SECOND AMENDMENT TO FORBEARANCE AGREEMENT
AND LIMITED WAIVER
This Second Amendment to Forbearance Agreement and Limited Waiver (the
"Amendment") is made this 24th day of April, 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 listed on the signature page hereof (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 "Original Agreement"), as
amended by that certain Amendment to Forbearance Agreement dated as of March 23,
2001 (the "First Amendment" and together with the Original Agreement, the
"Forbearance Agreement").
WHEREAS, certain Events of Default have occurred under the Forbearance
Agreement, as more specifically described herein, and
WHEREAS, the Company and the Guarantor have requested, and the Required
Banks have agreed, subject to the terms and conditions of this Amendment, to
waive certain Events of Default as hereinafter set forth and to amend the
Forbearance Agreement 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. Defaults and Limited Waiver. The Company and the Guarantor hereby
acknowledge and agree that certain Events of Default with respect to the
Forbearance Agreement have occurred on account of the Company's failure to
comply, as set forth below, with various provisions of the Forbearance Agreement
(collectively, the "Forbearance Defaults"):
(a) the Company's failure to deliver monthly compliance certificates
by the tenth business day of March and April of 2001 as required by
Section 5(j)(iii) of the Original Agreement;
(b) the Company's failure to provide notice of any Event of Default
as required by Section 5(j)(v) of the Original Agreement;
(c) the Company's failure to timely deliver a Security Agreement and
related financing statements relating to the assets of its subsidiary,
W.S.C. Water Management Corp., as required by Section 3(a)(ii) of the
First Amendment;
(d) the Company's failure to make the minimum principal payment of
Nine Million Dollars ($9,000,000) on April 10, 2001, as required by
Section 3(e) of the First Amendment;
(e) the Company's failure to maintain certain Accounts Receivable
levels for the months ended February 28, 2001 and March 31, 2001, as
required by Section 3(j)(iii) of the First Amendment; and
(f) the Company's failure to comply with the minimum Revenue
requirements for the month ended March 31, 2001, as required by Section
3(j)(i) of the First Amendment.
Subject to the terms and conditions hereof, in response to the request of the
Company and the Guarantor, the Required Banks and the Agent agree to waive the
Forbearance Defaults. The Banks and the Agent do not waive the Current Defaults
or any other Default or Event of Default under the Forbearance Agreement, the
Credit Agreement, or the Loan Documents whether or not known to the Agent or the
Banks and whether now existing or occurring after the date hereof. The Required
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. The Company and the Guarantor
understand that the Agent and the Banks reserve all of their rights except to
the extent their rights are expressly affected by this waiver. This waiver shall
be effective only in this specific instance and for the specific purpose for
which it is given. This waiver shall not entitle the Company to any other or
further waiver in any similar or other circumstances.
2. Amendment to Forbearance Agreement. Section 5(h) of the Original
Agreement shall be amended in its entirety to read as follows:
(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 establish its
sole disbursement accounts at Firstar Bank, N. A. (the "New
Disbursement Accounts"). No further checks shall be issued from the Old
Disbursement Accounts. Until the conclusion of the Forbearance Period
or the occurrence of an Event 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
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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 New
Disbursement Accounts and Payroll Accounts, but only if the items
presented for payment are in accordance with the Approved Budget (as
hereinafter defined), only if after giving effect to payment of the
presented item the difference between the principal balance of the
Revolving Credit Notes and the sum of (x) cash in the Collateral
Account plus (y) the aggregate amount of Inventory plus Accounts
Receivable is not greater than the difference as of April 21, 2001, 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; provided, however, that, until such
time as there is an Approved Budget (as hereinafter defined), the
Company shall only request disbursements from Available Proceeds to pay
for payroll, payroll related expenses, taxes, utilities, and payments
required to be made pursuant to this Agreement. 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. "Approved Budget" shall
mean a weekly cash budget developed by the Company and approved by the
Agent for the forty-five (45) day period commencing the week beginning
April 29, 2001, which budget shall (i) be in sufficient detail and
acceptable in all respects to the Agent; (ii) show projected receipts
and necessary disbursements by category per week; (iii) project the
balance of Accounts Receivable and Inventory on a weekly basis; and
(iv) provide that at no time shall the difference between the principal
balance of the Revolving Credit Notes and the sum of (x) cash in the
Collateral Account plus (y) the aggregate amount of Inventory plus
Accounts Receivable is not greater than the difference as of April 21,
2001; and
3. Conditions Precedent. This Amendment shall become effective upon
execution hereof by the Agent, the Required Banks, the Company, and the
Guarantor.
4. Consideration for Waiver. In consideration for, and as inducement
for, the Banks' and the Agent's waiver of the Forbearance Defaults as provided
herein, the Company: (a) shall immediately develop the information necessary to
prepare an Approved Budget and shall provide the Agent with such information as
the Agent deems necessary; (b) expressly agrees and reconfirms that its
obligations pursuant to Section 5(g) and the first two sentences of Section 5(h)
(as amended hereby) of the Original Agreement and Section 3(f) of the First
Amendment shall survive the termination of the Forbearance Period; and (c)
represents and warrants that until there is an Approved Budget, the Company
shall only request disbursements from Available Proceeds to pay for payroll,
payroll related expenses, taxes, utilities and payments required to be made
pursuant to the Forbearance Agreement.
5. No Extension of Forbearance Period. Notwithstanding anything
contained herein, including, but not limited to, the request for the Company to
develop an Approved Budget for a forty-five (45) day period, the Company and the
Guarantor agree that there has been no
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promise by the Banks or the Agent, whether express or implied, to forbear beyond
the Forbearance Period or to extend the Forbearance Period.
6. 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 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 Company and the Guarantor each has the power and authority
to enter into, deliver, issue and perform all of its obligations under
this Amendment. This Amendment, when duly executed and delivered on behalf
of the Company and the Guarantor, will constitute the legal, valid and
binding obligation of the Company and the Guarantor, enforceable against
each in accordance with its 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 execution, delivery and performance of this Amendment, (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 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, 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) The representations and warranties of the Company and the
Guarantor contained in the Forbearance Agreement, as well as the statement
set forth in Sections 1, 2 and 3 of the Original Agreement, are true and
correct in all respects as of the date of this Amendment, except that the
principal amount outstanding under the Obligations as of April ___, 2001
is $154,952,932.
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7. Release. The Company, 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, 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
Banks, the Agent or the Released Parties.
8. 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 Amendment
or in connection herewith except that no person shall be relieved of any
liability imposed by law for gross negligence or willful misconduct. 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). 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.
9. 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/ John Swendrowski
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Wisconsin Rapids, WI 54495-8020 Its: Chairman and Chief Executive Officer
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NCI FOODS, LLC
800 First Avenue South By: /s/ John Swendrowski
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Wisconsin Rapids, WI 54495-8020 Its: President
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FIRSTAR BANK, N. A., as Agent and a Bank
777 East Wisconsin Avenue By: /s/
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Milwaukee, WI 53202 Its:
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WELLS FARGO BANK MINNESOTA, N. A.
730 Second Avenue South, Suite 500
MAC N9314-050 By: /s/
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Minneapolis, MN 55479 Its:
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U. S. BANK NATIONAL ASSOCIATION
MPFP2516
601 Second Avenue South By: /s/
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Minneapolis, MN 55402-4302 Its:
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BANK OF AMERICA, NATIONAL ASSOCIATION
231 South LaSalle Street By:
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Chicago, IL 60697 Its:
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ST. FRANCIS BANK, F.S.B.
13400 Bishops Lane, Suite 190 By: /s/
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Brookfield, WI 53005-6203 Its:
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M&I MARSHALL & ILSLEY BANK
770 North Water Street By:
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Milwaukee, WI 53202 Its:
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ARK CLO 2001-1, LIMITED
c/o Woodside Capital
70 Russett Hill Road By: /s/
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Sherborn, MA 01770 Its:
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BANK ONE, NA
111 East Wisconsin Avenue By:
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Milwaukee, WI 53202 Its:
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LaSALLE BANK NATIONAL ASSOCIATION
411 East Wisconsin Avenue By: /s/
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Milwaukee, WI 53202 Its:
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