THIRD AMENDMENT TO FORBEARANCE AGREEMENT
This Third Amendment to Forbearance Agreement (the "Amendment") is made as
of the 1st day of May, 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 that certain Second Amendment to Forbearance Agreement
and Limited Waiver dated as of April 24, 2001 (the "Second Amendment" and
together with the Original Agreement and the First Amendment, the "Forbearance
Agreement").
WHEREAS, the Forbearance Agreement provided that the Forbearance Period
would be in effect through and including April 30, 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 July 30, 2001.
2. Amendment to Section 5(h) of the Forbearance Agreement. Section 5(h) of
the Forbearance 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 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 may, at the
direction of the Company, transmit such funds to the New Disbursement
Accounts and Payroll Accounts, but only (x) if the items presented for
payment are in accordance with the Approved Budget (as hereinafter
defined), (y) if after giving effect to payment of the presented item the
Base Amount (as hereinafter defined) is not less than Fifty Three Million
Four Hundred Ninety Nine Thousand Nine Hundred Fifty One Dollars
($53,499,951) (the "Floor Amount"), and (z) 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, at any time there is no Approved Budget (as hereinafter
defined), the Company agrees that it 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 and;
provided, further, the Agent may, in the exercise of its discretion,
transmit funds to the New Disbursement Account if after giving effect to
the payment of the presented item, the Base Amount is not more than Five
Hundred Thousand Dollars ($500,000) less than the Floor Amount. Items
presented for payment shall be considered presented "in accordance with the
Approved Budget" so long as at the date of presentment for payment the
amount of such items presented, when added to all other items previously
presented for payment during the term of the Approved Budget, do not
exceed, on a cumulative basis during the term of such budget, the total
budgeted weekly amounts through the date of such presentment. Any and all
Proceeds deposited in the Collateral Account may at any time be applied as
a permanent reduction of the principal amount of the Indebtedness and
Obligations within the Agent's discretion. "Base Amount" shall mean, as of
any date, the sum of cash in the Collateral Account plus the aggregate
amount of Inventory plus Accounts Receivable. "Approved Budget" shall mean
the weekly cash budget developed by the Company which is attached hereto as
Exhibit A, or any substitute therefor which (i) is in sufficient detail and
acceptable in all respects to the Required Banks; (ii) shows projected
receipts and necessary disbursements by category per week; (iii) projects
the balance of Accounts Receivable and Inventory on a weekly basis; and
(iv) shows the projected Base Amount; and
3. 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 an opinion of Foley & Lardner as to the
matters identified on Exhibit B attached hereto.
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4. 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) The Company: (i) agrees and reconfirms that its obligations
pursuant to Sections 5(e), 5(g) and 5(h) (as amended hereby) of the
Forbearance Agreement and Section 3(f) of the First Amendment continue
hereunder and shall survive the termination of the Forbearance Period; (ii)
agrees to provide to the Agent weekly, on each Wednesday as of the
preceding Friday, a certificate in the form of Exhibit C to evidence the
Company's compliance with certain provisions of Section 5(h) of the
Forbearance Agreement, as amended hereby; (iii) agrees that during the time
that an Approved Budget is in effect, it shall not request payments for
trade payables in an amount, when added to other payments for trade
payables made while the Approved Budget is in effect, that exceed on a
cumulative basis the total budgeted amount in the category "Production
Venders" since to do otherwise, the Company has determined, is not in its
best interest; and (iv) represents and warrants that at any time there is
no 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; and
(b) The Banks intend to continue to retain the Advisor as provided in
Section 3(h) of the First Amendment and the Company's obligations under
such section shall continue during the Forbearance Period, as extended
hereunder. The Company expressly authorizes the Agent to debit the
Collateral Account for payment of the Advisor's reasonable fees and
out-of-pocket expenses; and
(c) The Company's obligations pursuant to Section 3(i) of the First
Amendment shall continue during the Forbearance Period, as extended
hereunder. The Company expressly authorizes the Agent to debit the
Collateral Account for payment of such legal fees and out-of-pocket
expenses and the Agent will promptly notify the Company of the amount of
such debit; and
(d) Upon receipt, but in any event not later than June 15, 2001, the
Company shall provide the Agent with written evidence satisfactory to the
Required Banks in their sole and unfettered discretion that the Company has
made substantial progress in the pursuit of its strategic alternatives,
including a possible sale, merger or other business combination of the
Company, or one or more of its business units, or the sale of the Company's
brand on its own; and
(e) The Company acknowledges that interest continues to accrue at the
default rate provided in Section 2.2 of the Credit Agreement. Continuing on
May 4, 2001, and each Friday thereafter, the Company shall pay to the Agent
for the pro rata
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account of the Banks a portion of such interest which through April 30,
2001, is payable at the rate of five percent (5%) per annum and commencing
May 1, 2001, is payable at the rate of seven percent (7%) 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
May 4, 2001, shall be for such interest accruing for the period from April
27, 2001, through May 3, 2001, and thereafter each payment shall be for the
seven (7) day period ending on the Thursday prior to payment; and
(f) On or prior to each of the dates set forth below, the Company
shall pay to the Agent for the pro rata account of the Banks, principal of
not less than the amounts set forth below opposite such dates, which
payments shall be applied as permanent reductions of the principal amount
of the Obligations:
Date Principal Payment
---- -----------------
June 15, 2001 $12,000,000
Date of receipt of Cliffstar interest payment $675,000
June 30, 2001 $1,600,000
(g) On or before May 31, 2001, the members of the Board of Directors
of the Company who are not officers or employees of the Company shall
designate one or more persons who they deem appropriate consistent with
applicable principles of corporate governance and consistent with their
fiduciary duties and who is also reasonably acceptable to the Agent and any
two (2) other Banks (other than U. S. Bank National Association), to act on
behalf of, and represent, the Company in all negotiations with respect to
any expression of interest in regard to the Company's strategic
alternatives. Such designee(s) shall at all times remain subject to the
supervision of, and control by, the Board of Directors of the Company. Any
transaction relating to the strategic alternatives shall be subject to the
approval of the Board of Directors of the Company which approval shall be
given consistent with applicable principles of corporate governance and
consistent with their fiduciary duties. Upon the request of the Agent, and
upon reasonable notice, such designee(s) shall meet with the Banks, in
person or by telephone, at such times and places as the Agent shall select
to discuss the status of such negotiations; and
(h) Upon receipt, but not later than May 18, 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, and amended as of April 12, 2001, through and including
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July 30, 2001, pursuant to an Agreement in form and substance satisfactory
to the Agent in its discretion; and
(i) Upon receipt from the Agent, the Company will execute a direction
to Cliffstar to wire transfer to the Collateral Account all amounts due
from Cliffstar to the Company including all further payments under that
certain Promissory Note dated March 8, 2000, payable by Cliffstar to the
Company; and
(j) During the Forbearance Period, as extended hereunder:
(i) Senior management of the Company shall continue to 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 regular 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.
(ii) The Company's obligations pursuant to Sections 5(j)(i) -
(vi), 5(j)(viii) and 5(k) of the Forbearance Agreement shall continue.
(iii) 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 4(c) and (d) above, shall not constitute an Event of Default
hereunder.
5. 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
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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 30, 2001 is
One Hundred Fifty Four Million Nine Hundred Fifty Two Thousand Nine Hundred
Thirty Two and 14/100 Dollars ($154,952,932.14).
(f) The Company acknowledges that the Banks have requested that the
Company prepare and conduct business under a budget to avoid a diminution
in the Banks' Collateral. Each budget contemplated by or prepared in
connection with or in anticipation of this Amendment and the Second
Amendment including the Approved Budget were prepared solely by the Company
and its advisors without direction by the Banks, the Agent or their
advisors as to particular creditors or expenses to be paid or not paid.
6. 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
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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.
7. 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.
8. 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
provision of the Forbearance Agreement, the Obligations or the Guaranty.
IN WITNESS WHEREOF, the parties have executed this Third 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: /s/
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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ARK CLO 2001-1, LIMITED
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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