representations of the Company, the Banks
and the Agent, subject to the terms and conditions of this Agreement, have
agreed to forbear for the period through and including February 12, 2001 (the
"Forbearance Period"), from pursuing their remedies to collect payment of the
full amount due pursuant to the Obligations in order to allow the Company time
to refinance or otherwise repay the Obligations.
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NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
A G R E E M E N T
1. Statement of Indebtedness. The Company acknowledges and agrees that
pursuant to the Obligations the Company owes the Banks (i) the principal amount
of One Hundred Fifty Five Million Dollars ($155,000,000) on the Revolving Credit
Notes as of the date hereof, (ii) accrued and unpaid interest under the
Revolving Credit Notes as of the date hereof; (iii) interest accruing in
accordance with the Obligations and this Agreement subsequent to the date
hereof; and (iv) all fees, costs and expenses (including attorneys' fees) of the
Banks and the Agent required to be paid pursuant to the Obligations and this
Agreement (collectively, the "Indebtedness"). The Company and the Guarantor
agree that the Obligations, the Indebtedness, the Guaranty and any document to
which the Company or the Guarantor is a party have not been released or
forgiven, that they are a legal, valid and binding obligations of the Company
and the Guarantor, that they are payable and/or enforceable in accordance with
their respective terms, they are due and payable as of the date of this
Agreement, and none are subject to any defenses, counterclaims or setoffs
whatsoever. The Company and the Guarantor agree that nothing contained in this
Agreement shall (i) nullify, extinguish, satisfy, release, discharge, constitute
a novation or otherwise affect any of the Company's or the Guarantor's
respective obligations to the Banks, (ii) constitute a waiver of any default or
(iii) vary or waive any of the terms of the Obligations or the Guaranty.
2. Security Interests of the Banks. The Company and the Guarantor
acknowledge and agree that the Security Agreement, the Mortgages, the IP Grant,
the Guarantor IP Grant and the Collateral Pledge Agreement (collectively, the
"Collateral Documents") are legal, valid and binding obligations of the Company
and the Guarantor enforceable in accordance with their respective terms and the
Banks and the Agent have a legal, valid, binding, perfected and enforceable
security interest and lien, valid against all creditors of and against all
purchasers from the Company and the Guarantor (except to the extent otherwise
provided in the Wisconsin Uniform Commercial Code with respect to buyers in the
ordinary course of business), in the Collateral, the Real Estate Collateral, the
Trademark Collateral, the Cliffstar Collateral and the Guarantor Trademark
Collateral securing payment of the Indebtedness, and the Collateral, the Real
Estate Collateral, the Trademark Collateral, the Cliffstar Collateral and the
Guarantor Trademark Collateral are free and clear of all liens whatsoever, other
than the lien of the Banks, the Agent and the Permitted Liens. No indenture,
mortgage, security agreement, financing statement, equivalent security or lien
instrument or continuation statement covering all or any part of the Collateral,
the Real Estate Collateral, the Trademark Collateral, the Cliffstar Collateral
or the Guarantor Trademark Collateral is recorded or on file with any public
office except those in favor of the Banks, the Agent or a holder of a Permitted
Lien.
3. Guaranty. The Guarantor acknowledges and agrees that the Guaranty
has not been revoked, released, discharged or forgiven, and is a legal, valid,
binding obligation of the Guarantor enforceable against the Guarantor in
accordance with its terms, and is not subject to
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any defenses, counterclaims or setoffs whatsoever. The Guarantor hereby
acknowledges and consents to and agrees to the terms and provisions of this
Agreement. Nothing contained herein shall revoke, release, discharge or forgive
the obligations of the Guarantor pursuant to the Guaranty.
4. Conditions Precedent. This Agreement shall become effective upon
execution of this Agreement by all parties hereto and the Agent's receipt of the
following:
(a) An executed mortgage in the form of Exhibit E attached
hereto as to the Company's receiving station located in Portland, New
York;
(b) An opinion of Foley & Lardner as to the matters identified
on Exhibit F attached hereto; and
(c) an executed amendment to Mortgage in the form of Exhibit G
attached hereto.
From and after the Agent's receipt of the mortgage described in (a) above (the
"Additional Mortgage"), the term "Mortgages" as used herein shall also include
the Additional Mortgage.
5. Consideration for Forbearance. In consideration of the Banks' and
the Agent's agreement to forbear from taking certain actions during the
Forbearance Period, the Company agrees that:
(a) Upon receipt, but not later than December 22, 2000, the
Company shall provide the Agent with an executed copy of an agreement
between The Equitable Life Assurance Society of the United States
("Equitable") and the Company, in form and substance satisfactory to
the Banks and the Agent in their sole discretion, providing that during
the Forbearance Period Equitable (i) will defer all payments of
principal and interest which are due or which become due and owing to
it from the Company, (ii) will not take any action to foreclose its
mortgages on the Company's assets, and (iii) will not accept a
surrender or transfer to it of all or any part of its collateral
including by way of acceptance of a deed in lien of foreclosure; and
(b) Upon receipt, but not later than December 22, 2000, the
Company shall provide the Agent with a complete copy of an appraisal of
the Company's intangible property including its trademarks and
tradenames prepared by Houlihan, Lokey, Howard & Zukin ("Houlihan"),
together with copies of all materials provided by the Company to
Houlihan and all work papers of Houlihan prepared in connection
therewith; and
(c) Upon receipt, but not later than December 22, 2000, the
Company shall provide the Agent with executed copies of Waivers of
Liens substantially in the form of Exhibit H-1 attached hereto as to
the warehouse and/or processors listed on Exhibit H-2 attached hereto
and in the form of Exhibit H-3 attached hereto as to the landlords
listed on Exhibit H-4; and
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(d) Within three (3) business day of the Company's receipt
thereof, the Company shall provide the Agent with such UCC-1 financing
statements with respect to the Banks' collateral as are requested by
the Agent, each executed by the Company; and
(e) Upon receipt, the Company shall provide the Agent with
unedited copies of all proposal letters or other writings related to
the refinancing of the Obligations, the sale of any assets, or the
infusion of new equity; and
(f) Upon receipt, but no later than December 22, 2000, the
Company shall provide the Agent with a complete copy of an appraisal of
the Company's fixed assets including its real property, plants and
equipment prepared by Hilco Trading Co., Inc. ("Hilco"), together with
copies of all materials provided by the Company to Hilco and all work
papers of Hilco prepared in connection therewith; and
(g) No later than one (1) business day following the date this
Agreement becomes effective, the Company shall deposit in Account
Number 754861755 at Firstar Bank, N. A., an account under the sole
custody and control of the Agent, acting for itself and as Agent for
the Banks (the "Collateral Account"), all funds in the Company's Bank
Account Numbers 1129 957, 8026 061, 1137 834 and 1139 178 at Wood
County National Bank (the "Old Disbursement Accounts"), and in any
other accounts other than Payroll Accounts (as hereinafter defined) and
shall make no further deposits of any kind into such accounts at Wood
County National Bank or any other account other than the Collateral
Account. In addition, all payments received by the Company or the
Guarantor, including, without limitation, all proceeds of the
Collateral, the Real Estate Collateral, the Trademark Collateral, the
Guarantor Trademark Collateral, or the Cliffstar Collateral
(collectively, the "Proceeds"), shall, upon receipt, be immediately
endorsed for deposit in the Collateral Account and deposited in such
account in the same form as received by the Company. Until so
deposited, the Company shall hold all such payments and Proceeds in
trust for and as the property of the Agent and shall not commingle such
payments and Proceeds with any of its other funds or property. The
Company acknowledges that it does not have any right, title or interest
in and to the Collateral Account or any amounts at any time in such
account. Amounts deposited in the Collateral Account shall not bear
interest and shall not be subject to withdrawal by the Company, except
after full payment and discharge of all of the Obligations and
termination of all related credit facilities. The Company shall have no
right to make or countermand withdrawals from the Collateral Account.
The Company hereby pledges to and grants the Agent a security interest
in all funds on deposit in the Collateral Account from time to time and
all proceeds thereof to secure payment of all of the Obligations
whether now existing or hereafter arising; and
(h) Except with respect to the Company's established accounts
for payment of salaries, wage and related payroll taxes and other
deductions (the "Payroll Accounts"), the Company shall as soon as
reasonably practicable establish its sole disbursement accounts at
Firstar Bank, N. A. (the "Disbursement Accounts") and as soon as checks
for such accounts are available no further checks shall be issued from
the Old Disbursement Accounts. Until the conclusion of the Forbearance
Period or the occurrence of an Event
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of Default hereunder, upon final payment of checks, instruments or
other items received in the Collateral Account which are the proceeds
of (i) the Company's accounts receivable, (ii) the proceeds of the
Cliffstar Collateral to the extent such proceeds are regularly
scheduled payments of principal and interest on the note subject to the
Collateral Pledge Agreement, (iii) tax refunds, or (iv) direct payments
to the Company by the Secretary of Agriculture from the funds of the
Commodity Credit Corporation pursuant to the Agriculture, Rural
Development, Food and Drug Administration, and Related Agencies
Appropriations Act, 2001, Pub. L. No. 106-387 (collectively, the
"Available Proceeds"), the Agent shall, at the direction of the
Company, transmit such funds to the Old Disbursement Accounts (but only
until such time as the New Disbursement Accounts have been established
and there are no longer any outstanding checks from the Old
Disbursement Accounts), the New Disbursement Accounts and Payroll
Accounts, but only to the extent necessary to pay checks, drafts or
other withdrawals which have been presented for payment against such
accounts and only to the extent collected funds in the Collateral
Account which are Available Proceeds are available within the time
allowed by law to honor items presented for payment. Other than the
Available Proceeds, any and all Proceeds deposited in the Collateral
Account shall be applied as a permanent reduction of the principal
amount of the Indebtedness and Obligations; and
(i) On or before December 15, 2000, the Company shall pay to
the Agent (i) all of the reasonable legal fees and out-of-pocket
expenses incurred through the date hereof by the Banks and the Agent in
connection with this Agreement and the Obligations and invoiced on or
before December 12, 2000, and (ii) Fourteen Thousand Three Hundred
Eighty Two Dollars ($14,382), the costs and expenses paid by the Agent
in connection with the field audit recently conducted at the Company in
August, 2000, by auditors retained by the Agent; and
(j) During the Forbearance Period:
(i) The Company shall pay all amounts due employees
for wages, salary, and benefits together with state and
federal taxes (including, without limitation, all sales,
withholding and social security taxes) when due;
(ii) No later than each Thursday, the Company shall
provide the Agent with (a) weekly cash flow projections, which
projections shall forecast a minimum of four (4) weeks, (b)
actual results for the preceding week and (c) a variance
report comparing actual and projected results for the
preceding week, including an explanation of the reasons for
such variance;
(iii) Within ten (10) business days following the
last calendar day of each month, the Company shall provide the
Agent with a certificate from the President or Vice
President-Finance in sufficient detail demonstrating that the
Company has complied with all provisions of this Agreement;
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(iv) The Company shall provide, in a timely fashion,
all additional materials or information, financial or
otherwise, reasonably requested by any of the Banks or the
Agent or required in accordance with the Credit Agreement;
(v) The Company shall furnish to the Agent, on the
day the Company first obtains knowledge thereof, notice of the
occurrence of any Event of Default (as defined herein) or each
event which, with or without the giving of notice or lapse of
time or both, would constitute an Event of Default, together
with a statement of an authorized representative of the
Company setting forth details of such Event of Default; and
(vi) The Company shall continue to furnish the Agent
in a timely fashion the following written material:
(A) on the first day of each week, as of the
prior week's end, accounts payable aging for those
creditors with outstanding balances in excess of
Seventy Five Thousand Dollars ($75,000) and trade
accounts receivable aging for those customers with
outstanding balances in excess of Seventy Five
Thousand Dollars ($75,000),
(B) within three (3) business days after
receipt by the Company, copies of pleadings with
respect to Cliffstar's and the Company's respective
law suits against each other, and correspondence from
or to the Company relating to any potential
settlement of such litigation,
(C) within three (3) business days after the
occurrence of any such event, notice and description
of any lawsuits initiated by any vendors, including
copies of any written materials relating to the same,
and
(D) within thirty (30) days of each month
end (1) balance sheet as of such month end; (2)
profit and loss statement for the month and fiscal
year to date period ended on such date; (3) cash flow
statement for the month and fiscal year to date
period ended on such date; (4) a Compliance
Certificate as required under Section 7.4(d) of the
Credit Agreement as of such date; and (5) a narrative
regarding the Company's performance during such month
including explanations of variances from the
Company's projections and summaries of both cash and
non-cash expenses and charges which have had material
impact on the balance sheet and profit and loss
statements during such month, and the status of trade
credit including any actions known to have been taken
by the Company's vendors after the date hereof to put
the Company on a COD or CIA basis, or to stop any
further shipments to the Company; and
(vii) The Company shall comply with all of the terms
of the Obligations; provided, however, that regularly
scheduled payments of principal
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and interest otherwise due prior to the conclusion of the
Forbearance Period may be deferred until February 12, 2001, or
the earlier termination of the Banks' agreement to forbear;
and
(viii) Within one (1) business day of the Company's
receipt thereof, the Company shall provide the Agent written
notice of demand for payment made by the holder of any
guaranty made by the Company.
(k) Notwithstanding the Banks' agreement to forbear, and
notwithstanding the provisions of paragraphs 5(g) and 5(h) hereof, at
any time during the Forbearance Period, and without further notice: (a)
the Banks may take any or all actions permitted in paragraphs 3(g),
3(i), 5(a), 5(c), 5(d), 5(e), 6 and 7 of the Security Agreement which
may be taken following the happening of an Event of Default and
regardless of whether the Agent or the Banks have taken any other
action following the happening of an Event of Default; and (b) the
Agent may notify Cliffstar to make all future payments directly to the
Agent for all amounts due and payable under that certain Promissory
Note dated March 8, 2000, payable by Cliffstar to the Company; and
(l) The Company shall pay to the Agent on February 2, 2001, or
the earlier termination of the Banks' agreement to forbear as provided
herein, a fee in the amount of Three Hundred Seventy Five Thousand
Dollars ($375,000) (the "Forbearance Fee"); provided, however, that the
Banks shall credit the outstanding Indebtedness to the extent such fee
has been paid if the Company pays the Indebtedness in full on or before
February 12, 2001. Interest on the Obligations shall continue to accrue
at the default rate as provided in Section 2.2 of the Credit Agreement
from November 13, 2000.
6. Forbearance. The Banks and the Agent agree to forbear during the
Forbearance Period from seeking immediate payment of the full amount of the
Indebtedness, except to the extent provided herein, provided that the Company
and the Guarantor strictly comply with all of the terms and conditions of this
Agreement and provided further that no "Event of Default" (as hereinafter
defined) shall occur. The Banks' and the Agent's agreement contained herein
shall not nullify, extinguish, satisfy, release, discharge or otherwise affect
the Company's or the Guarantor's obligations to the Banks and to the Agent or
constitute a waiver of any Event of Default. The Company and the Guarantor
acknowledge and agree that if any of the terms or conditions of this Agreement
are not satisfied within the sole discretion of the Banks and the Agent, or any
Event of Default occurs, the Banks' and the Agent's agreement to forbear shall
terminate in accordance with the terms of this Agreement and the Banks and the
Agent shall have all of their rights and remedies.
7. Acknowledgments and Waivers. The Company and the Guarantor
acknowledge and agree as follows:
(a) All of the Recitals are true and correct.
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(b) The Current Defaults have occurred and, prior to giving
effect to the Banks' and the Agent's agreements contained herein,
payment of the entire amount of the Indebtedness is now due from the
Company and the Guarantor. The Banks' and the Agent's agreement to
forbear is not a waiver of the Current Defaults or any other Default or
Event of Default. No further notice of default is required with respect
to the Obligations. There has been no promise by the Banks or the
Agent, whether express or implied, to forbear beyond the Forbearance
Period, and the Company and the Guarantor understand that the
Indebtedness is due and payable in any event as of the conclusion of
the Forbearance Period or the earlier termination of this Agreement as
provided herein.
(c) On account of the occurrence of the Current Defaults,
pursuant to Section 10.14 of the Credit Agreement, the Company's
consent to an assignment of any Note or portion thereof is not
required. The Company hereby waives any further requirement for the
Company's consent to any assignment of any Note or portion thereof.
8. Representations and Warranties of the Company and the Guarantor. In
order to induce the Banks to enter into this Agreement, and in recognition of
the fact that the Banks and the Agent are acting in reliance thereupon, the
Company (as to the Company) and the Guarantor (as to the Guarantor) hereby
covenant, represent and warrant to the Banks and to the Agent that:
(a) The Company is duly incorporated and the Guarantor is duly
organized, each is validly existing and in good standing under the laws
of the State of Wisconsin and each has the power and authority and the
legal right to own and operate its property, to lease the property it
operates, and to conduct the business in which it is currently engaged.
(b) The chief executive office of the Company is, and
continues to be, located at 800 First Avenue South, Wisconsin Rapids,
Wisconsin 54495-8020.
(c) The Company and the Guarantor each has the power and
authority to enter into, deliver, issue and perform all of its
obligations under this Agreement. This Agreement, when duly executed
and delivered on behalf of the Company and the Guarantor, will
constitute the legal, valid and binding obligations of the Company and
the Guarantor enforceable against the Company and the Guarantor in
accordance with its terms.
(d) No consent or authorization of, filing with, or act by or
in respect of any governmental authority is required in connection with
the execution, delivery, performance, validity or enforceability of
this Agreement. The execution, delivery and performance of this
Agreement (i) has been duly authorized by all necessary action, where
applicable, (ii) will not violate any requirement of law or any
contractual obligation of the Company or the Guarantor and (iii) will
not result in, or require, the creation or imposition of any lien on
any of its properties or revenues pursuant to any requirement of law or
contractual obligation.
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(e) No information, financial statement, exhibit or report
furnished by the Company or the Guarantor to the Banks and the Agent in
connection with the negotiation of, or pursuant to, this Agreement
contains any material misstatement of fact, omits to state a material
fact, or omits any fact necessary to make the statements contained
therein, in light of the circumstances in which they were made, not
misleading.
9. Events of Default. An event of default pursuant to this Agreement
(an "Event of Default") shall have occurred hereunder if:
(a) The Company or the Guarantor fails to comply with any
term, covenant or agreement contained herein; or
(b) Any representation or warranty made by the Company or the
Guarantor herein or in any certificate, document, financial statement
or other statement furnished at any time under, and in connection with,
this Agreement, the Obligations or the Guaranty proves to have been
incorrect in any material respect on or as of the date made; or
(c) The Obligations, the Security Agreement, the Mortgages,
the IP Grant, the Collateral Pledge Agreement, the Guarantor IP Grant,
or any financing statement or mortgage necessary to perfect the
security interest granted in the Credit Agreement, the Security
Agreement, the Mortgages, the IP Grant, the Collateral Pledge Agreement
or the Guarantor IP Grant ceases to be in full force and effect or
ceases to create a lien on and security interest in the Collateral, the
Real Estate Collateral, the Trademark Collateral, the Cliffstar
Collateral or the Guarantor Trademark Collateral or for any other
reason the Banks and the Agent shall cease to have a perfected lien on
and security interest in any of the foregoing; or
(d) Any of this Agreement, the Obligations, the Security
Agreement, the Mortgages, the IP Grant, the Collateral Pledge
Agreement, the Guaranty or the Guarantor IP Grant shall, at any time
after their respective execution and delivery, and for any reason,
cease to be in full force and effect or shall be declared null and void
or be revoked or terminated, or the validity or enforceability thereof
or hereof shall be contested by the parties thereto or the parties
thereto shall deny that any of them has any or further liability or
obligations thereunder or hereunder, as the case may be; or
(e) The Company or the Guarantor (i) admits in writing that it
is insolvent; (ii) makes a general assignment for the benefit of
creditors; (iii) makes a general assignment to an agent authorized to
liquidate a substantial amount of its property; (iv) files, or consents
to the filing of, or the Board of Directors of either the Guarantor or
the Company votes to authorize the filing of any proceeding, petition
or case under any existing or future law of any jurisdiction, domestic
or foreign, relating to bankruptcy, insolvency, reorganization or
relief of debtors which constitutes the commencement of a case and/or
constitutes an order for relief or which seeks: (A) an adjudication
that it is bankrupt or insolvent, (B) a reorganization, arrangement,
winding up, liquidation, dissolution, composition or other relief with
respect to its debts, or (C) the appointment of a receiver, trustee,
custodian or other similar official for it or any substantial portion
of its
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assets; (v) has filed against it such a proceeding, petition or case;
or (vi) has filed against it any proceeding or action which seeks the
issuance of a warrant, attachment, execution, distraint or similar
process against any part of its assets with a book value of One Hundred
Thousand Dollars ($100,000) or more in the aggregate if such a
proceeding or action results in the issuance of such process and such
process is not vacated, discharged, stayed or fully bonded within two
(2) days of entry thereof; or
(f) Any "Event of Default" or "default," as either term is
defined in any document comprising the Obligations, the Security
Agreement, the Mortgages, the IP Grant, the Guarantor IP Grant, the
Collateral Pledge Agreement or the Guaranty, other than the Current
Defaults and continuing occurrences of defaults of the same nature,
shall occur after the date hereof; provided, however, that the failure
to make any regularly scheduled payment of principal or interest that
comes due prior to the conclusion of the Forbearance Period or the
earlier termination of the Banks' agreement to forbear, as provided
herein, or the failure to observe, during the Forbearance Period, any
of the financial covenants contained in sections 7.8-7.10 of the Credit
Agreement shall not constitute an Event of Default as defined herein;
or
(g) Equitable takes any action to accelerate or enforce the
obligations of the Company to Equitable, or to foreclose its mortgages
on the Company's assets or accepts a surrender or transfer to it of all
or any part of its collateral including by way of acceptance of a deed
in lien of foreclosure; or
(h) Any material adverse change in the business, financial
condition or property of the Company or the Guarantor shall occur.
Upon the occurrence of an Event of Default hereunder, the Forbearance
Period shall, at the election of the Required Banks (except with respect to (e)
in which event the Forbearance Period shall automatically terminate),
immediately terminate, without notice to the Company or the Guarantor, and the
Banks and the Agent shall have all of their rights and remedies as provided in
the Obligations, the Security Agreement, the Mortgages, the IP Grant, the
Collateral Pledge Agreement, the Guaranty and the Guarantor IP Grant, as well
as, any further rights and remedies provided by law. In addition to the
foregoing remedies, upon the occurrence of an Event of Default (except for an
Event of Default occasioned by either the failure to comply with section 5(c)
hereof or the failure to deliver the work papers of either Houlihan or Hilco as
required under sections 5(b) and 5(f) hereof, respectively) hereunder, the
Company shall retain both (i) a manager acceptable to the Required Banks who
will assume the responsibilities of a chief executive officer and a chief
operating officer and who will report directly to the Board of Directors of the
Company and (ii) investment bankers acceptable to the Required Banks to sell the
assets of the Company either individually or as a whole. The Company, acting
through its Board of Directors, shall make good faith efforts to sell the assets
of the Company or the Company as a whole. The Company will provide to the Agent
and the Banks all information relating to any expressions of interest in
purchasing all or any assets of the Company. In the event the Company receives
an offer to purchase any asset of the Company, it will promptly advise the Agent
of such offer and, upon request of the Required Banks, it will voluntarily
surrender to the Banks any assets subject to such offer to purchase, which
assets may then be
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sold under Article 9 of the Uniform Commercial Code if the Required Banks so
elect. The Banks' or the Agent's receipt of any payment after the occurrence of
any Event of Default shall not constitute a waiver of the Event of Default or of
the Banks' and the Agent's rights and remedies upon such Event of Default.
10. Right to Enter Mortgaged Premises. Upon the occurrence of an Event
of Default hereunder, the Banks and the Agent shall have the right to enter and
use the property described in the Mortgages, rent free, for such period of time
as shall be necessary to liquidate the Collateral.
11. Release. The Company and the Guarantor and each of their
affiliates, representatives, officers, directors, agents, employees, and
attorneys as well as their predecessors, successors and assigns (collectively,
the "Releasing Parties") forever release and discharge the Banks and the Agent
and their respective affiliates, officers, directors, shareholders, agents,
representatives, attorneys and employees, predecessors, successors and assigns
(collectively, the "Released Parties"), and each of them, past and present, from
any and all actions, obligations, costs, damages, losses, claims, liabilities
and demands of whatever kind and nature which the Releasing Parties have had,
now have or hereafter may have, arising from or by reason of or in any way
connected with any transaction, matter, event or circumstance which occurred or
existed on or prior to the date hereof. It is understood and agreed that this
release is not to be construed as an admission of liability on the part of the
Banks, the Agent or the Released Parties.
12. Limitation of Liability. Neither the Banks nor the Agent nor any of
the Released Parties shall be liable to the Releasing Parties for any action
taken, or omitted to be taken, by it or them or any of them under this Agreement
or in connection therewith except that no person shall be relieved of any
liability imposed by law for gross negligence or willful misconduct. Except as
provided in the preceding sentence, no claim may be made by the Releasing
Parties against the Banks, the Agent or the Released Parties for any special,
indirect, consequential or punitive damages in respect of any breach or wrongful
conduct (whether the claim is based in contract or tort or duty imposed by law)
arising out of or related to the transactions contemplated by this Agreement or
any act, omission or event occurring in connection therewith. The Releasing
Parties hereby waive, release and agree not to sue upon any claim for any such
damages, whether or not accrued and whether or not known or suspected to exist
in its favor.
13. Miscellaneous.
(a) The terms and conditions stated herein shall constitute
the complete and exclusive statement of the terms hereof and shall
supersede all prior oral or written statements of any kind whatsoever
made by the parties or their representatives concerning the terms
hereof. No statement or writing subsequent to the date hereof which
purports to modify or add to the terms or conditions hereof shall be
binding unless contained in a writing which makes specific reference to
this Agreement and which is signed by all parties hereto.
(b) This Agreement inures to the benefit of the Banks and the
Agent and their respective successors and assigns, and it binds the
Company and the Guarantor and their
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<PAGE>
respective successors, heirs and assigns. This Agreement may be
executed in any number of counterparts, which shall be effective as to
each signatory upon execution of any counterpart by such signatory.
(c) This Agreement shall be governed by and construed in
accordance with the laws of the State of Wisconsin.
(d) Without limitation of any terms or provisions of the
Obligations or the Guaranty, the Company and the Guarantor shall be
obligated to pay all the fees and out-of-pocket expenses incurred by
the Banks and the Agent in connection with the review, negotiation,
preparation and execution of this Agreement including, but not limited
to, all reasonable attorneys' fees and disbursements, and in the event
that any action shall be required in order to collect upon the
Obligations or the Guaranty, all of the Banks' and the Agent's fees and
out-of-pocket expenses incurred in connection therewith, including all
reasonable attorneys' fees and disbursements.
(e) Except as amended by this Agreement, all of the terms and
conditions of the Obligations and the Guaranty shall remain in all
other respects in full force and effect.
(f) ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST THE COMPANY OR
THE GUARANTOR ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE
OBLIGATIONS OR THE GUARANTY MAY BE BROUGHT IN ANY STATE OR FEDERAL
COURT OF COMPETENT JURISDICTION IN THE STATE OF WISCONSIN, COUNTY OF
MILWAUKEE.
(g) BY EXECUTING AND DELIVERING THIS AGREEMENT, THE COMPANY
AND THE GUARANTOR FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES
IRREVOCABLY:
(i) ACCEPTS GENERALLY AND UNCONDITIONALLY THE
NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS;
(ii) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
(iii) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH
PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO IT AT
ITS ADDRESS PROVIDED BY ITS SIGNATURE LINE;
(iv) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (iii)
ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION IN ANY
SUCH PROCEEDING AND IN ANY SUCH COURT, AND OTHERWISE
CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT;
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<PAGE>
(v) AGREES THAT THE BANKS AND THE AGENT RETAIN THE
RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
TO BRING PROCEEDINGS AGAINST ANY PARTY IN THE COURTS OF ANY
OTHER JURISDICTION; AND
(vi) AGREES THAT THE PROVISIONS OF THIS SUBSECTION
RELATING TO JURISDICTION AND VENUE SHALL BE BINDING AND
ENFORCEABLE TO THE FULLEST EXTENT PERMISSIBLE BY LAW.
(h) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO
WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE OBLIGATIONS,
THE GUARANTY OR ANY OF THE DEALINGS BETWEEN THE PARTIES HERETO. EACH
PARTY HERETO ACKNOWLEDGES THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER
INTO THIS AGREEMENT AND THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN
ENTERING INTO THIS AGREEMENT, AND THAT EACH WILL CONTINUE TO RELY ON
THIS WAIVER IN THEIR FUTURE DEALINGS.
NORTHLAND CRANBERRIES, INC.
800 First Avenue South By: /s/John Swendrowski
--------------------------------------
Wisconsin Rapids, WI 54495-8020 Its:
-------------------------------------
NCI FOODS, LLC
800 First Avenue South By: /s/John Swendrowski
--------------------------------------
Wisconsin Rapids, WI 54495-8020 Its:
-------------------------------------
FIRSTAR BANK, N. A., as Agent and a Bank
777 East Wisconsin Avenue By: /s/
--------------------------------------
Milwaukee, WI 53202 Its:
-------------------------------------
WELLS FARGO BANK MINNESOTA, N. A.
730 Second Avenue South, Suite 500
MAC N9314-050 By: /s/
--------------------------------------
Minneapolis, MN 55479 Its:
--------------------------------------
[Signatures continued on following page.]
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U. S. BANK NATIONAL ASSOCIATION
MPFP2516
601 Second Avenue South By: /s/
--------------------------------------
Minneapolis, MN 55402-4302 Its:
-------------------------------------
BANK OF AMERICA, NATIONAL ASSOCIATION
231 South LaSalle Street By: /s/
--------------------------------------
Chicago, IL 60697 Its:
-------------------------------------
ST. FRANCIS BANK, F.S.B.
13400 Bishops Lane, Suite 190 By: /s/
--------------------------------------
Brookfield, WI 53005-6203 Its:
-------------------------------------
M&I MARSHALL & ILSLEY BANK
770 North Water Street By: /s/
--------------------------------------
Milwaukee, WI 53202 Its:
-------------------------------------
FLEET CAPITAL CORPORATION
One South Wacker Drive
Suite 1400 By: /s/
--------------------------------------
Chicago, IL 60606 Its:
-------------------------------------
BANK ONE, NA
111 East Wisconsin Avenue By: /s/
--------------------------------------
Milwaukee, WI 53202 Its:
-------------------------------------
LaSALLE BANK NATIONAL ASSOCIATION
411 East Wisconsin Avenue By: /s/
--------------------------------------
Milwaukee, WI 53202 Its:
-------------------------------------
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