AMENDMENT TO FORBEARANCE AGREEMENT
This Amendment to Forbearance Agreement (the "Amendment") is made this
23rd day of March, 2001, 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 Forbearance Agreement by and among the
Company, the Guarantor, the Banks and the Agent, dated as of December 13, 2000
(the "Forbearance Agreement").
WHEREAS, the Forbearance Agreement provided that the Forbearance
Period would be in effect through and including February 12, 2001;
WHEREAS, the Company and the Guarantor have requested, and the
Required Banks have agreed, to extend the term of the Forbearance Period,
provided the terms and conditions of this Amendment are satisfied, and certain
terms and conditions of the Forbearance Agreement are amended, as hereinafter
set forth.
NOW, THEREFORE, in consideration of the mutual promises hereinafter
set forth and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties agree as follows:
1. Extension of Forbearance Period. The term "Forbearance Period" as
used in the Forbearance Agreement shall be amended to refer to the period
through and including April 30, 2001.
2. Conditions Precedent. This Amendment shall become effective upon
execution hereof by the Agent, the Required Banks, the Company, and the
Guarantor and the Agent's receipt of the following:
(a) An opinion of Foley & Lardner as to the matters identified on
Exhibit A attached hereto; and
(b) A certificate of an officer of the Company in the form of
Exhibit B certifying, except as provided in such certificate, that the
necessary applications have been made in all locations for noting the
Agent's lien on all titled vehicles owned by the Company, that none of the
Company, the Guarantor nor any Subsidiary of the Company owns any assets
that following the deliveries pursuant to Paragraph 3(a)
hereof are not subject to properly perfected liens, and that the Company
does not have any Subsidiaries other than those set forth on such
Certificate.
3. Consideration for Extension of Forbearance. In consideration of
the Required Banks' and the Agent's agreement to forbear from taking certain
actions during the Forbearance Period, as extended pursuant to this Amendment,
the Company agrees that:
(a) Upon execution of this Amendment by the Required Banks, the
Company shall have (i) delivered to the Agent a set of sufficiently
detailed assumptions underlying the projections heretofore provided to the
Banks; (ii) executed, or caused its Subsidiaries to execute, and delivered
to the Agent Security Agreements (the "Additional Security Agreements") and
UCC financing statements in the forms delivered to the Company by the Agent
with respect to the assets of the Company's Subsidiaries and any assets of
the Company not previously encumbered; and (iii) executed and delivered to
the Agent mortgages with respect to the Company's bogs known as Biron,
Associates East, White Creek, Three Lakes, Fifield and Gordon (the
"Additional Bog Mortgages"), in the forms delivered to the Company by the
Agent. Hereafter, the term "Mortgages" as used in the Forbearance Agreement
shall also include the Additional Bog Mortgages; and
(b) Upon receipt, but not later than March 12, 2001, the Company
shall provide the Agent with an executed copy of an agreement between
Equitable and the Company, in form and substance satisfactory to the Banks
and the Agent in their sole discretion, pursuant to which Equitable will
agree (i) to extend the term of its forbearance, as set forth in the
Forbearance Agreement between Equitable and the Company, as executed on or
about February 2, 2001, through and including April 30, 2001, and (ii)
notwithstanding the continuing accrual of interest at a higher rate, to
accept payments of interest at a rate not greater than five percent (5%)
through and including April 30, 2001; and
(c) The Company shall pay outstanding property taxes (together
with all applicable interest and penalties) on the real estate identified
on Exhibit C attached hereto in accordance with the schedule for payments
set forth on Exhibit C. Within three (3) business days after the payments
are due pursuant to Exhibit C, the Company shall provide the Agent with
proof of payment to the applicable taxing authorities; and
(d) The Company acknowledges that interest continues to accrue at
the default rate provided in Section 2.2 of the Credit Agreement.
Commencing March 9, 2001, and each Friday thereafter, the Company shall pay
to the Agent for the pro rata account of the Banks a portion of such
interest at the rate of five percent (5%) per
annum on the principal amount outstanding under the Credit Agreement,
computed in accordance with Section 2.4 of the Credit Agreement; and the
payment due on March 9, 2001, shall be for such interest accruing for the
period from February 16, 2001, through March 8, 2001, and thereafter each
payment shall be for the seven (7) day period ending on the Thursday prior
to payment.
(e) On or prior to April 10, 2001, the Company shall pay to the
Agent for the pro rata account of the Banks, principal of not less than
Nine Million Dollars ($9,000,000), which payment shall be applied as a
permanent reduction of the principal amount of the Obligations; and
(f) No later than seven (7) days following the date this Amendment
becomes effective, the Company (i) shall have opened a lockbox account with
the Agent in accordance with the Agent's standard lockbox applications,
procedures and agreements, which lockbox shall be under the sole custody
and control of the Agent, acting for itself and as Agent for the Banks (the
"Lockbox") and, (ii) shall instruct all of its account debtors to make
payments directly to the Lockbox. Funds received in the Lockbox will be
deposited in the Collateral Account on the next business day after receipt.
If, notwithstanding such instructions, the Company receives any payments on
its accounts, such payments, together with any other payments received by
the Company or the Guarantor, including any Proceeds, upon receipt, shall
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 or the Guarantor, as applicable, 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 Lockbox or the Collateral Account or any
amounts at any time in such accounts. Amounts deposited in the Lockbox and
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
Lockbox or the Collateral Account. The Company hereby pledges to and grants
the Agent a security interest in all funds received in or on deposit in
each of the Lockbox and 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
(g) No later than three (3) days following the date this Amendment
becomes effective, the Company shall engage investment bankers, reasonably
acceptable to the Agent and the Required Banks, to assist it in evaluating
and assessing strategic alternatives, including a possible sale, merger or
other business combination of the Company, or one or more of its business
units, and the Company's
brand on its own. On that date, it shall provide the Agent with an
engagement letter from the investment bankers in form and substance
satisfactory to the Agent and the Required Banks. The engagement letter
shall include, at a minimum, a description of the nature and extent of the
engagement, a list of the tasks to be performed, separate projected time
lines for accomplishing each of those tasks, and a list of the parties they
intend to contact as potential purchasers. Such investment bankers shall
have prepared and provided to the Company prior to April 2, 2001 (and the
Company shall on that date transmit it to the Agent), marketing materials
to be used by them in the Company's pursuit of such alternatives. Upon the
request of the Agent, and upon reasonable notice, such investment bankers
shall meet with the Banks at such times and places as the Agent shall
select to discuss the status of their efforts; and
(h) The Banks shall retain (at the Company's expense) an
independent financial advisor to assess the Company's operations,
projections and strategic alternatives (the "Advisor"). The Company shall
cooperate fully with the Advisor, and will provide the Advisor with full
access to the Company's facilities, its books and records and its financial
projections including the underlying assumptions during normal business
hours. The Company shall make its employees, officers, directors,
investment bankers, and third party advisors reasonably available to the
Advisor, and shall instruct them to provide whatever information is
reasonably requested by the Advisor other than matters of a privileged
nature. Within three (3) business days of receipt of the Advisor's invoices
for services, the Company shall pay to the Agent the reasonable fees and
out-of-pocket expenses of the Advisor; provided, however, that the Company
shall not be required to disburse more than Forty Five Thousand Dollars
($45,000) during March, 2001 with respect to such obligations. To the
extent such obligations are not paid in full by April 10, 2001, the Company
hereby expressly authorizes the Agent to debit the Collateral Account for
payment thereof; and
(i) Within three (3) business days of receipt of an invoice, the
Company shall pay to the Agent (i) all of the reasonable legal fees and
out-of-pocket expenses incurred through February 28, 2001, by the Banks and
the Agent in connection with this Agreement and the Obligations, and (ii)
all of the reasonable legal fees and out-of-pocket expenses incurred after
February 28, 2001, which will be invoiced on a monthly basis hereafter; and
(j) During the Forbearance Period:
(i) The Company shall not permit, for each fiscal month of
the Company ending on the dates set forth below, its Revenue (as
hereinafter defined) to be less than the amount set forth opposite
each such fiscal month below:
Month Ending Minimum Revenue
------------ ---------------
February 28, 2001 $9,000,000
March 31, 2001 $12,538,304
"Revenue" shall mean for any applicable period all revenue of the
Company and its Subsidiaries determined on a consolidated basis for
products sold which would be classified as revenue in accordance with
generally accepted accounting principles; plus trade credits
characterized as "EDLP" and "Off Invoice" to the extent the same have
been deducted in determining such revenue.
(ii) The Company shall not permit, for each fiscal month of
the Company ending on the dates set forth below, its Net Income to be
less than (or in the case of a loss, such Net Loss to be more than)
the amount set forth opposite each such fiscal month below (with any
number in ( ) being a loss):
Month Ending Minimum Net Income
------------ ------------------
February 28, 2001 ($2,500,000)
March 31, 2001 $143,205
(iii) The Company shall not permit, as of each date set forth
below, its Accounts Receivable to be less than the amount set forth
opposite such date below:
Date Minimum Accounts Receivable
---- ---------------------------
February 28, 2001 $10,000,000
March 31, 2001 $13,490,041
"Accounts Receivable" shall mean as of any date of determination the
dollar amount (as determined on a consolidated basis in accordance
with generally accepted accounting principles) of all accounts
receivable of the Company and its Subsidiaries, net of reserves both
as determined or established in accordance with generally accepted
accounting principles.
(iv) The Company shall not permit, as of each date set forth
below, its Inventory to be less than the amount set forth opposite
such date below:
Date Minimum Inventory
---- -----------------
February 28, 2001 $40,115,036
March 31, 2001 $40,536,472
"Inventory" shall mean as of any date of determination the dollar
amount (as determined on a consolidated basis in accordance with
generally accepted accounting principles) of all inventory of the
Company and its Subsidiaries.
(v) Senior management of the Company shall make themselves
available, and shall arrange for the Company's investment bankers to
be available, to meet with the Banks in person or by telephone, as
determined by the Agent, on a biweekly basis at such time and place as
the Agent shall select (following reasonable notification to the
Company) to discuss such matters as the Banks choose regarding the
Company's performance and the status of its pursuit of its strategic
alternatives.
(vi) The Company shall comply with all of the terms of the
Obligations; provided, however, that the failure to make regularly
scheduled payments of principal and interest otherwise due prior to
the conclusion of the Forbearance Period except as provided in
Sections 3 (d) and (e) above shall not constitute an Event of Default
hereunder.
4. Representations and Warranties of the Company and the Guarantor.
In order to induce the Banks to enter into this Amendment, and in recognition of
the fact that the Banks and the Agent are acting in reliance thereupon, the
Company (as to the Company and its Subsidiaries (other than the Guarantor)) and
the Guarantor (as to the Guarantor) hereby covenant, represent and warrant to
the Banks and to the Agent that:
(a) The Company and each of the Subsidiaries (other than the
Guarantor) 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) Each of the Company and its Subsidiaries (other than the
Guarantor) and the Guarantor has the power and authority to enter into,
deliver, issue and perform all of its obligations under this Amendment, the
Additional Bog Mortgages and the Additional Security Agreements, as
applicable. This Amendment, when duly executed and delivered on behalf of
the Company and the Guarantor, each of the Additional Bog Mortgages, when
duly executed and delivered on behalf of the Company and each of the
Additional Security Agreements, when duly executed and delivered on behalf
of the Subsidiaries which are a party thereto, will constitute the legal,
valid and binding obligations of the Company, the Guarantor or the
Subsidiary party thereto, as applicable, enforceable against such party in
accordance with their respective terms.
(c) 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 Amendment, the Additional
Bog Mortgages or the Additional Security Agreements other than the
recording of the Additional Bog Mortgages and the filing of UCC financing
statements with respect to the collateral covered by the Additional
Security Agreements. The execution, delivery and performance of this
Amendment, the Additional Bog Mortgages and the Additional Security
Agreements (i) have been duly authorized by all necessary action, where
applicable, (ii) will not violate any requirement of law or any contractual
obligation of the Company, the Guarantor or any Subsidiary, and (iii) will
not result in, or require, the creation or imposition of any lien on any of
their respective properties or revenues pursuant to any requirement of law
or contractual obligation.
(d) 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, the
Additional Bog Mortgages or the Additional Security Agreements 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.
(e) None of the Company, the Guarantor or any Subsidiary owns or
has any interest in any assets which are not subject to a lien or security
interest.
(f) The representations and warranties of the Company and the
Guarantor contained in the Forbearance Agreement, as well as the statements
set forth in Sections 1, 2 and 3 of the Forbearance Agreement, are true and
correct in all respects as of the date of this Amendment, except that the
principal amount currently outstanding under the Obligations is One Hundred
Fifty Four Million Nine Hundred Fifty Two Thousand Nine Hundred Thirty Two
and 14/100 Dollars ($154,952,932.14).
(g) The Company acknowledges and agrees that upon execution and
delivery of the Additional Security Agreements and the Additional Bog
Mortgages (collectively, the "New Collateral Documents") and upon the
filing of the UCC financing statements provided by the Agent and the
recording of the Additional Bog Mortgages, the Banks and the Agent will
have a legal, valid, binding, perfected and enforceable security interest
and lien, valid against all creditors of and against all purchasers from
the Company or the Subsidiaries (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 described therein securing
payment of the Indebtedness, and such collateral is free and clear of all
liens whatsoever, other than the lien of the Banks, the Agent and Permitted
Liens. No indenture, mortgage, security agreement, financing statement,
equivalent security or lien instrument or continuation statement covering
all or any part of such 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.
5. Miscellaneous.
(a) Each reference in the Forbearance Agreement to "this
Agreement" shall be deemed a reference to the Forbearance Agreement as
amended by this Amendment.
(b) This Amendment shall be governed by and construed in
accordance with the laws of the State of Wisconsin.
(c) Except as expressly modified or amended herein, all of the
terms and conditions of the Forbearance Agreement and each of the
Obligations and the Guaranty shall continue in effect and shall continue to
bind the parties hereto. This Amendment is limited to the terms and
conditions hereof and shall not constitute a modification, acceptance or
waiver of any other provision of the Forbearance Agreement, the Obligations
or the Guaranty.
IN WITNESS WHEREOF, the parties have executed this Amendment to
Forbearance Agreement as of the date first written above.
NORTHLAND CRANBERRIES, INC.
800 First Avenue South By: /s/
Wisconsin Rapids, WI 54495-8020 -----------------------------------
Its:
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NCI FOODS, LLC
800 First Avenue South By: /s/
Wisconsin Rapids, WI 54495-8020 -----------------------------------
Its:
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FIRSTAR BANK, N. A., as Agent and a Bank
777 East Wisconsin Avenue By: /s/
Milwaukee, WI 53202 -----------------------------------
Its:
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WELLS FARGO BANK MINNESOTA, N. A.
730 Second Avenue South, Suite 500 By:
MAC N9314-050 -----------------------------------
Minneapolis, MN 55479 Its:
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U. S. BANK NATIONAL ASSOCIATION
MPFP2516 By: /s/
601 Second Avenue South -----------------------------------
Minneapolis, MN 55402-4302 Its:
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BANK OF AMERICA, NATIONAL ASSOCIATION
231 South LaSalle Street By: /s/
Chicago, IL 60697 -----------------------------------
Its:
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ST. FRANCIS BANK, F.S.B.
13400 Bishops Lane, Suite 190 By: /s/
Brookfield, WI 53005-6203 -----------------------------------
Its:
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M&I MARSHALL & ILSLEY BANK
770 North Water Street By:
Milwaukee, WI 53202 -----------------------------------
Its:
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FLEET NATIONAL BANK
c/o Woodside Capital By: /s/
70 Russett Hill Road -----------------------------------
Sherborn, MA 01770 Its:
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BANK ONE, NA
111 East Wisconsin Avenue By:
Milwaukee, WI 53202 -----------------------------------
Its:
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LaSALLE BANK NATIONAL ASSOCIATION
411 East Wisconsin Avenue By: /s/
Milwaukee, WI 53202 -----------------------------------
Its:
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