-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HqCi4JBFKwz1orrswbdr2S8Q7Owx+EUrJ9u4+ewYRCwqip3keODTwUnpLp+a2cAQ QS1ss2PKnn/zbR/hBqSarw== 0000897069-01-500599.txt : 20020425 0000897069-01-500599.hdr.sgml : 20020425 ACCESSION NUMBER: 0000897069-01-500599 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 17 CONFORMED PERIOD OF REPORT: 20011106 ITEM INFORMATION: Changes in control of registrant ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20011121 DATE AS OF CHANGE: 20011203 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NORTHLAND CRANBERRIES INC /WI/ CENTRAL INDEX KEY: 0000818010 STANDARD INDUSTRIAL CLASSIFICATION: AGRICULTURE PRODUCTION - CROPS [0100] IRS NUMBER: 391583759 STATE OF INCORPORATION: WI FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-16130 FILM NUMBER: 1798400 BUSINESS ADDRESS: STREET 1: 800 FIRST AVE SO STREET 2: P O BOX 8020 CITY: WISCONSIN RAPIDS STATE: WI ZIP: 54494 BUSINESS PHONE: 7154244444 8-K 1 sdc74a.txt 8-K - NORTHLAND CRANBERRIES, INC. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _________________________ FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 _______________________ Date of Report (Date of earliest event reported): November 6, 2001 Northland Cranberries, Inc. (Exact name of registrant as specified in its charter) Wisconsin 0-16130 39-1583759 - - --------------- ---------------- ------------------- (State or other (Commission File (IRS Employer jurisdiction of Number) Identification No.) incorporation) 800 First Avenue South, P.O. Box 8020 Wisconsin Rapids, Wisconsin 54495-8020 ----------------------------------------------------------------- (Address of principal executive offices including zip code) (715) 424-4444 ---------------------------------- (Registrant's telephone number) Item 1. Changes in Control of Registrant. (a) As of the close of business on November 6, 2001, Northland Cranberries, Inc., a Wisconsin corporation (the "Company"), and Sun Northland, LLC, a Delaware limited liability company ("Sun Northland"), executed and consummated the transactions contemplated by a Stock Purchase Agreement (the "Purchase Agreement") pursuant to which, among other things, the Company issued and sold to Sun Northland 37,122,695 shares of the Company's Class A Common Stock, par value $.01 per share ("Common Stock"), 1,668,885 shares of the Company's Series A Preferred Stock, par value $.01 per share ("Series A Preferred Stock") (which will be automatically converted into 41,722,125 shares of Common Stock upon the effectiveness of an amendment to the Company's Articles of Incorporation increasing the number of authorized shares of Common Stock), and 100 shares of the Company's Series B Preferred Stock, par value $.01 per share ("Series B Preferred Stock"), for $7 million and the assignment of Sun Northland's rights in the Assignment, Assumption and Release Agreements described below. In connection with the consummation of the transactions contemplated by the Purchase Agreement, the Company restructured its then outstanding bank debt pursuant to an Assignment, Assumption and Release Agreement between Sun Northland and U.S. Bank National Association ("US Bank"), LaSalle Bank National Association, St. Francis Bank F.S.B.("St. Francis Bank") and ARK CLO 2000-1 Limited ("ARK") and an Assignment, Assumption and Release Agreement between Sun Northland and Wells Fargo Bank Minnesota, National Association, Endeavour, L.L.C., Bank One Wisconsin and M&I Marshall & Ilsley Bank (together, the "Assignment, Assumption and Release Agreements"). Pursuant to the Assignment, Assumption and Release Agreements, the members of the Company's then current bank group exchanged approximately $151 million of total outstanding revolving credit agreement indebtedness for an aggregate cash payment of $38.4 million and, to the members of the bank group which decided to continue as lenders to the Company, the issuance by the Company of (i) revised debt obligations in the aggregate principal amount of $25,714,000 and (ii) a total of 7,618,987 shares of Common Stock. The Assignment, Assumption and Release Agreements were assigned by Sun Northland to the Company as partial consideration for the Company's issuance of the securities noted in the immediately preceding paragraph, resulting in the cancellation of approximately $86.8 million of the Company's then outstanding bank indebtedness. In connection with the assignment of the Assignment, Assumption and Release Agreements, the Company entered into an Amended and Restated Credit Agreement, dated as of November 6, 2001, with US Bank, as agent and lender, St. Francis Bank and ARK, which evidences, among other things, the Company's obligation to repay the revised term loan of $25,714,000. Pursuant to this amended credit agreement, the revised term loan matures on November 1, 2006 and interest accrues on the outstanding principal balance at the prime rate plus 1%. During the first year of the term loan, the Company must make monthly interest payments only, with a lump-sum principal payment of $1.7 million due at the end of the first year. Thereafter, the term loan is subject to a 15-year straight amortization schedule until maturity. Financing for the debt restructuring, and for additional working capital availability to the Company, was provided by Foothill Capital Corporation ("Foothill") and Ableco Finance LLC ("Ableco Finance") pursuant to a Loan and Security Agreement, dated as of November 6, 2001. Under this loan agreement, Foothill and Ableco Finance provided the Company with two term loans, each in the amount of $10 million, and a new $30 million revolving credit facility. The term loans and the credit facility mature and/or expire on November 6, 2006 and interest accrues on the outstanding principal balance thereunder at the greater of 7.75% or the prime rate plus 1%. Quarterly principal 2 payments of $625,000, plus additional principal payments equal to (i) the quarterly principal payments received on Cliffstar Corporation's promissory note to the Company in excess of $625,000 and (ii) all earnout payments received under the Asset Purchase Agreement between the Company and Cliffstar Corporation, are due on the first term loan. Monthly principal payments of $166,667 are due on the second term loan. As part of the consideration to provide the new term loans and credit facility to the Company, the Company issued to Foothill and Ableco Holding LLC ("Ableco Holding") immediately exercisable warrants to acquire a total of 5,086,106 shares of Common Stock at an exercise price of $.01 per share. In connection with the consummation of the foregoing transactions, the Company and US Bank, St. Francis Bank, ARK, Foothill and Ableco Holding (collectively, the "Minority Stockholders") and Sun Northland entered into a Stockholders' Agreement and a Registration Agreement. Pursuant to the Stockholders' Agreement, each Minority Stockholder agreed to vote its shares of Common Stock, if any, in the manner specified by Sun Northland with respect to all matters submitted to a vote of the shareholders of the Company, and granted an irrevocable proxy to Sun Northland to so vote its shares. The Stockholders' Agreement also provides for, among other things, restrictions on the transferability of the shares of Common Stock held by the Minority Stockholders, "tag along" rights in favor of the Minority Stockholders in the event Sun Northland desires to transfer any of its shares of Common Stock, "drag along" rights in favor of Sun Northland in connection with any sale of a majority of the Company's fully-diluted equity and certain preemptive rights in favor of the Minority Stockholders. Pursuant to the Registration Agreement, the holders of a majority of the shares of Common Stock issued to Sun Northland may request, subject to certain limitations, up to four "demand" registrations on Form S-1 and an unlimited number of demand registrations on Forms S-2 or S-3. The Registration Agreement also provides for, among other things, certain "piggyback" registration rights to the holders of shares issued to Sun Northland and the Minority Stockholders. In connection with the consummation of the foregoing transactions, and as required under the Purchase Agreement, (i) the Company adopted the Northland Cranberries, Inc. 2001 Stock Option Plan and authorized the grant of options for shares of Common Stock equal to 4.929% of the fully-diluted post transaction equity ownership of the Company to certain key employees of the Company (which will vest ratably over a four-year period) and (ii) all of the previous members of the Company's Board of Directors, except for John Swendrowski, resigned and the following five individuals designated by Sun Northland became members of the Company's Board of Directors: Marc J. Leder, Rodger R. Krouse, David Kreilein, Clarence E. Terry and Kevin J. Calhoun. In connection with the foregoing, Sun Northland agreed to transfer all 100 shares of Series B Preferred Stock it acquired pursuant to the terms of the Purchase Agreement to an affiliate of John Swendrowski, the Chief Executive Officer of the Company, in exchange for $10. As also required by the Purchase Agreement, the Company and Sun Capital Partners Management, LLC ("SCPM"), an affiliate of Sun Northland, entered into a Management Services Agreement, dated as of November 6, 2001, pursuant to which SCPM will provide various financial and management consulting services to the Company in exchange for an annual fee (which is paid in quarterly installments) equal to the greater of $400,000 or 6% of the Company's EBITDA (as defined therein), provided that the fee may not exceed $1 million a year unless approved by a majority of the Company's directors who are not affiliates of SCPM. This agreement terminates on the earlier of November 6, 2008 or the date on which Sun Northland and its affiliates no longer own at least 50% of the voting power of the Company. 3 As a result of the foregoing transactions, and assuming the conversion of the Series A Preferred Stock into Common Stock, Sun Northland beneficially owns, within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934, approximately 94.4% of the shares of Common Stock currently outstanding (86.1% directly owned and 8.3% collectively held by US Bank (5.1%), ARK (2.3%) and St. Francis Bank (0.9%)); and the public shareholders of the Company beneficially own approximately 5.6% of the shares of Common Stock currently outstanding. Assuming the exercise of all options and warrants issued prior to or in connection with the foregoing transactions and no additional issuances of securities by the Company, Sun Northland would beneficially own approximately 90% of the shares of Common Stock then outstanding (77.5% directly owned and 12.5% collectively held by US Bank (4.6%), ARK (2.1%), St. Francis Bank (0.8%), Foothill (2.5%) and Ableco Holding (2.5%)); certain key employees of the Company would beneficially own approximately 5% of the shares of Common Stock then outstanding; and the public shareholders of the Company would beneficially own approximately 5% of the shares of Common Stock then outstanding. As previously announced, in order to facilitate the transactions contemplated by the Purchase Agreement, the Company effected a one-for-four reverse stock split as of the close of business on November 5, 2001 (which was authorized by the Company's shareholders at the January 30, 2001 annual shareholders meeting) and voluntarily delisted its Common Stock from trading on the Nasdaq National Market effective as of the close of business on November 5, 2001 so that its shares could begin trading on the over-the-counter bulletin board under the new symbol "NRCNA" as of November 6, 2001. The Purchase Agreement and the other agreements and documents described above are filed as exhibits to this Current Report on Form 8-K and are incorporated herein by reference. The brief summaries of the material provisions of such agreements and documents set forth above are qualified in their entirety by reference to each respective agreement and/or document filed as an exhibit hereto. The following information about the ownership of Sun Northland is based on information contained in a Schedule 13D filed with the Securities and Exchange Commission on November 16, 2001. Sun Northland is majority owned by Sun Capital Partners II, LP, a Delaware limited partnership. The general partner of Sun Capital Partners II, LP is Sun Capital Advisors II, LP, a Delaware limited partnership. The general partner of Sun Capital Advisors II, LP is Sun Capital Partners, LLC, a Delaware limited liability company. Each of Marc J. Leder and Rodger R. Krouse own 50% of the membership interests in Sun Capital Partners, LLC. (b) Except as described above, there are no arrangements known to the Company, the operation of which may at a subsequent date result in a change in control of the Company. Item 7. Financial Statements and Exhibits. (a) Not applicable. (b) Not applicable. (c) Exhibits. The exhibits listed in the accompanying Exhibit Index are filed as part of this Current Report on Form 8-K. 4 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. NORTHLAND CRANBERRIES, INC. Date: November 21, 2001 By: /s/ John Swendroski -------------------------------------- John Swendrowski Chairman and Chief Executive Officer 5 NORTHLAND CRANBERRIES, INC. EXHIBIT INDEX TO FORM 8-K Report Dated November 6, 2001 Exhibit Number Description (2.1) Stock Purchase Agreement, dated as of November 6, 2001, by and between Sun Northland, LLC and Northland Cranberries, Inc.* (2.2) Assignment, Assumption and Release Agreement, dated as of November 6, 2001, by and among Sun Northland, LLC, LaSalle Bank National Association, St. Francis Bank, F.S.B., ARK CLO 2000-1 Limited and U.S. Bank National Association (2.3) Assignment Agreement, dated as of November 6, 2001, by and between Sun Northland, LLC and Northland Cranberries, Inc. (assigning Exhibit (2.2) above to Northland Cranberries, Inc.) (2.4) Assignment, Assumption and Release Agreement, dated as of November 6, 2001, by and among Sun Northland, LLC, Wells Fargo Bank Minnesota, National Association, Endeavor, L.L.C., Bank One Wisconsin and M&I Marshall & Ilsley Bank (2.5) Assignment Agreement, dated as of November 6, 2001, by and between Sun Northland, LLC and Northland Cranberries, Inc. (assigning Exhibit (2.4) above to Northland Cranberries, Inc.) (4.1) Loan and Security Agreement, dated as of November 6, 2001, by and among Northland Cranberries, Inc., Foothill Capital Corporation and Ableco Finance LLC, as lenders, and Foothill Capital Corporation, as arranger and administrative agent* 6 Exhibit Number Description (4.2) Amended and Restated Credit Agreement, dated as of November 6, 2001, by and among Northland Cranberries, Inc., St. Francis Bank, F.S.B., ARK CLO 2000-1 Limited and U.S. Bank National Association, as lenders, and U.S. Bank National Association, as agent* (4.3) Stockholders' Agreement, dated as of November 6, 2001, by and among Sun Northland, LLC, the minority shareholders listed therein and Northland Cranberries, Inc. (4.4) Registration Agreement, dated as of November 6, 2001, by and among Northland Cranberries, Inc., Sun Northland, LLC and the other investors signatory thereto (4.5) Common Stock Purchase Warrant, dated as of November 6, 2001, issued to Foothill Capital Corporation (4.6) Common Stock Purchase Warrant, dated as of November 6, 2001, issued to Ableco Holding LLC (4.7) Articles of Amendment to the Articles of Incorporation of Northland Cranberries, Inc. effecting the one-for-four reverse stock split (4.8) Articles of Amendment to the Articles of Incorporation of Northland Cranberries, Inc. creating the Series A Preferred Stock (4.9) Articles of Amendment to the Articles of Incorporation of Northland Cranberries, Inc. creating the Series B Preferred Stock (99.1) Management Services Agreement, dated as of November 6, 2001, by and between Northland Cranberries, Inc. and Sun Capital Partners Management, LLC 7 Exhibit Number Description (99.2) Northland Cranberries, Inc. 2001 Stock Option Plan __________________________ * The schedules and exhibits to this document are not being filed herewith. The registrant agrees to furnish supplementally a copy of any such schedule or exhibit to the Securities and Exchange Commission upon request. 8 EX-2.1 3 sdc74b.txt STOCK PURCHASE AGREEMENT Stock Purchase Agreement by and among Sun Northland, LLC And Northland Cranberries, Inc. Dated as of November 6, 2001 TABLE OF CONTENTS Page 1. Definitions............................................................ 1 2. Purchase and Sale of Shares............................................ 7 (a) Basic Transaction................................................. 7 (b) Consideration..................................................... 7 (c) The Closing....................................................... 7 (d) Deliveries at the Closing......................................... 7 3. Representations and Warranties of the Buyer............................ 8 (a) Organization of the Buyer......................................... 8 (b) Authorization of Transaction...................................... 8 (c) Noncontravention.................................................. 8 (d) Brokers' Fees..................................................... 8 (e) Investment........................................................ 8 4. Representations and Warranties of the Company.......................... 8 (a) Organization, Qualification, and Corporate Power.................. 9 (b) Capitalization and Issuance of Shares............................. 9 (c) Noncontravention.................................................. 10 (d) Brokers' Fees..................................................... 10 (e) Title to Assets................................................... 10 (f) Subsidiaries...................................................... 10 (g) Financial Statements.............................................. 11 (h) Events Subsequent to Most Recent Fiscal Year End.................. 11 (i) Undisclosed Liabilities........................................... 13 (j) Legal Compliance.................................................. 13 (k) Tax Matters....................................................... 14 (l) Real Property..................................................... 15 (m) Intellectual Property............................................. 18 (n) Tangible Assets................................................... 19 (o) Contracts......................................................... 20 (p) Notes and Accounts Receivable..................................... 21 (q) Powers of Attorney................................................ 21 (r) Insurance......................................................... 21 (s) Litigation........................................................ 22 (t) Employees......................................................... 22 (u) Employee Benefits................................................. 23 (v) Guaranties........................................................ 25 (w) Environment, Health, and Safety Matters........................... 25 (x) Certain Business Relationships With the Company and its Subsidiaries............................................. 26 (y) SEC Documents..................................................... 26 (z) Relationships with Customers and Vendors.......................... 27 i 5. Conditions to Obligation to Close...................................... 28 (a) Conditions to Obligation of the Buyer............................. 28 (b) Conditions to Obligation of the Company........................... 31 6. Remedies for Breaches of This Agreement................................ 32 (a) Survival of Representations and Warranties........................ 32 (b) Indemnification Provisions for Benefit of the Buyer............... 33 (c) Determination of Adverse Consequences............................. 33 (d) Matters Involving Third Parties................................... 33 (e) Additional Matters................................................ 34 7. Tax Matters............................................................ 34 8. Miscellaneous.......................................................... 34 (a) Press Releases and Public Announcements........................... 34 (b) No Third-Party Beneficiaries...................................... 34 (c) Entire Agreement.................................................. 35 (d) Succession and Assignment......................................... 35 (e) Counterparts...................................................... 35 (f) Headings.......................................................... 35 (g) Notices........................................................... 35 (h) Governing Law..................................................... 36 (i) Amendments and Waivers............................................ 36 (j) Severability...................................................... 36 (k) Expenses.......................................................... 36 (l) Construction...................................................... 37 (m) Incorporation of Exhibits, Annexes, and Schedules................. 37 (n) Submission to Jurisdiction........................................ 37 (o) Legal Fees........................................................ 37 (p) Indemnification and Insurance..................................... 37 (q) ISRA Covenant..................................................... 38 (r) Tax Covenant...................................................... 38 (s) Severance Pay Covenant............................................ 39 Exhibit A - Historical Financial Statements Exhibit B - Form of Opinion of Counsel to the Company Exhibit C - Form of Stockholders' Agreement Exhibit D - Form of Registration Agreement Exhibit E - Agreements to be Entered Into With Vendors, Suppliers and Other Creditors Exhibit F - Stay Bonus and Management Agreement Payout Schedule ii STOCK PURCHASE AGREEMENT This Stock Purchase Agreement is entered into as of November 6, 2001, by and among Sun Northland, LLC, a Delaware limited liability company (the "Buyer"), and Northland Cranberries, Inc., a Wisconsin corporation (the "Company"). The Buyer and the Company are referred to collectively herein as the "Parties" and individually as a "Party". WHEREAS, the Buyer has entered into Assignment, Assumption and Release Agreements with the Current Senior Lenders pursuant to which the Buyer or its assignee will, at the Closing, acquire a portion of the Current Senior Lenders' rights pursuant to the Firstar Facility upon payment to the Current Senior Lenders of an aggregate of $38,388,000 in cash, the issuance to the Current Senior Lenders of new notes in the aggregate amount of $25,714,000, and the issuance to the Current Senior Lenders of Class A Common Stock, par value $0.01 per share "Class A Common Stock") representing an aggregate of 7.49% of the Company's Class A Common Stock; WHEREAS, the Company desires to issue and sell, and the Buyer desires to purchase, in exchange for cash and the assignment of the Buyer's rights in the Assignment, Assumption and Release Agreements (which will result in the cancellation of at least $$86.8 million of the Company's indebtedness), 37,122,695.00 shares of the Company's Class A Common Stock, 1,668,885.00 shares of the Company's Series A Preferred Stock, par value $.01 per share ("Series A Preferred Stock") (which shall be convertible into 41,722,125.00 shares of the Company's Class A Common Stock) and 100 shares of the Company's Series B Preferred Stock, par value $0.01 per share ("Series B Preferred Stock"), upon the terms and subject to the conditions contained in this Agreement; Now, therefore, in consideration of the premises and the mutual promises herein made, and in consideration of the representations, warranties, and covenants herein contained, the Parties agree as follows. 1. Definitions "Adverse Consequences" means all actions, suits, proceedings, hearings, investigations, charges, complaints, claims, demands, injunctions, judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs, reasonable amounts paid in settlement, liabilities, obligations, Taxes, liens, losses, expenses, and fees, including court costs and reasonable attorneys' fees and expenses. "Affiliate" means a Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, another Person. "Affiliated Group" means any affiliated group within the meaning of Code ss.1504(a) or any similar group defined under a similar provision of state, local, or foreign law. "Assignment, Assumption and Release Agreements" means (i) that certain Assignment, Assumption, and Release Agreement, dated as of the date hereof, by and among the Buyer, LaSalle Bank National Association, St. Francis Bank, F.S.B., ARK CLO 2000-1 Limited, and U.S. Bank National Association; and (ii) that certain Assignment, Assumption, and Release Agreement, dated as of the date hereof, by and among the Buyer, Wells Fargo, Bank Minnesota, National Association, Endeavour, LLC, Bank One Wisconsin and M&I Marshall & Ilsley Bank. "Basis" means any past or present fact, situation, circumstance, status, condition, activity, practice, plan, occurrence, event, incident, action, failure to act, or transaction that forms or could reasonably be expected to form the basis for any specified consequence. "Bog Properties" means those portions of the Owned Real Property and Leased Real Property enumerated under the heading "Bog Properties" in Sections 4(l)(i) and 4(l)(ii) of the Disclosure Schedule. "Buyer" has the meaning set forth in the preface above. "Capital Stock" means stock, units, interests, securities, or other instruments which (i) share in distributions either of earnings or assets or (ii) have the right to vote for directors, officers or managers. "Cash Purchase Price" has the meaning set forth in Section 2(b)(i) below. "Class A Common Stock" has the meaning in the preface above. "Class B Common Stock" has the meaning in Section 4(b) below. "Closing" has the meaning set forth in Section 2(c) below. "Closing Date" has the meaning set forth in Section 2(c) below. "COBRA" means the requirements of Part 6 of Subtitle B of Title I of ERISA and Code ss.4980B and of any similar state law. "Code" means the Internal Revenue Code of 1986, as amended. "Commission" or "SEC" means the Securities and Exchange Commission, or any successor agency. "Company" has the meaning set forth in the preface above. "Current Senior Lenders" means LaSalle Bank National Association, St. Francis Bank, F.S.B., ARK CLO 2000-1 Limited, U.S. Bank National Association, Wells Fargo, Bank Minnesota, National Association, Endeavour, LLC, Bank One Wisconsin, and M&I Marshall & Ilsley Bank. "Disclosure Schedule" has the meaning set forth in Section 4 below. "Employee Benefit Plan" means any "employee benefit plan" (including, without limitations, "plans" as defined in ERISA ss.3(3)), profit sharing, deferred compensation, bonus, stock option, stock purchase, vacation pay, holiday pay, pension, retirement plans, medical and any other form of compensation or benefit plan, program or arrangement of any kind regardless 2 of whether any such plan is written or oral or provided under an employment, collective bargaining or other similar arrangement. "Employee Pension Benefit Plan" has the meaning set forth in ERISA ss.3(2). "Employee Welfare Benefit Plan" has the meaning set forth in ERISA ss.3(1). "Environmental, Health, and Safety Requirements" shall mean all applicable federal, state, local and foreign statutes, regulations, ordinances and similar provisions having the force or effect of law, all judicial and administrative orders and determinations, and all common law concerning public health and safety, worker health and safety, pollution or protection of the environment, including, without limitation, all those relating to wetlands protection or the presence, use, production, generation, handling, transportation, treatment, storage, disposal, distribution, labeling, testing, processing, discharge, release, threatened release, control, or cleanup of any hazardous materials, substances or wastes, chemical substances or mixtures, pesticides, pollutants, contaminants, toxic chemicals, petroleum products or byproducts, asbestos, polychlorinated biphenyls, noise or radiation, each as amended, and as now or hereafter in effect. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. "ERISA Affiliate" means each entity which is treated as a single employer with the Company or its Subsidiaries for purposes of Code ss.414. "Executive" shall mean any of Ricke Kress, Steve Klus, William Haddow, Dan Lang, Ken Iwinski, Robert Wilson, John Stauner, Dick Teske, Nigel Cooper, and Jim Tierney. "Fiduciary" has the meaning set forth in ERISA ss.3(21). "Financial Statement" has the meaning set forth in Section 4(g) below. "Firstar Facility" means that certain Credit Agreement, dated as of March 15, 1999, by and between the Company and the financial institutions which are signatories thereto, and all amendments thereto. "Facility Properties" means those portions of the Owned Real Property enumerated under the heading "Facility Properties" in Section 4(l)(i) of the Disclosure Schedule. "Fundamental Representations and Warranties" means those representations and warranties made by the Company in Sections 4(a), (b), (c), (d), and (e) below. "GAAP" means United States generally accepted accounting principles as in effect from time to time. "Good Standing" means, when used with respect to the status of any corporation or limited liability company domiciled or doing business in the State of Wisconsin, that such corporation or limited liability company, as the case may be, has filed its most recent required annual report (or similar reports for non-corporate entities) and (i) if a domestic corporation or 3 limited liability company, has not filed articles of dissolution (or similar dissolution documents for non-corporate entities), and (ii) if a foreign corporation or limited liability company, has not applied for a certificate of withdrawal and is not the subject of a proceeding to revoke its certificate of authority (or similar certificates for non-corporate entities). "Improvements" means all buildings (or portions thereof), structures, fixtures, and building systems, and all components thereof, included in the Real Property. "Income Tax" means any federal, state, local, or foreign income tax, including any interest, penalty, or addition thereto, whether disputed or not. "Income Tax Return" means any return, declaration, report, claim for refund, or information return or statement relating to Income Taxes, including any schedule or attachment thereto, and including any amendment thereof. "Indemnified Party" has the meaning set forth in Section 6(d)(i) below. "Indemnifying Party" has the meaning set forth in Section 6(d)(i) below. "Intellectual Property" means (a) all ideas, business methods, know-how, inventions (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereto, and all patents, patent applications, and patent disclosures, together with all reissues, continuations, continuations-in-part, divisions, revisions, extensions, and reexaminations thereof, (b) all trademarks, service marks, trade dress, logos, trade names, domain names and corporate names, together with all translations, adaptations, derivations, and combinations thereof and including all goodwill associated therewith, and all applications for registration, registrations, and renewals in connection therewith, (c) all copyrightable works, all copyrights, and all applications for registration, registrations, and renewals in connection therewith, (d) all mask works and all applications for registration, registrations, and renewals in connection therewith, (e) all trade secrets and confidential business information (including without limitation ideas, research and development, know-how, formulas, compositions, manufacturing and production processes and techniques, technical data, designs, drawings, specifications, customer and supplier lists, pricing and cost information, and business and marketing plans and proposals), (f) all computer software (including, without limitation, data and related documentation), (g) all other proprietary rights, and (h) all copies and tangible embodiments thereof (in whatever form or medium now known or later developed). "Knowledge of the Company" means the actual knowledge of John Swendrowski, Ricke Kress, Ken Iwinski and Robert Teske. "Leased Real Property" means all leasehold or subleasehold estates and other rights to use or occupy any land, buildings, structures, improvements, fixtures or other interest in real property held by any of the Company or its Subsidiaries. "Leases" means all leases, subleases, licenses, concessions and other agreements (written or oral), including all amendments, extensions, renewals, guaranties and other agreements with 4 respect thereto, pursuant to which any of the Company or its Subsidiaries holds any Leased Real Property. "Liability" means any liability (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due), including any liability for Taxes. "Liens" means any mortgages, pledges, liens, claims, charges, security interests, guarantees, conditional and installment sale agreements, activity and use limitations, conservation easements, deed restrictions, and encumbrances of any kind. "Management Agreement" means that certain Amended and Restated Key Executive Employment and Severance Agreement, dated as of April 14, 2000, by and between the Company and John Swendrowski. "Most Recent Balance Sheet" shall have the meaning set forth in Section 4(g) below. "Multiemployer Plan" has the meaning set forth in ERISA ss.3(37). "Ordinary Course of Business" means the ordinary course of business consistent with past custom and practice (including with respect to quantity and frequency). "Organizational Documents" means all documents relating to the formation, organization and governance of any Person, including, without limitation, charters, bylaws, operating agreements, and certifications of formation. "Owned Real Property" means all land, together with all buildings, structures, improvements, fixtures, trees, plants, and other crops located thereon, and all easements, rights of way, servitudes, tenements, hereditaments, appurtenances, privileges and other rights including, without limitation, oil, gas, mineral and water rights, with respect thereto, owned by the Company or its Subsidiaries. "Party" has the meaning set forth in the preface above. "PBGC" means the Pension Benefit Guaranty Corporation. "Permits" has the meaning set forth in Section 4(j) below. "Permitted Encumbrances" means with respect to each parcel of Real Property: (a) real estate Taxes, assessments and other governmental levies, fees or charges imposed with respect to such Real Property which are not due and payable as of the Closing Date, or which are being contested in good faith and for which appropriate reserves have been established in accordance with GAAP; (b) mechanics liens and similar liens for labor, materials or supplies provided with respect to such Real Property incurred in the ordinary course of business for amounts which are not due and payable and which would not, individually or in the aggregate, have a material adverse effect on the business of the Company and its Subsidiaries as currently conducted thereon; (c) zoning, building codes and other land use laws regulating the use or occupancy of such Real Property or the activities conducted thereon which are imposed by any governmental 5 authority having jurisdiction over such Real Property, which are not violated by, or the violation of which would not have a material adverse effect on, the current use or occupancy of such Real Property or the operation of the business of the Company and its Subsidiaries as currently conducted thereon; (d) easements, covenants, conditions, restrictions and other similar matters of record, or other immaterial conditions as would be disclosed by an accurate survey, affecting title to such Real Property which do not or would not materially impair the use or occupancy of such Real Property in the operation of the business of the Company and its Subsidiaries as currently conducted thereon; and (e) the encumbrances set forth on Section 4 of the Disclosure Schedule. "Person" means an individual, a partnership, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, or a governmental entity (or any department, agency, or political subdivision thereof). "Prohibited Transaction" has the meaning set forth in ERISA ss.406 and Code ss.4975. "Real Property" has the meaning set forth in Section 4(l)(iii) below. "Real Property Permits" has the meaning set forth in Section 4(l)(vii) below. "Reportable Event" has the meaning set forth in ERISA ss.4043. "SEC Documents" has the meaning set forth in Section 4(y) below. "Securities Act" means the Securities Act of 1933, as amended. "Security Interest" means any mortgage, pledge, lien, encumbrance, charge, or other security interest, other than (a) mechanic's, materialmen's, and similar liens, (b) liens for Taxes not yet due and payable, (c) purchase money liens and liens securing rental payments under capital lease arrangements, and (d) other liens arising in the Ordinary Course of Business and not incurred in connection with the borrowing of money. "Series A Preferred Stock" has the meaning in the preface above. "Series B Preferred Stock" has the meaning in the preface above. "Severance and Stay Bonus Plan" means the Northland Cranberries, Inc. Severance and Stay Bonus Plan, effective April 14, 2000. "Shares" has the meaning set forth in Section 2(a) below. "Subsidiary" means a Person of which another Person and/or their respective Subsidiaries, as the case may be, own directly or indirectly, such number of shares as have more than 50% of the ordinary voting power for the election of directors or managers. "Tangible Personal Property" means all equipment, machinery, and other similar tangible personal property, with an individual original cost of $50,000 or more, which is owned by the Company and its Subsidiaries and used in their respective business. 6 "Tax" means any federal, state, local, or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Code ss.59A), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not, and any tax of any other Person resulting from being a member of an Affiliated Group. "Tax Return" means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof. "Third Party Claim" has the meaning set forth in Section 6(d)(i) below. "WBCL" means the Wisconsin Business Corporation Law, Chapter 180 Wis. Stats. 2. Purchase and Sale of Shares. (a) Basic Transaction. On and subject to the terms and conditions of this Agreement, the Buyer agrees to purchase from the Company, and the Company agrees to sell to the Buyer, 37,122,695.00 shares of Class A Common Stock, 1,668,885.00 shares of Series A Preferred Stock and 100 shares of Series B Preferred Stock (the "Shares") for the consideration specified below in this Section 2. (b) Consideration. The Buyer agrees to deliver the following consideration to the Company at the Closing: (i) Wire transfer of immediately available funds equal to $7,000,000 (the "Cash Purchase Price"); (ii) The assignment of the Buyer's rights to each of the Assignment, Assumption and Release Agreements (it being understood by the Parties that such assignment will result in the cancellation of at least $86.8 million of the Company's indebtedness). (c) The Closing. The closing of the transactions contemplated by this Agreement (the "Closing") shall take place as of the close of business on the date this Agreement is signed by the Parties (the "Closing Date"). (d) Deliveries at the Closing. (i) At the Closing, the Company will deliver to the Buyer: (A) the various certificates, instruments, and documents referred to in Section 5(a) below, and (B) stock certificates representing the Shares, free and clear of all Liens. (ii) At the Closing, the Buyer will deliver to the Company: (i) the various certificates, instruments, and documents referred to in Section 5(b) below and (ii) the consideration specified in Section 2(b) above. 7 3. Representations and Warranties of the Buyer. The Buyer represents and warrants to the Company that the statements contained in this Section 3 are correct and complete as of the date of this Agreement, except as set forth in Annex I attached hereto. (a) Organization of the Buyer. The Buyer is a limited liability company duly organized, validly existing, and in good standing under the laws of the jurisdiction of its formation. (b) Authorization of Transaction. The Buyer has full power and authority to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement constitutes the valid and legally binding obligation of the Buyer, enforceable in accordance with its terms and conditions. The Buyer need not give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency in order to consummate the transactions contemplated by this Agreement. (c) Noncontravention. Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (A) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which the Buyer is subject or any provision of its Organizational Documents or (B) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which the Buyer is a party or by which it is bound or to which any of its assets is subject. (d) Brokers' Fees. The Buyer has no Liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement for which the Company could become liable or obligated. (e) Investment. The Buyer is not acquiring the Shares with a view to or for sale in connection with any distribution thereof within the meaning of the Securities Act. 4. Representations and Warranties of the Company. The Company represents and warrants to the Buyer that the statements contained in this Section 4 are correct and complete as of the date of this Agreement, except as set forth in the disclosure schedule delivered by the Company to the Buyer on the date hereof (the "Disclosure Schedule") or as set forth in the Company's SEC Documents. Except for disclosures relating to environmental matters pursuant to Section 4(w), and made in Section 4(w) of the Disclosure Schedule, which may refer to specific environmental surveys and reports, nothing in the Disclosure Schedule shall be deemed adequate to disclose an exception to a representation or warranty made herein, however, unless the Disclosure Schedule identifies the exception with reasonable particularity and describes the relevant facts in reasonable detail. Except for disclosures relating to environmental matters pursuant to Section 4(w), and made in Section 4(w) of the Disclosure Schedule, which may refer to specific environmental surveys and reports, the mere listing (or inclusion of a copy) of a document or other item shall not be deemed adequate to disclose an exception to a representation or warranty made herein (unless the representation or warranty has to do with the existence of the document 8 or other item itself). The Disclosure Schedule will be arranged in paragraphs corresponding to the lettered and numbered paragraphs contained in this Section 4. (a) Organization, Qualification, and Corporate Power. Each of the Company and its Subsidiaries is a corporation, or limited liability company, duly formed or organized, as the case may be, validly existing, and in Good Standing under the laws of the jurisdiction of its incorporation or formation. Each of the Company and its Subsidiaries is duly authorized to conduct business and is in Good Standing under the laws of each jurisdiction where such qualification is required, except where the failure to be so qualified or in Good Standing would not have a material adverse effect on the Company or its Subsidiaries. Each of the Company and its Subsidiaries has full corporate, or limited liability company, power and authority and all licenses, permits, and authorizations necessary to carry on the businesses in which it is engaged and to own and use the properties owned and used by it, except where the failure to have any such licenses, permits or authorizations would not have a material adverse effect on the Company or its Subsidiaries. Section 4(a) of the Disclosure Schedule lists the directors and officers of each of the Company and its Subsidiaries. The Company has delivered to the Buyer correct and complete copies of the Organizational Documents of each of the Company and its Subsidiaries. The minute books (containing the records of meetings of the stockholders, the board of directors, and any committees of the board of directors), the stock certificate books, and the stock record books (or similar books and records for any of the Company's Subsidiaries which is not a corporation) of each of the Company and its Subsidiaries are correct and complete. None of the Company and its Subsidiaries is in default under or in violation of any provision of its Organizational Documents. The Company has full power and authority (including full corporate power and authority) to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement constitutes the valid and legally binding obligation of the Company, enforceable in accordance with its terms and conditions, except as such enforceability may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting or relating to creditors' rights generally, and by general equitable principles. (b) Capitalization and Issuance of Shares. Immediately prior to the Closing, the entire authorized Capital Stock of the Company consists of 60,000,000 shares of Class A Common Stock, of which no greater than 5,100,000 shares are issued and outstanding and no shares are held in treasury; 4,000,000 shares of Class B Common Stock, par value $0.01 per share ("Class B Common Stock"), of which no shares are issued and outstanding and no shares are held in treasury, and 5,000,000 shares of preferred stock, par value $0.01 per share, of which no shares are issued or outstanding. Immediately following the Closing, the entire authorized Capital Stock of the Company will consist of 60,000,000 shares of Class A Common Stock, of which approximately 49,827,788.00 shares will be issued and outstanding and no shares will be held in treasury; 4,000,000 shares of Class B Common Stock, of which no shares will be issued and outstanding and no shares will held in treasury, and 5,000,000 shares of preferred stock, of which 1,668,885.00 shares will be designated Series A Preferred Stock and will be issued and outstanding and of which 100 shares will be designated Series B Preferred Stock and will be issued and outstanding. Except as contemplated herein and by the transactions contemplated hereby, there are no outstanding or authorized Liens, options, warrants, purchase rights, subscription rights, conversion rights, exchange rights, or other contracts or commitments that could require the Company or its Subsidiaries to issue, sell, or otherwise cause to become 9 outstanding any of its Capital Stock. There are no outstanding or authorized stock appreciation, phantom stock, profit participation, or similar rights with respect to the Company or its Subsidiaries. There are no voting trusts, proxies, or other agreements or understandings with respect to the voting of the Capital Stock of the Company or its Subsidiaries. The Shares have been duly authorized and when issued, delivered and paid for pursuant to the terms of this Agreement, will be duly and validly issued, fully paid and non-assessable, except as otherwise provided in Section 180.0622(2)(b) of the WBCL. (c) Noncontravention. Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (i) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which any of the Company or its Subsidiaries is subject or any provision of their respective Organizational Documents or (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any material agreement, contract, lease, license, instrument, or other arrangement to which any of the Company or its Subsidiaries is a party or by which it is bound or to which any of its assets is subject (or result in the imposition of any Security Interest upon any of its assets). None of the Company and its Subsidiaries needs to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency or other Person in order for the Parties to consummate the transactions contemplated by this Agreement. (d) Brokers' Fees. Except for fees and commissions owed to Rabobank International, which shall not exceed $400,000 (plus expenses not to exceed $75,000), and the fees and expenses pursuant to a management services agreement to be entered into at Closing pursuant to Section 5(a)(xx), none of the Company and its Subsidiaries has any Liability or obligation to pay any fees or commissions to any broker, finder or agent with respect to the transactions contemplated by this Agreement. (e) Title to Assets. Except for Permitted Encumbrances, the Company and its Subsidiaries have good and marketable title to, or a valid leasehold interest in, the properties and assets used by them, located on their premises, or shown on the Most Recent Balance Sheet or acquired after the date thereof, free and clear of all Security Interests, except for properties and assets disposed of in the Ordinary Course of Business since August 31, 2001. The Company and its Subsidiaries own, or as of the Closing will own, all of the assets necessary for the conduct of their respective businesses in the same manner as they have been conducted since the August 31, 2001. (f) Subsidiaries. Section 4(f) of the Disclosure Schedule sets forth for each Subsidiary of the Company (i) its name and jurisdiction of incorporation or formation, (ii) the number of shares or membership interests, as applicable, of authorized Capital Stock of each class of its Capital Stock, (iii) the number of issued and outstanding shares or membership interests, as applicable, of each class of its Capital Stock, the names of the holders thereof as such names are reflected in the Company's records, and the number of shares or membership interests, as applicable, held by each such holder, and (iv) the number of shares or membership interests, as applicable, of its Capital Stock held in treasury. All of the issued and outstanding shares or membership interests, as applicable, of Capital Stock of each Subsidiary and each 10 Affiliate of the Company have been duly authorized and are validly issued, fully paid, and nonassessable, except as otherwise provided in Section 180.0622(2)(b) of the WBCL. One of the Company or its Subsidiaries holds of record and owns beneficially all of the outstanding shares or membership interests, as applicable, of each Subsidiary of the Company, free and clear of any restrictions on transfer (other than restrictions under the Securities Act and state securities laws), Liens, Taxes, Security Interests, options, warrants, purchase rights, contracts, commitments, equities, claims, and demands. There are no outstanding or authorized options, warrants, purchase rights, subscription rights, conversion rights, exchange rights, or other contracts or commitments that could require the Company to sell, transfer, or otherwise dispose of any Capital Stock of any of its Subsidiaries or that could require any Subsidiary of the Company to issue, sell, or otherwise cause to become outstanding any of its own Capital Stock. There are no outstanding stock appreciation, phantom stock, profit participation, or similar rights with respect to any Subsidiary of the Company. There are no voting trusts, proxies, or other agreements or understandings with respect to the voting of any Capital Stock of any Subsidiary of the Company. None of the Company and its Subsidiaries controls directly or indirectly or has any direct or indirect equity participation in any corporation, partnership, trust, or other business association which is not a Subsidiary of the Company and its Subsidiaries. (g) Financial Statements. Attached hereto as Exhibit A are the following financial statements (collectively, including the notes thereto, the "Financial Statements"): audited consolidated balance sheet as of August 31, 2000 and unaudited consolidated balance sheet as of August 31, 2001 (the "Most Recent Balance Sheet") and audited consolidated statements of operations, changes in shareholders' equity, and cash flows for the fiscal years ended August 31, 1999 and August 31, 2000, and unaudited consolidated statements of operations, changes in shareholders' equity, and cash flows for the fiscal year ended August 31, 2001, for the Company and its Subsidiaries. The Financial Statements have been prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby, present fairly the financial condition of the Company and its Subsidiaries as of such dates and the results of operations of the Company and its Subsidiaries for such periods, are correct and complete in all material respects, and are consistent in all material respects with the books and records of the Company and its Subsidiaries (which books and records are correct and complete in all material respects). (h) Events Subsequent to Most Recent Fiscal Year End. Since August 31, 2001, there has not been any material adverse change in the business, financial condition, operations, or results of operations of the Company and its Subsidiaries taken as a whole. Without limiting the generality of the foregoing, except with respect to the transactions contemplated hereby, since that date: (i) none of the Company and its Subsidiaries has sold, leased, transferred, or assigned any material assets, tangible or intangible, outside the Ordinary Course of Business; (ii) none of the Company and its Subsidiaries has entered into any material agreement, contract, lease, or license outside the Ordinary Course of Business; (iii) no party (including any of the Company or its Subsidiaries) has accelerated, terminated, made material modifications to, or canceled any material agreement, 11 contract, lease, or license to which any of the Company or its Subsidiaries is a party or by which any of them is bound nor will any party have a right to do the same due to this transaction; (iv) none of the Company and its Subsidiaries has imposed any Security Interest upon any of its assets, tangible or intangible including, but not limited to, its Intellectual Property; (v) none of the Company and its Subsidiaries has made any capital expenditures outside the Ordinary Course of Business; (vi) none of the Company and its Subsidiaries has made any capital investment in, or any loan to, any other Person outside the Ordinary Course of Business; (vii) the Company and its Subsidiaries have not created, incurred, assumed, or guaranteed any indebtedness for borrowed money and capitalized lease obligations; (viii) none of the Company and its Subsidiaries has delayed or postponed the payment of accounts payable and other Liabilities outside the Ordinary Course of Business; (ix) none of the Company and its Subsidiaries has granted any license or sublicense of any material rights under or with respect to any of its Intellectual Property; (x) there has been no change made or authorized in the Organizational Documents of any of the Company or its Subsidiaries; (xi) none of the Company and its Subsidiaries has issued, sold, or otherwise disposed of any of its Capital Stock, or granted any options, warrants, or other rights to purchase or obtain (including upon conversion, exchange, or exercise) any of its Capital Stock; (xii) none of the Company and its Subsidiaries has declared, set aside, or paid any dividend or made any distribution with respect to its Capital Stock (whether in cash or in kind) or redeemed, purchased, or otherwise acquired any of its Capital Stock; (xiii) none of the Company and its Subsidiaries has experienced any damage, destruction, or loss (whether or not covered by insurance) to its property that is material to the Company or its Subsidiaries; (xiv) none of the Company and its Subsidiaries has made any loan to, or entered into any other transaction with, any of its directors, officers, and employees outside the Ordinary Course of Business; (xv) none of the Company and its Subsidiaries has entered into any employment contract or collective bargaining agreement, written or oral, or modified the terms of any existing such contract or agreement; (xvi) none of the Company and its Subsidiaries has granted any increase in the base compensation of any of its directors, officers, and employees outside the Ordinary Course of Business; 12 (xvii) none of the Company and its Subsidiaries has adopted, amended, modified, or terminated any bonus, profit sharing, incentive, severance, or other plan, contract, or commitment for the benefit of any of its directors, officers, and employees (or taken any such action with respect to any other Employee Benefit Plan); (xviii) none of the Company and its Subsidiaries has made any other change in employment terms for any of its directors, officers, and employees outside the Ordinary Course of Business; (xix) none of the Company and its Subsidiaries has made or pledged to make any charitable or other capital contribution outside the Ordinary Course of Business; (xx) except as otherwise disclosed in this Section 4(h), there has not been any other occurrence, event, incident, action, failure to act, or transaction outside the Ordinary Course of Business involving any of the Company and its Subsidiaries; (xxi) none of the Company and its Subsidiaries has committed to any of the foregoing; and (xxii) none of the Company and its Subsidiaries has entered into any agreement to buy any shares of Capital Stock (or other equity interests of entities other than corporations) of any partnership, joint venture, trust, corporation, limited liability company or other entity. (i) Undisclosed Liabilities. None of the Company and its Subsidiaries has any Liability, except for (i) liabilities set forth in the Financial Statements or disclosed in the Company's filings with the SEC and (ii) liabilities which have arisen after August 31, 2001 in the Ordinary Course of Business. (j) Legal Compliance. (i) Each of the Company and its Subsidiaries has complied with all applicable laws (including rules, regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and charges thereunder) of federal, state, local, and foreign governments (and all agencies thereof), and no action, suit, proceeding, hearing, investigation, charge, complaint, claim, demand, or notice has been filed or commenced against any of them alleging any failure so to comply, except where the failure to comply would not have a material adverse effect on the business, financial condition, operations or results of operations of the Company or its Subsidiaries. (ii) To the Knowledge of the Company, the Company and its Subsidiaries hold and are in compliance in all material respects, or will be in compliance in all material respects as of the Closing, with all permits, certificates, licenses, approvals, registrations and authorizations required by them in connection with the conduct of their respective businesses and the ownership and operation of their respective assets under all federal, state, local and foreign laws, rules and regulations (the "Permits"). All of the Permits are, and as of the Closing of the transactions contemplated hereby will be, in full force and effect in all respects in accordance with their respective terms. 13 (k) Tax Matters. (i) Each of the Company and its Subsidiaries (and any Affiliated Groups of which any of the Company or its Subsidiaries has been a member at any time) has filed all Tax Returns that it was required to file. All such Tax Returns were correct and complete in all respects. All Taxes owed by any of the Company or its Subsidiaries (and any Affiliated Groups of which any of the Company or its Subsidiaries has been a member at any time) (whether or not shown on any Tax Return) have been paid or fully accrued for in the Financial Statements. None of the Company and its Subsidiaries (or any Affiliated Groups of which any of the Company or its Subsidiaries has been a member at any time) currently is the beneficiary of any extension of time within which to file any Tax Return. (ii) There is no dispute or claim concerning any Tax Liability of any of the Company or its Subsidiaries either (A) claimed or raised by any authority in writing or (B) as to which the Company and the directors and officers of the Company and its Subsidiaries has Knowledge based upon personal contact with any agent of such authority. (iii) Section 4(k) of the Disclosure Schedule lists all federal, state, local, and foreign Income Tax Returns filed with respect to each of the Company and its Subsidiaries for taxable periods ended on or after August 31, 1998 (including any returns filed by the parent of a consolidated, combined, unitary or similar group which includes any of the Company and its Subsidiaries for such periods), indicates all Tax Returns for taxable periods ended on or after August 31, 1998 that have been audited, and indicates all Tax Returns for taxable periods ended on or after August 31, 1998 that currently are the subject of audit. The Company has delivered to the Buyer correct and complete copies of all federal Income Tax Returns, examination reports, and statements of deficiencies with respect to each of the Company and its Subsidiaries since August 31, 1998. None of the Company and its Subsidiaries (or any Affiliated Group of which any of the Company or its Subsidiaries has been a member at any time) has waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency. (iv) None of the Company and its Subsidiaries has made any payments, is obligated to make any payments, or is a party to any agreement that under certain circumstances could obligate it to make any payments that will not be deductible under Code ss.280G. None of the Company and its Subsidiaries is a party to any Tax allocation or sharing agreement. None of the Company and its Subsidiaries (A) has been a member of an Affiliated Group filing a consolidated federal Income Tax Return (other than a group the common parent of which was the Company) or (B) has any Liability for the Taxes of any Person (other than any of the Company or its Subsidiaries) under Reg. ss.1.1502-6 (or any similar provision of state, local, or foreign law), as a transferee or successor, by contract, or otherwise. (v) The unpaid Taxes of the Company and its Subsidiaries did not, as of August 31, 2001, exceed the reserve for Tax Liability (rather than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth in the Financial Statements and will not exceed that reserve as adjusted for operations and transactions through the Closing Date. 14 (vi) None of the Company and its Subsidiaries will be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any (A) change in method of accounting for a taxable period ending on or prior to the Closing Date under Code ss.481(c) (or any corresponding or similar provision of state, local or foreign Income Tax law); (B) "closing agreement" as described in Code ss.7121 (or any corresponding or similar provision of state, local or foreign Income Tax law) executed on or prior to the Closing Date; (C) deferred intercompany gain or any excess loss account described in Treasury Regulations under Code ss.1502 (or any corresponding or similar provision of state, local or foreign Income Tax law); (D) installment sale or open transaction disposition made on or prior to the Closing Date; or (E) prepaid amount received on or prior to the Closing Date. (vii) There are no Liens for Taxes (other than Taxes not yet due and payable) upon the assets of any of the Company and its Subsidiaries (and any Affiliated Group of which any of the Company or its Subsidiaries has been a member at any time). (viii) None of the Company and its Subsidiaries has been a United States real property holding corporation within the meaning of Code ss.897(c)(2) during the applicable period specified in Code ss.897(c)(1)(A)(ii). (l) Real Property. (i) Section 4(l)(i) of the Disclosure Schedule sets forth the address and description of each parcel of Owned Real Property. With respect to each parcel of Owned Real Property: (A) the Company or one of its Subsidiaries has good and marketable fee simple title, free and clear of all liens and encumbrances, except Permitted Encumbrances; (B) none of the Company or its Subsidiaries has leased or otherwise granted to any Person the right to use or occupy such Owned Real Property or any portion thereof; and (C) there are no outstanding options, rights of first offer or rights of first refusal to purchase such Owned Real Property or any portion thereof or interest therein. (ii) Section 4(l)(ii) of the Disclosure Schedule sets forth the address of each parcel of Leased Real Property, and a true and complete list of all Leases for each such Leased Real Property (including the date and name of the parties to such Lease document). The Company has delivered to the Buyer a true and complete copy of each such Lease document (including all amendments, extensions, renewals, guaranties and other documents with respect thereto), and in the case of any oral Lease, a written summary of the material terms of such Lease. With respect to each of the Leases: (A) such Lease is legal, valid, binding, enforceable and in full force and effect; 15 (B) the transaction contemplated by this Agreement does not require the consent of any other party to such Lease, will not result in a breach of or default under such Lease, and will not otherwise cause such Lease to cease to be legal, valid, binding, enforceable and in full force and effect on identical terms following the Closing; (C) to the Knowledge of the Company, no party to such Lease has repudiated any provision thereof, and there are no disputes, oral agreements or forbearance programs in effect with respect to such Lease; (D) to the Knowledge of the Company, none of the Company and its Subsidiaries, or any other party to the Lease, is in breach or default under such Lease, and, to the Knowledge of the Company, no event has occurred or circumstance exists which, with the delivery of notice, the passage of time or both, would constitute such a breach or default, or permit the termination, modification or acceleration of rent under such Lease; (E) no security deposit or portion thereof deposited with respect to such Lease has been applied in respect of a breach or default under such Lease which has not been redeposited in full; (F) none of the Company and its Subsidiaries owes, or will owe in the future, any brokerage commissions or finder's fees with respect to such Lease; (G) the other party to such Lease is not an Affiliate of, and otherwise does not have any economic interest in, any of the Company or its Subsidiaries; (H) none of the Company and its Subsidiaries has subleased, licensed or otherwise granted any Person the right to use or occupy such Leased Real Property or any portion thereof; and (I) none of the Company and its Subsidiaries has collaterally assigned or granted any other security interest in such Lease or any interest therein. (iii) The Owned Real Property identified in Section 4(l)(i) of the Disclosure Schedule, and the Leased Real Property identified in Section 4(l)(ii) of the Disclosure Schedule (the "Real Property") comprise all of the real property used or intended to be used in the business of the Company and its Subsidiaries; and none of the Company and its Subsidiaries is a party to any agreement or option to purchase any real property or interest therein. (iv) To the Knowledge of the Company, (A) all buildings (or portions thereof), structures, fixtures and building systems, included in the Real Property are in condition and repair sufficient for the operation of the business of the Company and its Subsidiaries, and (B) those building systems which are not included in the Real Property and all equipment, and all components thereof, are in good condition and repair, reasonable wear and tear excepted, and sufficient for the operation of the business of the Company and its Subsidiaries. To the Knowledge of the Company, there are no facts or conditions affecting any of the Improvements which would, individually or in the aggregate, interfere in any material respect with the use or 16 occupancy of the Improvements or any portion thereof in the operation of the business of the Company and its Subsidiaries as currently conducted thereon. (v) None of Company or its Subsidiaries has received written notice of any condemnation, expropriation or other proceeding in eminent domain, affecting any parcel of Owned Real Property or any portion thereof or interest therein. There is no injunction, decree, order, writ or judgment outstanding, nor any claims, litigation, administrative actions or similar proceedings, pending, or, to the Knowledge of the Company, threatened, relating to the ownership, lease, use or occupancy of the Owned Real Property or any portion thereof, or the operation of the business of the Company or its Subsidiaries as currently conducted thereon and will not exceed that reserve as adjusted for operations and transactions through the Closing Date. (vi) To the Knowledge of the Company, the Real Property is in material compliance with all applicable building, zoning, subdivision, health and safety and other land use Laws, including The Americans with Disabilities Act of 1990, as amended, and all insurance requirements affecting the Real Property (collectively, the "Real Property Laws"). None of Company or its Subsidiaries has received any notice of violation of any Real Property Law and, to the Knowledge of the Company, there is no basis for the issuance of any such notice or the taking of any action for such violation. (vii) To the Knowledge of the Company, all certificates of occupancy, permits, licenses, franchises, approvals and authorizations (collectively, the "Real Property Permits") of all governmental authorities having jurisdiction over the Real Property, required or appropriate to have been issued to the Company or its Subsidiaries to enable the Real Property to be lawfully occupied and used for all of the purposes for which it is currently occupied and used have been lawfully issued and are in full force and effect. Neither the Company nor any Subsidiary has received or been informed by a third party of the receipt by it of any notice from any governmental authority having jurisdiction over the Real Property threatening a suspension, revocation, modification or cancellation of any Real Property Permit and, to the Knowledge of the Company, there is no basis for the issuance of any such notice or the taking of any such action. (viii) Each parcel of Real Property has direct access to a public street adjoining the Real Property or has access to a public street via insurable easements benefitting such parcel of Real Property, and such access is not dependent on any land or other real property interest which is not included in the Real Property. None of the Improvements or any portion thereof is dependent for its access, use or operation on any land, building, improvement or other real property interest which is not included in the Real Property. (ix) To the Knowledge of the Company, all water, oil, gas, electrical, steam, compressed air, telecommunications, sewer, storm and waste water systems and other utility services or systems for the Real Property have been installed and are operational and sufficient for the operation of the business of the Company and its Subsidiaries as currently conducted thereon. (x) To the Knowledge of the Company, the Company and its Subsidiaries' use or occupancy of the Real Property or any portion thereof and the operation of the business of the 17 Company and its Subsidiaries as currently conducted thereon is not dependent on a "permitted nonconforming use" or "permitted non-conforming structure" or similar variance, exemption or approval from any governmental authority. (xi) To the Knowledge of the Company, the current use and occupancy of the Owned Real Property and the operation of the business of the Company and its Subsidiaries as currently conducted thereon does not violate any easement, covenant, condition, restriction or, similar provision in any instrument of record or other unrecorded agreement affecting such Owned Real Property, the violation of which would have a material adverse effect on the operation of the business of the Company or its Subsidiaries. (m) Intellectual Property. (i) To the Knowledge of the Company, none of the Company and its Subsidiaries has interfered with, infringed, misappropriated, or violated any Intellectual Property rights of third parties that are currently not resolved, and neither the Company nor the directors, officers or employees of the Company and its Subsidiaries has received any correspondence, charge, complaint, claim, demand, or notice alleging any such non-resolved interference, infringement, misappropriation, or violation (including any offer for a license or any claim that any of the Company or its Subsidiaries must refrain from using any Intellectual Property rights of any third party). To the Knowledge of the Company, no third party has interfered with, infringed, misappropriated, or violated any Intellectual Property rights of any of the Company or its Subsidiaries that are currently not resolved. (ii) Section 4(m)(ii) of the Disclosure Schedule identifies each issued patent and each trademark, service mark, copyright, trade name and domain name registration that has been issued to any of the Company or its Subsidiaries with respect to any of its and their Intellectual Property, identifies each pending patent application and all applications for registration of any trademark, service mark, copyright and trade name that any of the Company or its Subsidiaries has made with respect to any of its Intellectual Property, and identifies each license, agreement, or other permission that any of the Company or its Subsidiaries has granted to any third party with respect to any of its Intellectual Property (together with any exceptions). The Company has delivered to the Buyer correct and complete copies of all such patents, registrations, applications for registration and patent, licenses, agreements, and permissions (as amended). Section 4(m)(ii) of the Disclosure Schedule also identifies each trade name, unregistered trademark, and unregistered copyright used by any of the Company or its Subsidiaries in connection with any of its businesses. With respect to each item of Intellectual Property required to be identified in Section 4(m)(ii) of the Disclosure Schedule: (A) the Company and its Subsidiaries possess all right, title, and interest in and to such item, free and clear of any Security Interest, license, or other restriction or Liens; (B) the item is not subject to any outstanding injunction, judgment, order, decree, ruling, or charge; 18 (C) no action, suit, proceeding (administrative or judicial), hearing, investigation, charge, complaint, claim, or demand is pending or, to the Knowledge of the Company is threatened which challenges the legality, validity, enforceability, use, or ownership of the item; (D) all maintenance and other fees for Intellectual Property registrations have been paid and are up to date, and all applications for registration of the Intellectual Property are in good standing and are being diligently prosecuted; and (E) none of the Company and its Subsidiaries has ever agreed to indemnify any Person for or against any use, interference, infringement, misappropriation or other conflict with respect to the item. (iii) Section 4(m)(iii) of the Disclosure Schedule identifies each material item of Intellectual Property that any third party owns and that any of the Company or its Subsidiaries uses pursuant to license, sublicense, lease, agreement, or permission. The Company has delivered to the Buyer correct and complete copies of all such licenses, sublicenses, leases, agreements, and permissions (as amended). With respect to each item of Intellectual Property required to be identified in Section 4(m)(iii) of the Disclosure Schedule: (A) the license, sublicense, agreement, or permission covering the item is legal, valid, binding, enforceable, and in full force and effect in all respects; (B) no party to the license, sublicense, agreement, or permission is in breach or default, and no event has occurred which with notice or lapse of time would constitute a breach or default or permit termination, modification, or acceleration thereunder; (C) no party to the license, sublicense, lease, agreement, or permission has repudiated any provision thereof nor shall have a right to do the same as a result of this transaction; and (D) none of the Company and its Subsidiaries has granted any sublicense or similar right with respect to such license, sublicense, lease, agreement, or permission. (n) Tangible Assets. The Company and its Subsidiaries have good and marketable title to and are in possession of all items of tangible personal property used in their respective businesses (other than leased property), and such property is free and clear of all Security Interests. The buildings, machinery, equipment and other tangible assets that the Company and its Subsidiaries own or lease are free from material defects (patent and latent), have been maintained in accordance with normal industry practice, and are in good operating condition and repair (subject to normal wear and tear). Section 4(n) of the Disclosure Schedule hereto describes all sales of Tangible Personal Property by the Company and its Subsidiaries since August 31, 2001 outside the Ordinary Course of Business and sets forth (i) the date of any such sale, (ii) a description of the Tangible Personal Property sold in any such sale, (iii) the sales price of the Tangible Personal Property sold in any such sale and (iv) the reason(s) for such sale. 19 (o) Contracts. Section 4(o) of the Disclosure Schedule lists the following contracts and other agreements, whether written or oral, to which any of the Company or its Subsidiaries is a party or otherwise bound (except those agreements contemplated by this Agreement or in connection with the restructuring in connection therewith): (i) any agreement (or group of related agreements) for the lease of personal property to or from any Person providing for lease payments which extend over a period of more than 180 days or include consideration in excess of $250,000; (ii) any agreement (or group of related agreements) for the purchase or sale of raw materials, commodities, supplies, products, or other personal property, or for the furnishing or receipt of services, the performance of which will extend over a period of more than 180 days or involve consideration in excess of $250,000; (iii) any agreement concerning a partnership or joint venture; (iv) any agreement (or group of related agreements) under which it has created, incurred, assumed, or guaranteed any indebtedness for borrowed money, or any capitalized lease obligation, or under which it has imposed a Security Interest on any of its assets, tangible or intangible; (v) any material agreement imposing confidentiality obligations on the Company or its Subsidiaries; (vi) any contract or agreement prohibiting it from freely engaging in any business or competing anywhere in the world; (vii) any agreement with the Company and its Affiliates (other than the Company and its Subsidiaries); (viii) any profit sharing, stock option, stock purchase, stock appreciation, deferred compensation, severance, or other plan or arrangement for the benefit of its current or former directors, officers, and employees; (ix) any collective bargaining agreement; (x) any agreement for the employment of any individual on a full-time, part-time, consulting, or other basis providing annual compensation in excess of $50,000 or providing material severance benefits; (xi) any contract, agreement or other arrangement with any officer or director of the Company or any of its Subsidiaries; (xii) any agreement under which it has advanced or loaned any amount to any of its directors, officers, and employees; 20 (xiii) any agreement under which the consequences of a default or termination could have a material adverse effect on the business, financial condition, operations or results of operations of the Company or its Subsidiaries; or (xiv) any other agreement (or group of related agreements) the performance of which involves consideration in excess of $250,000. The Company has delivered to the Buyer a correct and complete copy of each written agreement (as amended) listed in Section 4(o) of the Disclosure Schedule and a written summary setting forth the material terms and conditions of each oral agreement referred to in Section 4(o) of the Disclosure Schedule. With respect to each such agreement: (A) the agreement is legal, valid, binding, enforceable (except as enforceability may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting or relating to creditors' rights generally, and by general equitable principles) and in full force and effect; (B) the agreement will continue to be legal, valid, binding, enforceable (except as enforceability may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting or relating to creditors' rights generally, and by general equitable principles), and in full force and effect on identical terms following the consummation of the transactions contemplated hereby, (C) the Company is not, and to the Knowledge of the Company, no other party is in breach or default, and no event has occurred which with notice or lapse of time would constitute a breach or default, or permit termination, modification, or acceleration, under the agreement; and (D) the Company has not, and to the Knowledge of the Company, no other party has repudiated any material provision of the agreement. (p) Notes and Accounts Receivable. Section 4(p) of the Disclosure Schedule is an accounts receivable aging report which shows (i) the accounts receivable of the Company and its Subsidiaries, (ii) the name of each account debtor, (iii) the aging of each account receivable and the nature of the transaction in which it arose if other than an account receivable arising in the Ordinary Course of Business and (iv) a list of the provisions for reserves for doubtful accounts receivable or write-offs of accounts receivable made by the Company and its Subsidiaries since August 31, 1999. The accounts receivable of the Company and its Subsidiaries represent bona fide indebtedness incurred by account debtors and arose in the Ordinary Course of Business. No event has occurred that would, under practices in effect when the Most Recent Balance Sheet was prepared, require an increase in the reserves for any accounts receivable and, to the Knowledge of the Company, there is no contest, claim or right of set-off with any account debtor relating to the amount or validity of any account receivable other than those which do not exceed, in the aggregate, the reserve for uncollectible accounts contained in the Financial Statements. The Company and its Subsidiaries have good and marketable title to their respective accounts receivable reflected on the Most Recent Balance Sheet and to each of the accounts receivables that arose after August 31, 2001, free and clear of all Security Interests. (q) Powers of Attorney. To the Knowledge of the Company, there are no outstanding powers of attorney executed on behalf of any of the Company or its Subsidiaries. (r) Insurance. Section 4(r) of the Disclosure Schedule sets forth the following information with respect to each insurance policy (including policies providing property, casualty, liability, and workers' compensation coverage and bond and surety arrangements) 21 currently in effect with respect to which any of the Company or its Subsidiaries is a party, a named insured, or otherwise the beneficiary of coverage: (i) the name, address, and telephone number of the agent; (ii) the name of the insurer, the name of the policyholder, and the name of each covered insured; (iii) the policy number and the period of coverage; (iv) the scope (including an indication of whether the coverage is on a claims made, occurrence, or other basis) and amount (including a description of how deductibles and ceilings are calculated and operate) of coverage; and (v) a description of any retroactive premium adjustments or other material loss-sharing arrangements. With respect to each such insurance policy: (A) the policy is legal, valid, binding, enforceable, and in full force and effect in all material respects; (B) the policy will continue to be legal, valid, binding, enforceable, and in full force and effect on identical terms following the consummation of the transactions contemplated hereby; (C) neither any of the Company or its Subsidiaries nor, to the Knowledge of the Company, any other party to the policy is in breach or default (including with respect to the payment of premiums or the giving of notices), and, to the Knowledge of the Company, no event has occurred which, with notice or the lapse of time, would constitute such a breach or default, or permit termination, modification, or acceleration, under the policy; and (D) no party to the policy has repudiated any material provision thereof. Section 4(r) of the Disclosure Schedule describes any material self-insurance arrangements affecting any of the Company or its Subsidiaries. (s) Litigation. Section 4(s) of the Disclosure Schedule sets forth each instance in which any of the Company or its Subsidiaries (i) is subject to any outstanding injunction, judgment, order, decree, ruling, or charge or (ii) is a party or, to the Knowledge of the Company, is threatened to be made a party to any action, suit, proceeding, hearing, or investigation of, in, or before any court or quasi-judicial or administrative agency of any federal, state, local, or foreign jurisdiction or before any arbitrator. None of the actions, suits, proceedings, hearings, and investigations set forth in Section 4(s) of the Disclosure Schedule could reasonably be expected result in any material adverse change in the business, financial condition, operations or results of operations of any of the Company and its Subsidiaries. To the Knowledge of the Company, there is no reason to believe that any such action, suit, proceeding, hearing, or investigation may be brought or threatened against any of the Company and its Subsidiaries. (t) Employees. To the Knowledge of the Company, no executive, key employee, or significant group of employees plans to terminate employment with any of the Company or its Subsidiaries during the next 12 months. None of the Company and its Subsidiaries is a party to or bound by any collective bargaining agreement, nor has any of them experienced any strike or material grievance, claim of unfair labor practices, or other collective bargaining dispute within the past three years. None of the Company and its Subsidiaries has committed any material 22 unfair labor practice. To the Knowledge of the Company, there are no organizational effort presently being made or threatened by or on behalf of any labor union with respect to employees of any of the Company or its Subsidiaries. (u) Employee Benefits. (i) Section 4(u) of the Disclosure Schedule sets forth an accurate and complete list of each material Employee Benefit Plan that any of the Company or its Subsidiaries or ERISA Affiliates maintains, has any Liability or potential Liability, or to which any of the Company or its Subsidiaries or ERISA Affiliates contributes or has any obligation to contribute on behalf of any current or former employees of the Company and its Subsidiaries; and, with respect to each such Employee Benefit Plan: (A) such Employee Benefit Plan (and each related trust, insurance contract, or fund) has been maintained, funded and administered substantially in accordance with the terms of such Employee Benefit Plan and complies in form and in operation in all material respects with the applicable requirements of ERISA, the Code, and other applicable laws; (B) all required reports and descriptions (including annual reports (IRS Form 5500), summary annual reports, and summary plan descriptions) have been timely filed and/or distributed in accordance with the applicable requirements of ERISA and the Code with respect to each such Employee Benefit Plan. The requirements of COBRA have been met in all material respects with respect to each such Employee Benefit Plan which is an Employee Welfare Benefit Plan subject to COBRA; (C) all contributions (including all employer contributions and employee salary reduction contributions) which are due for any period ending on or before the Closing Date have been made within the time periods prescribed by ERISA and the Code to each such Employee Benefit Plan which is an Employee Pension Benefit Plan and all contributions for any period ending on or before the Closing Date which are not yet due have been made to each such Employee Pension Benefit Plan or accrued by the Company and its Subsidiaries. All premiums or other payments for all periods ending on or before the Closing Date have been paid with respect to each such Employee Benefit Plan which is an Employee Welfare Benefit Plan; (D) each such Employee Benefit Plan which is intended to meet the requirements of a "qualified plan" under Code ss.401(a) has received a favorable determination letter from the Internal Revenue Service that such Employee Benefit Plan is so qualified, and there are no facts or circumstances which exist that could reasonably be expected to adversely affect the qualified status of any such Employee Benefit Plan; (E) the market value of assets under each such Employee Benefit Plan which is an Employee Pension Benefit Plan (other than any Multiemployer Plan) equals or exceeds the present value of all vested and nonvested liabilities thereunder (determined on a plan termination basis using interest rates, factors and other methods specified by the Pension Benefits Guaranty Corporation (including its regulations) for the valuation of benefits upon a plan termination); 23 (F) the Company has delivered or made available to the Buyer or its agents correct and complete copies of the plan documents and summary plan descriptions, the most recent favorable determination letter received from the Internal Revenue Service, the most recent annual report (IRS Form 5500, with all applicable attachments), and all related trust agreements, insurance contracts, and other funding arrangements which implement or form a part of each such Employee Benefit Plan; and (G) no employee or former employee of the Company and its Subsidiaries will become entitled to any bonus, severance, job security, or similar benefit or any enhanced benefit (including, without limitation, the acceleration of vesting or exercise of an incentive award) solely as a result of the transactions contemplated hereby. (ii) With respect to each Employee Benefit Plan that any of the Company or its Subsidiaries and any ERISA Affiliate maintains, to which any of them contributes, or has any obligation to contribute, or with respect to which any of them has any Liability or potential Liability: (A) no such Employee Benefit Plan which is an Employee Pension Benefit Plan (other than any Multiemployer Plan) has been completely or partially terminated or been the subject of a Reportable Event as to which notices would be required to be filed with the PBGC. No proceeding by the PBGC to terminate any such Employee Pension Benefit Plan (other than any Multiemployer Plan) has been instituted or, to the Knowledge of the Company, threatened; (B) there have been no Prohibited Transactions with respect to any such Employee Benefit Plan. No Fiduciary has any Liability for any breach of fiduciary duty or any other failure to act or comply in connection with the administration or investment of the assets of any such Employee Benefit Plan nor do the transactions contemplated by this agreement constitute transactions which would subject any such party to either a civil penalty assessed pursuant to ERISA ss.502(i) or the Tax or penalty on prohibited transactions imposed by Code ss.4975. No action, suit, proceeding, hearing, or investigation with respect to the administration or the investment of the assets of any such Employee Benefit Plan (other than routine claims for benefits) is pending or, to the Knowledge of the Company, threatened which could result in any Liability to the Company and its Subsidiaries and, to the Knowledge of the Company, there are no circumstances which could give rise to any such action, suit, proceeding, hearing, or investigation; (C) none of the Company and its Subsidiaries has incurred any Liability (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due) to the PBGC (other than with respect to PBGC premium payments not yet due) or otherwise under Title IV of ERISA (including any withdrawal liability as defined in ERISA ss.4201) or under the Code with respect to any such Employee Benefit Plan which is an Employee Pension Benefit Plan, or under COBRA with respect to any such Employee Benefit Plan which is an Employee Welfare Benefit Plan; 24 (iii) none of the Company and its Subsidiaries or any ERISA Affiliate contributes to, has any obligation to contribute to, or has any Liability (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due), including any withdrawal liability (as defined in ERISA ss.4201), under or with respect to any Multiemployer Plan; and (iv) none of the Company and its Subsidiaries maintains, contributes to or has an obligation to contribute to, or has any Liability or potential Liability with respect to, any Employee Welfare Benefit Plan providing medical, health, or life insurance or other welfare-type benefits for current or future retired or terminated employees of the Company and its Subsidiaries (or any spouse or other dependent thereof) other than in accordance with COBRA. (v) Guaranties. None of the Company and its Subsidiaries is a guarantor or otherwise is responsible for any Liability or obligation (including indebtedness) of any other Person. (w) Environment, Health, and Safety Matters. (i) Each of the Company and its Subsidiaries and their respective predecessors and Affiliates and all of the Real Property and the use and development thereof has complied in all material respects and is in compliance in all material respects with all Environmental, Health, and Safety Requirements. (ii) Without limiting the generality of the foregoing, each of the Company and its Subsidiaries and their respective Affiliates, has obtained, has complied, and is in compliance in all material respects with all permits, licenses and other authorizations that are required pursuant to Environmental, Health, and Safety Requirements for the occupation of its facilities, the development and use of the Real Property, and the operation of its business. (iii) None of the Company and its Subsidiaries or their respective Affiliates has received any written or oral notice, report or other information regarding any actual or alleged violation of Environmental, Health, and Safety Requirements, or any Liabilities or potential Liabilities (whether accrued, absolute, contingent, unliquidated or otherwise), including any investigatory, remedial or corrective obligations, relating to any of them or their facilities (including without limitation the Real Estate) arising under Environmental, Health, and Safety Requirements. (iv) None of the following exists at any property or facility owned or operated by the Company or its Subsidiaries: (1) underground storage tanks, (2) asbestos-containing material in any friable and damaged form or condition, (3) materials or equipment containing polychlorinated biphenyls, or (4) solid waste landfills, solid waste surface impoundments, or solid waste disposal areas. (v) To the Knowledge of the Company, none of the Company and its Subsidiaries or any of their respective predecessors or Affiliates has treated, stored, disposed of, arranged for or permitted the disposal of, transported, handled, or released any substance, including without limitation any hazardous substance, or owned or operated any property or 25 facility (and no such property or facility is contaminated by any such substance) in a manner that has given or would give rise to Liabilities, including any Liability for response costs, corrective action costs, personal injury, property damage, natural resources damages or attorney fees or any remedial or corrective obligation, pursuant to the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended ("CERCLA") or the Solid Waste Disposal Act, as amended ("SWDA") or any other Environmental, Health, and Safety Requirements. (vi) Except as set forth in Section 8(q) hereof, neither this Agreement nor the consummation of the transaction that is the subject of this Agreement will result in any obligations for site investigation or cleanup, or notification to or consent of government agencies or third parties, pursuant to any of the so-called "transaction-triggered" or "responsible property transfer" Environmental, Health, and Safety Requirements. (vii) None of the Company and its Subsidiaries has assumed, undertaken, or otherwise become subject to, any Liability, including without limitation any obligation for corrective or remedial action, of any other person or entity relating to Environmental, Health, and Safety Requirements. (viii) The Company has provided to the Buyer copies of all environmental reports, audits, assessments, and investigations, all wetlands related studies or sampling documents, and any other material environmental documents, related to the past or present facilities, properties or operations of the Company and its Subsidiaries or any of their respective predecessors, to the extent the foregoing are in the possession, custody, or control of the Company or any of the Company and its Subsidiaries. (x) Certain Business Relationships With the Company and its Subsidiaries. Neither the Company nor its Subsidiaries has entered into any agreements with any Affiliate of the Company or its Subsidiaries which is still in force, and no Affiliate of the Company or its Subsidiaries owns any asset, tangible or intangible, which is used in the business of the Company or its Subsidiaries. (y) SEC Documents. (i) The Company has filed all required forms, reports and documents with the Commission since September 30, 1998, including all exhibits thereto (collectively, the "SEC Documents"), each of which complied in all material respects with all applicable requirements of the Securities Act and the Exchange Act as in effect on the dates so filed. None of the SEC Documents (as of their respective filing dates or, if amended, as of the date of the last such amendment filed prior to the date hereof) contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. (ii) To the Company's Knowledge, there are no facts that could, individually or in the aggregate, reasonably be expected to have a material adverse effect and that have not been disclosed in the SEC Documents or this Agreement (including the Disclosure Schedule) 26 other than the transactions contemplated hereby and the related restructuring in connection herewith. (z) Relationships with Customers and Vendors. Section 4(z) of the Disclosure Schedule sets forth a complete and correct list of the names and addresses of the ten (10) largest vendors and the ten (10) largest customers of each of the Company and its Subsidiaries during the twelve-month period ended on August 31, 2001 and the total sales to or purchases from such customers or vendors made by the Company and its Subsidiaries during each such twelve-month period. No such vendor or customer of the Company and its Subsidiaries has advised the Company and its Subsidiaries, formally or, to the Knowledge of the Company, informally, and to the Knowledge of the Company no such vendor or customer intends to terminate, discontinue or reduce its business with the Company and its Subsidiaries by reason of the transactions contemplated by this Agreement or otherwise. (aa) Accounts Payable and Other Accrued Expenses. The accounts payable, premiums payable to carriers, commissions payable and other accrued expenses of the Company and its Subsidiaries represent bona fide obligations incurred by the Company and its Subsidiaries which arose in the Ordinary Course of Business. Set forth on Section 4(aa) of the Disclosure Schedule is a list of all accounts payable, premiums payable to carriers and other accrued expenses as of August 31, 2001, in each case indicating the name of each payee, the relationship (if any) of the payee to the Company and its Subsidiaries, the amount payable to each payee, the date each such payment is due, the aging of such payable and the nature of the transaction in which it was incurred if other than a trade payable incurred in the Ordinary Course of Business consistent with past practice. (bb) Bank Accounts. Section 4(bb) of the Disclosure Schedule sets forth: (a) the name of each bank in which the Company and its Subsidiaries have an account or safe deposit box used in their respective businesses and the names of all persons authorized to draw thereon or to have access thereto; and (b) the name of each person, corporation, firm, association or business organization, entity or enterprise holding a general or special power of attorney from the Company and its Subsidiaries with respect to such accounts and safe deposits boxes. (cc) Information Accurate and Complete; Reliance. Without limiting the specific language of any other representation or warranty in this Section 4, all information furnished or to be furnished by the Company and its Subsidiaries to the Buyer in this Agreement, and in exhibits or schedules attached hereto, is or will be accurate and complete, includes or will include, to the Knowledge of the Company, all material facts required to be stated therein, and to the Knowledge of the Company, does not or will not contain any untrue statement of a material fact or omit any material fact necessary to make the statements therein not misleading. Notwithstanding any right of the Buyer fully to investigate the affairs of the Company and its Subsidiaries, and notwithstanding any knowledge of facts determined or determinable by the Buyer pursuant to such investigation or right of investigation, the Buyer has the right to rely fully upon the representations and warranties of the Company, contained herein, in the exhibits or the schedules hereto or in any other document delivered in connection with the transactions contemplated hereby. 27 5. Conditions to Obligation to Close. (a) Conditions to Obligation of the Buyer. The obligation of the Buyer to consummate the transactions to be performed by it in connection with the Closing is subject to satisfaction of the following conditions: (i) the representations and warranties set forth in Section 4 above shall be true and correct in all material respects (except to the extent that any such representation or warranty is qualified by any materiality standard, in which case such representation and warranty shall be true and correct in all respects) at and as of the Closing Date; (ii) the Company shall have provided notices to third parties, and shall have procured any third party consents, that the Buyer reasonably requested in connection with the matters referred to in Section 4(c) above; (iii) no action, suit, or proceeding shall be pending before any court or quasi-judicial or administrative agency of any federal, state, local, or foreign jurisdiction or before any arbitrator wherein an unfavorable injunction, judgment, order, decree, ruling, or charge would (A) prevent consummation of any of the transactions contemplated by this Agreement, (B) cause any of the transactions contemplated by this Agreement to be rescinded following consummation, (C) affect adversely the right of the Buyer to own the Shares and to control the Company and its Subsidiaries, or (D) affect materially and adversely the right of any of the Company or its Subsidiaries to own its assets and to operate its businesses (and no such injunction, judgment, order, decree, ruling, or charge shall be in effect); (iv) the Buyer, the Company, and the other parties thereto shall have entered into a Stockholders' Agreement in the form of Exhibit C attached hereto and the same shall be in full force and effect; (v) the Buyer, the Company, and the other parties thereto shall have entered into a Registration Agreement in the form of Exhibit D attached hereto and the same shall be in full force and effect; (vi) the Parties shall have received all other material authorizations, consents, and approvals of governments and governmental agencies referred to in Section 3(b), and Section 4(c) above; (vii) the Company shall have furnished the Buyer with the following certificates: (A) certificates, executed by the proper official of each jurisdiction, as to the Good Standing and qualification to do business of the Company and its Subsidiaries in each jurisdiction where the Company or its Subsidiaries is currently qualified to do business; (B) a certificate from the Secretary of the Company confirming the existence, incorporation and Good Standing of the Company on the Closing Date, and attaching copies of its Organizational Documents, and resolutions authorizing the execution, delivery and 28 performance of this Agreement and all other documents and the taking of all action required thereunder or in connection therewith on behalf of the Company and its Subsidiaries; (viii) the Buyer shall have received from Foley & Lardner an opinion in form and substance as set forth in Exhibit B attached hereto, addressed to the Buyer, and dated as of the Closing Date; (ix) the Buyer shall have received the written resignations, effective as of the Closing, of each director of each of the Company's Subsidiaries (other than NCI Foods, LLC and W.S.C. Water Management Corp., and the two directors of Northland Cranberries Sales Corp. who reside in the U.S. Virgin Islands) and of each director, other than John Swendrowski, of the Company; (x) the Company shall have taken such action so that: (i) Marc J. Leder, Rodger R. Krouse, David Kreilein, Clarence E. Terry and Kevin J. Calhoun shall be been appointed to the Board of Directors of the Company, (ii) Marc J. Leder and Rodger R. Krouse shall each have been appointed Vice-Chairmen of the Board, (iii) Marc J. Leder and Rodger R. Krouse shall have been appointed as the sole members of the Board of Directors of each of the Company's Subsidiaries (other than NCI Foods, LLC, W.S.C. Water Management Corp. and Northland Cranberries Sales Corp.) and (iv) Marc J. Leder, Rodger R. Krouse, and Clarence E. Terry shall have been appointed to the Board of Directors of Northland Cranberries Sales Corp., all in accordance with any applicable Organizational Documents and in compliance with all applicable laws; (xi) all actions to be taken by the Company in connection with consummation of the transactions contemplated hereby and all certificates, opinions, instruments, and other documents required to effect the transactions contemplated hereby will be reasonably satisfactory in form and substance to the Buyer; (xii) the Company shall have obtained, in preparation for Closing, at the Company's own cost and expense, and shall have delivered to the Buyer, a commitment for an ALTA Owners Policy of Title Insurance, Form B-1970 (or other form of policy reasonably acceptable to the Buyer), for each parcel of Owned Real Property identified in Section 4(l)(i) of the Disclosure Schedule (the "Title Commitments"), issued by a title insurer satisfactory to the Buyer (the "Title Insurer"), in such amount as the Buyer and the Company reasonably determine to be the fair market value (including all improvements thereon), insuring the Buyer's interest in such parcel as of Closing, subject only to the Permitted Encumbrances and standard title insurance exceptions and requirements, which will be removed or satisfied on or before the Closing except as the same relate to matters appearing in title to the Bog Properties that require a survey for removal. The Company shall deliver at the time of delivery of the Title Commitments, copies of all documents of record referred to therein. The Company will provide the Buyer with title insurance policies ("Title Policies") on or before the Closing, from the Title Insurer based upon the Title Commitments. The Company will deliver to the Title Insurer all affidavits, undertakings and other title clearance documents reasonably necessary to issue the Title Policies and endorsements thereto. Each such Title Policy will be dated as of the date of closing and (a) insure title to the applicable parcels of real estate and all recorded easements benefitting such parcels, subject only to Permitted Encumbrances, (b) contain an "extended 29 coverage endorsement" insuring over the general exceptions contained customarily in such policies, excepting survey matters with respect to the Bog Properties, (c) with respect to the Facility Properties, contain an ALTA Zoning Endorsement 3.1, with parking (or equivalent) to the extent available in the jurisdiction in which the property is located, (d) with respect to the Facility Properties, contain an endorsement insuring that the parcel described in such Title Policy is the parcel shown on the survey delivered with respect to such parcel and a survey accuracy endorsement, (e) contain an endorsement insuring that each street adjacent to such parcel is a public street and that there is direct and unencumbered pedestrian and vehicular access to such street from such parcel, (f) with respect to the Facility Properties, if the real estate covered by such policy consists of more than one record parcel, contain a "contiguity" endorsement insuring that all of the record parcels are contiguous to one another, (g) contain a non-imputation endorsement, (h) contain a tax number endorsement and (i) contain such other endorsements as the Buyer and the Buyer's lender, if any, may reasonably request. (xiii) The Company has procured, at its own cost and expense, in preparation for the Closing, and shall have delivered to the Buyer, current surveys or existing surveys accompanied with Affidavits of no change of each parcel of the Owned Real Property identified in Section 4(l)(i) of the Disclosure Schedule constituting a Facility Property, prepared by a licensed surveyor, satisfactory to the Buyer, and conforming to 1999 ALTA/ACSM Minimum Detail Requirements for Urban Land Title Surveys, and such standards as the Title Insurer may require as a condition to the removal of any survey exceptions from the Title Policy, and certified to the Buyer, the Buyer's lender and the Title Insurer. (xiv) the Company and its Subsidiaries shall have obtained and delivered to the Buyer an estoppel certificate with respect to each of the Leases, dated no more than 30 days prior to the Closing Date, from the other party to such Lease, in form and substance satisfactory to the Buyer; (xv) no damage, destruction, infestation or other change or casualty has occurred with respect to any of the Real Property or any portion thereof that, individually or in the aggregate, would have a material adverse effect on the use or occupancy of the Real Property or the operation of the business of the Company and its Subsidiaries; (xvi) the Company shall have effected a one for four (1:4) reverse stock split of its Class A Common Stock and Class B Common Stock; (xvii) each holder of Class B Common Stock shall have converted all of his, her or its shares of Class B Common Stock into Class A Common Stock, such that immediately following the Closing there are no issued or outstanding shares of Class B Common Stock; (xviii) the Company shall have entered into written agreements with the vendors, suppliers or other creditors set forth on Exhibit E attached hereto, which agreements shall be in form and substance satisfactory to the Buyer in its sole discretion; (xix) the Company's Board of Directors and / or Special Committee thereof shall have received a fairness opinion from Rabobank International; 30 (xx) the Company and the Buyer (or its Affiliate) shall have executed a management services agreement in form and substance satisfactory to the Buyer in its sole discretion; (xxi) since August 31, 2001, no change, occurrence or development with respect to the Company or its Subsidiaries that was not disclosed in the SEC Documents filed prior to the date of this Agreement or in the Disclosure Schedule shall have occurred or become known to the Buyer that has had or could reasonably be expected to have a material adverse effect on the Company's or any of its Subsidiaries' business, properties, assets, results, operations, or conditions (financial or other), either alone or in the aggregate. (xxii) the Management Agreement shall have been terminated; (xxiii) the Severance and Stay Bonus Plan shall have been terminated; (xxiv) the Buyer shall have received delivery of certificates for the Shares as set forth hereunder; (xxv) the Company shall have obtained on terms and conditions satisfactory to the Buyer all of the financing it needs in order to consummate the transactions contemplated hereby and, together with the Cash Purchase Price, fund the working capital requirements of the Company and its Subsidiaries after the Closing; (xxvi) the results of the Buyer's conversations with the Company's customers shall be satisfactory to the Buyer in the Buyer's sole discretion; (xxvii) the Company's Bylaws shall have been amended in form and substance satisfactory to the Buyer in its sole discretion; (xxviii) the Company shall have taken such action so that Marc J. Leder, Rodger R. Krouse, David Kreilein, M. Steven Liff, Clarence E. Terry and C. Deryl Couch shall have been appointed officers of the Company; (xxix) the Company shall deliver to the Buyer Phase I reports for the Facility Properties satisfactory to the Buyer in the Buyer's sole discretion; and (xxx) the Company and the other parties to the Assignment, Assumption and Release Agreements shall have executed the Assignment, Assumption and Release Agreements in form and substance satisfactory to the Buyer in its sole discretion. The Buyer may waive any condition specified in this Section 5(a) if it executes a writing so stating at or prior to the Closing. (b) Conditions to Obligation of the Company. The obligation of the Company to consummate the transactions to be performed by them in connection with the Closing is subject to satisfaction of the following conditions: 31 (i) the representations and warranties set forth in Article 3 above shall be true and correct in all material respects (except to the extent that any such representation or warranty is qualified by any materiality standard, in which case such representation and warranty shall be true and correct in all respects) at and as of the Closing Date; (ii) the Buyer shall have delivered to the Company the consideration required under Section 2(b) hereof and shall have performed and complied with all of its covenants hereunder in all material respects through the Closing; (iii) no action, suit, or proceeding shall be pending before any court or quasi-judicial or administrative agency of any federal, state, local, or foreign jurisdiction or before any arbitrator wherein an unfavorable injunction, judgment, order, decree, ruling, or charge would (A) prevent consummation of any of the transactions contemplated by this Agreement or (B) cause any of the transactions contemplated by this Agreement to be rescinded following consummation (and no such injunction, judgment, order, decree, ruling, or charge shall be in effect); (iv) the Buyer shall have received all other material authorizations, consents, and approvals of governments and governmental agencies referred to in Section 3(b) and Section 4(c) above; (v) the Buyer shall have assigned all of the Assignment, Assumption and Release Agreements to the Company and the same shall be in full force and effect; (vi) the Management Agreement and the Severance and Stay Bonus Plan shall be terminated and, in consideration therefor, the persons set forth on Exhibit F attached hereto shall have received the payments set forth opposite their respective names on such Exhibit F; (vii) the Company's 2001 Stock Option Plan shall have been adopted and options for 4.929% of the fully diluted post transaction equity ownership of the Company shall have been granted; and (viii) Rabobank International shall have been paid its fees, and reimbursed its expenses, as described in Section 4(d) hereof. The Company may waive any condition specified in this Section 5(b), except the condition specified in Section 5(b)(viii) if they execute a writing so stating at or prior to the Closing. 6. Remedies for Breaches of This Agreement. (a) Survival of Representations and Warranties. All of the representations and warranties of the Company contained in Section 4 above shall survive the Closing hereunder (even if the Buyer knew or had reason to know of any misrepresentation or breach of warranty at the time of Closing) and continue in full force and effect through the fifteenth (15th) day after the date of the issuance by the Company's auditors of its audit opinion/report on the consolidated financial statements of the Company for the fiscal year ended August 31, 2002; provided, however, that the representations and warranties contained in Section 3(b) and Sections 4(a), (b), (c), (d), (e), (k), and (w) above shall survive the Closing hereunder (even if the Buyer knew or 32 had reason to know of any misrepresentation or breach of warranty at the time of Closing) and continue in full force and effect until expiration of the applicable period or statute of limitations (including any extensions thereto). (b) Indemnification Provisions for Benefit of the Buyer. In the event the Company breaches any of its representations, warranties, and covenants contained herein, and, if there is an applicable survival period pursuant to Section 6(a) above, provided that the Buyer makes a written claim for indemnification against the Company within such survival period, then the Company agrees to indemnify the Buyer from and against the entirety of any Adverse Consequences the Buyer may suffer through and after the date of the claim for indemnification (including any Adverse Consequences the Buyer may suffer after the end of any applicable survival period) resulting from, arising out of, relating to, in the nature of, or caused by the breach provided, however, that the Company shall not have any obligation to indemnify the Buyer from and against any Adverse Consequences resulting from, arising out of, relating to, in the nature of, or caused by the breach of any representation or warranty of the Company other than the Fundamental Representations and Warranties until the Buyer has suffered Adverse Consequences by reason of all such breaches in excess of a $500,000 aggregate threshold at which point the Company will be obligated to indemnify the Buyer from and against all such Adverse Consequences in excess of a $175,000 aggregate deductible. (c) Determination of Adverse Consequences. The Parties shall make appropriate adjustments for tax benefits actually realized and insurance coverage proceeds actually received by the Buyer in determining Adverse Consequences for purposes of this Section 6. For the purposes of determining whether the Buyer is able to seek indemnification from the Company under this Section 6 for a breach by the Company of any representation and warranty, the use of the terms "material", "materially", materiality", "material adverse effect" or any similar words or phrases in this Agreement and on any schedule or exhibit hereto shall be disregarded and any and all claims for such indemnification shall be determined as if no such terms were present in the representation or warranty with respect to which such indemnification is sought. (d) Matters Involving Third Parties. (i) If any third party shall notify any Party (the "Indemnified Party") with respect to any matter (a "Third Party Claim") which may give rise to a claim for indemnification against any other Party (the "Indemnifying Party") under this Section 6, then the Indemnified Party shall promptly notify the Indemnifying Party thereof in writing; provided, however, that no delay on the part of the Indemnified Party in notifying the Indemnifying Party shall relieve the Indemnifying Party from any obligation hereunder unless (and then solely to the extent) the Indemnifying Party thereby is prejudiced. (ii) The Indemnifying Party will have the right to assume the defense of the Third Party Claim with counsel of its choice reasonably satisfactory to the Indemnified Party at any time within 15 days after the Indemnified Party has given notice of the Third Party Claim; provided, however, that the Indemnifying Party must conduct the defense of the Third Party Claim actively and diligently thereafter in order to preserve its rights in this regard; and provided further that the Indemnified Party may retain separate co-counsel at its sole cost and expense and participate in the defense of the Third Party Claim. 33 (iii) So long as the Indemnifying Party has assumed and is conducting the defense of the Third Party Claim in accordance with Section 6(d)(ii) above, (A) the Indemnified Party may retain separate co-counsel at its sole cost and expense and participate in the defense of the Third Party Claim, (B) the Indemnifying Party will not consent to the entry of any judgment or enter into any settlement with respect to the Third Party Claim without the prior written consent of the Indemnified Party (not to be withheld unreasonably) unless the judgment or proposed settlement involves only the payment of money damages by one or more of the Indemnifying Parties and does not impose an injunction or other equitable relief upon the Indemnified Party and (C) the Indemnified Party will not consent to the entry of any judgment or enter into any settlement with respect to the Third Party Claim without the prior written consent of the Indemnifying Party (not to be withheld unreasonably). (iv) In the event none of the Indemnifying Parties assumes and conducts the defense of the Third Party Claim in accordance with Section 6(d)(ii) above, however, (A) the Indemnified Party may defend against, and consent to the entry of any judgment or enter into any settlement with respect to, the Third Party Claim in any manner it reasonably may deem appropriate (and the Indemnified Party need not consult with, or obtain any consent from, any Indemnifying Party in connection therewith), (B) the Indemnifying Parties will reimburse the Indemnified Party promptly and periodically for the costs of defending against the Third Party Claim (including attorneys' fees and expenses), and (C) the Indemnifying Parties will remain responsible for any Adverse Consequences the Indemnified Party may suffer resulting from, arising out of, relating to, in the nature of, or caused by the Third Party Claim to the fullest extent provided in this Section 6. (e) Additional Matters. All indemnification obligations of the Company, other than Third Party Claims, shall be satisfied by the payment of cash or, at the sole option of the Buyer in each instance, the issuance of additional shares of Class A Common Stock, valued at a price per share equal to the original cost of the Shares (on a per share basis) without taking into consideration the value of Assignment, Assumption and Release Agreements. 7. Tax Matters. All transfer, documentary, sales, use, stamp, registration and other such Taxes, and all conveyance fees, recording charges and other fees and charges (including any penalties and interest) incurred in connection with the consummation of the transactions contemplated by this Agreement shall be borne by the Company. 8. Miscellaneous. (a) Press Releases and Public Announcements. No Party shall issue any press release or make any public announcement relating to the subject matter of this Agreement without the prior written approval of the Buyer and the Company; provided, however, that any Party may make any public disclosure it believes in good faith is required by applicable law (in which case the disclosing Party will use its best efforts to advise the other Parties prior to making the disclosure). (b) No Third-Party Beneficiaries. Except as provided pursuant to Section 8(p) hereof, this Agreement shall not confer any rights or remedies upon any Person other than the Parties and their respective successors and permitted assigns. 34 (c) Entire Agreement. This Agreement (including the documents referred to herein) constitutes the entire agreement among the Parties and supersedes any prior understandings, agreements, or representations by or among the Parties, written or oral, to the extent they related in any way to the subject matter hereof. (d) Succession and Assignment. This Agreement shall be binding upon and inure to the benefit of the Parties named herein and their respective successors and permitted assigns. No Party may assign either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of the Buyer and the Company; provided, however, that the Buyer may (i) assign any or all of its rights and interests hereunder to one or more of its Affiliates and (ii) designate one or more of its Affiliates to perform its obligations hereunder (in any or all of which cases the Buyer nonetheless shall remain responsible for the performance of all of its obligations hereunder). (e) Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. (f) Headings. The section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement. (g) Notices. All notices, requests, demands, claims, and other communications hereunder will be in writing. Any notice, request, demand, claim, or other communication hereunder shall be deemed duly given if (and then two business days after) it is sent by registered or certified mail, return receipt requested, postage prepaid, and addressed to the intended recipient as set forth below: If to the Company: Northland Cranberries, Inc. 800 First Avenue South P.O. Box 8020 Wisconsin Rapids, WI 54495-8020 Attn: John Swendrowski Fax: (715) 422-6844 Copy to: Foley & Lardner 777 East Wisconsin Avenue Milwaukee, WI 53202-5367 Attn: Jeffrey J. Jones Fax: (414) 297-4900 35 If to the Buyer: Sun Northland, LLC c/o Sun Capital Partners, Inc. 5200 Town Center Road, Suite 470 Boca Raton, FL 33486 Attn: C. Deryl Couch Fax: (561) 394-0540 Copy to: Kirkland & Ellis 200 East Randolph Drive Chicago, IL 60601 Attn: Douglas C. Gessner Fax: (312) 861-2200 Any Party may send any notice, request, demand, claim, or other communication hereunder to the intended recipient at the address set forth above using any other means (including personal delivery, expedited courier, messenger service, telecopy, telex, ordinary mail, or electronic mail), but no such notice, request, demand, claim, or other communication shall be deemed to have been duly given unless and until it actually is received by the intended recipient. Any Party may change the address to which notices, requests, demands, claims, and other communications hereunder are to be delivered by giving the other Parties notice in the manner herein set forth. (h) Governing Law. This Agreement shall be governed by and construed in accordance with the domestic laws of the State of Wisconsin without giving effect to any choice or conflict of law provision or rule (whether of the State of Wisconsin or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Wisconsin. (i) Amendments and Waivers. No amendment of any provision of this Agreement shall be valid unless the same shall be in writing and signed by the Buyer and the Company. No waiver by any Party of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence. (j) Severability. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. (k) Expenses. The Company shall pay or cause to be paid at Closing (i) all reasonable out-of-pocket fees and expenses incurred by the Buyer and its Affiliates and (ii) the reasonable out-of-pocket legal fees of the Company each in connection with the transactions contemplated by this Agreement (including, without limitation, reasonable fees and disbursements of counsel and consultants). The fees and expenses covered by this Section 8(k) 36 are separate from and in addition to, and in no way shall limit, the fees and expenses to be paid to the Buyer pursuant to the management services agreement. (l) Construction. The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any federal, state, local, or foreign statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The word "including" shall mean including without limitation. The parties intend that each representation, warranty, and covenant contained herein shall have independent significance. If any Party has breached any representation, warranty, or covenant contained herein in any respect, the fact that there exists another representation, warranty, or covenant relating to the same subject matter (regardless of the relative levels of specificity) which the Party has not breached shall not detract from or mitigate the fact that the Party is in breach of the first representation, warranty, or covenant. (m) Incorporation of Exhibits, Annexes, and Schedules. The Exhibits, Annexes, and Schedules identified in this Agreement are incorporated herein by reference and made a part hereof. (n) Submission to Jurisdiction. Each Party hereto submits to the jurisdiction of any state or federal court sitting in Chicago, Illinois, in any action or proceeding arising out of or relating to this Agreement and agrees that all claims in respect of the action or proceeding may be heard and determined in any such court. Each Party also agrees not to bring any action or proceeding arising out of or relating to this Agreement in any other court. Each Party hereto waives any defense of inconvenient forum to the maintenance of any action or proceeding so brought and waives any bond, surety, or other security that might be required of any other Party with respect thereto. Any Party may make service on any other Party by sending or delivering a copy of the process to the Party to be served at the address and in the manner provided for the giving of notices in Section 8(g) above. Nothing in this Section 8(n), however, shall affect the right of any Party to bring any action or proceeding arising out of or relating to this Agreement in any other court or to serve legal process in any other manner permitted by law or at equity. Each Party agrees that a final judgment in any action or proceeding so brought shall be conclusive and may be enforced by suit on the judgment or in any other manner provided by law or at equity. (o) Legal Fees. If any party to this Agreement seeks to enforce the terms and provisions of this Agreement, then the prevailing party in such action shall be entitled to recover from the non-prevailing party, all costs incurred in connection with such action, including without limitation reasonable fees, expenses and costs incurred at the trial court, all appellate courts and during negotiations. (p) Indemnification and Insurance. The Buyer agrees that for a period of six years from the Closing Date it will maintain all rights to indemnification now existing in favor of the current or former directors, officers, and employees of the Company as provided in the Company's articles of incorporation and bylaws or otherwise in effect under any agreement on the date of this Agreement. In addition, the Buyer agrees that the articles of incorporation and 37 bylaws of the Company shall contain the provisions with respect to indemnification set forth in the Company's articles of incorporation and bylaws on the date hereof, which provisions shall not be amended, repealed or otherwise modified for a period of six years after the Closing Date in any manner that would adversely affect the rights thereunder of individuals who at any time prior to the Closing Date were directors or officers of the Company in respect of actions or omissions occurring at or prior to the Closing Date (including, without limitation, the transactions contemplated by this Agreement), unless such modification is required by law. Notwithstanding the six-year period specified in the foregoing sentences, in the event any claim or claims are asserted or made within such six-year period, all rights to indemnification in respect of any such claim or claims shall continue until disposition of any and all such claims. (i) The Company will at all times exercise the powers granted to it by its articles of incorporation, its bylaws, and by applicable law to indemnify and hold harmless to the fullest extent possible present or former directors, officers, and employees of the Company against any threatened or actual claim, action, suit, proceeding or investigation made against them arising from their service in such capacities (or service in such capacities for another enterprise at the request of the Company) prior to, and including the Closing Date, including, without limitation, with respect to matters relating to this Agreement. (ii) The Buyer agrees that the Company shall cause to be maintained in effect for not less than six years from the Closing Date the current policies of the directors' and officers' liability insurance maintained by the Company with respect to matters occurring at or prior to the Closing Date (including, without limitation, the transactions contemplated by this Agreement); provided that the Company may substitute therefor policies of at least the same coverage containing terms and conditions which are no less advantageous and provided that such substitution shall not result in any gaps or lapses in coverage with respect to matters occurring prior to the Closing Date; and provided, further, that the Company shall not be required to pay an annual premium in excess of 200% of the last annual premium paid by the Company prior to the date hereof and if the Company is unable to obtain the insurance required by this Section 8(p)(ii) it shall obtain as much comparable insurance as possible for an annual premium equal to such maximum amount. (iii) This Section 8(p) is intended to benefit the current and former directors, officers, and employees of the Company and shall be binding on all successors and assigns of the Buyer and the Company. (q) ISRA Covenant. The Company shall submit to the New Jersey Department of Environmental Protection ("NJDEP") within 30 days after Closing, true, accurate and complete copies of all filings required pursuant to the New Jersey Industrial Site Recovery Act ("ISRA") (N.J.S.A. 13:1k-6 et seq.) as necessary to obtain formal ISRA nonapplicability determinations from NJDEP for the real properties and operations of the Company in Bridgeton, New Jersey. (r) Tax Covenant. The Company shall elect under Treasury Regulation ss.1.382-6(b) to close its books as of the end of the Closing Date with respect to the ownership change (within the meaning of Code ss.382) occurring pursuant to this Agreement. 38 (s) Severance Pay Covenant. The Company agrees that if prior to the one year anniversary of the date hereof, any Executive's employment with the Company is terminated by the Company or its successors in interest without cause, such Executive shall be entitled to continue to receive his then-current base salary, which shall be no lower than his base salary as of the date hereof, payable in regular installments as special severance payments for six-months from the date of termination; provided, if such Executive breaches the provisions of any non-solicitation or confidentiality covenants he has made (or shall make) to the Company, the Company shall have no obligation to make (or continue to make) severance payments to such Executive. ***** 39 IN WITNESS WHEREOF, the Parties hereto have executed this Stock Purchase Agreement on as of the date first above written. SUN NORTHLAND, LLC By: /s/ --------------------------------- Title: NORTHLAND CRANBERRIES, INC. By: /s/ --------------------------------- Title: 40 EX-2.2 4 sdc74c.txt ASSIGNMENT, ASSUMPTION AND RELEASE AGREEMENT ASSIGNMENT, ASSUMPTION AND RELEASE AGREEMENT THIS ASSIGNMENT, ASSUMPTION AND RELEASE AGREEMENT (this "Agreement") is made by and among Sun Northland, LLC, as assignee (the "Assignee"), LaSalle Bank National Association, St. Francis Bank, F.S.B., ARK CLO 2000-1 Limited, and U.S. Bank National Association, (each an "Assignor," and collectively the "Assignors"). Unless otherwise defined herein or the context otherwise requires, terms used herein shall have the meanings provided in the Credit Agreement (defined below). WHEREAS, each of the the Assignors are party to a certain Credit Agreement dated as of March 15, 1999 (together with all amendments, supplements, restatements and other modifications from time to time made thereto prior to the date hereof, the "Credit Agreement") among Northland Cranberries, Inc., a Wisconsin corporation (the "Borrower"), each of the banks from time to time a party to the Credit Agreement (herein collectively the "Banks" and each individually a "Bank"), and U.S. Bank National Association (formerly known as Firstar Bank, N.A.), as agent for itself and the other Banks (the "Agent") pursuant to which each Assignor in its capacity as a Bank made certain Revolving Credit Loans and issued and/or participated in the issuance of certain L/Cs; and WHEREAS, each of the Assignors desires to sell, assign and transfer some or all (as applicable) of its Revolving Credit Loans and L/C participations, together with all accrued and unpaid interest thereon and certain other rights with respect thereto, to Assignee, as more specifically set forth herein, and the Assignee desires to purchase such Revolving Credit Loans and L/C participations and other rights. NOW THEREFORE, in consideration of the premises and covenants contained herein, and for other good and valuable consideration, receipt and sufficiency of which are hereby acknowledged, the parties hereto7 agree as follows: 1. Assignment. On the Settlement Date, in exchange for the consideration set forth opposite such Assignor's name in the table set forth in paragraph 2 hereof, each of the Assignors will hereby sell, transfer and assign to Assignee (i) the percentage set forth opposite such Assignor's name in the table below (the "Stated Percentage") of its Revolving Credit Loans and L/C participations outstanding under the Credit Agreement as of the Settlement Date, (ii) the Stated Percentage of any rights to accrued and unpaid interest (including default interest) thereon, fees, expenses, indemnities or any other amounts due and owing by the Borrower to the Banks as of the Settlement Date pursuant to the Credit Agreement or any other Loan Document, (iii) the Collateral heretofore securing the Revolving Credit Loans and L/C participations set forth on the Scheduled of Assigned Collateral attached hereto, and (iv) any other rights such Assignor may have on the Settlement Date against the Borrower or its Subsidiaries, their officers, directors, shareholders or advisors or with respect to the items described in the foregoing clauses (i), (ii) and (iii) pursuant to any Loan Document or otherwise, and Assignee will purchase and assume each of such Assignor's rights thereunder: --------------------------------- ------------------------------------- Name of Bank Percentage of Revolving Credit Loans and L/C participations assigned(1) --------------------------------- ------------------------------------- LaSalle Bank National Association 100% --------------------------------- ------------------------------------- St. Francis Bank, F.S.B. 68.203102% --------------------------------- ------------------------------------- ARK CLO 2000-1 Limited 23.829902% --------------------------------- ------------------------------------- U.S. Bank National Association 67.601618% --------------------------------- ------------------------------------- 2. Consideration. In exchange for the assignment and transfer of Revolving Credit Loans and L/C participations and other rights set forth in paragraph 1 hereof, Assignee, or its permitted assigns pursuant to paragraph 9 hereto, shall deliver on the Settlement Date to each of the Assignors, or its permitted assigns pursuant to paragraph 9 hereto, the consideration set forth below opposite such Assignor's name: --------------------------------- ------------------ ----------------- Name of Bank Cash Consideration Shares of Class A Common Stock of the Company --------------------------------- ------------------ ----------------- LaSalle Bank National Association $ 4,989,000 0 --------------------------------- ------------------ ----------------- St. Francis Bank, F.S.B. $ 1,935,000 844,294 --------------------------------- ------------------ ----------------- ARK CLO 2000-1 Limited $ 0 2,115,820 --------------------------------- ------------------ ----------------- U.S. Bank National Association $ 10,494,000 4,658,873 --------------------------------- ------------------ ----------------- 3. Settlement Procedures. The effective date of this Agreement (the "Settlement Date") shall be the date upon which (i) this Agreement is executed by all Assignors and by Assignee and (ii) Assignee, or its permitted assigns pursuant to paragraph 9 hereto, has delivered the cash consideration (in immediately available funds) and stock certificates representing the applicable shares of the Borrower's Class A common stock, as applicable, to each of the Assignors, or its permitted assigns pursuant to paragraph 9 hereof, in accordance with paragraph 2 hereof. 4. Certain Representations, Warranties and Consents by Assignors. Each Assignor hereby severally, and not jointly, represents and warrants to Assignee that it is the legal and beneficial owner of the Revolving Credit Loans and L/C participations and other rights being assigned by it hereunder and the interests transferred by such Assignor hereunder are free and clear of any liens, security interest, adverse claim or any other encumbrance on such Assignor's right, title and interest therein. Each Assignor (including U.S. Bank National Association in its capacity as Bank and as Agent) hereby consents to the (i) assignments made hereunder by each other Assignor and (ii) assignments being made to Assignee by the other Banks not an Assignor hereunder pursuant to separate assignment documentation, in each case, notwithstanding anything to the contrary contained in Section 10.3 or Section 10.14 of the Credit Agreement or in any other Loan Document. - - ------------------------ (1) Note these percentages are preliminary calculations based on estimates regarding current outstandings under the US Bank Credit Facility. Percentages will be revised as numbers get finalized. 2 5. Loans to Remain Outstanding. After giving effect to the assigning and transferring of the specified Revolving Credit Loans, L/C participations and other rights to the Assignee on the Settlement Date as set forth above, then (a) the outstanding principal amount of the Revolving Credit Loans owing to each Assignor and each Assignor's participation L/Cs on the Adjustment Date shall be equal to the amount set forth opposite such Assignor's name under the captions "Adjusted Loans" and "Adjusted Participation" in the table set forth below and (b) the adjusted Percentage of each Assignor shall be equal to the Percentage set forth opposite such Assignor's name under the caption "Adjusted Percentage" (and each Assignor shall be relieved of all obligations under the Credit Agreement to the extent of the reduction effected to its Percentage in accordance herewith): ------------------------------ ------------- -------------- ------------ Name of Bank Adjusted Adjusted Adjusted Loans Participation s Percentage ------------------------------ ------------- -------------- ------------ LaSalle Bank National Association $ 0 0 0% ------------------------------ ------------- -------------- ------------ St. Francis Bank, F.S.B. $ 2,857,000 0 11.110679% ------------------------------ ------------- -------------- ------------ ARK CLO 2000-1 Limited $ 6,844,000 0 26.615851% ------------------------------ ------------- -------------- ------------ U.S. Bank National Association $16,013,000 0 62.273470% ------------------------------ ------------- -------------- ------------ In addition, the Banks (other than LaSalle Bank National Association) shall retain all rights to the Collateral not set forth on the Schedule of Assigned Collateral attached hereto. Concurrently with the execution and delivery hereof, the Assignors (other than LaSalle Bank National Association), the Borrower and the Assignee will execute such amendments, modifications, terminations and releases with respect to the Loan Documents as are necessary to reflect the transactions contemplated by this Agreement and, in any event, each Assignor shall surrender its Notes to the Company and the Company shall issue and deliver to each Assignor (other than LaSalle Bank National Association) substitute Notes payable to each Assignor (other than LaSalle Bank National Association) and in the aggregate principal amounts indicated opposite such Assignor's name in the table set forth above. Any Revolving Credit Loans or L/C participations, rights to interest, fees, indemnities, rights to Collateral or any other rights purchased by the Assignee hereunder shall be cancelled and shall no longer be obligations or liabilities of the Borrower under the Loan Documents. Notwithstanding the above, upon consummation of the transactions contemplated herein on the Settlement Date, LaSalle Bank National Association shall cease to be a Bank under the Loan Documents or any replacements thereof and shall have no further rights or obligations with respect thereto. 6. Further Assurances. Each of the undersigned, at any time and from time to time upon the written request of any other of the undersigned, shall execute and deliver such further documents and do such further acts and things as such party may reasonably request in order to effect the purpose of this Agreement. 7. Counterparts: Governing Law. This Agreement may be executed in any number of counterparts by the parties hereto, each of which counterparts shall be deemed to be an 3 original and all of which shall together constitute one and the same certificate. Matters relating to this Agreement shall be governed by, and construed in accordance with, the laws of the State of Wisconsin, without regard to conflicts of law principles. 8. Assignee Acknowledgement. The Assignee acknowledges and confirms that it has received a copy of the Credit Agreement and all other Loan Documents, and all instruments and agreements referred to in the Credit Agreement. 9. Assignments. Each of the Assignors hereby agree that Assignee may assign any or all of its rights and obligations under this Agreement to any third party, including, without limitation, to the Borrower, including on or prior to the Settlement Date, without consent of the Assignors notwithstanding Section 10.3 or Section 10.14 of the Credit Agreement or any other prohibition on assignment contained in any Loan Document or any other agreement executed in connection therewith. If any Assignor receiving Class A common stock of the Borrower pursuant to paragraph 2 hereto is prohibited by law from owning stock in the Borrower, such Assignor may assign all of its rights to receive such stock to an affiliate of the Assignor, provided such assignee prior to such assignment executes all stockholders agreements, registration agreements and other documents relating to Borrower's Class A common stock that Assignee may reasonably require. 10. Release. LaSalle Bank National Association hereby agrees that, as of the Settlement Date, upon receipt of the consideration set forth in paragraph 2 hereto on the Settlement Date, it shall have no rights or claims against the Borrower, any of its Subsidiaries or any of their shareholders, officers, employees, directors or advisors (collectively, the "Releasees") with respect to the Credit Agreement or any other Loan Document or any transaction relating thereto and hereby waives its rights to sue, make any claim or take any action against any Releasee with respect to any right, claim or liability occurring under any Loan Document or any transaction relating thereto that arose or occurred prior to the Settlement Date. 4 IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the Settlement Date set forth above. Assignee: SUN NORTHLAND, L.L.C. By: /s/ ------------------------------- Its: ------------------------------- Assignors: LA SALLE BANK NATIONAL ASSOCIATION By: /s/ ------------------------------- Its: ------------------------------- ST. FRANCIS BANK, F.S.B. By: /s/ ------------------------------- Its: ------------------------------- ARK CLO 2000-1 LIMITED By: Patriarch Partners Its: Manager By: /s/ ------------------------------- Its: ------------------------------- U.S. BANK NATIONAL ASSOCIATION By: /s/ ------------------------------- Its: ------------------------------- 5 ACKNOWLEDGEMENT, CONSENT AND RELEASE Northland Cranberries, Inc. hereby acknowledges the foregoing Assignment, Assumption and Release Agreement and consents to the assignments and other actions by the Assignors thereunder, notwithstanding any provisions of the Credit Agreement to the contrary. Northland Cranberries, Inc. hereby absolutely and unconditionally releases and forever discharges LaSalle Bank National Association and any and all participants, parent corporations, subsidiary, affiliated corporations, insurers, indemnitors, successors and assigns, together with all of the present and former directors, officers, agents and employees of any of the foregoing, from any and all claims, demands or causes of action of any kind, nature or description, whether arising in law or equity or upon contract or tort or under any state or federal law or otherwise, which Northland Cranberries, Inc. has had, or now has, or has made claim to have against any such person or entity for or by reason of any act, omission, matter, cause or thing whatsoever arising from the transactions contemplated under the Loan Documents to and including the date of this Acknowledgement, Consent and Release, whether such claims, demands and causes of action are matured or unmatured, liquidated or unliquidated or known or unknown, and Northland Cranberries, Inc. hereby waives its right to sue, make any claim or take any action against any Assignor with respect thereto. November 6, 2001 NORTHLAND CRANBERRIES, INC. By: /s/ ------------------------------- Its: ------------------------------- EX-2.3 5 sdc74d.txt ASSIGNMENT AGREEMENT Execution Copy ASSIGNMENT AGREEMENT THIS ASSIGNMENT AGREEMENT (this "Agreement") is made as of November 6, 2001, by and between Sun Northland, LLC, a Delaware limited liability company (the "Assignor") and Northland Cranberries, Inc., a Wisconsin corporation (the "Assignee"). Unless otherwise defined herein or the context otherwise requires, terms used herein shall have the meanings provided in the Stock Purchase Agreement, dated as of November 6, 2001, by and among Assignor and Assignee. WHEREAS, Assignor has entered into an Assignment, Assumption and Release Agreement, dated as of November 6, 2001, with LaSalle Bank National Association, St. Francis Bank, F.S.B., ARK CLO 2000-1, Limited, and U.S. Bank National Association (the "Assigned Agreement"), pursuant to which Assignor has certain rights and obligations as set forth therein. WHEREAS, Assignor wishes to assign all of its rights and obligations in, to and under the Assigned Agreement to Assignee, and Assignee wishes to be assigned all of Assignor's rights and obligations in, to and under the Assigned Agreement. NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement hereby agree as follows: 1. Assignment. Assignor hereby transfers and assigns, and Assignee hereby accepts the transfer and assignment of, all of Assignor's rights and obligations pursuant to the Assigned Agreement as Assignee would have had if Assignee had been an original party to the Assigned Agreement. Assignee agrees to be subject to all of the rights and obligations and be bound by all of the terms and conditions set forth in the Assigned Agreement as if Assignee were originally a party thereto. 2. Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein. 3. Indemnification. Assignee agrees to indemnify and hold harmless Assignor against any and all liabilities incurred by Assignor to any third party arising out of or resulting from the Assigned Agreement or this Agreement. 4. Complete Agreement. This Agreement, those documents expressly referred to herein and other documents of even date herewith embody the complete agreement and understanding among the parties with respect to the subject matter hereof and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way. 5. Counterparts. This Agreement may be executed in two or more separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement. 6. Choice of Law. This agreement and the rights and obligations of the parties hereunder shall be governed and interpreted, construed and enforced in accordance with the laws of the State of Delaware, without regard to conflict of laws. 7. Amendment and Waiver. The provisions of this Agreement may be amended and waived only with the prior written consent of each of the parties hereto. * * * * * 2 IN WITNESS WHEREOF, the parties hereto have executed this Assignment Agreement on the date first written above. Assignor: SUN NORTHLAND, LLC By: /s/ M. Steven Liff -------------------------------- Name: M. Steven Liff Title: Vice President Assignee: NORTHLAND CRANBERRIES, INC. By: /s/ -------------------------------- Its: -------------------------------- 3 EX-2.4 6 sdc74e.txt ASSIGNMENT, ASSUMPTION AND RELEASE AGREEMENT ASSIGNMENT, ASSUMPTION AND RELEASE AGREEMENT THIS ASSIGNMENT, ASSUMPTION AND RELEASE AGREEMENT (this "Agreement") is made by and among Sun Northland, LLC, as assignee (the "Assignee"), Wells Fargo Bank Minnesota, National Association, Endeavor, L.L.C., Bank One Wisconsin, and M&I Marshall & Ilsley Bank (each an "Assignor," and collectively the "Assignors"). Unless otherwise defined herein or the context otherwise requires, terms used herein shall have the meanings provided in the Credit Agreement (defined below). WHEREAS, each of the the Assignors are party to a certain Credit Agreement dated as of March 15, 1999 (together with all amendments, supplements, restatements and other modifications from time to time made thereto, the "Credit Agreement") among Northland Cranberries, Inc., a Wisconsin corporation (the "Borrower"), each of the banks from time to time a party to the Credit Agreement (herein collectively the "Banks" and each individually a "Bank"), and US National Bank Association (formerly known as Firstar Bank, N.A.), as agent for itself and the other Banks (the "Agent") pursuant to which each Assignor in its capacity as a Bank made certain Revolving Credit Loans and issued and/or participated in the issuance of certain L/Cs; and WHEREAS, each Assignor desires to sell, assign and transfer, without recourse to such Assignor, all of its Revolving Credit Loans and L/Cs participations, together with all accrued and unpaid interest thereon and certain other rights with respect thereto, to Assignee, as more specifically set forth herein, and the Assignee desires to purchase such Revolving Credit Loans and L/C participations and other rights and assume all obligations of the Assignors thereunder. NOW THEREFORE, in consideration of the premises and covenants contained herein, and for other good and valuable consideration, receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Assignment. On the Settlement Date, in exchange for the consideration set forth opposite such Assignor's name in the table set forth in paragraph 2 hereof, each Assignor will hereby sell, transfer and assign, without recourse and without any representation or warranty whatsoever, except as specifically set forth in this Agreement, to Assignee all of its Revolving Credit Loans and L/C participations, together with any rights to accrued and unpaid interest (including default interest) thereon, fees, indemnities or any other amounts due and owing by the Borrower or its Subsidiaries to the Banks pursuant to the Credit Agreement or any other Loan Document and any other rights such Assignor may have against the Borrower or its Subsidiaries, their officers, directors, shareholders or advisors or with respect to any Collateral pursuant to any Loan Document or otherwise, except the right to reimbursement for legal fees incurred through the Settlement Date, as more specifically set forth in paragraph 10 hereto, and Assignee will purchase and assume each of such Assignor's rights thereunder. 2. Consideration. In exchange for the assignment and transfer of Revolving Credit Loans and L/C participations and other rights set forth in paragraph 1 hereof, Assignee, or its permitted assigns pursuant to paragraph 8 hereto, shall deliver on the Settlement Date to each of the Assignors the cash consideration set forth below opposite such Assignor's name: ------------------------------------------------- ------------------ Name of Bank Cash Consideration ------------------------------------------------- ------------------ Wells Fargo Bank Minnesota, National Association $8,065,000 ------------------------------------------------- ------------------ Endeavor, L.L.C. $4,840,000 ------------------------------------------------- ------------------ Bank One Wisconsin $4,840,000 ------------------------------------------------- ------------------ M&I Marshall & Ilsley Bank $3,225,000 ------------------------------------------------- ------------------ 3. Settlement Procedures. The effective date of this Agreement (the "Settlement Date") shall be the date upon which (i) this Agreement is executed by all Assignors and by Assignee and (ii) Assignee, or its permitted assigns pursuant to paragraph 8 hereto, has delivered the cash consideration (in immediately available funds) to each of the Assignors in accordance with paragraph 2 hereof. In no event shall the Settlement Date be later than 2 p.m.(central time) on November 5, 2001. 4. Certain Representations, Warranties and Consents by Assignors. Each Assignor hereby represents and warrants that it is the legal and beneficial owner of the Revolving Credit Loans and L/C participations and other rights being assigned hereunder and that such interest is free and clear of any adverse claim. Each Assignor hereby consents to (i) the assignments made hereunder by each other Assignor and (ii) the assignments made to Assignee by the other Banks not Assignors hereunder pursuant to separate assignment agreements, in each case, notwithstanding anything to the contrary contained in Section 10.3 and Section 10.14 of the Credit Agreement or in any other Loan Document. Assignee hereby represents and warrants that the assignments contemplated herein have been consented to by the other Banks not Assignors hereunder. 5. Further Assurances. Each of the undersigned, at any time and from time to time upon the written request of any other of the undersigned, shall execute and deliver such further documents and do such further acts and things as such party may reasonably request in order to effect the purpose of this Agreement. 6. Counterparts: Governing Law. This Agreement may be executed in any number of counterparts by the parties hereto, each of which counterparts shall be deemed to be an original and all of which shall together constitute one and the same agreement. Matters relating to this Agreement shall be governed by, and construed in accordance with, the laws of the State of Wisconsin, without regard to conflicts of law principles. 7. Assignee Acknowledgement. The Assignee acknowledges and confirms that it has received a copy of the Credit Agreement and all other Loan Documents, and all instruments and agreements referred to in the Credit Agreement and agrees to be bound by such instruments and agreements. Assignee has made its own investigation of the Borrower and has made its decision to enter into this transaction without reliance on any statements, representations or opinions of the Assignors with respect to the Borrower's' financial condition or performance or any other matter relating to the Borrower. 2 8. Assignments. Each of the Assignors hereby agree that Assignee may assign any or all of its rights and obligations under this Agreement to any third party, including, without limitation, to the Borrower, including on or prior to the Settlement Date, without consent of the Assignors notwithstanding Section 10.3 or Section 10.14 of the Credit Agreement or any other prohibition on assignment contained in any Loan Document or any other agreement executed in connection therewith. 9. Release. Each of the Assignors hereby agrees that, upon receipt of the consideration set forth in paragraph 2 hereto and the reimbursement of the fees and expenses under paragraph 10 hereto on the Settlement Date, it shall have no rights or claims against the Borrower, any of its Subsidiaries or any of their parent corporations, affiliates, insurers, indemnitors, successors, assigns, advisors, shareholders, together with all present and former officers, employees and directors (collectively the "Releasees") with respect to all claims, demands, causes of action of any kind, nature or description, whether arising in law or in equity which Assignors had had, or now has, or has made claim to have against any Releasee arising from the transactions contemplated under the Credit Agreement or any other Loan Document whether such claims, demands and causes of action are matured or unmatured, liquidated or unliquidated or known or unknown, and each Assignor hereby waives its right to sue, make any claim or take any action against any Releasee with respect thereto. The foregoing release excludes, and does not in any way release or affect, any liability or obligation of (a) Borrower to M&I Marshall & Ilsley Bank under that certain guaranty dated May 13, 1997 (as amended) executed by Borrower in favor of M&I Mid State Bank and (b) any of the Releasees to M&I Marshall & Ilsley Bank or its affiliates under that certain Agreement dated as of August 25, 2000 between Teske-Rayala Cranberry Co., R. Teske Farms, Inc., Richard P. Teske, Karen A. Teske and M&I Mid State Bank, all such rights being specifically retained by M&I Marshall & Ilsley Bank against such Releasees. 10. Fees and Expenses. On the Settlement Date, the Assignee hereby agrees to reimburse each Assignor for its (i) reasonable unreimbursed legal fees and expenses incurred in connection with the Credit Agreement (provided that such fees and expenses shall not significantly exceed the estimates set forth in those certain letter agreements between each Assignor and Assignee describing the basic terms of this Agreement) and (ii) reasonable legal fees and expenses incurred in connection with the negotiation of this Agreement. 3 IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the Settlement Date set forth above. Assignee: SUN NORTHLAND, L.L.C. By: /s/ -------------------------------- Its: -------------------------------- Assignors: WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION By: /s/ -------------------------------- Its: -------------------------------- ENDEAVOR, LLC By: /s/ -------------------------------- Its: -------------------------------- BANK ONE WISCONSIN By: /s/ -------------------------------- Its: -------------------------------- M&I MARSHALL & ILSLEY BANK By: /s/ -------------------------------- Its: -------------------------------- 4 ACKNOWLEDGEMENT, CONSENT AND RELEASE Northland Cranberries, Inc. hereby acknowledges the foregoing Assignment, Assumption and Release Agreement and consents to the assignments and other actions by the Assignors thereunder, notwithstanding any provisions of the Credit Agreement to the contrary. Northland Cranberries, Inc. hereby absolutely and unconditionally releases and forever discharges the Assignors and any and all participants, parent corporations, subsidiary, affiliated corporations, insurers, indemnitors, successors and assigns, together with all of the present and former directors, officers, agents and employees of any of the foregoing, from any and all claims, demands or causes of actin of any kind, nature or description, whether arising in law or equity or upon contract or tort or under any state or federal law or otherwise, which Northland Cranberries, Inc. has had, or now has, or has made claim to have against any such person or entity for or by reason of any act, omission, matter, cause or thing whatsoever arising from the transactions contemplated under the Loan Documents to and including the date of this Acknowledgement, Consent and Release, whether such claims, demands and causes of action are matured or unmatured, liquidated or unliquidated or known or unknown, and Northland Cranberries, Inc. hereby waives its right to sue, make any claim or take any action against any Assignor with respect thereto. November 6, 2001 NORTHLAND CRANBERRIES, INC. By: /s/ -------------------------------- Its: -------------------------------- 5 EX-2.5 7 sdc74f.txt ASSIGNMENT AGREEMENT Execution Copy ASSIGNMENT AGREEMENT THIS ASSIGNMENT AGREEMENT (this "Agreement") is made as of November 6, 2001, by and between Sun Northland, LLC, a Delaware limited liability company (the "Assignor") and Northland Cranberries, Inc., a Wisconsin corporation (the "Assignee"). Unless otherwise defined herein or the context otherwise requires, terms used herein shall have the meanings provided in the Stock Purchase Agreement, dated as of November 6, 2001, by and among Assignor and Assignee. WHEREAS, Assignor has entered into an Assignment, Assumption and Release Agreement, dated as of November 6, 2001, with Wells Fargo Bank Minnesota, National Association, Endeavour, LLC, Bank One Wisconsin, and M&I Marshall & Ilsley Bank (the "Assigned Agreement"), pursuant to which Assignor has certain rights and obligations as set forth therein. WHEREAS, Assignor wishes to assign all of its rights and obligations in, to and under the Assigned Agreement to Assignee, and Assignee wishes to be assigned all of Assignor's rights and obligations in, to and under the Assigned Agreement. NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement hereby agree as follows: 1. Assignment. Assignor hereby transfers and assigns, and Assignee hereby accepts the transfer and assignment of, all of Assignor's rights and obligations pursuant to the Assigned Agreement as Assignee would have had if Assignee had been an original party to the Assigned Agreement. Assignee agrees to be subject to all of the rights and obligations and be bound by all of the terms and conditions set forth in the Assigned Agreement as if Assignee were originally a party thereto. 2. Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein. 3. Indemnification. Assignee agrees to indemnify and hold harmless Assignor against any and all liabilities incurred by Assignor to any third party arising out of or resulting from the Assigned Agreement or this Agreement. 4. Complete Agreement. This Agreement, those documents expressly referred to herein and other documents of even date herewith embody the complete agreement and understanding among the parties with respect to the subject matter hereof and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way. 5. Counterparts. This Agreement may be executed in two or more separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement. 6. Choice of Law. This agreement and the rights and obligations of the parties hereunder shall be governed and interpreted, construed and enforced in accordance with the laws of the State of Delaware, without regard to conflict of laws. 7. Amendment and Waiver. The provisions of this Agreement may be amended and waived only with the prior written consent of each of the parties hereto. * * * * * 2 IN WITNESS WHEREOF, the parties hereto have executed this Assignment Agreement on the date first written above. Assignor: SUN NORTHLAND, LLC By: /s/ M. Steven Liff -------------------------------- Name: M. Steven Liff Title: Vice President Assignee: NORTHLAND CRANBERRIES, INC. By: /s/ -------------------------------- Its: -------------------------------- 3 EX-4.1 8 sdc74g.txt LOAN AND SECURITY AGREEMENT LOAN AND SECURITY AGREEMENT by and among NORTHLAND CRANBERRIES, INC. as Borrower, THE LENDERS THAT ARE SIGNATORIES HERETO as the Lenders, and FOOTHILL CAPITAL CORPORATION as the Arranger and Administrative Agent Dated as of November 6, 2001 LOAN AND SECURITY AGREEMENT THIS LOAN AND SECURITY AGREEMENT (this "Agreement"), is entered into as of November 6, 2001, between and among, on the one hand, Foothill Capital Corporation and Ableco Finance LLC and the other lenders identified on the signature pages hereof (such lenders, together with their respective successors and assigns, are referred to hereinafter each individually as a "Lender" and collectively as the "Lenders"), FOOTHILL CAPITAL CORPORATION, a California corporation, as the arranger and administrative agent for the Lenders ("Agent"), and, on the other hand, NORTHLAND CRANBERRIES, INC., a Wisconsin corporation ("Borrower"). The parties agree as follows: 1. DEFINITIONS AND CONSTRUCTION. 1.1 Definitions. As used in this Agreement, the following terms shall have the following definitions: "Ableco" shall mean Ableco Finance LLC, a Delaware limited liability company. "Account Debtor" means any Person who is or who may become obligated under, with respect to, or on account of, an Account, chattel paper, or a General Intangible. "Accounts" means all of Borrower's now owned or hereafter acquired right, title, and interest with respect to "accounts" (as that term is defined in the Code), and any and all supporting obligations in respect thereof. "Additional Documents" has the meaning set forth in Section 4.4. "Adjusted Letter of Credit Usage" means, as of the date of determination, the sum of (a) 100% of the undrawn amount of all outstanding Letters of Credit, plus (b) 100% of the amount of outstanding time drafts accepted by an Underlying Issuer as a result of drawings under Underlying Letters of Credit. "Adjusted Revolver Usage" means, as of any date of determination, the sum of (a) the then extant amount of outstanding Advances, plus (b) the then extant amount of the Adjusted Letter of Credit Usage. "Advances" has the meaning set forth in Section 2.1. "Affiliate" means, as applied to any Person, any other Person who, directly or indirectly, controls, is controlled by, or is under common control with, such Person. For purposes of this definition, "control" means the possession, directly or indirectly, of the power to direct the management and policies of a Person, whether through the ownership of Stock, by contract, or otherwise; provided, however, that, in any event: (a) any Person which owns directly or indirectly 10% or more of the securities having ordinary voting power for the election of directors or other members of the governing body of a Person or 10% or more of the partnership 2 or other ownership interests of a Person (other than as a limited partner of such Person) shall be deemed to control such Person, (b) each director (or comparable manager) of a Person shall be deemed to be an Affiliate of such Person, and (c) each partnership or joint venture in which a Person is a partner or joint venturer shall be deemed to be an Affiliate of such Person. "Agent" means Foothill, solely in its capacity as agent for the Lenders hereunder, and any successor thereto. "Agent's Account" means an account at a bank designated by Agent from time to time as the account into which Borrower shall make all payments to Agent for the benefit of the Lender Group and into which the Lender Group shall make all payments to Agent under this Agreement and the other Loan Documents; unless and until Agent notifies Borrower and the Lender Group to the contrary, Agent's Account shall be that certain deposit account bearing account number 323-266193 and maintained by Agent with The Chase Manhattan Bank, 4 New York Plaza, 15th Floor, New York, New York 10004, ABA #021000021. "Agent Advances" has the meaning set forth in Section 2.3(e)(i). "Agent's Liens" means the Liens granted by Borrower to Agent for the benefit of the Lender Group under this Agreement or the other Loan Documents. "Agent-Related Persons" means Agent together with its Affiliates, officers, directors, employees, and agents. "Agreement" has the meaning set forth in the preamble hereto. "Applicable Prepayment Premium" means, as of any date of determination, an amount equal to (a) during the period of time from and after the date of the execution and delivery of this Agreement up to the date that is the first anniversary of the Closing Date, 5% multiplied by the sum of the Maximum Revolver Amount plus the then outstanding balance of the Term Loans, (b) during the period of time from and including the date that is the first anniversary of the Closing Date up to the date that is the second anniversary of the Closing Date, 4% multiplied by the sum of the Maximum Revolver Amount plus the then outstanding balance of the Term Loans, (c) during the period of time from and including the date that is the second anniversary of the Closing Date up to the date that is the third anniversary of the Closing Date, 3% multiplied by the sum of the Maximum Revolver Amount plus the then outstanding balance of the Term Loans, (d) during the period of time from and including the date that is the third anniversary of the Closing Date up to the date that is the fourth anniversary of the Closing Date, 2% multiplied by the sum of the Maximum Revolver Amount plus the then outstanding balance of the Term Loans, and (e) during the period of time from and including the date that is the fourth anniversary of the Closing Date up to the Maturity Date, 1% multiplied by the sum of the Maximum Revolver Amount plus the then outstanding balance of the Term Loans. "Assignee" has the meaning set forth in Section 14.1. 3 "Assignment and Acceptance" means an Assignment and Acceptance in the form of Exhibit A-1. "Authorized Person" means any officer or other employee of Borrower. "Availability" means, as of any date of determination, if such date is a Business Day, and determined at the close of business on the immediately preceding Business Day, if such date of determination is not a Business Day, the amount that Borrower is entitled to borrow as Advances under Section 2.1 (after giving effect to all then outstanding Obligations and all sublimits and reserves applicable hereunder). "Bankruptcy Code" means the United States Bankruptcy Code, as in effect from time to time. "Base Rate" means, the rate of interest announced within Wells Fargo at its principal office in San Francisco as its "prime rate", with the understanding that the "prime rate" is one of Wells Fargo's base rates (not necessarily the lowest of such rates) and serves as the basis upon which effective rates of interest are calculated for those loans making reference thereto and is evidenced by the recording thereof after its announcement in such internal publication or publications as Wells Fargo may designate. "Base Rate Margin" means one (1%) percentage point. "Benefit Plan" means a "defined benefit plan" (as defined in Section 3(35) of ERISA) for which Borrower or any Subsidiary or ERISA Affiliate of Borrower has been an "employer" (as defined in Section 3(5) of ERISA) within the past six years. "Board of Directors" means the board of directors (or comparable managers) of Borrower or any committee thereof duly authorized to act on behalf of the board. "Books" means Borrower's now owned or hereafter acquired books and records (including all of its Records indicating, summarizing, or evidencing its assets (including the Collateral) or liabilities, all of its Records relating to its business operations or financial condition, and all of its goods or General Intangibles related to such information). "Borrower" has the meaning set forth in the preamble to this Agreement. "Borrowing" means a borrowing hereunder consisting of Advances (or term loans, in the case of the Term Loans) made on the same day by the Lenders (or Agent on behalf thereof) or by Swing Lender in the case of a Swing Loan, or by Agent in the case of an Agent Advance. "Borrowing Base" has the meaning set forth in Section 2.1. "Borrowing Base Certificate" means a certificate in the form of Exhibit B-1. "Business Day" means any day that is not a Saturday, Sunday, or other day on which national banks are authorized or required to close. "Capital Lease" means a lease that is required to be capitalized for financial 4 reporting purposes in accordance with GAAP. "Capitalized Lease Obligation" means any Indebtedness represented by obligations under a Capital Lease. "Cash Equivalents" means (a) marketable direct obligations issued or unconditionally guaranteed by the United States or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within 1 year from the date of acquisition thereof, (b) marketable direct obligations issued by any state of the United States or any political subdivision of any such state or any public instrumentality thereof maturing within 1 year from the date of acquisition thereof and, at the time of acquisition, having the highest rating obtainable from either S&P or Moody's, (c) commercial paper maturing no more than 1 year from the date of acquisition thereof and, at the time of acquisition, having a rating of A-1 or P-1, or better, from S&P or Moody's, and (d) certificates of deposit or bankers' acceptances maturing within 1 year from the date of acquisition thereof either (i) issued by any bank organized under the laws of the United States or any state thereof which bank has a rating of A or A2, or better, from S&P or Moody's, or (ii) certificates of deposit less than or equal to $100,000 in the aggregate issued by any other bank insured by the Federal Deposit Insurance Corporation. "Cash Management Bank" has the meaning set forth in Section 2.7(a). "Cash Management Account" has the meaning set forth in Section 2.7(a). "Cash Management Agreements" means those certain cash management service agreements, in form and substance satisfactory to Agent, each of which is among Borrower, Agent, and one of the Cash Management Banks. "Change of Control" means (a) Sun Capital Partners II LP shall cease to be the managing member of Sun Northland, LLC, or (b) Sun Northland, LLC shall cease to own and control, beneficially and of record more than 50.1% or more of the Stock of the Borrower, or (c) Borrower ceases to directly own and control 100% of the outstanding capital Stock of each of its Subsidiaries extant as of the Closing Date, except with respect to W.S.C. Water Management Corp., Borrower ceases to directly own and control 66 2/3% of the outstanding capital stock of such Subsidiary, subject to the rights of Borrower under Section 7.3(b) to cause certain mergers, dissolutions or other actions with respect to Borrower's Subsidiaries. "Cliffstar Note" means the Promissory Note dated March8, 2000, in the original principal amount of $28,000,000, payable by Cliffstar Corporation to Borrower, as in effect on the date hereof. "Closing Date" means the date of the making of the initial Advance (or other extension of credit) hereunder. "Closing Date Business Plan" means the set of Projections of Borrower for the 3 year period following the Closing Date (on a year by year basis, and for the 1 year period following the Closing Date, on a month by month basis), in form and substance (including as to scope and underlying assumptions) satisfactory to Agent. 5 "Code" means the New York Uniform Commercial Code, as in effect from time to time. "Collateral" means all of Borrower's now owned or hereafter acquired right, title, and interest in and to each of the following: (a) Accounts, (b) Books, (c) Equipment, (d) General Intangibles, (e) Inventory, (f) Investment Property, (g) Negotiable Collateral, (h) Real Property Collateral, (i) Farm Products, (j) money or other assets of Borrower that now or hereafter come into the possession, custody, or control of any member of the Lender Group, and (k) the proceeds and products, whether tangible or intangible, of any of the foregoing, including proceeds of insurance covering any or all of the foregoing, and any and all Accounts, Books, Equipment, General Intangibles, Inventory, Investment Property, Negotiable Collateral, Real Property, money, deposit accounts, or other tangible or intangible property resulting from the sale, exchange, collection, or other disposition of any of the foregoing, or any portion thereof or interest therein, and the proceeds thereof; notwithstanding anything to the contrary set forth in this definition of Collateral, Collateral shall not include: (i) the Excluded Collateral, (ii) any rights or interests in any contract, lease, permit, license, charter or license agreement covering real or personal property, as such, if under the terms of such contract, lease, permit, license, charter or license agreement, or applicable law with respect thereto, the valid grant of a security interest or lien therein to Agent is prohibited and such prohibition has not been or is not waived or the consent of the other party to such contract, lease, permit, license, charter or license agreement has not been or is not otherwise obtained or under applicable law such prohibition cannot be waived; provided, that, the foregoing exclusion shall in 6 no way be construed (A) to apply if any such prohibition is unenforceable under the UCC or other applicable law or (B) so as to limit, impair or otherwise affect Agent's unconditional continuing security interests in and liens upon any rights or interests of Borrower in or to the proceeds thereof, including, without limitation, monies due or to become due under any such contract, lease, permit, license, charter or license agreement (including any Accounts), or (iii) Principal payments on account of the Cliffstar Note and "Earnout Amount" payments under and as defined in the Asset Purchase Agreement by and between Borrower and Cliffstar Corporation dated January 5, 2000 to the extent the aggregate of such payments actually received by Agent exceeds $10,000,000. "Collateral Access Agreement" means a landlord waiver, bailee letter, or acknowledgment agreement of any lessor, warehouseman, processor, consignee, or other Person in possession of, having a Lien upon, or having rights or interests in the Equipment, Inventory or Books constituting Collateral, in each case, in form and substance satisfactory to Agent. "Collections" means all cash, checks, notes, instruments, and other items of payment (including insurance proceeds, proceeds of cash sales, rental proceeds, and tax refunds) of Borrower. "Commitment" means, with respect to each Lender, its Revolver Commitment, its Term Loan Commitment, or its Total Commitment, as the context requires, and, with respect to all Lenders, their Revolver Commitments, their Term Loan Commitments, or their Total Commitments, as the context requires, in each case as such Dollar amounts are set forth beside such Lender's name under the applicable heading on Schedule C-1 or on the signature page of the Assignment and Acceptance pursuant to which such Lender became a Lender hereunder in accordance with the provisions of Section 14.1. "Compliance Certificate" means a certificate substantially in the form of Exhibit C-1 delivered by the chief financial officer of Borrower to Agent. "Concentrate Cash Cost" means, per gallon, (A) the sum of (i) Ocean Spray's lowest base pool price for raw cranberries for the immediately preceding harvest, plus (ii) $3.00, plus (iii) Borrower's per barrel cost (as determined by Agent) of hauling and storage of such frozen cranberries prior to conversion to concentrate, divided by 1.5 (or such other factor as Agent determines to be appropriate, provided that Agent may not decrease such factor without the consent of the Required Lenders) plus (B) the per gallon cost (as determined by Agent), to convert frozen cranberries into such concentrate, including labor, overhead, manufacturing costs and depreciation, and shall exclude, without limitation, all hauling and storage after conversion into concentrate. "Continuing Bank Group" means, individually and collectively, U.S. Bank National Association, St. Francis Bank, F.S.B. and ARK CLO 2000-1 Limited. "Continuing Bank Group Documents" means the Amended and Restated Credit Agreement, by and among the Borrower and the Continuing Bank Group, the Amended and Restated Security Agreement, by Borrower in favor of the Continuing Bank Group and the Amended and Restated Collateral Pledge Agreement, by Borrower in favor of the Continuing 7 Bank Group, the Amended and Restated Mortgages and the Assignments of Leases and Rents and Collateral Assignments of Rent by Borrower in favor of the Continuing Bank Group, each dated as of the Closing Date, in form and substance satisfactory to Agent in its sole discretion. "Continuing Bank Group Intercreditor Agreement" means the Intercreditor Agreement, dated as of the Closing Date between Agent and the Continuing Bank Group, as amended. "Continuing Director" means (a) any member of the Board of Directors who was a director (or comparable manager) of Borrower on the Closing Date, and (b) any individual who becomes a member of the Board of Directors after the Closing Date if such individual was appointed or nominated for election to the Board of Directors by a majority of the Continuing Directors, but excluding any such individual originally proposed for election in opposition to the Board of Directors in office at the Closing Date in an actual or threatened election contest relating to the election of the directors (or comparable managers) of Borrower (as such terms are used in Rule 14a-11 under the Exchange Act) and whose initial assumption of office resulted from such contest or the settlement thereof. "Control Agreement" means a control agreement, in form and substance satisfactory to Agent, executed and delivered by Borrower, Agent, and the applicable securities intermediary with respect to a Securities Account or bank with respect to a deposit account. "Cranberry Concentrate Value" shall mean the Eligible Inventory of Borrower consisting of gallons of cranberry concentrate, up to a maximum of 850,000 gallons at any time between October1st and December 31st and between January 1st and the last day of February of each year, 675,000 gallons between March 1st and March 31st of each year, and 500,000 gallons at all other times, multiplied, per gallon, by the lesser of (a) (i) through April 30, 2002, the weighted average sale price for the immediately preceding three (3) months, as determined by Agent, and (ii) thereafter the lowest sales price per gallon for Borrower's sales of cranberry concentrate in the immediately preceding three (3) months, and (b) the per gallon Concentrate Cash Cost of such cranberry concentrate, in each case as determined by Agent. "Daily Balance" means, with respect to each day during the term of this Agreement, the amount of an Obligation owed at the end of such day. "DDA" means any checking or other demand deposit account maintained by Borrower. "Default" means an event, condition, or default that, with the giving of notice, the passage of time, or both, would be an Event of Default. "Defaulting Lender" means any Lender that fails to make any Advance (or other extension of credit) that it is required to make hereunder on the date that it is required to do so hereunder. 8 "Defaulting Lender Rate" means (a) the Base Rate for the first 3 days from and after the date the relevant payment is due, and (b) thereafter, at the interest rate then applicable to Advances that are Base Rate Loans (inclusive of the Base Rate Margin applicable thereto). "Designated Account" means account number 754771517 of Borrower maintained with Borrower's Designated Account Bank, or such other deposit account of Borrower (located within the United States) that has been designated as such, in writing, by Borrower to Agent. "Designated Account Bank" means Firstar Bank, N.A., whose office is located at Milwaukee, Wisconsin, and whose ABA number is 042000013. "Dilution" means, as of any date of determination, a percentage, based upon the experience of the immediately prior ninety (90) days, that is the result of dividing the Dollar amount of (a) bad debt write-downs, discounts, advertising allowances, credits, or other dilutive items with respect to the Accounts during such period, by (b) Borrower's Collections with respect to Accounts during such period (excluding extraordinary items) plus the Dollar amount of clause (a). "Dilution Reserve" means, as of any date of determination, an amount sufficient to reduce the advance rate against Eligible Accounts by one percentage point for each percentage point by which Dilution is in excess of 5%. "Disbursement Letter" means an instructional letter executed and delivered by Borrower to Agent regarding the extensions of credit to be made on the Closing Date, the form and substance of which is satisfactory to Agent. "Dollars" or "$" means United States dollars. "Due Diligence Letter" means the due diligence letter sent by Agent's counsel to Borrower, together with Borrower's completed responses to the inquiries set forth therein, the form and substance of such responses to be satisfactory to Agent. "EBITDA" means, with respect to any fiscal period, Borrower's and its Subsidiaries consolidated net earnings (or loss), minus extraordinary gains and interest income, plus interest expense, income taxes, non-cash nonrecurring, unusual or extraordinary losses and depreciation and amortization for such period, as determined in accordance with GAAP. "Eligible Accounts" means those Accounts created by Borrower in the ordinary course of its business, that arise out of Borrower's sale of goods or rendition of services, that comply with each of the representations and warranties respecting Eligible Accounts made by Borrower in the Loan Documents, and that are not excluded as ineligible by virtue of one or more of the criteria set forth below; provided, however, that such criteria may be fixed and revised from time to time by Agent in Agent's Permitted Discretion to address the results of any audit performed by Agent from time to time after the Closing Date. In determining the amount to be included, Eligible Accounts shall be calculated net of customer deposits and unapplied cash remitted to Borrower. Eligible Accounts shall not include the following, except that: (a) (i) Accounts that the Account Debtor has failed to pay within the lesser of 9 (A) 90 days of original invoice date and (B) 60 days of the due date, and (ii) in the case of Accounts due and owing from up to any three (3) Account Debtors, Accounts (on terms satisfactory to Agent) that the Account Debtor has failed to pay within the lesser of (A) 120 days of original invoice date and (B) 90 days of the due date and provided further that the aggregate of Eligible Accounts under this Section (ii) shall not exceed $588,000 at any time. (b) Accounts owed by an Account Debtor (or its Affiliates) where 50% or more of all Accounts owed by that Account Debtor (or its Affiliates) are deemed ineligible under clause (a) above, (c) Accounts with respect to which the Account Debtor is an employee, Affiliate, or agent of Borrower, (d) Accounts arising in a transaction wherein goods are placed on consignment or are sold pursuant to a guaranteed sale, a sale or return, a sale on approval, a bill and hold, or any other terms by reason of which the payment by the Account Debtor may be conditional, (e) Accounts that are not payable in Dollars, (f) Accounts with respect to which the Account Debtor either (i) does not maintain its chief executive office in the United States, or (ii) is not organized under the laws of the United States or any state thereof, or (iii) is the government of any foreign country or sovereign state, or of any state, province, municipality, or other political subdivision thereof, or of any department, agency, public corporation, or other instrumentality thereof, unless (A) the Account is supported by an irrevocable letter of credit satisfactory to Agent (as to form, substance, and issuer or domestic confirming bank) that has been delivered to Agent and is directly drawable by Agent, or (B) the Account is covered by credit insurance in form, substance, and amount, and by an insurer, satisfactory to Agent, (g) Accounts with respect to which the Account Debtor is either (i) the United States or any department, agency, or instrumentality of the United States (exclusive, however, of Accounts with respect to which Borrower has complied, to the reasonable satisfaction of Agent, with the Assignment of Claims Act, 31 USC Section 3727), or (ii) any state of the United States (exclusive, however, of (y) Accounts owed by any state that does not have a statutory counterpart to the Assignment of Claims Act, or (z) Accounts owed by any state that does have a statutory counterpart to the Assignment of Claims Act as to which Borrower has complied to Agent's satisfaction) provided that Section (g) shall not apply to Accounts which are otherwise Eligible Accounts and do not exceed $500,000 in the aggregate at any time. (h) Accounts with respect to which the Account Debtor is a creditor of Borrower, has or has asserted a right of setoff, has disputed its liability, or has made any claim with respect to its obligation to pay the Account, to the extent of such claim, right of setoff, or dispute, (i) Accounts with respect to an Account Debtor whose total obligations owing to Borrower exceed 10% of all Eligible Accounts (or, in the case of Tropicana Products, Inc., Wal-Mart Stores, Inc. and Nestle, S.A., obligations owing to Borrower which, in the case of each 10 of any two (2) such Account Debtors, exceed 15%, or in the case of any one (1) such Account Debtor exceed 20%, or in the case of all such Account Debtors exceed 45% in the aggregate, of all Eligible Accounts), to the extent of the obligations owing by such Account Debtor in excess of such percentage, (j) Accounts with respect to which the Account Debtor is subject to an Insolvency Proceeding, is not Solvent, has gone out of business, or as to which Borrower has received notice of an imminent Insolvency Proceeding or a material impairment of the financial condition of such Account Debtor, (k) Accounts with respect to which the Account Debtor is located in the states of New Jersey or Minnesota (or any other state that requires a creditor to file a business activity report or similar document in order to bring suit or otherwise enforce its remedies against such Account Debtor in the courts or through any judicial process of such state), unless Borrower has qualified to do business in New Jersey or Minnesota, or such other states, or has filed a business activities report with the applicable division of taxation, the department of revenue, or with such other state offices, as appropriate, for the then-current year, or is exempt from such filing requirement, (l) Accounts, the collection of which, Agent, in its Permitted Discretion, believes to be doubtful by reason of the Account Debtor's financial condition, (m) Accounts that are not subject to a valid and perfected first priority Agent's Lien except as otherwise expressly permitted under Section (g) above, (n) Accounts with respect to which (i) the goods giving rise to such Account have not been shipped and billed to the Account Debtor, or (ii) the services giving rise to such Account have not been performed and billed to the Account Debtor, or (o) Accounts that represent the right to receive progress payments or other advance billings that are due prior to the completion of performance by Borrower of the subject contract for goods or services. "Eligible Inventory" means Inventory consisting of first quality goods held for sale in the ordinary course of Borrower's business located at one of Borrower's business locations set forth on Schedule E-1 (or in-transit between any such locations), that complies with each of the representations and warranties respecting Eligible Inventory made by Borrower in the Loan Documents and that is not excluded as ineligible by virtue of the one or more of the criteria set forth below; provided, however, that such criteria may be fixed and revised from time to time by Agent in Agent's Permitted Discretion to address the results of any audit or appraisal performed by Agent from time to time after the Closing Date. Borrower may revise Schedule E-1, in a manner reasonably acceptable to Agent, upon not less than twenty (20) days advance written notice to Agent. In determining the amount to be so included, Inventory shall be valued at the lower of cost (subject to the other terms and provisions of this Agreement with respect to calculation of cost) or market on a basis consistent with Borrower's historical accounting practices. An item of Inventory shall not be included in Eligible Inventory if: (a) Borrower does not have good, valid, and marketable title thereto, 11 (b) it is not located at one of the locations in the United States set forth on Schedule E-1 or in transit from one such location to another such location, (c) it is located on real property leased by Borrower or in a contract warehouse, in each case, unless it is subject to a Collateral Access Agreement executed by the lessor, warehouseman, or other third party, as the case may be, and unless it is segregated or otherwise separately identifiable from goods of others, if any, stored on the premises, (d) it is not subject to a valid and perfected first priority Agent's Lien, (e) it consists of goods returned or rejected by Borrower's customers, or (f) it consists of goods that are obsolete or slow moving (which with respect to goods consisting of concentrate shall be goods held by Borrower for three (3) years or more, with respect to goods consisting of frozen berries shall be goods held by Borrower for eighteen (18) months or more, and with respect to goods consisting of finished goods other than concentrate shall be goods held by Borrower for fifteen (15) months or more), restrictive or custom items, work-in-process or goods that constitute spare parts, packaging and shipping materials, supplies used or consumed in Borrower's business, bill and hold goods, defective goods, "seconds," or Inventory acquired on consignment. "Eligible Transferee" means (a) a commercial bank organized under the laws of the United States, or any state thereof, and having total assets in excess of $250,000,000, (b) a commercial bank organized under the laws of any other country which is a member of the Organization for Economic Cooperation and Development or a political subdivision of any such country and which has total assets in excess of $250,000,000, provided that such bank is acting through a branch or agency located in the United States, (c) a finance company, insurance company, or other financial institution or fund that is engaged in making, purchasing, or otherwise investing in commercial loans in the ordinary course of its business and having (together with its Affiliates) total assets in excess of $250,000,000, (d) any Affiliate (other than individuals) of a Lender that was party hereto as of the Closing Date or any fund, money market account, investment account or other account managed by a Lender or an Affiliate of a Lender, (e) so long as no Event of Default has occurred and is continuing, any other Person approved by Agent and Borrower, and (f) during the continuation of an Event of Default, any other Person approved by Agent. "Environmental Actions" means any complaint, summons, citation, notice, directive, order, claim, litigation, investigation, judicial or administrative proceeding, judgment, letter, or other communication from any Governmental Authority, or any third party involving violations of Environmental Laws or releases of Hazardous Materials from (a) any assets, properties, or businesses of Borrower or any predecessor in interest, (b) from adjoining properties or businesses, or (c) from or onto any facilities which received Hazardous Materials generated by Borrower or any predecessor in interest. "Environmental Law" means any applicable federal, state, provincial, foreign or 12 local statute, law, rule, regulation, ordinance, code, legally binding and enforceable guideline, legally binding and enforceable written policy, or rule of common law now or hereafter in effect and in each case as amended, or any judicial or administrative interpretation thereof, including any legally binding judicial or administrative order, consent decree or judgment, to the extent binding on Borrower, relating to the environment, employee health and safety, or Hazardous Materials, including CERCLA; RCRA; the Federal Water Pollution Control Act, 33 USC Section 1251 et seq.; the Toxic Substances Control Act, 15 USC, Section 2601 et seq.; the Clean Air Act, 42 USC Section 7401 et seq.; the Safe Drinking Water Act, 42 USC. Section 3803 et seq.; the Oil Pollution Act of 1990, 33 USC. Section 2701 et seq.; the Emergency Planning and the Community Right-to-Know Act of 1986, 42 USC. Section 11001 et seq.; the Hazardous Material Transportation Act, 49 USC Section 1801 et seq.; and the Occupational Safety and Health Act, 29 USC. Section 651 et seq. (to the extent it regulates occupational exposure to Hazardous Materials); any state and local or foreign counterparts or equivalents, in each case as amended from time to time. "Environmental Liabilities and Costs" means all liabilities, monetary obligations, Remedial Actions, losses, damages, punitive damages, consequential damages, treble damages, costs and expenses (including all reasonable fees, disbursements and expenses of counsel, experts, or consultants, and costs of investigation and feasibility studies), fines, penalties, sanctions, and interest incurred as a result of any claim or demand by any Governmental Authority or any third party, and which relate to any Environmental Action. "Environmental Lien" means any Lien in favor of any Governmental Authority for Environmental Liabilities and Costs. "Equipment" means all of Borrower's now owned or hereafter acquired right, title, and interest with respect to equipment, machinery, machine tools, motors, furniture, furnishings, fixtures, vehicles (including motor vehicles), tools, parts, goods (other than consumer goods, farm products, or Inventory), wherever located, including all attachments, accessories, accessions, replacements, substitutions, additions, and improvements to any of the foregoing. "Equitable Intercreditor Agreement" means the Intercreditor Agreement dated as of the Closing Date by and between Agent and The Equitable Life Assurance Society of the United States, as amended. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute thereto. "ERISA Affiliate" means (a) any Person subject to ERISA whose employees are treated as employed by the same employer as the employees of Borrower under IRC Section 414(b), (b) any trade or business subject to ERISA whose employees are treated as employed by the same employer as the employees of Borrower under IRC Section 414(c), (c) solely for purposes of Section 302 of ERISA and Section 412 of the IRC, any organization subject to ERISA that is a member of an affiliated service group of which Borrower is a member under IRC Section 414(m), or (d) solely for purposes of Section 302 of ERISA and Section 412 of the IRC, any Person subject to ERISA that is a party to an arrangement with Borrower and whose employees are aggregated with the employees of Borrower under IRC Section 414(o). "Event of Default" has the meaning set forth in Section 8. 13 "Excess Availability" means the amount, as of the date any determination thereof is to be made, equal to Availability minus the aggregate amount, if any, of all trade payables of Borrower aged in excess of historical levels with respect thereto and all book overdrafts in excess of historical practices with respect thereto, in each case as determined by Agent in its Permitted Discretion. "Exchange Act" means the Securities Exchange Act of 1934, as in effect from time to time. "Excluded Collateral" means the real and personal property of Borrower set forth on Schedule 4.1 hereto. "Existing Lenders" means individually and collectively, the Continuing Bank Group, the Equitable Life Assurance Society of the United States and Wood County National Bank. "Farm Products" means all of Borrower's now owned or hereafter existing or acquired farm products of every kind and nature, including without limitation, crops, livestock and supplies used or produced in farming operations, and products of crops or livestock, wherever located. "Farm Products Sellers" shall mean, individually and collectively, sellers or suppliers to Borrower of any farm product (as such term is defined in both the Food Security Act and the Code) and including any perishable agricultural commodity (as defined in PACA). "Fee Letter" means that certain fee letter, dated as of even date herewith, between Borrower and Agent, in form and substance satisfactory to Agent. "Fee Notes" means the Fee Note in the original principal amount of $2,500,000, payable by Borrower to Foothill and the Fee Note in the original principal amount of $2,500,000 in favor of Ableco. "FEIN" means Federal Employer Identification Number. "Food Security Act" shall mean the Food Security Act of 1984, 7 U.S.C. Section 1631 et. seq., as the same now exists or may hereafter from time to time be amended, modified, recodified or supplemented, together with all rules and regulations thereunder. "Food Security Act Notices" shall have the meaning set forth in Section 5.21. "Foothill" means Foothill Capital Corporation, a California corporation. "Frozen Cranberry Sublimit" shall mean, during each month of any year of the term of this Agreement, the amount set forth below opposite such month: October $10,000,000 November $ 9,400,000 14 December $ 8,800,000 January $ 8,200,000 February $ 7,600,000 March $ 7,000,000 April $ 6,400,000 May $ 5,800,000 June $ 5,200,000 July $ 4,600,000 August $ 4,000,000 September $ 3,400,000 "Frozen Cranberry Cost" means, per barrel, (i) Ocean Spray's lowest base pool price for frozen cranberries for the immediately preceding harvest, plus (ii) $3.00, plus (iii) the hauling and storage cost (as determined by Agent) of such frozen cranberries prior to conversion to concentrate. "Frozen Cranberry Value" means the Eligible Inventory of Borrower consisting of barrels of frozen cranberries multiplied, per barrel, by the lesser of (a) during the first six (6) fiscal months following the Closing Date, the weighted average sale price of cranberry concentrate for the immediately preceding three (3) months, as determined by Agent, and thereafter the lowest sales price per gallon for Borrower's sales of cranberry concentrate in the immediately preceding three (3) months, in each case, less the per barrel cost to convert such frozen cranberries into concentrate, multiplied by 1.5 (or such other multiple as Agent determines to be appropriate, provided that Agent may not increase such multiple without the consent of the Required Lenders), and (b) the Frozen Cranberry Cost of such frozen cranberries. "Funding Date" means the date on which a Borrowing occurs. "GAAP" means generally accepted accounting principles as in effect from time to time in the United States, consistently applied. "General Intangibles" means all of Borrower's now owned or hereafter acquired right, title, and interest with respect to general intangibles (including payment intangibles, contract rights, rights to payment, rights arising under common law, statutes, or regulations, choses or things in action, goodwill, patents, trade names, trademarks, servicemarks, copyrights, 15 blueprints, drawings, purchase orders, customer lists, monies due or recoverable from pension funds, route lists, rights to payment and other rights under any royalty or licensing agreements, infringement claims, computer programs, information contained on computer disks or tapes, software, literature, reports, catalogs, money, deposit accounts, insurance premium rebates, tax refunds, and tax refund claims), and any and all supporting obligations in respect thereof, and any other personal property other than goods, Accounts, Investment Property, and Negotiable Collateral. "Governing Documents" means, with respect to any Person, the certificate or articles of incorporation, by-laws, or other organizational documents of such Person. "Governmental Authority" means any federal, state, local, or other governmental or administrative body, instrumentality, department, or agency or any court, tribunal, administrative hearing body, arbitration panel, commission, or other similar dispute-resolving panel or body. "Guarantor" and "Guarantors" means, individually and collectively, NCI Foods, LLC, Wildhawk, Inc., Northland Insurance Center, Inc., Northland Cranberries Sales Corp., PFVA Acquisition Corp., and Potomac Foods of Virginia, Inc. "Hazardous Materials" means (a) substances that are defined or listed in, or otherwise classified pursuant to, any applicable laws or regulations as "hazardous substances," "hazardous materials," "hazardous wastes," "toxic substances," or any other formulation intended to define, list, or classify substances by reason of deleterious properties such as ignitability, corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP toxicity", (b) oil, petroleum, or petroleum derived substances, natural gas, natural gas liquids, synthetic gas, drilling fluids, produced waters, and other wastes associated with the exploration, development, or production of crude oil, natural gas, or geothermal resources, (c) any flammable substances or explosives or any radioactive materials, and (d) asbestos in any form or electrical equipment that contains any oil or dielectric fluid containing levels of polychlorinated biphenyls in excess of 50 parts per million. "Indebtedness" means (a) all obligations of Borrower for borrowed money, (b) all obligations of Borrower evidenced by bonds, debentures, notes, or other similar instruments and all reimbursement or other obligations of Borrower in respect of letters of credit, bankers acceptances, interest rate swaps, or other financial products, (c) all obligations of Borrower under Capital Leases, (d) all obligations or liabilities of others secured by a Lien on any asset of Borrower, irrespective of whether such obligation or liability is assumed, (e) all obligations of Borrower for the deferred purchase price of assets (other than trade debt incurred in the ordinary course of Borrower's business and repayable in accordance with customary trade practices), and (f) any obligation of Borrower guaranteeing or intended to guarantee (whether directly or indirectly guaranteed, endorsed, co-made, discounted, or sold with recourse to Borrower) any obligation of any other Person. "Indemnified Liabilities" has the meaning set forth in Section 11.3. "Indemnified Person" has the meaning set forth in Section 11.3. 16 "Insolvency Proceeding" means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code or under any other state or federal bankruptcy or insolvency law, assignments for the benefit of creditors, formal or informal moratoria, compositions, extensions generally with creditors, or proceedings seeking reorganization, arrangement, or other similar relief. "Intangible Assets" means, with respect to any Person, that portion of the book value of all of such Person's assets that would be treated as intangibles under GAAP. "Inventory" means all Borrower's now owned or hereafter acquired right, title, and interest with respect to inventory, including goods held for sale or lease or to be furnished under a contract of service, goods that are leased by Borrower as lessor, goods that are furnished by Borrower under a contract of service, and raw materials, work in process, or materials used or consumed in Borrower's business. "Inventory Reserves" means reserves (determined from time to time by Agent in its Permitted Discretion) for (a) the estimated costs relating to unpaid freight charges, warehousing or storage charges, taxes, duties, and other similar unpaid costs associated with the acquisition of Eligible In-Transit Inventory by Borrower, plus (b)the estimated reclamation claims of unpaid sellers of Inventory sold to Borrower. "Investment" means, with respect to any Person, any investment by such Person in any other Person (including Affiliates) in the form of loans, guarantees, advances, or capital contributions (excluding (a) commission, travel, and similar advances to officers and employees of such Person made in the ordinary course of business, and (b) bona fide Accounts arising from the sale of goods or rendition of services in the ordinary course of business consistent with past practice), purchases or other acquisitions for consideration of Indebtedness or Stock, and any other items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. "Investment Property" means all of Borrower's now owned or hereafter acquired right, title, and interest with respect to "investment property" as that term is defined in the Code, and any and all supporting obligations in respect thereof. "IRC" means the Internal Revenue Code of 1986, as in effect from time to time. "Issuing Lender" means Foothill or any other Lender that, at the request of Borrower and with the consent of Agent agrees, in such Lender's sole discretion, to become an Issuing Lender for the purpose of issuing L/Cs or L/C Undertakings pursuant to Section 2.12. "L/C" has the meaning set forth in Section 2.12(a). "L/C Disbursement" means a payment made by the Issuing Lender pursuant to a Letter of Credit. "L/C Undertaking" has the meaning set forth in Section 2.12(a). "Lender" and "Lenders" have the respective meanings set forth in the preamble to this Agreement, and shall include any other Person made a party to this Agreement in accordance with the provisions of Section 14.1. 17 "Lender Group" means, individually and collectively, each of the Lenders (including the Issuing Lender) and Agent. "Lender Group Expenses" means all (a) costs or expenses (including taxes, and insurance premiums) required to be paid by Borrower under any of the Loan Documents that are paid or incurred by the Lender Group, (b) fees or charges paid or incurred by Lender Group in connection with the Lender Group's transactions with Borrower, including, fees or charges for photocopying, notarization, couriers and messengers, telecommunication, public record searches (including tax lien, litigation, and UCC searches and including searches with the patent and trademark office, the copyright office, or the department of motor vehicles), filing, recording, publication, appraisal (including periodic Collateral appraisals or business valuations to the extent of the fees and charges (and up to the amount of any limitation) contained in this Agreement), real estate surveys, real estate title policies and endorsements, and environmental audits, (c) costs and expenses incurred by Agent in the disbursement of funds to Borrower (by wire transfer or otherwise), (d) charges paid or incurred by Agent resulting from the dishonor of checks, (e) reasonable costs and expenses paid or incurred by the Lender Group to correct any default or enforce any provision of the Loan Documents, or in gaining possession of, maintaining, handling, preserving, storing, shipping, selling, preparing for sale, or advertising to sell the Collateral, or any portion thereof, irrespective of whether a sale is consummated, (f) audit fees and expenses of Lender Group related to audit examinations of the Books to the extent of the fees and charges (and up to the amount of any limitation) contained in this Agreement, (g) reasonable costs and expenses of third party claims or any other suit paid or incurred by the Lender Group in enforcing or defending the Loan Documents or in connection with the transactions contemplated by the Loan Documents or the Lender Group's relationship with Borrower or any guarantor of the Obligations, (h) Agent's and each Lender's reasonable fees and expenses (including attorneys fees) incurred in advising, structuring, drafting, reviewing, administering, or amending the Loan Documents, and (i) Agent's and each Lender's reasonable fees and expenses (including attorneys fees) incurred in terminating, enforcing (including attorneys fees and expenses incurred in connection with a "workout," a "restructuring," or an Insolvency Proceeding concerning Borrower or in exercising rights or remedies under the Loan Documents), or defending the Loan Documents, irrespective of whether suit is brought, or in taking any Remedial Action concerning the Collateral. "Lender-Related Person" means, with respect to any Lender, such Lender, together with such Lender's Affiliates, and the officers, directors, employees, and agents of such Lender. "Letter of Credit" means an L/C or an L/C Undertaking, as the context requires. "Letter of Credit Usage" means, as of any date of determination, the aggregate undrawn amount of all outstanding Letters of Credit plus 100% of the amount of outstanding time drafts accepted by an Underlying Issuer as a result of drawings under Underlying Letters of Credit. 18 "Lien" means any interest in an asset securing an obligation owed to, or a claim by, any Person other than the owner of the asset, whether such interest shall be based on the common law, statute, or contract, whether such interest shall be recorded or perfected, and whether such interest shall be contingent upon the occurrence of some future event or events or the existence of some future circumstance or circumstances, including the lien or security interest arising from a mortgage, deed of trust, encumbrance, pledge, hypothecation, assignment, deposit arrangement, security agreement, conditional sale or trust receipt, or from a lease, consignment, or bailment for security purposes and also including reservations, exceptions, encroachments, easements, rights-of-way, covenants, conditions, restrictions, leases, and other title exceptions and encumbrances affecting Real Property. "Liquidating Assets" shall mean the assets of Borrower listed on the attached Schedule 1.1, as in effect on the Closing Date. "Loan Account" has the meaning set forth in Section 2.10. "Loan Documents" means this Agreement, the Cash Management Agreements, the Control Agreements, the Disbursement Letter, the Fee Letter, the Fee Notes, the Letters of Credit, the Mortgages, the Officers' Certificate, the Stock Pledge Agreement, the Subsidiary Documents, the Trademark Security Agreement, the Warrants, any note or notes executed by Borrower in connection with this Agreement and payable to a member of the Lender Group, and any other agreement entered into, now or in the future, by Borrower, any Guarantor and the Lender Group in connection with this Agreement. "Material Adverse Change" means (a) a material adverse change in the business, prospects, operations, results of operations, assets, liabilities or condition (financial or otherwise) of Borrower, (b) a material impairment of Borrower's ability to perform its obligations under the Loan Documents to which it is a party or of the Lender Group's ability to enforce the Obligations or realize upon the Collateral, or (c) a material impairment of the enforceability or priority of the Agent's Liens with respect to the Collateral as a result of an action or failure to act on the part of Borrower. "Material Subsidiary" shall mean any Subsidiary of Borrower, excluding W.S.C. Water Management Corp,. which owns assets with a value equal to 5% or more of the value of the Borrower's assets, or which owns General Intangibles or other property necessary or material to the Borrower's conduct of its business. "Maturity Date" has the meaning set forth in Section 3.4. "Maximum Credit Line" means $50,000,000. "Maximum Revolver Amount" means $30,000,000. "Mortgages" means, individually and collectively, one or more mortgages, deeds of trust, or deeds to secure debt, executed and delivered by Borrower in favor of Agent, for the benefit of the Lender Group, in form and substance satisfactory to Agent, that encumber the Real Property Collateral and the related improvements thereto. 19 "Negotiable Collateral" means all of Borrower's now owned and hereafter acquired right, title, and interest with respect to letters of credit, letter of credit rights, instruments, promissory notes (including, but not limited to, Borrower's right to payment of principal and interest on the Cliffstar Note), drafts, documents, and chattel paper (including electronic chattel paper and tangible chattel paper), and any and all supporting obligations in respect thereof. "Net Liquidation Percentage" means the percentage of the book value of Borrower's Inventory that is estimated to be recoverable in an orderly liquidation of such Inventory, such percentage to be as determined from time to time by a qualified appraisal company selected by Agent. "Obligations" means all loans (including the Term Loans), Advances, debts, principal, interest (including any interest that, but for the provisions of the Bankruptcy Code, would have accrued), contingent reimbursement obligations with respect to outstanding Letters of Credit, premiums, liabilities (including all amounts charged to Borrower's Loan Account pursuant hereto), obligations, fees (including the fees provided for in the Fee Letter), charges, costs, Lender Group Expenses (including any fees or expenses that, but for the provisions of the Bankruptcy Code, would have accrued), lease payments, guaranties, covenants, and duties of any kind and description owing by Borrower to the Lender Group pursuant to or evidenced by the Loan Documents and irrespective of whether for the payment of money, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, and including all interest not paid when due and all Lender Group Expenses that Borrower is required to pay or reimburse by the Loan Documents, by law, or otherwise. Any reference in this Agreement or in the Loan Documents to the Obligations shall include all amendments, changes, extensions, modifications, renewals replacements, substitutions, and supplements, thereto and thereof, as applicable, both prior and subsequent to any Insolvency Proceeding. "Officers' Certificate" means the representations and warranties of officers form submitted by Agent to Borrower, together with Borrower's completed responses to the inquiries set forth therein, the form and substance of such responses to be satisfactory to Agent. "Originating Lender" has the meaning set forth in Section 14.1(e). "Overadvance" has the meaning set forth in Section 2.5. "PACA" shall mean the Perishable Agricultural Commodities Act, 1930, as amended, 7 U.S.C. Section 499a et. seq., as the same now exists or may from time to time hereafter be amended, modified, recodified or supplemented, together with all rules, regulations and interpretations thereunder or related thereto. "Participant" has the meaning set forth in Section 14.1(e). "Permitted Discretion" means a determination made in good faith and in the exercise of reasonable (from the perspective of a secured asset-based lender) business judgment. 20 "Permitted Dispositions" means (a) sales or other dispositions by Borrower of Equipment that is no longer used or useful in the conduct of Borrower's business, with a fair market value not to exceed $100,000 in each year, or substantially worn, damaged, or obsolete in the ordinary course of Borrower's business, (b) sales by Borrower of Inventory to buyers in the ordinary course of business, (c) the use or transfer of money or Cash Equivalents by Borrower in a manner that is not prohibited by the terms of this Agreement or the other Loan Documents, (d) the licensing by Borrower, on a non-exclusive basis, of patents, trademarks, copyrights, and other intellectual property rights in the ordinary course of Borrower's business and (e) the sale or other disposition by Borrower of the Liquidating Assets. "Permitted Investments" means (a) investments in Cash Equivalents, (b) investments in negotiable instruments for collection, (c) advances made in connection with purchases of goods or services in the ordinary course of business, (d) the Cliffstar Note, (e) Stock of Subsidiaries and (f) Stock of Beaver Creek Cranberry Growers Assoc., Inc. "Permitted Liens" means (a) Liens held by Agent for the benefit of Agent and the Lenders, (b) Liens for unpaid taxes that either (i) are not yet delinquent, or (ii) do not constitute an Event of Default hereunder and are the subject of Permitted Protests, (c) Liens set forth on Schedule P-1, (d) the interests of lessors under operating leases, (e) purchase money Liens or the interests of lessors under Capital Leases to the extent that such Liens or interests secure Permitted Purchase Money Indebtedness and so long as such Lien attaches only to the asset purchased or acquired and the proceeds thereof, (f) Liens arising by operation of law in favor of warehousemen, landlords, carriers, mechanics, materialmen, laborers, wage claimants, or suppliers, incurred in the ordinary course of business of Borrower and not in connection with the borrowing of money, and which Liens either (i) are for sums not yet delinquent, or (ii) are the subject of Permitted Protests, (g) Liens arising from deposits made in connection with obtaining worker's compensation or other unemployment insurance, (h) Liens or deposits to secure performance of bids, tenders, or leases incurred in the ordinary course of business of Borrower and not in connection with the borrowing of money, (i) Liens granted as security for surety or appeal bonds in connection with obtaining such bonds in the ordinary course of business of Borrower, (j) Liens resulting from any judgment or award that is not an Event of Default hereunder, (k) Liens with respect to the Real Property Collateral that are exceptions to the commitments for title insurance issued in connection with the Mortgages, as accepted by Agent, (l) with respect to any Real Property that is not part of the Real Property Collateral, Liens easements, rights of way, and zoning restrictions that do not materially interfere with or impair the use or operation thereof by Borrower, and (m) Liens or Trust Claims on Borrower's Inventory or other assets, in favor of any Farm Product Seller, whether or not such Liens or claims are inchoate or are fully perfected (with respect to perfected liens, to the extent Agent has established and maintains a Reserve with respect thereto) and payable, arising from any federal or state statute, including, without limitation, PACA, the Food Security Act, the Oregon Agricultural Produce Lien or Agricultural Services Lien statutes, (O.R.S. Section 87.700, et seq.), the Wisconsin Agricultural Lien statute (W.S.A. Section 409.109, et seq.), or otherwise arising by operation of law. "Permitted Protest" means the right of Borrower to protest any Lien (other than any such Lien that secures the Obligations), taxes (other than payroll taxes or taxes that are the subject of a United States federal tax lien), or rental payment, provided that (a)a reserve with respect to such obligation is established on the Books in such amount as is required under 21 GAAP, (b)any such protest is instituted promptly and prosecuted diligently by Borrower in good faith, and (c)Agent is satisfied that, while any such protest is pending, there will be no impairment of the enforceability, validity, or priority of any of the Agent's Liens. "Permitted Purchase Money Indebtedness" means, as of any date of determination, Purchase Money Indebtedness incurred after the Closing Date in an aggregate principal amount outstanding at any one time not in excess of $1,800,000 on or before the first anniversary of the Closing Date, $2,000,000 from and after the first anniversary of the Closing Date and before the second anniversary of the Closing Date, and from and after the second anniversary of the Closing Date, $2,500,000. "Person" means natural persons, corporations, limited liability companies, limited partnerships, general partnerships, limited liability partnerships, joint ventures, trusts, land trusts, business trusts, or other organizations, irrespective of whether they are legal entities, and governments and agencies and political subdivisions thereof. "Personal Property Collateral" means all Collateral other than Real Property. "Projections" means Borrower's forecasted (a) balance sheets, (b) profit and loss statements, and (c) cash flow statements, all prepared on a basis consistent with Borrower's historical financial statements, together with appropriate supporting details and a statement of underlying assumptions. "Pro Rata Share" means: (a) with respect to a Lender's obligation to make Advances and receive payments of principal, interest, fees, costs, and expenses with respect thereto, the percentage obtained by dividing (i) such Lender's Revolver Commitment, by (ii) the aggregate Revolver Commitments of all Lenders, (b) with respect to a Lender's obligation to participate in Letters of Credit, to reimburse the Issuing Lender, and to receive payments of fees with respect thereto, the percentage obtained by dividing (i) such Lender's Revolver Commitment, by (ii) the aggregate Revolver Commitments of all Lenders, (c) with respect to a Lender's obligation to make the Term Loans and receive payments of interest, fees, and principal with respect thereto, the percentage obtained by dividing (i) such Lender's Term Loan Commitment, by (ii) the aggregate amount of all Lenders' Term Loan Commitments, and (d) with respect to all other matters (including the indemnification obligations arising under Section 16.7), the percentage obtained by dividing (i) such Lender's Total Commitment, by (ii) the aggregate amount of Total Commitments of all Lenders; provided, however, that, in each case, in the event all Commitments have been terminated, Pro Rata Share shall be determined according to the Commitments in effect immediately prior to such termination. "PSA" shall mean the Packers and Stockyard Act of 1921, 7 U.S.C. Section 181 22 et. seq., as the same now exists or may from time to time hereafter be amended, modified, recodified or supplemented, together with all rules, regulations and interpretations thereunder or related thereto. "Purchase Money Indebtedness" means Indebtedness (other than the Obligations, but including Capitalized Lease Obligations), incurred at the time of, or within 20 days after, the acquisition of any fixed assets for the purpose of financing all or any part of the acquisition cost thereof. "Real Property" means any estates or interests in real property now owned or hereafter acquired by Borrower and the improvements thereto. "Real Property Collateral" means the parcel or parcels of Real Property identified on Schedule R-1 and any Real Property hereafter acquired by Borrower. "Record" means information that is inscribed on a tangible medium or which is stored in an electronic or other medium and is retrievable in perceivable form. "Remedial Action" means all actions taken to (a) clean up, remove, remediate, contain, treat, monitor, assess, evaluate, or in any way address a release or threatened release of Hazardous Materials in the indoor or outdoor environment, (b) prevent or minimize a release or threatened release of Hazardous Materials so they do not migrate or endanger or threaten to endanger public health or welfare or the indoor or outdoor environment, (c) perform any pre-remedial studies, investigations, or post-remedial operation and maintenance activities, or (d) conduct any other actions authorized by 42 USC Section 9601. "Report" has the meaning set forth in Section 16.17. "Required Availability" means Excess Availability and unrestricted cash and Cash Equivalents in an aggregate amount of not less than $5,000,000. "Required Lenders" means, at any time, Lenders whose Pro Rata Shares aggregate 66*% of the Total Commitments, or if the Commitments have been terminated irrevocably, 66*% of the Obligations then outstanding. "Reserves" means, with respect to the Borrowing Base (a) the Inventory Reserves, (b) the Supplemental Reserve, and (c) such other reserves against Eligible Accounts, Eligible Inventory or Availability that Agent may, in its reasonable credit judgment, establish from time to time. Without limiting the generality of the foregoing, (i) Reserves established to ensure the payment of accrued Indebtedness or other charges Borrower is obligated to pay and discharge pursuant to this Agreement, shall be deemed to be a reasonable exercise of Agent's credit judgment and (ii) Agent shall have the right at all times to establish a reserve, and to increase and decrease such reserve from time to time, in respect of any or all amounts owed, or which may under any contingency be owed, by Borrower to any Farm Products Sellers, any wage claimants or other Person, which amounts are or may be secured by any of the Collateral, or if Agent 23 believes in good faith such reserve is or may be necessary to protect it against statutory or common law Liens or trust fund claims or other Liens in favor of any Farm Products Sellers or any agent to any Farm Product Sellers or any other Person with a security interest in the assets of such supplier or seller or any category of Indebtedness or other obligation or liability owed to a third party, the payment of which is or may be secured by a statutory or common law Lien or entitled to the benefit of a trust or other Lien upon any of the assets and properties of Borrower. "Reserve Percentage" means, on any day, for any Lender, the maximum percentage prescribed by the Board of Governors of the Federal Reserve System (or any successor Governmental Authority) for determining the reserve requirements (including any basic, supplemental, marginal, or emergency reserves) that are in effect on such date with respect to eurocurrency funding (currently referred to as "eurocurrency liabilities") of that Lender, but so long as such Lender is not required or directed under applicable regulations to maintain such reserves, the Reserve Percentage shall be zero. "Revolver Commitment" means, with respect to each Lender, its Revolver Commitment, and, with respect to all Lenders, their Revolver Commitments, in each case as such Dollar amounts are set forth beside such Lender's name under the applicable heading on Schedule C-1 or on the signature page of the Assignment and Acceptance pursuant to which such Lender became a Lender hereunder in accordance with the provisions of Section 14.1. "Revolver Usage" means, as of any date of determination, the sum of (a) the then extant amount of outstanding Advances, plus (b) the then extant amount of the Letter of Credit Usage. "Risk Participation Liability" means, as to each Letter of Credit, all reimbursement obligations of Borrower to the Issuing Lender with respect to an L/C Undertaking, consisting of (a) the amount available to be drawn or which may become available to be drawn, (b) all amounts that have been paid by the Issuing Lender to the Underlying Issuer to the extent not reimbursed by Borrower, whether by the making of an Advance or otherwise, and (c) all accrued and unpaid interest, fees, and expenses payable with respect thereto. "SEC" means the United States Securities and Exchange Commission and any successor thereto. "Securities Account" means a "securities account" as that term is defined in the Code. "Settlement" has the meaning set forth in Section 2.3(e)(i). "Settlement Date" has the meaning set forth in Section 2.3(e)(i). "Solvent" means, with respect to any Person on a particular date, that such Person is not insolvent (as such term is defined in the Uniform Fraudulent Transfer Act). "Stock" means all shares, options, warrants, interests, participations, or other equivalents (regardless of how designated) of or in a Person, whether voting or nonvoting, including common stock, preferred stock, or any other "equity security" (as such term is defined 24 in Rule3a11-1 of the General Rules and Regulations promulgated by the SEC under the Exchange Act). "Stock Pledge Agreement" means a stock pledge agreement, in form and substance satisfactory to Agent, executed and delivered by Borrower to Agent with respect to the pledge of the Stock owned by Borrower. "Subsidiary" of a Person means a corporation, partnership, limited liability company, or other entity in which that Person directly or indirectly owns or controls the shares of Stock having ordinary voting power to elect a majority of the board of directors (or appoint other comparable managers) of such corporation, partnership, limited liability company, or other entity. "Subsidiary Documents" means the Guarantee, Trademark Security Agreement and General Security Agreement by each Guarantor with or in favor of Agent and any other agreement entered into, now or in the future, by any Guarantor and the Lender Group in connection with this Agreement. "Sun Capital" shall mean Sun Capital Partners Management, LLC. "Sun Capital Management Agreement" shall mean the Management Services Agreement dated as of the Closing Date between Sun Capital and Borrower, as in effect on the Closing Date. "Supplemental Reserve" means the reserves established at the Closing Date in the amount of $4,000,000, which Supplemental Reserve shall decrease by $135,000 per month on the first day of each of the first eleven (11) months following the Closing Date. On the first anniversary of the Closing Date and at all times thereafter, the Supplemental Reserve shall be set at $2,500,000 and shall not be reduced. "Swing Lender" means Foothill or any other Lender that, at the request of Borrower and with the consent of Agent agrees, in such Lender's sole discretion, to become the Swing Lender hereunder. "Swing Loan" has the meaning set forth in Section 2.3(d)(i). "Taxes" has the meaning set forth in Section 16.11. "Term Loans" has the meaning set forth in Section 2.2. "Term Loan A Amount" means $10,000,000. "Term Loan B Amount" means $10,000,000. "Term Loan Commitment" means, with respect to each Lender, its Term Loan Commitment, and, with respect to all Lenders, their Term Loan Commitments, in each case as such Dollar amounts are set forth beside such Lender's name under the applicable heading on Schedule C-1 or on the signature page of the Assignment and Acceptance pursuant to which such Lender became a Lender hereunder in accordance with the provisions of Section 14.1. 25 "Terminating Bank Group" shall mean Bank of America, National Trust & Savings Association, M&I Marshall & Isley Bank, Bank Boston N.A., LaSalle National Bank National Association and Wells Fargo Bank Minnesota, N.A. " Terminating Bank Group Documents" shall mean in form and substance satisfactory to Agent, from the Terminating Bank Group respecting, among other things, the amount necessary to repay in full all of the obligations of Borrower owing to the Terminating Bank Group and obtain a release of all of the Liens existing in favor of the Terminating Bank Group in and to the assets of Borrower. "Total Commitment" means, with respect to each Lender, its Total Commitment, and, with respect to all Lenders, their Total Commitments, in each case as such Dollar amounts are set forth beside such Lender's name under the applicable heading on Schedule C-1 attached hereto or on the signature page of the Assignment and Acceptance pursuant to which such Lender became a Lender hereunder in accordance with the provisions of Section 14.1. "Trademark Security Agreement" means a Trademark Security Agreement executed and delivered by Borrower and Agent, the form and substance of which is satisfactory to Agent. "Underlying Issuer" means a third Person which is the beneficiary of an L/C Undertaking and which has issued a letter of credit at the request of the Issuing Lender for the benefit of Borrower. "Underlying Letter of Credit" means a letter of credit that has been issued by an Underlying Issuer. "Voidable Transfer" has the meaning set forth in Section 17.7. "Warrant" shall mean the warrants issued by Borrower and delivered to each Lender entitling each Lender to purchase for a nominal price its pro rata share of up to 5% of the fully diluted common stock of Borrower, upon terms and conditions satisfactory to such Lender in its sole discretion. "Wells Fargo" means Wells Fargo Bank, National Association, a national banking association. 1.2 Accounting Terms. All accounting terms not specifically defined herein shall be construed in accordance with GAAP. When used herein, the term "financial statements" shall include the notes and schedules thereto. Whenever the term "Borrower" is used in respect of a financial covenant or a related definition, it shall be understood to mean Borrower and its Subsidiaries on a consolidated basis unless the context clearly requires otherwise. 1.3 Code. Any terms used in this Agreement that are defined in the Code shall be construed and defined as set forth in the Code unless otherwise defined herein. 26 1.4 Construction. Unless the context of this Agreement or any other Loan Document clearly requires otherwise, references to the plural include the singular, references to the singular include the plural, the term "including" is not limiting, and the term "or" has, except where otherwise indicated, the inclusive meaning represented by the phrase "and/or." The words "hereof," "herein," "hereby," "hereunder," and similar terms in this Agreement or any other Loan Document refer to this Agreement or such other Loan Document, as the case may be, as a whole and not to any particular provision of this Agreement or such other Loan Document, as the case may be. Section, subsection, clause, schedule, and exhibit references herein are to this Agreement unless otherwise specified. Any reference in this Agreement or in the other Loan Documents to any agreement, instrument, or document shall include all alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements, thereto and thereof, as applicable (subject to any restrictions on such alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements set forth herein). Any reference herein to any Person shall be construed to include such Person's successors and assigns. Any requirement of a writing contained herein or in the other Loan Documents shall be satisfied by the transmission of a Record and any Record transmitted shall constitute a representation and warranty as to the accuracy and completeness of the information contained therein. 1.5 Schedules and Exhibits. All of the schedules and exhibits attached to this Agreement shall be deemed incorporated herein by reference. 2. LOAN AND TERMS OF PAYMENT. 2.1 Revolver Advances. (a) Subject to the terms and conditions of this Agreement, and during the term of this Agreement, each Lender with a Revolver Commitment agrees (severally, not jointly or jointly and severally) to make advances ("Advances") to Borrower in an amount at any one time outstanding not to exceed such Lender's Pro Rata Share of an amount equal to the lesser of: (i) the Maximum Revolver Amount less the Letter of Credit Usage or (ii) the Borrowing Base less the Letter of Credit Usage, less the aggregate amount of the Reserves. For purposes of this Agreement, "Borrowing Base," as of any date of determination, shall mean the result of: (A) the lesser of: (1) 85% of the Dollar amount of Eligible Accounts, less the amount, if any, of the Dilution Reserve, and (2) a Dollar amount equal to Borrower's Collections with respect to Accounts for the immediately preceding 60 day period, plus (B) the lesser of: (1) $25,000,000 during the first year after the Closing Date and 27 $20,000,000 thereafter; and (2) the sum of (a) the lesser of (x) the Frozen Cranberry Sublimit, (y) sixty-five percent (65%) of the Frozen Cranberry Value, and (z) eighty percent (80%) of the net recovery liquidation value of Eligible Inventory consisting of frozen cranberries as determined from time to time after closing by appraisers acceptable to Agent, plus (b) the lesser of (x) $10,000,000, (y) sixty-five percent (65%) of the Cranberry Concentrate Value, and (z) eighty percent (80%) of the net recovery liquidation value of Eligible Inventory consisting of cranberry concentrate as determined from time to time after closing by appraisers acceptable to Agent, plus (3) the lesser of (x)sixty-five percent (65%) of the cost of Eligible Inventory consisting of other finished goods and other raw materials, and (y)eighty percent (80%) of the net recovery liquidation value of eligible inventory consisting of such other finished goods and other raw materials as determined by appraisers acceptable to Agent, less (C) the aggregate amount of the Reserves, if any, including those established by Agent under Section 2.1(b). (b) Anything to the contrary in this Section 2.1 notwithstanding, in addition to the Reserves, Agent shall have the right to establish reserves in such amounts, and with respect to such matters, as Agent in its Permitted Discretion shall deem necessary or appropriate, against the Borrowing Base, including reserves with respect to (i) sums that Borrower is required to pay (such as taxes, assessments, insurance premiums, or, in the case of leased assets, rents or other amounts payable under such leases) and has failed to pay under any Section of this Agreement or any other Loan Document, and (ii) amounts owing by Borrower to any Person to the extent secured by a Lien on, or trust over, any of the Collateral (other than any existing Permitted Lien set forth on Schedule P-1 which is specifically identified thereon as entitled to have priority over the Agent's Liens), which Lien or trust, in the Permitted Discretion of Agent likely would have a priority superior to the Agent's Liens (such as Liens or trusts in favor of landlords, warehousemen, carriers, mechanics, materialmen, laborers, or suppliers, or Liens or trusts for ad valorem, excise, sales, or other taxes where given priority under applicable law) in and to such item of the Collateral. In addition to the foregoing, Agent shall have the right to have the Inventory reappraised by a qualified appraisal company selected by Agent from time to time after the Closing Date for the purpose of redetermining the Net Liquidation Percentage of the Eligible Inventory portion of the Collateral and, as a result, redetermining the Borrowing Base. (c) The Lenders with Revolver Commitments shall have no obligation to make additional Advances hereunder to the extent such additional Advances would cause the Revolver Usage to exceed the Maximum Revolver Amount. (d) Amounts borrowed pursuant to this Section may be repaid and, subject to the terms and conditions of this Agreement, reborrowed at any time during the term of this Agreement. 2.2 Term Loans. Subject to the terms and conditions of this Agreement, on the 28 Closing Date each Lender with a Term Loan Commitment agrees (severally, not jointly or jointly and severally) to make term loans, in the form of Term Loan A and Term Loan B (collectively, the "Term Loans"), to Borrower in an amount equal to such Lender's Pro Rata Share of each of the Term Loan A Amount and the Term Loan B Amount. The Term Loans shall be repaid on the following dates and in the following amounts: TERM LOAN A Date Each Installment Amount December 1, 2001 and the first day of $166,667 each month thereafter TERM LOAN B Date Each Installment Amount November 30th of each year $625,000 the last day of February of each year $625,000 May 31st of each year $625,000 August 31st of each year $625,000 The outstanding unpaid principal balance and all accrued and unpaid interest under the Term Loans shall be due and payable on the date of termination of this Agreement, whether by its terms, by prepayment, or by acceleration. All amounts outstanding under the Term Loans shall constitute Obligations. In addition to the regularly scheduled payments of principal due on Term Loan B, Borrower shall make mandatory prepayments of Term Loan B in an amount equal to the aggregate of all principal payments in excess of $625,000 per calendar quarter received by Borrower in each calendar quarter on account of the Cliffstar Note and all payments received by Borrower in each calendar quarter on account of the earnout payments payable under the Asset Purchase Agreement by and between Borrower and Cliffstar Corporation dated January 5, 2000. Each such prepayment shall be applied against the unpaid installment of Term Loan B in the inverse order of maturity thereof. 2.3 Borrowing Procedures and Settlements. (a) Procedure for Borrowing. Each Borrowing shall be made by an irrevocable written request by an Authorized Person delivered to Agent (which notice must be 29 received by Agent no later than 10:00 a.m. (California time) on the Business Day prior to the date that is the requested Funding Date in the case of a request for an Advance or the Term Loan specifying (i) the amount of such Borrowing, and the requested Funding Date, which shall be a Business Day; provided, however, that in the case of a request for a Swing Loan in an amount of $3,000,000, or less, such notice will be timely received if it is received by Agent no later than 10:00 a.m. (California time) on the Business Day that is the requested Funding Date) specifying (i) the amount of such Borrowing, and (ii) the requested Funding Date, which shall be a Business Day. At Agent's election, in lieu of delivering the above-described written request, any Authorized Person may give Agent telephonic notice of such request by the required time, with such telephonic notice to be confirmed in writing within 24 hours of the giving of such notice. (b) Agent's Election. Promptly after receipt of a request for a Borrowing pursuant to Section 2.3(a), Agent shall elect, in its discretion, (i) to have the terms of Section 2.3(c) apply to such requested Borrowing, or (ii) if the Borrowing is for an Advance, to request Swing Lender to make a Swing Loan pursuant to the terms of Section 2.3(d) in the amount of the requested Borrowing; provided, however, that if Swing Lender declines in its sole discretion to make a Swing Loan pursuant to Section 2.3(d), Agent shall elect to have the terms of Section 2.3(c) apply to such requested Borrowing. (c) Making of Advances. (i) In the event that Agent shall elect to have the terms of this Section 2.3(c) apply to a requested Borrowing as described in Section 2.3(b), then promptly after receipt of a request for a Borrowing pursuant to Section 2.3(a), Agent shall notify the Lenders, not later than 1:00 p.m. (California time) on the Business Day immediately preceding the Funding Date applicable thereto, by telecopy, telephone, or other similar form of transmission, of the requested Borrowing. Each Lender shall make the amount of such Lender's Pro Rata Share of the requested Borrowing available to Agent in immediately available funds, to Agent's Account, not later than 10:00 a.m. (California time) on the Funding Date applicable thereto. After Agent's receipt of the proceeds of such Advances (or the Term Loan, as applicable), upon satisfaction of the applicable conditions precedent set forth in Section 3 hereof, Agent shall make the proceeds thereof available to Borrower on the applicable Funding Date by transferring immediately available funds equal to such proceeds received by Agent to Borrower's Designated Account; provided, however, that, subject to the provisions of Section 2.3(i), Agent shall not request any Lender to make, and no Lender shall have the obligation to make, any Advance (or its portion of the Term Loans) if Agent shall have actual knowledge that (1) one or more of the applicable conditions precedent set forth in Section 3 will not be satisfied on the requested Funding Date for the applicable Borrowing unless such condition has been waived, or (2) the requested Borrowing would exceed the Availability on such Funding Date. (ii) Unless Agent receives notice from a Lender on or prior to the Closing Date or, with respect to any Borrowing after the Closing Date, at least one (1) Business Day prior to the date of such Borrowing, that such Lender will not make available as and when required hereunder to Agent for the account of Borrower the amount of that Lender's Pro Rata Share of the Borrowing, Agent may assume that each Lender has made 30 or will make such amount available to Agent in immediately available funds on the Funding Date and Agent may (but shall not be so required), in reliance upon such assumption, make available to Borrower on such date a corresponding amount. If and to the extent any Lender shall not have made its full amount available to Agent in immediately available funds and Agent in such circumstances has made available to Borrower such amount, that Lender shall on the Business Day following such Funding Date make such amount available to Agent, together with interest at the Defaulting Lender Rate for each day during such period. A notice submitted by Agent to any Lender with respect to amounts owing under this subsection shall be conclusive, absent manifest error. If such amount is so made available, such payment to Agent shall constitute such Lender's Advance on the date of Borrowing for all purposes of this Agreement. If such amount is not made available to Agent on the Business Day following the Funding Date, Agent will notify Borrower of such failure to fund and, upon demand by Agent, Borrower shall pay such amount to Agent for Agent's account, together with interest thereon for each day elapsed since the date of such Borrowing, at a rate per annum equal to the interest rate applicable at the time to the Advances composing such Borrowing. The failure of any Lender to make any Advance on any Funding Date shall not relieve any other Lender of any obligation hereunder to make an Advance on such Funding Date, but no Lender shall be responsible for the failure of any other Lender to make the Advance to be made by such other Lender on any Funding Date. (iii) Agent shall not be obligated to transfer to a Defaulting Lender any payments made by Borrower to Agent for the Defaulting Lender's benefit, and, in the absence of such transfer to the Defaulting Lender, Agent shall transfer any such payments to each other non-Defaulting Lender member of the Lender Group ratably in accordance with their Commitments (but only to the extent that such Defaulting Lender's Advance was funded by the other members of the Lender Group) or, if so directed by Borrower and if no Default or Event of Default had occurred and is continuing (and to the extent such Defaulting Lender's Advance was not funded by the Lender Group), retain same to be re-advanced to Borrower as if such Defaulting Lender had made Advances to Borrower. Subject to the foregoing, Agent may hold and, in its Permitted Discretion, re-lend to Borrower for the account of such Defaulting Lender the amount of all such payments received and retained by it for the account of such Defaulting Lender. Solely for the purposes of voting or consenting to matters with respect to the Loan Documents, such Defaulting Lender shall be deemed not to be a "Lender" and such Lender's Commitment shall be deemed to be zero. This Section shall remain effective with respect to such Lender until (x) the Obligations under this Agreement shall have been declared or shall have become immediately due and payable, (y) the non-Defaulting Lenders, Agent, and Borrower shall have waived such Defaulting Lender's default in writing, or (z) the Defaulting Lender makes its Pro Rata Share of the applicable Advance and pays to Agent all amounts owing by Defaulting Lender in respect thereof. The operation of this Section shall not be construed to increase or otherwise affect the Commitment of any Lender, to relieve or excuse the performance by such Defaulting Lender or any other Lender of its duties and obligations hereunder, or to relieve or excuse the performance by Borrower of its duties and obligations hereunder to Agent or to the Lenders other than such Defaulting Lender. Any such failure to fund by any Defaulting Lender shall constitute a material breach by such Defaulting Lender of this Agreement and shall entitle Borrower at its 31 option, upon written notice to Agent, to arrange for a substitute Lender to assume the Commitment of such Defaulting Lender, such substitute Lender to be acceptable to Agent. In connection with the arrangement of such a substitute Lender, the Defaulting Lender shall have no right to refuse to be replaced hereunder, and agrees to execute and deliver a completed form of Assignment and Acceptance Agreement in favor of the substitute Lender (and agrees that it shall be deemed to have executed and delivered such document if it fails to do so) subject only to being repaid its share of the outstanding Obligations (including an assumption of its Pro Rata Share of the Risk Participation Liability) without any premium or penalty of any kind whatsoever; provided further, however, that any such assumption of the Commitment of such Defaulting Lender shall not be deemed to constitute a waiver of any of the Lender Groups' or Borrower's rights or remedies against any such Defaulting Lender arising out of or in relation to such failure to fund. (d) Making of Swing Loans. (i) In the event Agent shall elect, with the consent of Swing Lender, as a Lender, to have the terms of this Section 2.3(d) apply to a requested Borrowing as described in Section 2.3(b), Swing Lender as a Lender shall make such Advance in the amount of such Borrowing (any such Advance made solely by Swing Lender as a Lender pursuant to this Section 2.3(d) being referred to as a "Swing Loan" and such Advances being referred to collectively as "Swing Loans") available to Borrower on the Funding Date applicable thereto by transferring immediately available funds to Borrower's Designated Account. Each Swing Loan is an Advance hereunder and shall be subject to all the terms and conditions applicable to other Advances, and all payments on any Swing Loan shall be payable to Swing Lender as a Lender solely for its own account (and for the account of the holder of any participation interest with respect to such Swing Loan). Subject to the provisions of Section 2.3(i), Agent shall not request Swing Lender as a Lender to make, and Swing Lender as a Lender shall not make, any Swing Loan if Agent has actual knowledge that (i) one or more of the applicable conditions precedent set forth in Section 3 will not be satisfied on the requested Funding Date for the applicable Borrowing unless such condition has been waived, or (ii) the requested Borrowing would exceed the Availability on such Funding Date. Swing Lender as a Lender shall not otherwise be required to determine whether the applicable conditions precedent set forth in Section 3 have been satisfied on the Funding Date applicable thereto prior to making, in its sole discretion, any Swing Loan. (ii) The Swing Loans shall be secured by the Agent's Liens, shall constitute Advances and Obligations hereunder, and shall bear interest at the rate applicable from time to time to Advances that are Base Rate Loans. (e) Agent Advances. (i) Agent hereby is authorized by Borrower and the Lenders, from time to time in Agent's sole discretion, (1) after the occurrence and during the continuance of a 32 Default or an Event of Default, or (2) at any time that any of the other applicable conditions precedent set forth in Section 3 have not been satisfied, to make Advances to Borrower on behalf of the Lenders that Agent, in its Permitted Discretion deems necessary or desirable (A) to preserve or protect the Collateral, or any portion thereof, (B) to enhance the likelihood of repayment of the Obligations, or (C) to pay any other amount chargeable to Borrower pursuant to the terms of this Agreement, including Lender Group Expenses and the costs, fees, and expenses described in Section 10 (any of the Advances described in this Section 2.3(e) shall be referred to as "Agent Advances"); provided, that notwithstanding anything to the contrary contained in this Section 2.3(e), the aggregate principal amount of Agent Advances outstanding at any one time, when taken together with the aggregate principal amount of Overadvances made in accordance with Section 2.3(i) outstanding at any time, shall not exceed an amount equal to the lesser of (x) 10% of the Borrowing Base then in effect and (y) $3,000,000. Each Agent Advance is an Advance hereunder and shall be subject to all the terms and conditions applicable to other Advances, except that all payments thereon shall be payable to Agent solely for its own account (and for the account of the holder of any participation interest with respect to such Agent Advance). (ii) The Agent Advances shall be repayable on demand and secured by the Agent's Liens granted to Agent under the Loan Documents, shall constitute Advances and Obligations hereunder, and shall bear interest at the rate applicable from time to time to Advances. (f) Settlement. It is agreed that each Lender's funded portion of the Advances is intended by the Lenders to equal, at all times, such Lender's Pro Rata Share of the outstanding Advances. Such agreement notwithstanding, Agent, Swing Lender and the other Lenders agree (which agreement shall not be for the benefit of or enforceable by Borrower) that in order to facilitate the administration of this Agreement and the other Loan Documents, settlement among them as to the Advances and the Agent Advances shall take place on a periodic basis in accordance with the following provisions: (i) Agent shall request settlement ("Settlement") with the Lenders on a weekly basis, or on a more frequent basis if so determined by Agent, (1) on behalf of Swing Lender, with respect to each outstanding Swing Loan, (2) for itself, with respect to each Agent Advance, and (3) with respect to Collections received, as to each by notifying the Lenders by telecopy, telephone, or other similar form of transmission, of such requested Settlement, no later than 2:00 p.m. (California time) on the Business Day immediately prior to the date of such requested Settlement (the date of such requested Settlement being the "Settlement Date"). Such notice of a Settlement Date shall include a summary statement of the amount of outstanding Advances, Swing Loans, and Agent Advances for the period since the prior Settlement Date. Subject to the terms and conditions contained herein (including Section 2.3(c)(iii)): (y) if a Lender's balance of the Advances, Swing Loans, and Agent Advances exceeds such Lender's Pro Rata Share of the Advances, Swing Loans, and Agent Advances as of a Settlement Date, then Agent shall, by no later than 12:00 p.m. (California time) on the Settlement Date, transfer in immediately available funds to the account of such Lender as such Lender may designate, an amount such that each such Lender shall, upon receipt of such amount, have as of the Settlement Date, its Pro Rata Share of the Advances, Swing Loans, and Agent Advances, and (z) if a Lender's balance of the Advances, Swing Loans, and Agent Advances is less than such Lender's Pro Rata Share of the Advances, Swing Loans, and Agent Advances as of a Settlement Date, such Lender shall no later than 12:00 p.m. (California time) on the Settlement Date transfer in immediately available funds to the Agent's Account, an amount such that each such Lender shall, upon transfer of such amount, have as of the 33 Settlement Date, its Pro Rata Share of the Advances, Swing Loans, and Agent Advances. Such amounts made available to Agent under clause (z) of the immediately preceding sentence shall be applied against the amounts of the applicable Swing Loan or Agent Advance and, together with the portion of such Swing Loan or Agent Advance representing Swing Lender's Pro Rata Share thereof, shall constitute Advances of such Lenders. If any such amount is not made available to Agent by any Lender on the Settlement Date applicable thereto to the extent required by the terms hereof, Agent shall be entitled to recover for its account such amount on demand from such Lender together with interest thereon at the Defaulting Lender Rate. (ii) In determining whether a Lender's balance of the Advances, Swing Loans, and Agent Advances is less than, equal to, or greater than such Lender's Pro Rata Share of the Advances, Swing Loans, and Agent Advances as of a Settlement Date, Agent shall, as part of the relevant Settlement, apply to such balance the portion of payments actually received in good funds by Agent with respect to principal, interest, fees payable by Borrower and allocable to the Lenders hereunder, and proceeds of Collateral. To the extent that a net amount is owed to any such Lender after such application, such net amount shall be distributed by Agent to that Lender as part of such next Settlement. (iii) Between Settlement Dates, Agent, to the extent no Agent Advances or Swing Loans are outstanding, may pay over to Swing Lender any payments received by Agent, that in accordance with the terms of this Agreement would be applied to the reduction of the Advances, for application to Swing Lender's Pro Rata Share of the Advances. If, as of any Settlement Date, Collections received since the then immediately preceding Settlement Date have been applied to Swing Lender's Pro Rata Share of the Advances other than to Swing Loans, as provided for in the previous sentence, Swing Lender shall pay to Agent for the accounts of the Lenders, and Agent shall pay to the Lenders, to be applied to the outstanding Advances of such Lenders, an amount such that each Lender shall, upon receipt of such amount, have, as of such Settlement Date, its Pro Rata Share of the Advances. During the period between Settlement Dates, Swing Lender with respect to Swing Loans, Agent with respect to Agent Advances, and each Lender (subject to the effect of letter agreements between Agent and individual Lenders) with respect to the Advances other than Swing Loans and Agent Advances, shall be entitled to interest at the applicable rate or rates payable under this Agreement on the daily amount of funds employed by Swing Lender, Agent, or the Lenders, as applicable. (g) Notation. Agent shall record on its books the principal amount of the Advances owing to each Lender, including the Swing Loans owing to Swing Lender and Agent Advances owing to Agent, and the interests therein of each Lender, from time to time. In addition, each Lender is authorized, at such Lender's option, to note the date and amount of each payment or prepayment of principal of such Lender's Advances in its books and records, including computer 34 records, such books and records constituting conclusive evidence, absent manifest error, of the accuracy of the information contained therein. (h) Lenders' Failure to Perform. All Advances (other than Swing Loans and Agent Advances) shall be made by the Lenders contemporaneously and in accordance with their Pro Rata Shares. It is understood that (i) no Lender shall be responsible for any failure by any other Lender to perform its obligation to make any Advance (or other extension of credit) hereunder, nor shall any Commitment of any Lender be increased or decreased as a result of any failure by any other Lender to perform its obligations hereunder, and (ii) no failure by any Lender to perform its obligations hereunder shall excuse any other Lender from its obligations hereunder. (i) Optional Overadvances. Any contrary provision of this Agreement notwithstanding, the Lenders hereby authorize Agent or Swing Lender, as applicable, and Agent or Swing Lender, as applicable, may, but is not obligated to, knowingly and intentionally, continue to make Advances (including Swing Loans) to Borrower notwithstanding that an Overadvance exists or thereby would be created, so long as (i) after giving effect to such Advances (including a Swing Loan), the outstanding Adjusted Revolver Usage does not exceed the Borrowing Base by more than an amount equal to the lesser of 10% of the Borrowing Base then in effect and $3,000,000, (ii) after giving effect to such Advances (including a Swing Loan), the outstanding Revolver Usage (except for and excluding amounts charged to the Loan Account for interest, fees, or Lender Group Expenses) does not exceed the Maximum Revolver Amount, (iii) the aggregate principal amount of Overadvances made pursuant to this Section 2.3(i) when taken together with the aggregate principal amount of Agent Advances made pursuant to Section 2.3(e) does not exceed at any time an amount equal to the lesser of (1) 10% of the Borrowing Base then in effect and (2) $3,000,000, and (iv) at the time of the making of any such Advance (including a Swing Loan), Agent does not believe, in good faith, that the Overadvance created by such Advance will be outstanding for more than 90 days. The foregoing provisions are for the exclusive benefit of Agent, Swing Lender and the Lenders and are not intended to benefit Borrower in any way. The Advances and Swing Loans that are made pursuant to this Section 2.3(i) shall be subject to the same terms and conditions as any other Advance or Swing Loan, except that the rate of interest applicable thereto shall be the rate applicable to Advances under Section 2.6(c) hereof without regard to the presence or absence of a Default or Event of Default. (i) In the event Agent obtains actual knowledge that the Revolver Usage exceeds the amounts permitted by the preceding paragraph, regardless of the amount of, or reason for, such excess, Agent shall notify Lenders as soon as practicable (and prior to making any (or any additional) intentional Overadvances (except for and excluding amounts charged to the Loan Account for interest, fees, or Lender Group Expenses) unless Agent determines that prior notice would result in imminent harm to the Collateral or its value), and the Lenders with Revolver Commitments thereupon shall, together with Agent, jointly determine the terms of arrangements that shall be implemented with Borrower intended to reduce, within a reasonable time, the outstanding principal amount of the Advances to Borrower to an amount permitted by the preceding paragraph. In the event Agent or any Lender disagrees over the terms of reduction or repayment of any Overadvance, the terms of reduction or repayment thereof shall be implemented according to the determination of the Required Lenders. 35 (ii) Each Lender with a Revolver Commitment shall be obligated to settle with Agent as provided in Section 2.3(e) for the amount of such Lender's Pro Rata Share of any unintentional Overadvances by Agent reported to such Lender, any intentional Overadvances made as permitted under this Section 2.3(h), and any Overadvances resulting from the charging to the Loan Account of interest, fees, or Lender Group Expenses. 2.4 Payments. (a) Payments by Borrower. (i) Except as otherwise expressly provided herein, all payments by Borrower shall be made to Agent's Account for the account of the Lender Group and shall be made in immediately available funds, no later than 11:00 a.m. (California time) on the date specified herein. Any payment received by Agent later than 11:00 a.m. (California time) shall be deemed to have been received on the following Business Day and any applicable interest or fee shall continue to accrue until such following Business Day. (ii) Unless Agent receives notice from Borrower prior to the date on which any payment is due to the Lenders that Borrower will not make such payment in full as and when required, Agent may assume that Borrower has made (or will make) such payment in full to Agent on such date in immediately available funds and Agent may (but shall not be so required), in reliance upon such assumption, distribute to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent Borrower does not make such payment in full to Agent on the date when due, each Lender severally shall repay to Agent on demand such amount distributed to such Lender, together with interest thereon at the Defaulting Lender Rate for each day from the date such amount is distributed to such Lender until the date repaid. (b) Apportionment and Application of Payments. (i) Except as otherwise provided with respect to Defaulting Lenders and except as otherwise provided in the Loan Documents (including letter agreements between Agent and individual Lenders), aggregate principal and interest payments shall be apportioned ratably among the Lenders (according to the unpaid principal balance of the Obligations to which such payments relate held by each Lender) and payments of fees and expenses (other than fees or expenses that are for Agent's separate account, after giving effect to any letter agreements between Agent and individual Lenders) shall be apportioned ratably among the Lenders having a Pro Rata Share of the type of Commitment or Obligation to which a particular fee relates. All payments shall be remitted to Agent and all such payments (other than payments received while no Default or Event of Default has occurred and is continuing and which relate to the payment of principal or interest of specific Obligations or which relate to the payment of specific fees), and all proceeds of Accounts or other Collateral received by Agent, shall be applied as follows: (A) first, to pay any Lender Group Expenses then due to Agent under 36 the Loan Documents, until paid in full, (B) second, to pay any Lender Group Expenses then due to the Lenders under the Loan Documents, on a ratable basis, until paid in full, (C) third, to pay any fees then due to Agent (for its separate accounts, after giving effect to any letter agreements between Agent and individual Lenders) under the Loan Documents until paid in full, (D) fourth, to pay any fees then due to any or all of the Lenders (after giving effect to any letter agreements between Agent and individual Lenders) under the Loan Documents, on a ratable basis, until paid in full, (E) fifth, to pay interest due in respect of all Agent Advances, until paid in full, (F) sixth, ratably to pay interest due in respect of the Advances (other than Agent Advances) and the Term Loans until paid in full, (G) seventh, to pay the principal of all Agent Advances until paid in full, (H) eighth, ratably to pay all principal amounts then due and payable (other than as a result of an acceleration thereof) with respect to the Term Loans until paid in full, (I) ninth, to pay the principal of all Swing Loans until paid in full, (J) tenth, to pay the principal of all Advances until paid in full, (K) eleventh, if an Event of Default has occurred and is continuing, to pay the outstanding principal balance of the Term Loans (in the inverse order of the maturity of the installments due thereunder) until the Term Loans are paid in full, (L) twelfth, if an Event of Default has occurred and is continuing, to Agent, to be held by Agent, for the ratable benefit of Issuing Lender and those Lenders having a Revolver Commitment, as cash collateral in an amount up to 105% of the then extant Letter of Credit Usage until paid in full, (M) thirteenth, to pay any other Obligations until paid in full, and (N) fourteenth, to Borrower (to be wired to the Designated Account) or such other Person entitled thereto under applicable law. (ii) Agent promptly shall distribute to each Lender, pursuant to the applicable wire instructions received from each Lender in writing, such funds as it may be entitled to receive, subject to a Settlement delay as provided in Section 2.3(e). 37 (iii) In each instance, so long as no Default or Event of Default has occurred and is continuing, Section 2.4(b) shall not be deemed to apply to any payment by Borrower specified by Borrower to be for the payment of specific Obligations then due and payable (or prepayable) under any provision of this Agreement. (iv) For purposes of the foregoing, "paid in full" means payment of all amounts owing under the Loan Documents according to the terms thereof, including loan fees, service fees, professional fees, interest (and specifically including interest accrued after the commencement of any Insolvency Proceeding), default interest, interest on interest, and expense reimbursements, whether or not the same would be or is allowed or disallowed in whole or in part in any Insolvency Proceeding. (v) In the event of a direct conflict between the priority provisions of this Section 2.4 and other provisions contained in any other Loan Document, it is the intention of the parties hereto that such priority provisions in such documents shall be read together and construed, to the fullest extent possible, to be in concert with each other. In the event of any actual, irreconcilable conflict that cannot be resolved as aforesaid, the terms and provisions of this Section 2.4 shall control and govern. 2.5 Overadvances. If, at any time or for any reason, the amount of Obligations owed by Borrower to the Lender Group pursuant to Sections 2.1 and 2.12 is greater than either the Dollar or percentage limitations set forth in Sections 2.1 or 2.12, (an "Overadvance"), Borrower immediately shall pay to Agent, in cash, the amount of such excess, which amount shall be used by Agent to reduce the Obligations in accordance with the priorities set forth in Section 2.4(b). In addition, Borrower hereby promises to pay the Obligations (including principal, interest, fees, costs, and expenses) in Dollars in full to the Lender Group as and when due and payable under the terms of this Agreement and the other Loan Documents. 2.6 Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations. (a) Interest Rates. Except as provided in clause (c) below, all Obligations (except for undrawn Letters of Credit) that have been charged to the Loan Account pursuant to the terms hereof shall bear interest on the Daily Balance thereof at a per annum rate equal to the Base Rate plus the Base Rate Margin. The foregoing notwithstanding, at no time shall any portion of the non-contingent Obligations bear interest on the Daily Balance thereof at a per annum rate less than 7%. To the extent that interest accrued hereunder at the rate set forth herein would be less than the foregoing minimum daily rate, the interest rate chargeable hereunder for such day automatically shall be deemed increased to the minimum rate. (b) Letter of Credit Fee. Borrower shall pay Agent (for the ratable benefit of the Lenders with a Revolver Commitment, subject to any letter agreement between Agent and individual Lenders), a Letter of Credit fee (in addition to the charges, commissions, fees, and costs set forth in Section 2.12(e)) which shall accrue at a rate equal to 2.5% per annum times the Daily Balance of the undrawn amount of all outstanding Letters of Credit. (c) Default Rate. Upon the occurrence and during the continuation of an 38 Event of Default (and at the election of Agent or the Required Lenders), (i) all Obligations (except for undrawn Letters of Credit ) that have been charged to the Loan Account pursuant to the terms hereof shall bear interest on the Daily Balance thereof at a per annum rate equal to four (4) percentage points above the per annum rate otherwise applicable hereunder, and (ii) the Letter of Credit fee provided for above shall be increased to four (4) percentage points above the per annum rate otherwise applicable hereunder. (d) Payment. Interest, Letter of Credit fees, and all other fees payable hereunder shall be due and payable, in arrears, on the first day of each month at any time that Obligations or Commitments are outstanding. Borrower hereby authorizes Agent, from time to time without prior notice to Borrower, to charge such interest and fees, all Lender Group Expenses (as and when incurred), the charges, commissions, fees, and costs provided for in Section 2.12(e) (as and when accrued or incurred), the fees and costs provided for in Section 2.11 (as and when accrued or incurred), and all other payments as and when due and payable under any Loan Document (including the installments due and payable with respect to the Term Loan) to Borrower's Loan Account, which amounts thereafter constitute Advances hereunder and shall accrue interest at the rate then applicable to Advances hereunder. Any interest not paid when due shall be compounded by being charged to Borrower's Loan Account and shall thereafter constitute Advances hereunder and shall accrue interest at the rate then applicable to Advances. (e) Computation. All interest and fees chargeable under the Loan Documents shall be computed on the basis of a 360 day year for the actual number of days elapsed. In the event the Base Rate is changed from time to time hereafter, the rates of interest hereunder based upon the Base Rate automatically and immediately shall be increased or decreased by an amount equal to such change in the Base Rate. (f) Intent to Limit Charges to Maximum Lawful Rate. In no event shall the interest rate or rates payable under this Agreement, plus any other amounts paid in connection herewith, exceed the highest rate permissible under any law that a court of competent jurisdiction shall, in a final determination, deem applicable. Borrower and the Lender Group, in executing and delivering this Agreement, intend legally to agree upon the rate or rates of interest and manner of payment stated within it; provided, however, that, anything contained herein to the contrary notwithstanding, if said rate or rates of interest or manner of payment exceeds the maximum allowable under applicable law, then, ipso facto, as of the date of this Agreement, Borrower is and shall be liable only for the payment of such maximum as allowed by law, and payment received from Borrower in excess of such legal maximum, whenever received, shall be applied to reduce the principal balance of the Obligations to the extent of such excess. 2.7 Cash Management. (a) Borrower shall (i) establish and maintain cash management services of a type and on terms satisfactory to Agent at one or more of the banks set forth on Schedule 2.7(a) (each, a "Cash Management Bank"), and shall request in writing and otherwise take such 39 reasonable steps to ensure that all of its Account Debtors forward payment of the amounts owed by them directly to such Cash Management Bank, and (ii) deposit or cause to be deposited promptly, and in any event no later than the first Business Day after the date of receipt thereof, all Collections (including those sent directly by Account Debtors to a Cash Management Bank) into a bank account in Agent's name (a "Cash Management Account") at one of the Cash Management Banks. (b) Each Cash Management Bank shall establish and maintain Cash Management Agreements with respect to the Cash Management Accounts with Agent and Borrower, in form and substance acceptable to Agent. Each such Cash Management Agreement shall provide, among other things, that (i) all items of payment deposited in such Cash Management Account and proceeds thereof are held by such Cash Management Bank as agent or bailee-in-possession for Agent, (ii) the Cash Management Bank has no rights of setoff or recoupment or any other claim against the applicable Cash Management Account other than for payment of its service fees and other charges directly related to the administration of such Cash Management Account and for returned checks or other items of payment, and (iii) it immediately will forward by daily sweep all amounts in the applicable Cash Management Account to the Agent's Account. (c) So long as no Default or Event of Default has occurred and is continuing, Borrower may amend Schedule 2.7(a) to add or replace a Cash Management Bank or Cash Management Account; provided, however, that (i) such prospective Cash Management Bank shall be satisfactory to Agent and Agent shall have consented in writing in advance to the opening of such Cash Management Account with the prospective Cash Management Bank, and (ii) prior to the time of the opening of such Cash Management Account, Borrower and such prospective Cash Management Bank shall have executed and delivered to Agent a Cash Management Agreement. Borrower shall close any of its Cash Management Accounts (and establish replacement cash management accounts in accordance with the foregoing sentence) promptly and in any event within 30 days of notice from Agent that the creditworthiness of any Cash Management Bank is no longer acceptable in Agent's reasonable judgment, or as promptly as practicable and in any event within 60 days of notice from Lender Group that the operating performance, funds transfer, or availability procedures or performance of the Cash Management Bank with respect to Cash Management Accounts or Agent's liability under any Cash Management Agreement with such Cash Management Bank is no longer acceptable in Agent's reasonable judgment. (d) The Cash Management Accounts shall be cash collateral accounts, with all cash, checks and similar items of payment in such accounts securing payment of the Obligations, and in which Borrower is hereby deemed to have granted a Lien to Agent. 2.8 Crediting Payments; Float Charge. The receipt of any payment item by Agent (whether from transfers to Agent by the Cash Management Banks pursuant to the Cash Management Agreements or otherwise) shall not be considered a payment on account unless such payment item is a wire transfer of immediately available federal funds made to the Agent's Account or unless and until such payment item is honored when presented for payment. Should 40 any payment item not be honored when presented for payment, then Borrower shall be deemed not to have made such payment and interest shall be calculated accordingly. Anything to the contrary contained herein notwithstanding, any payment item shall be deemed received by Agent only if it is received into the Agent's Account on a Business Day on or before 11:00 a.m. (California time). If any payment item is received into the Agent's Account on a non-Business Day or after 11:00 a.m. (California time) on a Business Day, it shall be deemed to have been received by Agent as of the opening of business on the immediately following Business Day. From and after the Closing Date, Agent shall be entitled to charge Borrower for one (1) Business Day of 'clearance' or 'float' at the rate applicable to Base Rate Loans under Section 2.6 on all Collections that are received by Borrower (regardless of whether forwarded by the Cash Management Banks to Agent). This across-the-board one (1) Business Day clearance or float charge on all Collections is acknowledged by the parties to constitute an integral aspect of the pricing of the financing of Borrower and shall apply irrespective of whether or not there are any outstanding monetary Obligations; the effect of such clearance or float charge being the equivalent of charging one (1) Business Days of interest on such Collections. The parties acknowledge and agree that the economic benefit of the foregoing provisions of this Section 2.8 shall be for the exclusive benefit of Agent. 2.9 Designated Account. Agent is authorized to make the Advances and the Term Loan, and Issuing Lender is authorized to issue the Letters of Credit, under this Agreement based upon telephonic or other instructions received from anyone purporting to be an Authorized Person, or without instructions if pursuant to Section 2.6(d). Borrower agrees to establish and maintain the Designated Account with the Designated Account Bank for the purpose of receiving the proceeds of the Advances requested by Borrower and made by Agent or the Lenders hereunder. Unless otherwise agreed by Agent and Borrower, any Advance, Agent Advance, or Swing Loan requested by Borrower and made by Agent or the Lenders hereunder shall be made to the Designated Account. 2.10 Maintenance of Loan Account; Statements of Obligations. Agent shall maintain an account on its books in the name of Borrower (the "Loan Account") on which Borrower will be charged with the Term Loan, all Advances (including Agent Advances and Swing Loans) made by Agent, Swing Lender, or the Lenders to Borrower or for Borrower's account, the Letters of Credit issued by Issuing Lender for Borrower's account, and with all other payment Obligations hereunder or under the other Loan Documents, including, accrued interest, fees and expenses, and Lender Group Expenses. In accordance with Section 2.8, the Loan Account will be credited with all payments received by Agent from Borrower or for Borrower's account, including all amounts received in the Agent's Account from any Cash Management Bank. Agent shall render statements regarding the Loan Account to Borrower, including principal, interest, fees, and including an itemization of all charges and expenses constituting Lender Group Expenses owing, and such statements shall be conclusively presumed to be correct and accurate and constitute an account stated between Borrower and the Lender Group unless, within 30 days after receipt thereof by Borrower, Borrower shall deliver to Agent written objection thereto describing the error or errors contained in any such statements. 2.11 Fees. Borrower shall pay to Agent the following fees and charges, which fees and charges shall be non-refundable when paid (irrespective of whether this Agreement is terminated thereafter) and shall be apportioned among the Lenders in accordance with the terms of letter 41 agreements between Agent and individual Lenders: (a) Unused Line Fee. On the first day of each month during the term of this Agreement, an unused line fee in an amount equal to .50% per annum times the result of (a) the Maximum Revolver Amount, less (b) the sum of (i) the average Daily Balance of Advances that were outstanding during the immediately preceding month, plus (ii) the average Daily Balance of the Letter of Credit Usage during the immediately preceding month, (b) Fee Letter Fees. As and when due and payable under the terms of the Fee Letter, Borrower shall pay to Agent the fees set forth in the Fee Letter, and (c) Audit, Appraisal, and Valuation Charges. For the separate account of Agent, audit, appraisal, and valuation fees and charges as follows (i) a fee of $850 per day, per auditor, plus out-of-pocket expenses for each financial audit of Borrower performed by personnel employed by Agent, (ii) if implemented, a one time charge of $5,000 plus out-of-pocket expenses for expenses for the establishment of electronic collateral reporting systems, (iii) a fee of $1,500 per day per appraiser, plus out-of-pocket expenses, for each appraisal of the Collateral performed by personnel employed by Agent, and (iv) the actual charges paid or incurred by Agent if it elects to employ the services of one or more third Persons to perform financial audits of Borrower, to appraise the Collateral, or any portion thereof, or to assess Borrower's business valuation. For any strategic business advisor or consultant retained by Agent, at the direction of the Required Lenders, (the "Strategic Advisor"), retained not less than three (3) months after the Closing Date, to conduct an exit strategy analysis. Borrower shall fully cooperate with any Strategic Advisor and shall authorize Strategic Advisor to provide such information and reports from time to time with respect to Borrower and Guarantors and their financial condition, business, assets, liabilities and prospects, as Agent shall from time to time request. All reasonable fees and expenses of any Strategic Advisors shall be solely the responsibility of Borrower. 2.12 Letters of Credit. (a) Subject to the terms and conditions of this Agreement, the Issuing Lender agrees to issue letters of credit for the account of Borrower (each, an "L/C") or to purchase participations or execute indemnities or reimbursement obligations (each such undertaking, an "L/C Undertaking") with respect to letters of credit issued by an Underlying Issuer (as of the Closing Date, the prospective Underlying Issuer is to be Wells Fargo) for the account of Borrower. To request the issuance of an L/C or an L/C Undertaking (or the amendment, renewal, or extension of an outstanding L/C or L/C Undertaking), Borrower shall hand deliver or telecopy (or transmit by electronic communication, if arrangements for doing so have been approved by the Issuing Lender) to the Issuing Lender and Agent (reasonably in advance of the requested date of issuance, amendment, renewal, or extension) a notice requesting the issuance of an L/C or L/C Undertaking, or identifying the L/C or L/C Undertaking to be amended, renewed, or extended, the date of issuance, amendment, renewal, or extension, the date on which such L/C or L/C Undertaking is to expire, the amount of such L/C or L/C Undertaking, the name and address of the beneficiary thereof (or the beneficiary of the Underlying Letter of Credit, as applicable), and such other information as shall be necessary to prepare, amend, renew, or extend such L/C or L/C Undertaking. If requested by the Issuing Lender, Borrower also shall be an applicant under the application with respect to any Underlying Letter of Credit that is to be the subject of an L/C 42 Undertaking. The Issuing Lender shall have no obligation to issue a Letter of Credit if any of the following would result after giving effect to the requested Letter of Credit: (i) the Adjusted Letter of Credit Usage would exceed the Borrowing Base less the amount of outstanding Advances, or (ii) the Letter of Credit Usage would exceed $5,000,000, or (iii) the Letter of Credit Usage would exceed the Maximum Revolver Amount less the then extant amount of outstanding Advances. Borrower and the Lender Group acknowledge and agree that certain Underlying Letters of Credit may be issued to support letters of credit that already are outstanding as of the Closing Date. Each Letter of Credit (and corresponding Underlying Letter of Credit) shall have an expiry date no later than 30 days prior to the Maturity Date and all such Letters of Credit (and corresponding Underlying Letter of Credit) shall be in form and substance acceptable to the Issuing Lender (in the exercise of its Permitted Discretion), including the requirement that the amounts payable thereunder must be payable in Dollars. If Issuing Lender is obligated to advance funds under a Letter of Credit, Borrower immediately shall reimburse such L/C Disbursement to Issuing Lender by paying to Agent an amount equal to such L/C Disbursement not later than 11:00 a.m., California time, on the date that such L/C Disbursement is made, if Borrower shall have received written or telephonic notice of such L/C Disbursement prior to 10:00 a.m., California time, on such date, or, if such notice has not been received by Borrower prior to such time on such date, then not later than 11:00 a.m., California time, on the Business Day that Borrower receives such notice, if such notice is received prior to 10:00 a.m., California time, on the date of receipt, and, in the absence of such reimbursement, the L/C Disbursement immediately and automatically shall be deemed to be an Advance hereunder and, thereafter, shall bear interest at the rate then applicable to Advances under Section 2.6. To the extent an L/C Disbursement is deemed to be an Advance hereunder, Borrower's obligation to reimburse such L/C Disbursement shall be discharged and replaced by the resulting Advance. Promptly following receipt by Agent of any payment from Borrower pursuant to this paragraph, Agent shall distribute such payment to the Issuing Lender or, to the extent that Lenders have made payments pursuant to Section 2.12(c) to reimburse the Issuing Lender, then to such Lenders and the Issuing Lender as their interest may appear. (b) Promptly following receipt of a notice of L/C Disbursement pursuant to Section 2.12(a), each Lender with a Revolver Commitment agrees to fund its Pro Rata Share of any Advance deemed made pursuant to the foregoing subsection on the same terms and conditions as if Borrower had requested such Advance and Agent shall promptly pay to Issuing Lender the amounts so received by it from the Lenders. By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) and without any further action on the part of the Issuing Lender or the Lenders with Revolver Commitment, the Issuing Lender shall be deemed to have granted to each Lender with a Revolver Commitment, and each Lender with a Revolver Commitment shall be deemed to have purchased, a participation in each Letter of Credit, in an amount equal to its Pro Rata Share of the Risk Participation Liability of such 43 Letter of Credit, and each such Lender agrees to pay to Agent, for the account of the Issuing Lender, such Lender's Pro Rata Share of any payments made by the Issuing Lender under such Letter of Credit. In consideration and in furtherance of the foregoing, each Lender with a Revolver Commitment hereby absolutely and unconditionally agrees to pay to Agent, for the account of the Issuing Lender, such Lender's Pro Rata Share of each L/C Disbursement made by the Issuing Lender and not reimbursed by Borrower on the date due as provided in clause (a) of this Section, or of any reimbursement payment required to be refunded to Borrower for any reason. Each Lender with a Revolver Commitment acknowledges and agrees that its obligation to deliver to Agent, for the account of the Issuing Lender, an amount equal to its respective Pro Rata Share pursuant to this Section 2.12(b) shall be absolute and unconditional and such remittance shall be made notwithstanding the occurrence or continuation of an Event of Default or Default or the failure to satisfy any condition set forth in Section 3 hereof. If any such Lender fails to make available to Agent the amount of such Lender's Pro Rata Share of any payments made by the Issuing Lender in respect of such Letter of Credit as provided in this Section, Agent (for the account of the Issuing Lender) shall be entitled to recover such amount on demand from such Lender together with interest thereon at the Defaulting Lender Rate until paid in full. (c) Borrower hereby agrees to indemnify, save, defend, and hold the Lender Group harmless from any loss, cost, expense, or liability, and reasonable attorneys fees incurred by the Lender Group arising out of or in connection with any Letter of Credit; provided, however, that Borrower shall not be obligated hereunder to indemnify for any loss, cost, expense, or liability that is caused by the gross negligence or willful misconduct of the Issuing Lender or any other member of the Lender Group. Borrower agrees to be bound by the Underlying Issuer's regulations and interpretations of any Underlying Letter of Credit or by Issuing Lender's interpretations of any L/C issued by Issuing Lender to or for Borrower's account, even though this interpretation may be different from Borrower's own, and Borrower understands and agrees that the Lender Group shall not be liable for any error, negligence, or mistake, whether of omission or commission, in following Borrower's instructions or those contained in the Letter of Credit or any modifications, amendments, or supplements thereto. Borrower understands that the L/C Undertakings may require Issuing Lender to indemnify the Underlying Issuer for certain costs or liabilities arising out of claims by Borrower against such Underlying Issuer. Borrower hereby agrees to indemnify, save, defend, and hold the Lender Group harmless with respect to any loss, cost, expense (including reasonable attorneys fees), or liability incurred by the Lender Group under any L/C Undertaking as a result of the Lender Group's indemnification of any Underlying Issuer; provided, however, that Borrower shall not be obligated hereunder to indemnify for any loss, cost, expense, or liability that is caused by the gross negligence or willful misconduct of the Issuing Lender or any other member of the Lender Group. (d) Borrower hereby authorizes and directs any Underlying Issuer to deliver to the Issuing Lender all instruments, documents, and other writings and property received by such Underlying Issuer pursuant to such Underlying Letter of Credit and to accept and rely upon the Issuing Lender's instructions with respect to all matters arising in connection with such Underlying Letter of Credit and the related application. (e) Any and all charges, commissions, fees, and costs incurred by the Issuing Lender relating to Underlying Letters of Credit shall be Lender Group Expenses for purposes of this Agreement and immediately shall be reimbursable by Borrower to Agent for the account of 44 the Issuing Lender; it being acknowledged and agreed by Borrower that, as of the Closing Date, the issuance charge imposed by the prospective Underlying Issuer is .825% per annum times the face amount of each Underlying Letter of Credit, that such issuance charge may be changed from time to time, and that the Underlying Issuer also imposes a schedule of charges for amendments, extensions, drawings, and renewals. (f) If by reason of (i) any change in any applicable law, treaty, rule, or regulation or any change in the interpretation or application thereof by any Governmental Authority, or (ii) compliance by the Underlying Issuer or the Lender Group with any direction, request, or requirement (irrespective of whether having the force of law) of any Governmental Authority or monetary authority including, Regulation D of the Federal Reserve Board as from time to time in effect (and any successor thereto): (i) any reserve, deposit, or similar requirement is or shall be imposed or modified in respect of any Letter of Credit issued hereunder, or (ii) there shall be imposed on the Underlying Issuer or the Lender Group any other condition regarding any Underlying Letter of Credit or any Letter of Credit issued pursuant hereto, and the result of the foregoing is to increase, directly or indirectly, the cost to the Lender Group of issuing, making, guaranteeing, or maintaining any Letter of Credit or to reduce the amount receivable in respect thereof by the Lender Group, then, and in any such case, Agent may, at any time within a reasonable period after the additional cost is incurred or the amount received is reduced, notify Borrower, and Borrower shall pay on demand such amounts as Agent may specify to be necessary to compensate the Lender Group for such additional cost or reduced receipt, together with interest on such amount from the date of such demand until payment in full thereof at the rate then applicable to Advances hereunder. The determination by Agent of any amount due pursuant to this Section, as set forth in a certificate setting forth the calculation thereof in reasonable detail, shall, in the absence of manifest or demonstrable error, be final and conclusive and binding on all of the parties hereto. 2.13 Capital Requirements. If, after the date hereof, any Lender determines that (a) the adoption of or change in any law, rule, regulation or guideline regarding capital requirements for banks or bank holding companies, or any change in the interpretation or application thereof by any Governmental Authority charged with the administration thereof, or (b) compliance by such Lender or its parent bank holding company with any guideline, request, or directive of any such entity regarding capital adequacy (whether or not having the force of law), will have the effect of reducing the return on such Lender's or such holding company's capital as a consequence of such Lender's Commitments hereunder to a level below that which such Lender or such holding company could have achieved but for such adoption, change, or compliance (taking into consideration such Lender's or such holding company's then existing policies with respect to capital adequacy and assuming the full utilization of such entity's capital) by any amount deemed by such Lender to be material, then such Lender may notify Borrower and Agent thereof. Following receipt of such notice, Borrower agrees to pay such Lender on demand the amount of such reduction of return of capital as and when such reduction is determined, payable within 90 days after presentation by such Lender of a statement in the amount and setting forth in 45 reasonable detail such Lender's calculation thereof and the assumptions upon which such calculation was based (which statement shall be deemed true and correct absent manifest error). In determining such amount, such Lender may use any reasonable averaging and attribution methods. 3. CONDITIONS; TERM OF AGREEMENT. 3.1 Conditions Precedent to the Initial Extension of Credit. The obligation of the Lender Group (or any member thereof) to make the initial Advance (or otherwise to extend any credit provided for hereunder), is subject to the fulfillment, to the satisfaction of Agent, of each of the conditions precedent set forth below: (a) the Closing Date shall occur on or before December 5, 2001; (b) Agent shall have received all financing statements required by Agent, duly authorized by Borrower and the Guarantors, and Agent shall have received searches reflecting the filing of all such financing statements; (c) Agent shall have received each of the following documents, in form and substance satisfactory to Agent, duly executed, and each such document shall be in full force and effect: (i) [intentionally omitted]; (ii) the Disbursement Letter; (iii) the Fee Notes; (iv) the Fee Letter; (v) the Cash Management Agreements; (vi) the Mortgages; (vii) the Officers' Certificate; (viii) the Subsidiary Documents; (ix) Sun Capital Management Agreement; (x) the Trademark Security Agreement; (xi) the Terminating Bank Group Documents, together with UCC termination statements and other documentation evidencing the termination by the Terminating Bank Group of its Liens in and to the properties and assets of Borrower, (xii) the Warrants; (xiii) the Continuing Bank Group Intercreditor Agreement and the Equitable Intercreditor Agreement; 46 (d) Agent shall have received a certificate from the Secretary of Borrower attesting to the resolutions of Borrower's Board of Directors authorizing its execution, delivery, and performance of this Agreement and the other Loan Documents to which Borrower is a party and authorizing specific officers of Borrower to execute the same; (e) Agent shall have received copies of Borrower's Governing Documents, as amended, modified, or supplemented to the Closing Date, certified by the Secretary of Borrower; (f) Agent shall have received a certificate of status with respect to Borrower, dated within 10 days of the Closing Date, such certificate to be issued by the appropriate officer of the jurisdiction of organization of Borrower, which certificate shall indicate that Borrower is in good standing in such jurisdiction; (g) Agent shall have received certificates of status with respect to Borrower, each dated within 30 days of the Closing Date, such certificates to be issued by the appropriate officer of the jurisdictions (other than the jurisdiction of organization of Borrower) in which its failure to be duly qualified or licensed would constitute a Material Adverse Change, which certificates shall indicate that Borrower is in good standing in such jurisdictions; (h) Agent shall have received a certificate from the Secretary of Guarantor attesting to the resolutions of Guarantor's Board of Directors authorizing its execution, delivery, and performance of the Loan Documents to which Guarantor is a party and authorizing specific officers of Guarantor to execute the same; (i) Agent shall have received copies of Guarantor's Governing Documents, as amended, modified, or supplemented to the Closing Date, certified by the Secretary of Guarantor; (j) Agent shall have received a certificate of status with respect to Guarantor, dated within 10 days of the Closing Date, such certificate to be issued by the appropriate officer of the jurisdiction of organization of Guarantor, which certificate shall indicate that Guarantor is in good standing in such jurisdiction; (k) Agent shall have received certificates of status with respect to Guarantor, each dated within 30 days of the Closing Date, such certificates to be issued by the appropriate officer of the jurisdictions (other than the jurisdiction of organization of Guarantor) in which its failure to be duly qualified or licensed would constitute a Material Adverse Change, which certificates shall indicate that Guarantor is in good standing in such jurisdictions; (l) Agent shall have received the original Cliffstar Note and any related documents as Agent may request, in its sole discretion, including without limitation, a Note Pledge Agreement and a certificate from an officer of Borrower satisfactory to Agent that, except as set forth on Schedule 3.1(l), no payment default has occurred on account of the Cliffstar Note and that, to Borrower's knowledge, no event of default has occurred under Cliffstar Corporation's existing bank credit facility; 47 (m) Agent shall have received copies of the fully executed Continuing Bank Group Documents and such documents shall be in full force and effect, and no event of default shall have occurred thereunder; (n) Agent shall have received from Borrower a written analysis of the tax consequences to Borrower of the refinancing of Borrower's existing Indebtedness to the Bank Group from Borrower's independent accountants with respect to the foregoing, all of which shall be satisfactory to Agent in its sole discretion. (o) Agent shall have received from Borrower copies of all written agreements with its Farm Product Sellers, and with its other material vendors and material customers, as well as Borrower's written analysis of any arrangements with such vendors or customers, which may not be memorialized in writing, all of which shall be satisfactory to Agent, in Agent's sole discretion. (p) No Default or Event of Default exists as of the Closing Date; (q) Agent shall have received a certificate of insurance, together with the endorsements thereto, as are required by Section 6.7, the form and substance of which shall be satisfactory to Agent; (r) Agent shall have received Collateral Access Agreements from Wood County National Bank, Congress Financial Corporation and such other parties as Lender may require in its sole discretion with respect to, without limitation, the following locations: 2321 West Grand Avenue, Wisconsin Rapids, Wisconsin 54455, and Cornelius, Oregon; (s) [Intentionally omitted]; (t) Agent shall have received from Borrower a written analysis of Borrower's preferential wage claims and related Liens, along with an opinion of counsel to Borrower with respect to the foregoing, all of which shall be satisfactory to Agent in its sole discretion; (u) Agent shall have received satisfactory evidence (including a certificate of the chief financial officer of Borrower) that, except as listed on Schedule 3.1(u), all tax returns required to be filed by Borrower have been timely filed and all taxes upon Borrower or its properties, assets, income, and franchises (including Real Property taxes and payroll taxes) have been paid prior to delinquency, except such taxes that are the subject of a Permitted Protest; (v) Borrower shall have the Required Availability after giving effect to the initial extensions of credit hereunder; (w) Agent shall have completed its business, legal, and collateral due diligence, including (i) a collateral audit and review of Borrower's books and records and verification of Borrower's representations and warranties to the Lender Group, the results of which shall be satisfactory to Agent, and (ii) an inspection of each of the locations where Inventory is located, the results of which shall be satisfactory to Agent; 48 (x) Agent shall have received completed reference checks with respect to Borrower's senior management, the results of which are satisfactory to Agent in its sole discretion; (y) Agent shall have received an appraisal of the Liquidation Percentage applicable to Borrower's Inventory and an appraisal of Borrower's Equipment, the results of which shall be satisfactory to Agent and an analysis by a third party industry expert satisfactory to Agent of the Hilco Appraisal Services LLC Inventory Appraisal dated November, 2000, in form and substance satisfactory to Agent; (z) Agent shall have received a testing, satisfactory to Agent in all respects from a market expert satisfactory to Agent, of the Borrower's Inventory, including the concentrate Inventory, verifying that Inventory is in good and saleable condition. (aa) Agent shall have received Borrower's Closing Date Business Plan together with a certificate of the chief executive officer of Borrower stating that the Closing Date Business Plan has been prepared on a reasonable basis and in good faith and is based on assumptions believed by Borrower to be reasonable at the time made and from the best information then available to Borrower; (bb) Borrower shall pay all Lender Group Expenses incurred in connection with the transactions evidenced by this Agreement; (cc) Agent shall have received (i) appraisals of the Real Property Collateral satisfactory to Agent, and (ii) mortgagee title insurance policies (or marked commitments to issue the same) for the Real Property Collateral issued by a title insurance company satisfactory to Agent (each a "Mortgage Policy" and, collectively, the "Mortgage Policies") in amounts satisfactory to Agent assuring Agent that the Mortgages on such Real Property Collateral are valid and enforceable first priority mortgage Liens on such Real Property Collateral free and clear of all defects and encumbrances except Permitted Liens, and the Mortgage Policies otherwise shall be in form and substance satisfactory to Agent; (dd) Agent shall have received a phase-I environmental report and a real estate survey with respect to each parcel composing the Real Property Collateral; the environmental consultants and surveyors retained for such reports or surveys, the scope of the reports or surveys, and the results thereof shall be acceptable to Agent; (ee) [Intentionally deleted]; (ff) Borrower shall have received all licenses, approvals or evidence of other actions required by any Governmental Authority in connection with the execution and delivery by Borrower of this Agreement or any other Loan Document or with the consummation of the transactions contemplated hereby and thereby; (gg) Borrower shall have received a cash equity investment from Sun Capital in an amount not less than $6,300,000, net of all fees paid or payable to Sun Capital at closing of such equity investment, on terms and conditions satisfactory to Agent, in its sole discretion; and 49 (hh) all other documents and legal matters in connection with the transactions contemplated by this Agreement shall have been delivered, executed, or recorded and shall be in form and substance satisfactory to Agent. (ii) Agent shall have received from Borrower a written analysis identifying all crops which it purchases from agricultural producers, all states in which it conducts processing operations or receives its product for processing, and all states in which the crops purchased by Borrower have been grown, along with an opinion from Borrower's counsel with respect to the applicability of any state or federal statutory agricultural liens or trust rights with respect to 90% or more of the crops subject to Borrower's purchases, all of which shall be satisfactory to Agent, in its sole discretion. 3.2 Conditions Subsequent to the Initial Extension of Credit. The obligation of the Lender Group (or any member thereof) to continue to make Advances (or otherwise extend credit hereunder) is subject to the fulfillment, on or before the date applicable thereto, of each of the conditions subsequent set forth below (the failure by Borrower to so perform or cause to be performed constituting an Event of Default): (a) within 60 days prior to or 30 days after the Closing Date, deliver to Agent certified copies of the policies of insurance, together with the endorsements thereto, as are required by Section 6.7, the form and substance of which shall be satisfactory to Agent and its counsel; and (b) Satisfy all terms and conditions set forth in the Letter re: certain Post Closing Items dated as of the Closing Date, by Borrower in favor of Lender, within the applicable time as set forth therein. 3.3 Conditions Precedent to all Extensions of Credit. The obligation of the Lender Group (or any member thereof) to make all Advances (or to extend any other credit hereunder) shall be subject to the following conditions precedent: (a) the representations and warranties contained in this Agreement and the other Loan Documents shall be true and correct in all material respects on and as of the date of such extension of credit, as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date), (b) no Default or Event of Default shall have occurred and be continuing on the date of such extension of credit, nor shall either result from the making thereof, (c) no injunction, writ, restraining order, or other order of any nature prohibiting, directly or indirectly, the extending of such credit shall have been issued and remain in force by any Governmental Authority against Borrower, Agent, any Lender, or any of their Affiliates. (d) no Material Adverse Change shall have occurred, except as set forth on Schedule 3.3(d) as in effect on the Closing Date. 50 3.4 Term. This Agreement shall become effective upon the execution and delivery hereof by Borrower, Agent, and the Lenders and shall continue in full force and effect for a term ending on November 6, 2006 (the "Maturity Date"). The foregoing notwithstanding, the Lender Group, upon the election of the Required Lenders, shall have the right to terminate its obligations under this Agreement immediately and without notice upon the occurrence and during the continuation of an Event of Default. 3.5 Effect of Termination. On the date of termination of this Agreement, all Obligations (including contingent reimbursement obligations of Borrower with respect to outstanding Letters of Credit) immediately shall become due and payable without notice or demand. No termination of this Agreement, however, shall relieve or discharge Borrower of its duties, Obligations, or covenants hereunder and the Agent's Liens in the Collateral shall remain in effect until all Obligations have been fully and finally discharged and the Lender Group's obligations to provide additional credit hereunder have been terminated. When this Agreement has been terminated and all of the Obligations have been fully and finally discharged and the Lender Group's obligations to provide additional credit under the Loan Documents have been terminated irrevocably, Agent will, at Borrower's sole expense, execute and deliver any UCC termination statements, lien releases, mortgage releases, re-assignments of trademarks, discharges of security interests, and other similar discharge or release documents (and, if applicable, in recordable form) as are reasonably necessary to release, as of record, the Agent's Liens and all notices of security interests and liens previously filed by Agent with respect to the Obligations. 3.6 Early Termination by Borrower. Borrower has the option, at any time upon 30 days prior written notice to Agent, to terminate this Agreement by paying to Agent, for the benefit of the Lender Group, in cash, the Obligations (including either (i) providing cash collateral to be held by Agent for the benefit of those Lenders with a Revolver Commitment in an amount equal to 105% of the then extant Letter of Credit Usage, or (ii) causing the original Letters of Credit to be returned to the Issuing Lender), in full, together with the Applicable Prepayment Premium (to be allocated based upon letter agreements between Agent and individual Lenders). Notwithstanding anything to the contrary contained herein, in the event the Obligations are paid in full and the Loan Documents are terminated as the result of a conventional bank credit facility provided by Wells Fargo Bank and no Event of Default exists as of the date of termination, the Applicable Prepayment Premium shall be waived. If Borrower has sent a notice of termination pursuant to the provisions of this Section, then the Commitments shall terminate and Borrower shall be obligated to repay the Obligations (including either (i) providing cash collateral to be held by Agent for the benefit of those Lenders with a Revolver Commitment in an amount equal to 105% of the then extant Letter of Credit Usage, or (ii) causing the original Letters of Credit to be returned to the Issuing Lender), in full, together with the Applicable Prepayment Premium, on the date set forth as the date of termination of this Agreement in such notice. In the event of the termination of this Agreement and repayment of the Obligations at any time prior to the Maturity Date, for any other reason, including (a) termination upon the election of the Required Lenders to terminate after the occurrence of an Event of Default, (b) foreclosure and sale of Collateral, (c) sale of the Collateral in any Insolvency Proceeding, or (iv) restructure, reorganization, or compromise of the Obligations by 51 the confirmation of a plan of reorganization or any other plan of compromise, restructure, or arrangement in any Insolvency Proceeding, then, in view of the impracticability and extreme difficulty of ascertaining the actual amount of damages to the Lender Group or profits lost by the Lender Group as a result of such early termination, and by mutual agreement of the parties as to a reasonable estimation and calculation of the lost profits or damages of the Lender Group, Borrower shall pay the Applicable Prepayment Premium to Agent (to be allocated based upon letter agreements between Agent and individual Lenders), measured as of the date of such termination. 4. CREATION OF SECURITY INTEREST. 4.1 Grant of Security Interest. Borrower hereby grants to Agent, for the benefit of the Lender Group, a continuing security interest in all of its right, title, and interest in all currently existing and hereafter acquired or arising Collateral in order to secure prompt repayment of any and all of the Obligations in accordance with the terms and conditions of the Loan Documents and in order to secure prompt performance by Borrower of each of its covenants and duties under the Loan Documents. The Agent's Liens in and to the Collateral shall attach to all Collateral without further act on the part of Agent or Borrower. Anything contained in this Agreement or any other Loan Document to the contrary notwithstanding, except for Permitted Dispositions, Borrower has no authority, express or implied, to dispose of any item or portion of the Collateral. 4.2 Negotiable Collateral. In the event that any Collateral, including proceeds, is evidenced by or consists of Negotiable Collateral, and if and to the extent that perfection or priority of Agent's security interest is dependent on or enhanced by possession, Borrower, immediately upon the request of Agent, shall endorse and deliver physical possession of such Negotiable Collateral to Agent. 4.3 Collection of Accounts, General Intangibles, and Negotiable Collateral. At any time after the occurrence and during the continuation of an Event of Default, Agent or Agent's designee may (a) notify Account Debtors of Borrower that the Accounts, chattel paper, or General Intangibles have been assigned to Agent or that Agent has a security interest therein, or (b) collect the Accounts, chattel paper, or General Intangibles directly and charge the collection costs and expenses to the Loan Account. Borrower agrees that it will hold in trust for the Lender Group, as the Lender Group's trustee, any Collections on account of Collateral that it receives and immediately will deliver said Collections to Agent or a Cash Management Bank in their original form as received by Borrower. 4.4 Delivery of Additional Documentation Required. At any time upon the request of Agent, Borrower shall execute and deliver to Agent, any and all financing statements, original financing statements in lieu of continuation statements, fixture filings, security agreements, pledges, assignments, endorsements of certificates of title, and all other documents (the "Additional Documents") that Agent may request in its Permitted Discretion, in form and substance satisfactory to Agent, to perfect and continue perfected or better perfect the Agent's Liens in the Collateral (whether now owned or hereafter arising or acquired), to create and 52 perfect Liens in favor of Agent in any Real Property acquired after the Closing Date, and in order to fully consummate all of the transactions contemplated hereby and under the other Loan Documents. To the maximum extent permitted by applicable law, Borrower authorizes Agent to execute any such Additional Documents in Borrower's name and authorizes Agent to file such executed Additional Documents in any appropriate filing office. In addition, on such periodic basis as Agent shall require, Borrower shall (a) provide Agent with a report of all new patentable, copyrightable, or trademarkable materials acquired or generated by Borrower during the prior period, (b) cause all patents, copyrights, and trademarks acquired or generated by Borrower that are not already the subject of a registration with the appropriate filing office (or an application therefor diligently prosecuted) to be registered with such appropriate filing office in a manner sufficient to impart constructive notice of Borrower's ownership thereof, and (c) cause to be prepared, executed, and delivered to Agent supplemental schedules to the applicable Loan Documents to identify such patents, copyrights, and trademarks as being subject to the security interests created thereunder. 4.5 Power of Attorney. Borrower hereby irrevocably makes, constitutes, and appoints Agent (and any of Agent's officers, employees, or agents designated by Agent) as Borrower's true and lawful attorney, with power to (a) if Borrower refuses to, or fails timely to execute and deliver any of the documents described in Section 4.4, sign the name of Borrower on any of the documents described in Section 4.4, (b) at any time that an Event of Default has occurred and is continuing, sign Borrower's name on any invoice or bill of lading relating to the Collateral, drafts against Account Debtors, or notices to Account Debtors, (c) send requests for verification of Accounts, (d) endorse Borrower's name on any Collection item that may come into the Lender Group's possession and which is Collateral or proceeds of Collateral, (e) at any time that an Event of Default has occurred and is continuing, make, settle, and adjust all claims under Borrower's policies of insurance and make all determinations and decisions with respect to such policies of insurance, except to the extent that property covered by such insurance does not constitute Collateral and (f) at any time that an Event of Default has occurred and is continuing, settle and adjust disputes and claims respecting the Accounts, chattel paper, or General Intangibles directly with Account Debtors, for amounts and upon terms that Agent determines to be reasonable, and Agent may cause to be executed and delivered any documents and releases that Agent determines to be necessary. The appointment of Agent as Borrower's attorney, and each and every one of its rights and powers, being coupled with an interest, is irrevocable until all of the Obligations have been fully and finally repaid and performed and the Lender Group's obligations to extend credit hereunder are terminated. 4.6 Right to Inspect. Agent and each Lender (through any of their respective officers, employees, or agents) shall have the right during regular business hours prior to the occurrence of any Event of Default and at any time after the occurrence of an Event of Default, from time to time hereafter to inspect the Books and to check, test, and appraise the Collateral in order to verify Borrower's financial condition or the amount, quality, value, condition of, or any other matter relating to, the Collateral. 4.7 Control Agreements. Borrower agrees that it will not transfer assets out of any Securities Accounts other than as permitted under Section 7.19 and, if to another securities intermediary, unless each of Borrower, Agent, and the substitute securities intermediary have entered into a Control Agreement. No arrangement contemplated hereby or by any Control 53 Agreement in respect of any Securities Accounts or other Investment Property shall be modified by Borrower without the prior written consent of Agent. Upon the occurrence and during the continuance of a Default or Event of Default, Agent may notify any securities intermediary to liquidate the applicable Securities Account or any related Investment Property maintained or held thereby and remit the proceeds thereof to the Agent's Account. 5. REPRESENTATIONS AND WARRANTIES. In order to induce the Lender Group to enter into this Agreement, Borrower makes the following representations and warranties to the Lender Group which shall be true, correct, and complete, in all material respects, as of the date hereof, and shall be true, correct, and complete, in all material respects, as of the Closing Date, and at and as of the date of the making of each Advance (or other extension of credit) made thereafter, as though made on and as of the date of such Advance (or other extension of credit) (except to the extent that such representations and warranties relate solely to an earlier date) and such representations and warranties shall survive the execution and delivery of this Agreement: 5.1 No Encumbrances. Borrower has good and indefeasible title to the Collateral and the Real Property constituting Collateral, free and clear of Liens except for Permitted Liens. 5.2 Eligible Accounts. The Eligible Accounts are bona fide existing payment obligations of Account Debtors created by the sale and delivery of Inventory or the rendition of services to such Account Debtors in the ordinary course of Borrower's business, owed to Borrower without defenses, disputes, offsets, counterclaims, or rights of return or cancellation. As to each Eligible Account, such Account is not: (a) owed by an employee, Affiliate, or agent of Borrower, (b) on account of a transaction wherein goods were placed on consignment or were sold pursuant to a guaranteed sale, a sale or return, a sale on approval, a bill and hold, or on any other terms by reason of which the payment by the Account Debtor may be conditional, (c) payable in a currency other than Dollars, (d) owed by an Account Debtor that has or has asserted a right of setoff, has disputed its liability, or has made any claim with respect to its obligation to pay the Account, (e) owed by an Account Debtor that is subject to any Insolvency Proceeding or is not Solvent or as to which Borrower has received notice of an imminent Insolvency Proceeding or a material impairment of the financial condition of such Account Debtor, (f) on account of a transaction as to which the goods giving rise to such Account have not been shipped and billed to the Account Debtor or the services giving rise to such Account have not been performed and accepted by the Account Debtor, (g) a right to receive progress payments or other advance billings that are due prior to the completion of performance by Borrower of the subject contract for goods or services, and 54 (h) an Account that has not been billed to the customer. 5.3 Eligible Inventory. All Eligible Inventory is of good and merchantable quality, free from defects. As to each item of Eligible Inventory, such Inventory is: (a) owned by Borrower free and clear of all Liens other than Liens in favor of Lender, (b) either located at one of the locations set forth on Schedule E-1 or in transit from one such location to another such location, (c) not located on real property leased by Borrower or in a contract warehouse, in each case, unless subject to a Collateral Access Agreement executed by the lessor, the warehouseman, or other third party, as the case may be, and unless segregated or otherwise separately identifiable from goods of others, if any, stored on the premises, (d) not goods that have been returned or rejected by Borrower's customers, and (e) not goods that are obsolete or slow moving, restrictive or custom items, work-in-process, or that constitute spare parts, packaging and shipping materials, supplies used or consumed in Borrower's business, bill and hold goods, defective goods, "seconds," or Inventory acquired on consignment. 5.4 Equipment. All of the Equipment is used or held for use in Borrower's business and is fit for such purposes. 5.5 Location of Inventory and Equipment. The Inventory and Equipment constituting Collateral are not stored with a bailee, warehouseman, or similar party and are located only at the locations identified on Schedule 5.5. Borrower may from time to time update Schedule 5.5 so long as (i) Borrower gives Agent not less than thirty (30) days advance written notice and (ii) Borrower delivers to Agent a Collateral Access Agreement with respect to each additional location listed on any revised Schedule 5.5. 5.6 Inventory Records. Borrower keeps correct and accurate records itemizing and describing the type, quality, and quantity of its Inventory and the book value thereof. 5.7 Location of Chief Executive Office; FEIN. The chief executive office of Borrower is located at the address indicated in Schedule 5.7 and Borrower's FEIN is identified in Schedule 5.7. Borrower may from time to time update Schedule 5.7 so long as (i) Borrower gives Agent not less than thirty (30) days advance written notice and (ii) Borrower delivers to Lender a Collateral Access Agreement with respect to each additional location listed on any revised Schedule 5.7. 55 5.8 Due Organization and Qualification; Subsidiaries. (a) Borrower is duly organized and existing and in good standing under the laws of the jurisdiction of its organization and qualified to do business in any state where the failure to be so qualified reasonably could be expected to have a Material Adverse Change. (b) Set forth on Schedule 5.8(b) is a complete and accurate description as of the Closing Date of the authorized capital Stock of Borrower, by class, and, as of the Closing Date, a description of the number of shares of each such class that are issued and outstanding. Other than as described on Schedule 5.8(b), there are no subscriptions, options, warrants, or calls relating to any shares of Borrower's capital Stock, including any right of conversion or exchange under any outstanding security or other instrument. Borrower is not subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of its capital Stock or any security convertible into or exchangeable for any of its capital Stock. (c) Set forth on Schedule 5.8(c), is a complete and accurate list of Borrower's direct and indirect Subsidiaries, showing: (i) the jurisdiction of their organization, (ii) the number of shares of each class of common and preferred Stock authorized for each of such Subsidiaries, and (iii) the number and the percentage of the outstanding shares of each such class owned directly or indirectly by Borrower. All of the outstanding capital Stock of each such Subsidiary has been validly issued and is fully paid and non-assessable, except as otherwise expressly provided under Wisconsin Stat.180.0622(2)(b). (d) Except as set forth on Schedule 5.8(c), there are no subscriptions, options, warrants, or calls relating to any shares of Borrower's Subsidiaries' capital Stock, including any right of conversion or exchange under any outstanding security or other instrument. Neither Borrower nor any of its Subsidiaries is subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of Borrowers' Subsidiaries' capital Stock or any security convertible into or exchangeable for any such capital Stock. (e) Borrower is in compliance with all applicable provisions of law, including, without limitation, the Food Security Act, PACA and Borrower, and each of its subsidiaries and affiliates possess all necessary authorizations, permits and licenses to lawfully conduct business operations. Borrower, and each of Borrower's subsidiaries, affiliates, divisions and branches possess all necessary dealer's license(s) under PACA, and such licenses are current and valid. 5.9 Due Authorization; No Conflict. (a) The execution, delivery, and performance by Borrower of this Agreement and the Loan Documents to which it is a party have been duly authorized by all necessary action on the part of Borrower. (b) The execution, delivery, and performance by Borrower of this Agreement and the Loan Documents to which it is a party do not and will not (i)violate any provision of federal, state, or local law or regulation applicable to Borrower, the Governing Documents of Borrower, or any order, judgment, or decree of any court or other Governmental Authority binding on Borrower, (ii) conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under any material contractual obligation of Borrower, (iii) result 56 in or require the creation or imposition of any Lien of any nature whatsoever upon any properties or assets of Borrower, other than Permitted Liens, or (iv) require any approval of Borrower's interestholders or any approval or consent of any Person under any material contractual obligation of Borrower, except to the extent any such approval or consent has been obtained. (c) Other than the filing of financing statements, fixture filings, and Mortgages and NASDAQ disclosure statements, the execution, delivery, and performance by Borrower of this Agreement and the Loan Documents to which Borrower is a party do not and will not require any registration with, consent, or approval of, or notice to, or other action with or by, any Governmental Authority or other Person. (d) This Agreement and the other Loan Documents to which Borrower is a party, and all other documents contemplated hereby and thereby, when executed and delivered by Borrower will be the legally valid and binding obligations of Borrower, enforceable against Borrower in accordance with their respective terms, except as enforcement may be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or limiting creditors' rights generally. (e) The Agent's Liens on Collateral are validly created, perfected, and first priority Liens, subject only to Permitted Liens. (f) The execution, delivery, and performance by each Guarantor of the Loan Documents to which it is a party have been duly authorized by all necessary action on the part of Guarantor. (g) The execution, delivery, and performance by Guarantor of the Loan Documents to which it is a party do not and will not (i)violate any provision of federal, state, or local law or regulation applicable to Guarantor, the Governing Documents of Guarantor, or any order, judgment, or decree of any court or other Governmental Authority binding on Guarantor, (ii)conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under any material contractual obligation of Guarantor, (iii)result in or require the creation or imposition of any Lien of any nature whatsoever upon any properties or assets of Guarantor, other than Permitted Liens, or (iv)require any approval of Guarantor's interestholders or any approval or consent of any Person under any material contractual obligation of Guarantor. (h) The execution, delivery, and performance by Guarantor of the Loan Documents to which Guarantor is a party do not and will not require any registration with, consent, or approval of, or notice to, or other action with or by, any Governmental Authority or other Person. (i) The Loan Documents to which Guarantor is a party, and all other documents contemplated hereby and thereby, when executed and delivered by Guarantor will be the legally valid and binding obligations of Guarantor, enforceable against Guarantor in accordance with their respective terms, except as enforcement may be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or limiting creditors' rights generally. 5.10 Litigation. Other than those matters disclosed on Schedule 5.10, there are no 57 actions, suits, or proceedings pending or, to the best knowledge of Borrower, threatened against Borrower, or any of its Subsidiaries, as applicable, except for (a) matters that are fully covered by insurance (subject to customary deductibles), and (b) matters arising after the Closing Date that, if decided adversely to Borrower, or any of its Subsidiaries, as applicable, reasonably could not be expected to result in a Material Adverse Change. 5.11 No Material Adverse Change. All financial statements relating to Borrower or Guarantors that have been delivered by Borrower to the Lender Group have been prepared in accordance with GAAP (except, in the case of unaudited financial statements, for the lack of footnotes and being subject to year-end audit adjustments) and present fairly in all material respects, Borrower's (or Guarantors, as applicable) financial condition as of the date thereof and results of operations for the period then ended. There has not been a Material Adverse Change with respect to Borrower and Guarantors taken as a whole, since the date of the latest financial statements submitted to the Lender Group on or before the Closing Date. 5.12 Fraudulent Transfer. (a) Borrower is Solvent after giving effect to transactions contemplated on the Closing Date by Borrower with Agent, Lenders, Sun Capital, the Terminating Bank Group and the Continuing Bank Group. (b) No transfer of property is being made by Borrower and no obligation is being incurred by Borrower in connection with the transactions contemplated by this Agreement or the other Loan Documents with the intent to hinder, delay, or defraud either present or future creditors of Borrower. 5.13 Employee Benefits. Except as set forth on Schedule 5.13, none of Borrower, any of its Subsidiaries, or any of their ERISA Affiliates maintains or contributes to any Benefit Plan. 5.14 Environmental Condition. Except as set forth on Schedule 5.14, (a) to Borrower's knowledge, none of Borrower's assets has ever been used by Borrower or by previous owners or operators in the disposal of, or to produce, store, handle, treat, release, or transport, any Hazardous Materials, where such production, storage, handling, treatment, release or transport was in violation, in any material respect, of applicable Environmental Law, (b) to Borrower's knowledge, none of Borrower's properties or assets has ever been designated or identified in any manner pursuant to any environmental protection statute as a Hazardous Materials disposal site, (c) Borrower has not received notice that a Lien arising under any Environmental Law has attached to any revenues or to any Real Property owned or operated by Borrower, and (d) Borrower has not received a summons, citation, notice, or directive from the Environmental Protection Agency or any other federal or state governmental agency concerning any action or omission by Borrower resulting in the releasing or disposing of Hazardous Materials into the environment. 5.15 Brokerage Fees. Except as set forth on Schedule 5.15,Borrower has not utilized the services of any broker or finder in connection with Borrower's obtaining financing from the Lender Group under this Agreement and no brokerage commission or finders fee is payable by Borrower in connection herewith. 58 5.16 Intellectual Property. Borrower owns, has rights to use or holds licenses in, all trademarks, trade names, copyrights, patents, patent rights, and licenses that are necessary to the conduct of its business as currently conducted. Attached hereto as Schedule 5.16 is a true, correct, and complete listing of all material patents, patent applications, trademarks, trademark applications, copyrights, and copyright registrations as to which Borrower is the owner or is an exclusive licensee. Borrower may from time to time update Schedule 5.16 on not less than thirty (30) days advance written notice to Agent. 5.17 Leases. Except as expressly set forth on Schedule 5.17, Borrower enjoys peaceful and undisturbed possession under all leases material to the business of Borrower and to which it is a party or under which it is operating. All of such leases are valid and subsisting and no material default by Borrower exists under any of them. 5.18 DDAs. Set forth on Schedule 5.18 are all of Borrower's DDAs, including, with respect to each depository (i) the name and address of such depository, and (ii) the account numbers of the accounts maintained with such depository. Borrower may from time to time update Schedule 5.18 on not less than thirty (30) days advance written notice to Agent. 5.19 Complete Disclosure. All factual information (taken as a whole) furnished by or on behalf of Borrower in writing to Agent or any Lender (including all information contained in the Schedules hereto or in the other Loan Documents) for purposes of or in connection with this Agreement, the other Loan Documents, or any transaction contemplated herein or therein is, and all other such factual information (taken as a whole) hereafter furnished by or on behalf of Borrower in writing to Agent or any Lender will be, true and accurate, in all material respects, on the date as of which such information is dated or certified and not incomplete by omitting to state any fact necessary to make such information (taken as a whole) not misleading in any material respect at such time in light of the circumstances under which such information was provided. On the Closing Date, the Closing Date Projections represent, and as of the date on which any other Projections are delivered to Agent, such additional Projections represent Borrower's good faith best estimate of its future performance for the periods covered thereby. 5.20 Indebtedness. Set forth on Schedule 5.20 is a true and complete list of all Indebtedness of Borrower outstanding immediately prior to the Closing Date that is to remain outstanding after the Closing Date and such Schedule accurately reflects the aggregate principal amount of such Indebtedness as of the Closing Date and the principal terms thereof. 5.21 Notices from Farm Products Sellers, etc. (a) Except as set forth in Schedule 5.21(a) hereto, Borrower has not, within the one (1) year period prior to the date hereof, received any written notice pursuant to the applicable provisions of the Food Security Act, or pursuant to the Code or any state statutory agricultural or producers' lien laws or any other applicable local laws from (i) any Farm Products Seller or (ii) any lender to any Farm Products Seller or any other Person with a security interest in the assets of any Farm Products Seller or (iii) the Secretary of State (or equivalent official) or other Governmental Authority of any State, Commonwealth or political subdivision thereof 59 in which any Farm Products purchased by Borrower are produced, in any case advising or notifying Borrower of the intention of such Farm Products Seller or other Person to preserve the benefits of any trust, lien or other interest applicable to any assets of Borrower established in favor of such Farm Products Seller or other Person under any other law other than PACA or claiming a Lien or security interest in and to any perishable agricultural commodity or any other Farm Products which may be or have been purchased by Borrower or any related or other assets of Borrower (all of the foregoing, together with any such notices as Borrower may at any time hereafter receive, collectively, the "Food Security Act Notices"). (b) Borrower is not engaged in, and shall not engage in, raising, cultivating, propagating, fattening or grazing, livestock operations, or other farming operations. (c) Borrower is not and shall not function as a meat packer, "livestock dealer", or "live poultry dealer" as those terms are defined under the PSA nor does or shall Borrower purchase or deal in any type of livestock, live poultry, or the slaughtered carcasses thereof whatsoever. 6. AFFIRMATIVE COVENANTS. Borrower covenants and agrees that, so long as any credit hereunder shall be available and until full and final payment of the Obligations, Borrower shall and shall cause each of its Subsidiaries to do all of the following: 6.1 Accounting System. Maintain a system of accounting that enables Borrower to produce financial statements in accordance with GAAP and maintain records pertaining to the Collateral that contain information as from time to time reasonably may be requested by Agent. Borrower also shall keep an inventory reporting system that shows all additions, sales, claims, returns, and allowances with respect to the Inventory. 6.2 Collateral Reporting. Provide Agent (and if so requested by Agent, with copies for each Lender) with the following documents at the following times in form satisfactory to Agent: Daily (a) a sales journal, collection journal, and credit register since the last such schedule and a calculation of the Borrowing Base as of such date; (b) notice of all returns, disputes, or claims in excess of $5,000; 60 Weekly (c) Inventory reports specifying Borrower's cost and the wholesale market value of its Inventory, by category, including without limitation a breakout of cranberry concentrate and frozen cranberries by gallons and pounds, respectively, with additional detail showing additions to and deletions from the Inventory; (d) an invoice register, including the price per gallon paid with respect to each sale, and including a certification as to the lowest per gallon price paid by any customer during the period covered by such invoice register; Monthly (not later (e) a detailed calculation of the Borrowing Base than the 15th day (including detail regarding those Accounts that are of each month) not Eligible Accounts); (f) a detailed aging, by total, of the Accounts, together with a reconciliation to the detailed calculation of the Borrowing Base previously provided to Agent; (g) a summary aging, by vendor, of Borrower's accounts payable and any book overdraft; (h) a calculation of Dilution for the prior month; (i) a cranberry concentrate forecast; (j) a Schedule listing all inventory owned by Nestle U.S.A., Inc. or Apple & Eve, LLC in the Borrower's possession; (k) a listing of Farm Products Sellers and amounts owed to each such Person; Quarterly (l) a detailed list of Borrower's customers; (m) a report regarding Borrower's accrued, but unpaid, ad valorem taxes; 61 Upon request by (n) copies of invoices in connection with the Agent Accounts, credit memos, remittance advices, deposit slips, shipping and delivery documents in connection with the Accounts and, for Inventory and Equipment acquired by Borrower, purchase orders and invoices; (o) such other reports as to the Collateral, or the financial condition of Borrower, as Agent may request; Upon occurrence (p) immediate notice of any default or notice of default received with respect to the Cliffstar Note, or the Continuing Bank Documents or the federal multi-peril crop insurance policy including a copy of any written notice received by Borrower; (q) within five (5) Business Days of Borrower's receipt thereof, a copy of any notice or report with respect to any earnout or similar calculations with respect to the Cliffstar Note. In addition, Borrower agrees to cooperate fully with Agent to facilitate and implement a system of electronic collateral reporting in order to provide electronic reporting of each of the items set forth above. 6.3 Financial Statements, Reports, Certificates. Deliver to Agent, with copies to each Lender: (a) as soon as available, but in any event within 30 days (45 days in the case of a month that is the end of one of the first 3 fiscal quarters in a fiscal year or that is the month immediately following the Closing Date) after the end of each month during each of Borrower's fiscal years, (i) a company prepared consolidated balance sheet, income statement, and statement of cash flow covering Borrower's and its Subsidiaries' operations during such period, (ii) a certificate signed by the chief financial officer of Borrower to the effect that: (A) the financial statements delivered hereunder have been prepared in accordance with GAAP (except for the lack of footnotes and being subject to year-end audit adjustments) and fairly present in all material respects the financial condition of Borrower and its Subsidiaries, (B) the representations and warranties of Borrower contained in this Agreement and the other Loan Documents are true and correct in all material respects on and as of the date of such certificate, as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date), and 62 (C) there does not exist any condition or event that constitutes a Default or Event of Default (or, to the extent of any non-compliance, describing such non-compliance as to which he or she may have knowledge and what action Borrower has taken, is taking, or proposes to take with respect thereto), and (iii) for each month that is the date on which a financial covenant in Section 7.20 is to be tested, a Compliance Certificate demonstrating, in reasonable detail, compliance at the end of such period with the applicable financial covenants contained in Section 7.20, and (b) as soon as available, but in any event within 120 days after the end of each of Borrower's fiscal years, (i) financial statements of Borrower and its Subsidiaries for each such fiscal year, audited by independent certified public accountants reasonably acceptable to Agent and certified, without any qualifications (including, without limitation, (i) any going concern or like qualification or exception or (ii) any qualification as to the scope of such audit), by such accountants to have been prepared in accordance with GAAP (such audited financial statements to include a balance sheet, income statement, and statement of cash flow and, if prepared, such accountants' letter to management), (ii) a certificate of such accountants addressed to Agent and the Lenders stating that such accountants do not have knowledge of the existence of any Default or Event of Default under Section 7.20, (c) as soon as available, but in any event within 30 days prior to the start of each of Borrower's fiscal years, (i) copies of Borrower's Projections, in form and substance (including as to scope and underlying assumptions) satisfactory to Agent, in its sole discretion, for the forthcoming 3 years, year by year, and for the forthcoming fiscal year, month by month, certified by the chief financial officer of Borrower as being such officer's good faith best estimate of the financial performance of Borrower during the period covered thereby, (d) if and when filed by Borrower, (i) Form 10-Q quarterly reports, Form 10-K annual reports, and Form 8-K current reports, (ii) any other filings made by Borrower with the SEC, (iii) copies of Borrower's federal income tax returns, and any amendments thereto, filed with the Internal Revenue Service, and 63 (iv) any other information that is provided by Borrower to its shareholders generally, (e) if and when filed by Borrower and as requested by Agent, satisfactory evidence of payment of applicable excise taxes in each jurisdictions in which (i) Borrower conducts business or is required to pay any such excise tax, (ii) where Borrower's failure to pay any such applicable excise tax would result in a Lien on the properties or assets of Borrower, or (iii) where Borrower's failure to pay any such applicable excise tax reasonably could be expected to result in a Material Adverse Change, (f) as soon as Borrower has knowledge of any event or condition that constitutes a Default or an Event of Default, notice thereof and a statement of the curative action that Borrower proposes to take with respect thereto, and (g) upon the request of Agent, any other report reasonably requested relating to the financial condition of Borrower. In addition to the financial statements referred to above, Borrower agrees to deliver financial statements prepared on both a consolidated and consolidating basis and agrees that no Subsidiary of Borrower will have a fiscal year different from that of Borrower. Borrower agrees that its independent certified public accountants are authorized to communicate with Agent and to release to Agent whatever financial information concerning Borrower Agent reasonably may request. Borrower waives the right to assert a confidential relationship, if any, it may have with any accounting firm or service bureau in connection with any information requested by Agent pursuant to or in accordance with this Agreement, and agrees that Agent may contact directly any such accounting firm or service bureau in order to obtain such information. 6.4 Return. Cause returns and allowances, as between Borrower and its Account Debtors, to be on the same basis and in accordance with the usual customary practices of Borrower, as they exist at the time of the execution and delivery of this Agreement. If, at a time when no Event of Default has occurred and is continuing, any Account Debtor returns any Inventory with a sale price in excess of $25,000, or any Account Debtors return inventory in any fiscal quarter with a sale price in excess of $50,000 in the aggregate, to Borrower, Borrower promptly shall determine the reason for such return and, if Borrower accepts such return, issue a credit memorandum (with a copy to be sent to Agent) in the appropriate amount to such Account Debtor. If, at a time when an Event of Default has occurred and is continuing, any Account Debtor returns any Inventory to Borrower, Borrower promptly shall determine the reason for such return and, if Agent consents (which consent shall not be unreasonably withheld), issue a credit memorandum (with a copy to be sent to Agent) in the appropriate amount to such Account Debtor. 6.5 Maintenance of Properties. Except as expressly set forth on Schedule 5.17, maintain and preserve all of its properties which are necessary or useful in the proper conduct to its business in good working order and condition, ordinary wear and tear excepted, and comply at all times with the provisions of all leases to which it is a party as lessee so as to prevent any loss or forfeiture thereof or thereunder. 6.6 Taxes. Cause all assessments and taxes, whether real, personal, or otherwise, due 64 or payable by, or imposed, levied, or assessed against Borrower or any of its assets to be paid in full, before delinquency or before the expiration of any extension period, except to the extent that the validity of such assessment or tax shall be the subject of a Permitted Protest. Borrower will make timely payment or deposit of all tax payments and withholding taxes required of it by applicable laws, including those laws concerning F.I.C.A., F.U.T.A., state disability, and local, state, and federal income taxes, and will, upon request, furnish Agent with proof satisfactory to Agent indicating that Borrower has made such payments or deposits. Borrower shall deliver satisfactory evidence of payment of applicable excise taxes in each jurisdictions in which Borrower is required to pay any such excise tax. 6.7 Insurance. (a) At Borrower's expense, maintain insurance respecting its assets wherever located, covering loss or damage by fire, theft, explosion, and all other hazards and risks as ordinarily are insured against by other Persons engaged in the same or similar businesses. Borrower also shall maintain business interruption, public liability, multi-peril crop and product liability insurance, as well as insurance against larceny, embezzlement, and criminal misappropriation. All such policies of insurance shall be in such amounts and with such insurance companies as are reasonably satisfactory to Agent. Borrower shall deliver copies of all such policies to Agent with a satisfactory lender's loss payable endorsement naming Agent as sole loss payee (with respect to Collateral) or additional insured, as appropriate. Each policy of insurance or endorsement shall contain a clause requiring the insurer to give not less than 30 days prior written notice to Agent in the event of cancellation of the policy for any reason whatsoever. (b) Borrower shall give Agent prompt notice of any loss covered by such insurance. Agent shall have the exclusive right to adjust any losses payable under any such insurance policies in excess of $100,000, without any liability to Borrower whatsoever in respect of such adjustments. Any monies received as payment for any loss with respect to Collateral under any insurance policy mentioned above (other than liability insurance policies) or as payment of any award or compensation for condemnation or taking by eminent domain, shall be paid over to Agent to be applied at the option of the Required Lenders either to the prepayment of the Obligations or shall be disbursed to Borrower under staged payment terms reasonably satisfactory to the Required Lenders for application to the cost of repairs, replacements, or restorations. Any such repairs, replacements, or restorations shall be effected with reasonable promptness and shall be of a value at least equal to the value of the items of property destroyed prior to such damage or destruction. (c) Borrower will not take out separate insurance concurrent in form or contributing in the event of loss with that required to be maintained under this Section 6.7 with respect to Collateral, unless Agent is included thereon as named insured with the loss payable to Agent under a lender's loss payable endorsement or its equivalent. Borrower immediately shall notify Agent whenever such separate insurance is taken out, specifying the insurer thereunder and full particulars as to the policies evidencing the same, and copies of such policies promptly shall be provided to Agent. 6.8 Location of Inventory and Equipment. Keep the Inventory and Equipment only at the locations identified on Schedule 5.5; provided, however, that Borrower may amend Schedule 5.5 so long as such amendment occurs by written notice to Agent not less than 30 days 65 prior to the date on which Inventory or Equipment constituting Collateral is moved to such new location, so long as such new location is within the continental United States, and so long as, at the time of such written notification, Borrower provides any financing statements or fixture filings necessary to perfect and continue perfected the Agent's Liens on such assets and also provides to Agent a Collateral Access Agreement. 6.9 Compliance with Laws. Comply with the requirements of all applicable laws, rules, regulations, and orders of any Governmental Authority, including the Fair Labor Standards Act, the Americans With Disabilities Act, PACA, the Food Security Act, other than laws, rules, regulations, and orders the non-compliance with which, individually or in the aggregate, would not result in and reasonably could not be expected to result in a Material Adverse Change. 6.10 Leases. Except as expressly set forth on Schedule 5.17, pay when due all rents and other amounts payable under any leases to which Borrower is a party or by which Borrower's properties and assets are bound, unless such payments are the subject of a Permitted Protest. 6.11 Brokerage Commissions. Pay any and all brokerage commission or finders fees incurred in connection with or as a result of Borrower's obtaining financing from the Lender Group under this Agreement. Borrower agrees and acknowledges that payment of all such brokerage commissions or finders fees shall be the sole responsibility of Borrower, and Borrower agrees to indemnify, defend, and hold Agent and the Lender Group harmless from and against any claim of any broker or finder arising out of Borrower's obtaining financing from the Lender Group under this Agreement. 6.12 Existence. At all times preserve and keep in full force and effect Borrower's valid existence and good standing and any rights and franchises material to Borrower's businesses. 6.13 Environmental. (a) Keep any property either owned or operated by Borrower free of any Environmental Liens or post bonds or other financial assurances sufficient to satisfy the obligations or liability evidenced by such Environmental Liens, (b) comply, in all material respects, with Environmental Laws and provide to Agent documentation of such compliance which Agent reasonably requests, (c) promptly notify Agent of any release of a Hazardous Material in any reportable quantity from or onto property owned or operated by Borrower and take any Remedial Actions required to abate said release or otherwise to come into compliance with applicable Environmental Law, and (d) promptly provide Agent with written notice within 10 days of the receipt of any of the following: (i) notice that an Environmental Lien has been filed against any of the real or personal property of Borrower, (ii) commencement of any Environmental Action or notice that an Environmental Action will be filed against Borrower, and (iii) notice of a violation, citation, or other administrative order which reasonably could be expected to result in a Material Adverse Change. 6.14 Agricultural Products. (a) Borrower shall pay, not later than seven (7) Business Days prior to the date required for payment therein, the amount of any outstanding invoices for the purchase of perishable agricultural commodities (as defined in PACA) which is required to be paid within 66 thirty (30) days of Borrower's acceptance of such commodities unless Borrower has obtained from the Farm Products Seller of such commodities a waiver of its rights under PACA in form and substance acceptable to Agent; provided, however, that in the event that any such invoice requires payment upon delivery, payment shall be made on such date of delivery. Borrower acknowledges that Agent shall establish a reserve against the Borrowing Base in the amount of, at any given time, all accounts payable to sellers of perishable agricultural commodities with terms of thirty (30) days (after Borrower's receipt and acceptance of such commodities) or less, unless Borrower has obtained from any such seller a waiver of its rights under PACA, in form and substance acceptable to Agent. Borrower shall at all times comply with all existing and future Food Security Act Notices during their periods of effectiveness under the Food Security Act, including, without limitation, directions to make payments to the Farm Products Seller by issuing payment instruments directly to the secured party with respect to any assets of the Farm Products Seller or jointly payable to the Farm Products Seller and any secured party with respect to the assets of such Farm Products Seller, as specified in the Food Security Act Notice, so as to terminate or release the security interest in any farm products maintained by such Farm Products Seller or any secured party with respect to the assets of such Farm Products Seller under the Food Security Act. (b) Borrower shall take all other actions as may be reasonably required, if any, to ensure that any perishable agricultural commodity (in whatever form) or other Farm Products are purchased free and clear of any security interest, Lien, trust or other claim in favor of any Farm Products Seller or any secured party with respect to the assets of any Farm Products Seller, including, without limitation, registration with all states which have established central filing systems as contemplated under the Food Security Act. (c) Borrower shall notify Agent in writing within three (3) Business Days after receipt by Borrower of any Food Security Act Notice or amendment to a previous Food Security Act Notice and including any notice from any Farm Products Seller of the intention of such Farm Products Seller to preserve the benefits of any trust applicable to any assets of Borrower established in favor of such Farm Products Seller or other Person under the provisions of PACA or any local law, and within such three (3) Business Days, Borrower shall provide Agent with a true, correct and complete copy of such Food Security Act Notice or amendment or other notice, as the case may be, and including any master lists of effective financing statements delivered to Borrower pursuant to the Food Security Act. Borrower shall, upon Agent's request, at any time and from time to time, furnish Agent with a true, correct and complete list of Persons from whom Borrower or any Subsidiary purchases any perishable agricultural commodity or other Farm Products and the outstanding amounts owed by Borrower or any other Subsdiary to such Person. In the event Borrower receives a Food Security Act Notice, Borrower shall pay the related invoice within one (1) Business Day of receipt of such Food Security Act Notice and notify Agent of such receipt; provided, however, that such invoice may remain unpaid if, and only so long as (i) appropriate legal or administrative action has been commenced in good faith and is being diligently pursued or defended by Borrower, (ii) adequate reserves with respect to such contest are maintained on the books of Borrower, in accordance with GAAP, (iii) the ability of 67 the vendor to pursue any fights or enforce any Liens or trusts provided under PACA has been stayed or otherwise legally prohibited during the pendency of such action, (iv) Agent shall have established a Reserve against the Borrowing Base in an amount at least equal to the amount claimed to be due by such vendor under the relevant invoice (but without duplication of any Reserve established under Section 6.14(a)) and (v) Borrower shall promptly pay or discharge such contested invoice and all additional charges, interest, penalties and expenses, if any, and shall deliver to Agent evidence reasonably acceptable to Agent of such payment, if such contest is terminated or discontinued adversely to Borrower or the conditions set forth in this Section 6.14(c) are no longer met, and (vi) Agent has not advised Borrower in writing that Agent reasonably believes that nonpayment thereof could have or result in a Material Adverse Change. 6.15 Disclosure Updates. Promptly and in no event later than 7 Business Days after obtaining knowledge thereof, (a) notify Agent if any written information, exhibit, or report furnished to the Lender Group contained any untrue statement of a material fact or omitted to state any material fact necessary to make the statements contained therein not misleading in light of the circumstances in which made, and (b) correct any defect or error that may be discovered therein or in any Loan Document or in the execution, acknowledgement, filing, or recordation thereof. 7. NEGATIVE COVENANTS. Borrower covenants and agrees that, so long as any credit hereunder shall be available and until full and final payment of the Obligations, Borrower will not and will not permit any of its Subsidiaries to do any of the following: 7.1 Indebtedness. Create, incur, assume, permit, guarantee, or otherwise become or remain, directly or indirectly, liable with respect to any Indebtedness, except: (a) Indebtedness evidenced by this Agreement and the other Loan Documents, together with Indebtedness owed to Underlying Issuers with respect to Underlying Letters of Credit, (b) Indebtedness set forth on Schedule 5.20, (c) Permitted Purchase Money Indebtedness, and (d) refinancings, renewals, or extensions of Indebtedness permitted under clauses (b) and (c) of this Section 7.1 (and continuance or renewal of any Permitted Liens associated therewith) so long as: (i) the terms and conditions of such refinancings, renewals, or extensions do not, in Agent's judgment, materially impair the prospects of repayment of the Obligations by Borrower or materially impair Borrower's creditworthiness, (ii) such refinancings, renewals, or extensions do not result in an increase in the principal amount of, or interest rate with respect to, the Indebtedness so refinanced, renewed, or extended, (iii) such refinancings, renewals, or extensions do not result in a shortening of the average weighted maturity of the Indebtedness so refinanced, renewed, or extended, nor are they on terms or conditions that, taken as a whole, are materially more burdensome or restrictive to Borrower, and (iv) if the Indebtedness that is refinanced, renewed, or extended was subordinated in right of payment to the Obligations, then the terms and conditions of the refinancing, renewal, or extension Indebtedness 68 must include subordination terms and conditions that are at least as favorable to the Lender Group as those that were applicable to the refinanced, renewed, or extended Indebtedness. 7.2 Liens. Create, incur, assume, or permit to exist, directly or indirectly, any Lien on or with respect to any of its assets, of any kind, whether now owned or hereafter acquired, or any income or profits therefrom, except for Permitted Liens (including Liens that are replacements of Permitted Liens to the extent that the original Indebtedness is refinanced, renewed, or extended under Section 7.1(d) and so long as the replacement Liens only encumber those assets that secured the refinanced, renewed, or extended Indebtedness). 7.3 Restrictions on Fundamental Changes. (a) Enter into any merger, consolidation, reorganization, or recapitalization, or reclassify its Stock. (b) Liquidate, wind up, or dissolve itself (or suffer any liquidation or dissolution provided that Borrower may, so long as (i) no Event of Default has occurred or would directly result, (ii) Agent has received not less than thirty (30) days advance written notice and (iii) no Material Adverse Change would result, cause one or more of its wholly-owned Subsidiaries to enter into any merger or consolidation with any other wholly-owned Subsidiary of Borrower, or to liquidate, windup or dissolve. (c) Convey, sell, lease, license, assign, transfer, or otherwise dispose of, in one transaction or a series of transactions, all or any substantial part of its assets other than sales of Inventory in the ordinary course of business or as otherwise expressly permitted under this Agreement. 7.4 Disposal of Assets. Other than Permitted Dispositions, convey, sell, lease, license, assign, transfer, or otherwise dispose of any of Borrower's Collateral, or any other assets of Borrower constituting Collateral or any other assets of Borrower if, with respect to other assets of Borrower not constituting Collateral, such action would result in a Material Adverse Change. 7.5 Change Name. Change Borrower's name, FEIN, corporate structure, or identity, or add any new fictitious name; provided, however, that Borrower may change its name upon at least 30 days prior written notice to Agent of such change and so long as, at the time of such written notification, Borrower provides any financing statements or fixture filings necessary to perfect and continue perfected the Agent's Liens. 7.6 Guarantee. Except as expressly set forth on Schedule 5.20, guarantee or otherwise become in any way liable with respect to the obligations of any third Person except by endorsement of instruments or items of payment for deposit to the account of Borrower or which are transmitted or turned over to Agent. 7.7 Nature of Business. Make any change in the principal nature of its business. 7.8 Prepayments and Amendments. (a) Except in connection with a refinancing permitted by Section 7.1(d), or 69 except as expressly permitted under the Continuing Bank Group Intercreditor Agreement, prepay, redeem, defease, purchase, or otherwise acquire any Indebtedness of Borrower, other than the Obligations in accordance with this Agreement, and (b) Except in connection with a refinancing permitted by Section 7.1(d), or except as expressly permitted under the Continuing Bank Group Intercreditor Agreement, directly or indirectly, amend, modify, alter, increase, or change any of the terms or conditions of any agreement, instrument, document, indenture, or other writing evidencing or concerning Indebtedness permitted under Sections 7.1(b) or (c). 7.9 Change of Control. Cause, permit, or suffer, directly or indirectly, any Change of Control. 7.10 Consignments. Consign any Inventory constituting Collateral or sell any Inventory constituting Collateral on bill and hold, sale or return, sale on approval, or other conditional terms of sale. 7.11 Distributions. Make any distribution or declare or pay any dividends (in cash or other property, other than common Stock) on, or purchase, acquire, redeem, or retire any of Borrower's Stock, of any class, whether now or hereafter outstanding provided that so long as (i) no Event of Default exists or has occurred and is continuing, (ii) Borrower has Excess Availability of not less than $350,000 immediately after giving effect to such payment and (iii) Agent receives not less than twenty (20) days advance written notice, Borrower may redeem employee-owned Stock of the Borrower, in an aggregate amount not to exceed $350,000 in any Fiscal Year, upon such employee's termination of employment or death. 7.12 Accounting Methods. Modify or change its method of accounting (other than as may be required to conform to GAAP) or enter into, modify, or terminate any agreement currently existing, or at any time hereafter entered into with any third party accounting firm or service bureau for the preparation or storage of Borrower's accounting records without said accounting firm or service bureau agreeing to provide Agent information regarding the Collateral or Borrower's financial condition. 7.13 Investments. Except for Permitted Investments, directly or indirectly, make or acquire any Investment or incur any liabilities (including contingent obligations) for or in connection with any Investment; provided, however, that Borrower shall not have Permitted Investments (other than in the Cash Management Accounts, advances made in connection with purchase of goods and services in the ordinary course of business, the Cliffstar Note, Stock of Subsidiaries and Stock of Beaver Creek Cranberry Grower Assoc. Inc.) in excess of $100,000 outstanding at any one time unless Borrower and the applicable securities intermediary or bank have entered into Control Agreements governing such Permitted Investments, as Agent shall determine in its Permitted Discretion, to perfect (and further establish) the Agent's Liens in such Permitted Investments. 7.14 Transactions with Affiliates. Directly or indirectly enter into or permit to exist any transaction with any Affiliate of Borrower except for transactions that are in the ordinary course of Borrower's business, upon fair and reasonable terms, that are fully disclosed to Agent, and that are no less favorable to Borrower than would be obtained in an arm's length transaction 70 with a non-Affiliate, provided that, so long as (i) no Event of Default under Section 7.20 of this Agreement has occurred or would result, (ii) Borrower has Excess Availability of not less than $500,000 immediately after giving effect to such payment and (iii) Agent has received not less than fifteen (15) days advance written notice of such payment, Borrower may pay regularly scheduled fees and out of pocket expenses payable under the Sun Management Agreement as in effect on the Closing Date. 7.15 Suspension. Suspend or go out of a substantial portion of its business. 7.16 [Intentionally Omitted] 7.17 Use of Proceeds. Use the proceeds of the Advances and the Term Loan for any purpose other than (a) on the Closing Date, (i) to repay, in full (after giving effect to the Terminating Bank Group Documents), the outstanding principal, accrued interest, and accrued fees and expenses owing to the Terminating Bank Group, (ii) to repay in part, the outstanding principal, accrued interest, and accrued fees and expenses owing to the Continuing Bank Group and (iii) to pay transactional fees, costs, and expenses incurred in connection with this Agreement, the other Loan Documents, and the transactions contemplated hereby and thereby, and (b) thereafter, consistent with the terms and conditions hereof, for its lawful and permitted purposes. 7.18 Change in Location of Chief Executive Office; Inventory and Equipment with Bailees. Relocate its chief executive office to a new location without providing 30 days prior written notification thereof to Agent and so long as, at the time of such written notification, Borrower provides any financing statements or fixture filings necessary to perfect and continue perfected the Agent's Liens and also provides to Agent a Collateral Access Agreement with respect to such new location. The Inventory and Equipment constituting Collateral shall not at any time now or hereafter be stored with a bailee, warehouseman, or similar party without Agent's prior written consent. 7.19 Securities Accounts. Establish or maintain any Securities Account unless Agent shall have received a Control Agreement in respect of such Securities Account. Borrower shall not transfer assets out of any Securities Account; provided, however, that, so long as no Event of Default has occurred and is continuing or would result therefrom, Borrower may use such assets (and the proceeds thereof) to the extent not prohibited by this Agreement. 7.20 Financial Covenants. (a) Minimum EBITDA. Fail to maintain EBITDA, measured on a fiscal month-end basis, of not less than the required amount set forth in the following table for the applicable period set forth opposite thereto; 71 Applicable Amount Applicable Period ($897,298) For the 3 month period ending January 31, 2002 $429,998 For the 4 month period ending February 28, 2002 ($339,393) For the 5 month period ending March 31, 2002 ($288,953) For the 6 month period ending April 30, 2002 ($293,551) For the 7 month period ending May 31, 2002 ($566,533) For the 8 month period ending June 30, 2002 $1,044,984 For the 9 month period ending July 31, 2002 $2,132,232 For the 10 month period ending August 31, 2002 $2,442,526 For the 11 month period ending September 30, 2002 $2,959,933 For the 12 month period ending October 31, 2002 $2,826,729 For the 12 month period ending November 30, 2002 $5,692,444 For the 12 month period ending December 31, 2002 $6,778,870 For the 12 month period ending January 31, 2003 $6,499,141 For the 12 month period ending February 28, 2003 72 $8,543,857 For the 12 month period ending March 31, 2003 $9,529,124 For the 12 month period ending April 30, 2003 $10,862,950 For the 12 month period ending May 31, 2003 $12,756,309 For the 12 month period ending June 30, 2003 $12,215,248 For the 12 month period ending July 31, 2003 $12,511,558 For the 12 month period ending August 31, 2003 $13,909,954 For the 12 month period ending October 31, 2003 $14,000,000 For the 12 month period ending September 30, 2003 and each rolling twelve month period (measured at the end of each fiscal month) thereafter (b) Capital Expenditures. Make Capital Expenditures in any fiscal year in excess of the amount of $1,386,000 for each Fiscal Year. So long as, as of the end of any Fiscal Year, no Event of Default then exists or has occurred and is continuing, the amount of Capital Expenditures permitted in such Fiscal Year which remains unused may be added to the permitted amount of Capital Expenditures in the immediately following Fiscal Year. In the event that Borrower requests an increase to the amount of Capital Expenditures permitted under this Section, and so long as no Event of Default has then occurred the Agent and Required Lenders shall not charge an amendment or similar fee in connection with any increase in such amount agreed to by the Required Lenders, provided that Agent and Required Lenders shall have no commitment or obligation whatsoever, of any kind or nature, to agree to any such increase. 8. EVENTS OF DEFAULT. Any one or more of the following events shall constitute an event of default (each, an "Event of Default") under this Agreement: 73 8.1 If Borrower or any Guarantor which is a Material Subsidiary fails to pay when due and payable, or when declared due and payable, all or any portion of the Obligations (whether of principal, interest (including any interest which, but for the provisions of the Bankruptcy Code, would have accrued on such amounts), fees and charges due the Lender Group, reimbursement of Lender Group Expenses, or other amounts constituting Obligations); 8.2 If Borrower or any Guarantor which is a Material Subsidiary fails to perform, keep, or observe: (a) any term, provision, condition, covenant, or agreement contained in Section 6.2 or Section 6.3 and such failure continues for a period of five (5) days after the date of such failure; provided that a single failure, for up to five (5) days, in any fiscal quarter to perform, keep or observe any one of the daily and weekly reporting requirements contained in Section 6.2 shall not, so long as no other Event of Default then exists or has occurred and is continuing, constitute an Event of Default; (b) any term, provision, condition, covenant or agreement contained in Sections 6.4, 6.5, 6.6, 6.8 or 6.10 and such failure continues for a period of fifteen (15) days after the date of such failure or (c) any other term, provision, condition, covenant or agreement contained in this Agreement or in any of the other Loan Documents; 8.3 If any material portion of Borrower's or any of its material Subsidiaries' assets is attached, seized, subjected to a writ or distress warrant, levied upon, or comes into the possession of any third Person; 8.4 If an Insolvency Proceeding is commenced by Borrower or any of its Material Subsidiaries; 8.5 If an Insolvency Proceeding is commenced against Borrower, or any of its Material Subsidiaries, and any of the following events occur: (a) Borrower or the Subsidiary consents to the institution of such Insolvency Proceeding against it, (b) the petition commencing the Insolvency Proceeding is not timely controverted, (c) the petition commencing the Insolvency Proceeding is not dismissed within 45 calendar days of the date of the filing thereof; provided, however, that, during the pendency of such period, Agent (including any successor agent) and each other member of the Lender Group shall be relieved of their obligations to extend credit hereunder, (d) an interim trustee is appointed to take possession of all or any substantial portion of the properties or assets of, or to operate all or any substantial portion of the business of, Borrower or any of its Subsidiaries, or (e) an order for relief shall have been entered therein; 8.6 If Borrower or any of its Material Subsidiaries is enjoined, restrained, or in any way prevented by court order from continuing to conduct all or any material part of its business affairs; 8.7 If a notice of Lien, levy, or assessment is filed of record with respect to any of Borrower's or any of its Material Subsidiaries' assets by the United States, or any department, agency, or instrumentality thereof, or by any state, county, municipal, or governmental agency, or if any taxes or debts owing at any time hereafter to any one or more of such entities becomes a Lien, whether choate or otherwise, upon any of Borrower's or any of its Subsidiaries' assets and the same is not paid before such payment is delinquent; 74 8.8 If a judgment or other claim in excess of $ 50,000 becomes a Lien or encumbrance upon any material portion of Borrower's or any of its Subsidiaries' assets; 8.9 If there is a default in any material agreement, including, without limitation, the Continuing Bank Group Documents, to which Borrower or any of its Subsidiaries is a party and such default (a) occurs at the final maturity of the obligations thereunder, or (b) results in a right by the other party thereto, irrespective of whether exercised, to accelerate the maturity of Borrower's or its Subsidiaries' obligations thereunder, to terminate such agreement, or to refuse to renew such agreement pursuant to an automatic renewal right therein; 8.10 If Borrower or any of its Subsidiaries makes any payment on account of Indebtedness that has been contractually subordinated in right of payment to the payment of the Obligations, except to the extent such payment is permitted by the terms of the subordination provisions applicable to such Indebtedness; 8.11 If any misstatement or misrepresentation exists now or hereafter in any warranty, representation, statement, or Record made to the Lender Group by Borrower, its Subsidiaries, or any officer, employee, agent, or director of Borrower or any of its Subsidiaries; 8.12 The occurrence of an event of default of any kind, except as set forth on Schedule 3.1(u), under the Cliffstar Note, provided that the failure on the part of Cliffstar to make interest or principal payments under the Cliffstar Note shall not constitute an Event of Default if the Borrower timely pays to the Agent the regularly scheduled Term Loan B principal payments on the dates such regularly scheduled payments are due, notwithstanding such nonpayment by Cliffstar; 8.13 If the obligation of a Guarantor under any Guaranty is limited or terminated by operation of law or by Guarantor thereunder, except to the extent such obligation is limited or terminated by operation of law upon a merger, liquidation or dissolution expressly permitted under this Agreement; or 8.14 If this Agreement or any other Loan Document that purports to create a Lien, shall, for any reason, fail or cease to create a valid and perfected and, except to the extent permitted by the terms hereof or thereof, first priority Lien on or security interest in the Collateral covered hereby or thereby; or 8.15 Any provision of any Loan Document shall at any time for any reason be declared to be null and void, or the validity or enforceability thereof shall be contested by Borrower, or a proceeding shall be commenced by Borrower or any Guarantor which is a Material Subsidiary, or by any Governmental Authority having jurisdiction over Borrower, seeking to establish the invalidity or unenforceability thereof, or Borrower or any Guarantor which is a Material Subsidiary shall deny that Borrower or such Guarantor has any liability or obligation purported to be created under any Loan Document. 75 9. THE LENDER GROUP'S RIGHTS AND REMEDIES. 9.1 Rights and Remedies. Upon the occurrence, and during the continuation, of an Event of Default, the Required Lenders (at their election but without notice of their election and without demand) may authorize and instruct Agent to do any one or more of the following on behalf of the Lender Group (and Agent, acting upon the instructions of the Required Lenders, shall do the same on behalf of the Lender Group), all of which are authorized by Borrower: (a) Declare all Obligations, whether evidenced by this Agreement, by any of the other Loan Documents, or otherwise, immediately due and payable; (b) Cease advancing money or extending credit to or for the benefit of Borrower under this Agreement, under any of the Loan Documents, or under any other agreement between Borrower and the Lender Group; (c) Terminate this Agreement and any of the other Loan Documents as to any future liability or obligation of the Lender Group, but without affecting any of the Agent's Liens in the Collateral and without affecting the Obligations; (d) Settle or adjust disputes and claims directly with Account Debtors for amounts and upon terms which Agent considers advisable, and in such cases, Agent will credit Borrower's Loan Account with only the net amounts received by Agent in payment of such disputed Accounts after deducting all Lender Group Expenses incurred or expended in connection therewith; (e) Cause Borrower to hold all returned Inventory in trust for the Lender Group, segregate all returned Inventory from all other assets of Borrower or in Borrower's possession and conspicuously label said returned Inventory as the property of the Lender Group; (f) Without notice to or demand upon Borrower, make such payments and do such acts as Agent considers necessary or reasonable to protect its security interests in the Collateral. Borrower agrees to assemble the Personal Property Collateral if Agent so requires, and to make the Personal Property Collateral available to Agent at a place that Agent may designate which is reasonably convenient to both parties. Borrower authorizes Agent to enter the premises where the Personal Property Collateral is located, to take and maintain possession of the Personal Property Collateral, or any part of it, and to pay, purchase, contest, or compromise any Lien that in Agent's determination appears to conflict with the Agent's Liens and to pay all expenses incurred in connection therewith and to charge Borrower's Loan Account therefor. With respect to any of Borrower's owned or leased premises, Borrower hereby grants Agent a license to enter into possession of such premises and to occupy the same, without charge, in order to exercise any of the Lender Group's rights or remedies provided herein, at law, in equity, or otherwise, subject to the express terms and conditions of the Continuing Bank Group Intercreditor Agreement; (g) Without notice to Borrower (such notice being expressly waived), and without constituting a retention of any collateral in satisfaction of an obligation (within the meaning of the Code), set off and apply to the Obligations any and all (i) balances and deposits of Borrower held by the Lender Group (including any amounts received in the Cash Management Accounts), or (ii) Indebtedness at any time owing to or for the credit or the account of Borrower held by the Lender Group, subject to the Continuing Bank Group Intercreditor Agreement; 76 (h) Hold, as cash collateral, any and all balances and deposits of Borrower held by the Lender Group, and any amounts received in the Cash Management Accounts, to secure the full and final repayment of all of the Obligations; (i) Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell (in the manner provided for herein) the Personal Property Collateral. Borrower hereby grants to Agent a license or other right to use, without charge, Borrower's labels, patents, copyrights, trade secrets, trade names, trademarks, service marks, and advertising matter, or any property of a similar nature, as it pertains to the Personal Property Collateral, in completing production of, advertising for sale, and selling any Personal Property Collateral and Borrower's rights under all licenses and all franchise agreements shall inure to the Lender Group's benefit; (j) Sell the Personal Property Collateral at either a public or private sale, or both, by way of one or more contracts or transactions, for cash or on terms, in such manner and at such places (including Borrower's premises) as Agent determines is commercially reasonable. It is not necessary that the Personal Property Collateral be present at any such sale; (k) Agent shall give notice of the disposition of the Personal Property Collateral as follows: (i) Agent shall give Borrower a notice in writing of the time and place of public sale, or, if the sale is a private sale or some other disposition other than a public sale is to be made of the Personal Property Collateral, the time on or after which the private sale or other disposition is to be made; and (ii) The notice shall be personally delivered or mailed, postage prepaid, to Borrower as provided in Section 12, at least 10 days before the earliest time of disposition set forth in the notice; no notice needs to be given prior to the disposition of any portion of the Personal Property Collateral that is perishable or threatens to decline speedily in value or that is of a type customarily sold on a recognized market; (l) Agent, on behalf of the Lender Group, may credit bid and purchase at any public sale; and (m) Agent may seek the appointment of a receiver or keeper to take possession of all or any portion of the Collateral or to operate same and, to the maximum extent permitted by law, may seek the appointment of such a receiver without the requirement of prior notice or a hearing; (n) The Lender Group shall have all other rights and remedies available at law or in equity or pursuant to any other Loan Document; and (o) Any deficiency that exists after disposition of the Personal Property Collateral as provided above will be paid immediately by Borrower. Any excess will be returned, without interest and subject to the rights of third Persons, by Agent to Borrower. 9.2 Remedies Cumulative. The rights and remedies of the Lender Group under this 77 Agreement, the other Loan Documents, and all other agreements shall be cumulative. The Lender Group shall have all other rights and remedies not inconsistent herewith as provided under the Code, by law, or in equity. No exercise by the Lender Group of one right or remedy shall be deemed an election, and no waiver by the Lender Group of any Event of Default shall be deemed a continuing waiver. No delay by the Lender Group shall constitute a waiver, election, or acquiescence by it. 10. TAXES AND EXPENSES. If Borrower fails to pay any monies (whether taxes, assessments, insurance premiums, or, in the case of leased properties or assets, rents or other amounts payable under such leases) due to third Persons, or fails to make any deposits or furnish any required proof of payment or deposit, all as required under the terms of this Agreement, then, Agent, in its sole discretion and without prior notice to Borrower, may do any or all of the following: (a) make payment of the same or any part thereof, (b) set up such reserves in Borrower's Loan Account as Agent deems necessary to protect the Lender Group from the exposure created by such failure, or (c) in the case of the failure to comply with Section 6.8 hereof, obtain and maintain insurance policies of the type described in Section 6.8 and take any action with respect to such policies as Agent deems prudent. Any such amounts paid by Agent shall constitute Lender Group Expenses and any such payments shall not constitute an agreement by the Lender Group to make similar payments in the future or a waiver by the Lender Group of any Event of Default under this Agreement. Agent need not inquire as to, or contest the validity of, any such expense, tax, or Lien and the receipt of the usual official notice for the payment thereof shall be conclusive evidence that the same was validly due and owing. 11. WAIVERS; INDEMNIFICATION. 11.1 Demand; Protest. Borrower waives demand, protest, notice of protest, notice of default or dishonor, notice of payment and nonpayment, nonpayment at maturity, release, compromise, settlement, extension, or renewal of documents, instruments, chattel paper, and guarantees at any time held by the Lender Group on which Borrower may in any way be liable. 11.2 The Lender Group's Liability for Collateral. Borrower hereby agrees that: (a) so long as Agent complies with its obligations, if any, under the Code, the Lender Group shall not in any way or manner be liable or responsible for: (i) the safekeeping of the Collateral, (ii) any loss or damage thereto occurring or arising in any manner or fashion from any cause, (iii) any diminution in the value thereof, or (iv) any act or default of any carrier, warehouseman, bailee, forwarding agency, or other Person, and (b) all risk of loss, damage, or destruction of the Collateral shall be borne by Borrower. 11.3 Indemnification. Borrower shall pay, indemnify, defend, and hold the Agent-Related Persons, the Lender-Related Persons with respect to each Lender, each Participant, and each of their respective officers, directors, employees, agents, and attorneys-in-fact (each, an "Indemnified Person") harmless (to the fullest extent permitted by law) from and against any and all claims, demands, suits, actions, investigations, proceedings, and damages, and all reasonable 78 attorneys fees and disbursements and other costs and expenses actually incurred in connection therewith (as and when they are incurred and irrespective of whether suit is brought), at any time asserted against, imposed upon, or incurred by any of them (a) in connection with or as a result of or related to the execution, delivery, enforcement, performance, or administration of this Agreement, any of the other Loan Documents, or the transactions contemplated hereby or thereby, and (b) with respect to any investigation, litigation, or proceeding related to this Agreement, any other Loan Document, or the use of the proceeds of the credit provided hereunder (irrespective of whether any Indemnified Person is a party thereto), or any act, omission, event, or circumstance in any manner related thereto (all the foregoing, collectively, the "Indemnified Liabilities"). The foregoing to the contrary notwithstanding, Borrower shall have no obligation to any Indemnified Person under this Section 11.3 with respect to any Indemnified Liability that a court of competent jurisdiction finally determines to have resulted from the gross negligence or willful misconduct of such Indemnified Person. This provision shall survive the termination of this Agreement and the repayment of the Obligations. If any Indemnified Person makes any payment to any other Indemnified Person with respect to an Indemnified Liability as to which Borrower was required to indemnify the Indemnified Person receiving such payment, the Indemnified Person making such payment is entitled to be indemnified and reimbursed by Borrower with respect thereto. WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY OTHER PERSON. 12. NOTICES. Unless otherwise provided in this Agreement, all notices or demands by Borrower or Agent to the other relating to this Agreement or any other Loan Document shall be in writing and (except for financial statements and other informational documents which may be sent by first-class mail, postage prepaid) shall be personally delivered or sent by registered or certified mail (postage prepaid, return receipt requested), overnight courier, electronic mail (at such email addresses as Borrower or Agent, as applicable, may designate to each other in accordance herewith), or telefacsimile to Borrower or Agent, as the case may be, at its address set forth below: If to Borrower: NORTHLAND CRANBERRIES, INC. 800 First Avenue South Wisconsin Rapids, Wisconsin 54495 Attn: Mr. John Swendrowski Fax No. 715-422-6800 with copies to: Foley & Lardner 777 E. Wisconsin Avenue Milwaukee, Wisconsin 53202 Attn: Patricia Lane, Esq. Fax No. 414-297-4900 79 -and- Sun Capital Partners 5200 Town Center Circle Suite 470 Boca Raton, Florida 33486 Attn: C. Deryl Couch General Counsel Fax No. 561-394-0540 If to Agent: FOOTHILL CAPITAL CORPORATION 2450 Colorado Avenue Suite 3000 West Santa Monica, California 90404 Attn: Business Finance Division Manager Fax No. 310-453-7413 FOOTHILL CAPITAL CORPORATION 400 Northpark Town Center 1000 Abernathy Road, N.E. Suite 1450 Atlanta, Georgia 30328 Attn: Business Finance Division Manager Fax No. 770-508-1375 with copies to: OTTERBOURG, STEINDLER, HOUSTON & ROSEN, P.C. 230 Park Avenue New York, New York 10169 Attn: Mitchell M. Brand, Esq. Fax No. 212-682-6104 ABLECO FINANCE LLC 450 Park Avenue, 28th Floor New York, New York 10022 Attn. Eric F. Miller Fax No: 212-758-5305 SCHULTE ROTH & ZABLE LLP 919 Third Avenue New York, New York 10022 Attn. Frederic L. Ragucci, Esq. Fax No: 212-593-5955 Agent and Borrower may change the address at which they are to receive notices 80 hereunder, by notice in writing in the foregoing manner given to the other party. All notices or demands sent in accordance with this Section 12, other than notices by Agent in connection with enforcement rights against the Collateral under the provisions of the Code, shall be deemed received on the earlier of the date of actual receipt or five (5) Business Days after the deposit thereof in the mail. Borrower acknowledges and agrees that notices sent by the Lender Group in connection with the exercise of enforcement rights against Collateral under the provisions of the Code shall be deemed sent when deposited in the mail or personally delivered, or, where permitted by law, transmitted by telefacsimile or any other method set forth above. 13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER. (a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. (b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. BORROWER AND THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 13(b). (c) BORROWER AND THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. BORROWER AND THE LENDER GROUP REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF 81 LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT. 14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS. 14.1 Assignments and Participations. (a) Any Lender may, with the written consent of Agent (provided that no written consent of Agent shall be required in connection with any assignment and delegation by a Lender to an Eligible Transferee and no notice to Agent shall be required in connection with any assignment and delegation by a Lender to an Affiliate of a Lender or a fund or account managed by a Lender or an Affiliate of a Lender), assign and delegate to one or more assignees (each an "Assignee") all, or any ratable part of all, of the Obligations, the Commitments and the other rights and obligations of such Lender hereunder and under the other Loan Documents, in a minimum amount of $5,000,000 (except that such minimum amount shall not apply to any Affiliate of a Lender or any fund or account managed by a Lender or an Affiliate of Lender); provided, however, that Borrower and Agent may continue to deal solely and directly with such Lender in connection with the interest so assigned to an Assignee until (i) written notice of such assignment, together with payment instructions, addresses, and related information with respect to the Assignee, have been given to Borrower and Agent by such Lender and the Assignee, (ii) such Lender and its Assignee have delivered to Borrower and Agent an Assignment and Acceptance in form and substance satisfactory to Agent, and (iii) the assignor Lender or Assignee has paid to Agent for Agent's separate account a processing fee in the amount of $5,000. Anything contained herein to the contrary notwithstanding, the consent of Agent shall not be required (and payment of any fees shall not be required) if such assignment is in connection with any merger, consolidation, sale, transfer, or other disposition of all or any substantial portion of the business or loan portfolio of such Lender or the Assignee is an Affiliate of or a fund money market account, investment account or other account managed by a Lender or an Affiliate of a Lender. (b) From and after the date that Agent notifies the assignor Lender (with a copy to Borrower) that it has received an executed Assignment and Acceptance and payment of the above-referenced processing fee, (i) the Assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, shall have the rights and obligations of a Lender under the Loan Documents, and (ii) the assignor Lender shall, to the extent that rights and obligations hereunder and under the other Loan Documents have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights (except with respect to Section 11.3 hereof) and be released from its obligations under this Agreement (and in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender's rights and obligations under this Agreement and the other Loan Documents, such Lender shall cease to be a party hereto and thereto), and such assignment shall affect a novation between Borrower and the Assignee. (c) By executing and delivering an Assignment and Acceptance, the assigning 82 Lender thereunder and the Assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (1) other than as provided in such Assignment and Acceptance, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other Loan Document furnished pursuant hereto, (2) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of Borrower or the performance or observance by Borrower of any of its obligations under this Agreement or any other Loan Document furnished pursuant hereto, (3) such Assignee confirms that it has received a copy of this Agreement, together with such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance, (4) such Assignee will, independently and without reliance upon Agent, such assigning Lender or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement, (5) such Assignee appoints and authorizes Agent to take such actions and to exercise such powers under this Agreement as are delegated to Agent, by the terms hereof, together with such powers as are reasonably incidental thereto, and (6) such Assignee agrees that it will perform all of the obligations which by the terms of this Agreement are required to be performed by it as a Lender. (d) Immediately upon each Assignee's making its processing fee payment, if applicable, under the Assignment and Acceptance and receipt and acknowledgment by Agent of such fully executed Assignment and Acceptance, this Agreement shall be deemed to be amended to the extent, but only to the extent, necessary to reflect the addition of the Assignee and the resulting adjustment of the Commitments arising therefrom. The Commitment allocated to each Assignee shall reduce such Commitments of the assigning Lender pro tanto. (e) Any Lender may at any time, with the written consent of Agent, sell to one or more commercial banks, financial institutions, or other Persons not Affiliates of such Lender (a "Participant") participating interests in its Obligations, the Commitment, and the other rights and interests of that Lender (the "Originating Lender") hereunder and under the other Loan Documents (provided that no written consent of Agent shall be required in connection with any sale of any such participating interests by a Lender to an Eligible Transferee); provided, however, that (i) the Originating Lender shall remain a "Lender" for all purposes of this Agreement and the other Loan Documents and the Participant receiving the participating interest in the Obligations, the Commitments, and the other rights and interests of the Originating Lender hereunder shall not constitute a "Lender" hereunder or under the other Loan Documents and the Originating Lender's obligations under this Agreement shall remain unchanged, (ii) the Originating Lender shall remain solely responsible for the performance of such obligations, (iii) Borrower, Agent, and the Lenders shall continue to deal solely and directly with the Originating Lender in connection with the Originating Lender's rights and obligations under this Agreement and the other Loan Documents, (iv) no Lender shall transfer or grant any participating interest under which the Participant has the right to approve any amendment to, or any consent or waiver with respect to, this Agreement or any other Loan Document, except to the extent such amendment to, or consent or waiver with respect to this Agreement or of any other Loan Document would (A) extend the final maturity date of the Obligations hereunder in which such Participant is participating, (B) reduce the interest rate applicable to the Obligations hereunder in which such Participant is 83 participating, (C) release all or a material portion of the Collateral or guaranties (except to the extent expressly provided herein or in any of the Loan Documents) supporting the Obligations hereunder in which such Participant is participating, (D) postpone the payment of, or reduce the amount of, the interest or fees payable to such Participant through such Lender, or (E) change the amount or due dates of scheduled principal repayments or prepayments or premiums, and (v) all amounts payable by Borrower hereunder shall be determined as if such Lender had not sold such participation, except that, if amounts outstanding under this Agreement are due and unpaid, or shall have been declared or shall have become due and payable upon the occurrence of an Event of Default, each Participant shall be deemed to have the right of set-off in respect of its participating interest in amounts owing under this Agreement to the same extent as if the amount of its participating interest were owing directly to it as a Lender under this Agreement. The rights of any Participant only shall be derivative through the Originating Lender with whom such Participant participates and no Participant shall have any rights under this Agreement or the other Loan Documents or any direct rights as to the other Lenders, Agent, Borrower, the Collections, the Collateral, or otherwise in respect of the Obligations. No Participant shall have the right to participate directly in the making of decisions by the Lenders among themselves. (f) In connection with any such assignment or participation or proposed assignment or participation, a Lender may disclose all documents and information which it now or hereafter may have relating to Borrower or Borrower's business. (g) Any other provision in this Agreement notwithstanding, any Lender may at any time create a security interest in, or pledge, all or any portion of its rights under and interest in this Agreement in favor of any Federal Reserve Bank in accordance with Regulation A of the Federal Reserve Bank or U.S. Treasury Regulation 31 CFR Section 203.14, and such Federal Reserve Bank may enforce such pledge or security interest in any manner permitted under applicable law. 14.2 Successors. This Agreement shall bind and inure to the benefit of the respective successors and assigns of each of the parties; provided, however, that Borrower may not assign this Agreement or any rights or duties hereunder without the Lenders' prior written consent and any prohibited assignment shall be absolutely void ab initio. No consent to assignment by the Lenders shall release Borrower from its Obligations. A Lender may assign this Agreement and the other Loan Documents and its rights and duties hereunder and thereunder pursuant to Section 14.1 hereof and, except as expressly required pursuant to Section 14.1 hereof, no consent or approval by Borrower is required in connection with any such assignment. 15. AMENDMENTS; WAIVERS. 15.1 Amendments and Waivers. No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent with respect to any departure by Borrower therefrom, shall be effective unless the same shall be in writing and signed by the Required Lenders (or by Agent at the written request of the Required Lenders) and Borrower and then any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no such waiver, amendment, or consent shall, unless in writing and signed by all of the Lenders affected thereby and Borrower, do any of the following: 84 (a) increase or extend any Commitment of any Lender, (b) postpone or delay any date fixed by this Agreement or any other Loan Document for any payment of principal, interest, fees, or other amounts due hereunder or under any other Loan Document, (c) reduce the principal of, or the rate of interest on, any loan or other extension of credit hereunder, or reduce any fees or other amounts payable hereunder or under any other Loan Document, (d) change the percentage of the Commitments that is required to take any action hereunder, (e) amend, modify or waive this Section or any provision of the Agreement providing for consent or other action by all Lenders, (f) release Collateral other than as permitted by Section 16.12, (g) change the definition of "Required Lenders" or "Pro Rata Share", (h) contractually subordinate any of the Agent's Liens, (i) release Borrower or any Guarantor from any obligation for the payment of money, or (j) increase the advance rate with respect to Advances (except for the restoration of an advance rate after the prior reduction thereof), (k) amend, modify or waive any of the provisions of the Intercreditor Agreements, (l) change the definition of Borrowing Base or the definitions of Eligible Accounts, Eligible Inventory, Reserves, Inventory Reserves, Supplemental Reserves, Maximum Revolver Amount, Term Loan A Amount or Term Loan B Amount, or change Section 2.1(a) or Section 2.1(b) or any definition or term used in any of the foregoing definitions or Sections, (m) amend, modify or waive any of the provisions of Section 2.1(d), 2.2, 2.3(e)(i), 2.3(i), 2.4(b), 15.1 or 16 or change the definitions used in any such Sections. and, provided further, however, that no amendment, waiver or consent shall, unless in writing and signed by Agent, Issuing Lender, or Swing Lender, as applicable, affect the rights or duties of Agent, Issuing Lender, or Swing Lender, as applicable, under this Agreement or any other Loan Document. The foregoing notwithstanding, any amendment, modification, waiver, consent, termination, or release of, or with respect to, any provision of this Agreement or any other Loan Document that relates only to the relationship of the Lender Group among themselves, and that does not affect the rights or obligations of Borrower, shall not require consent by or the agreement of Borrower. 85 The Agent and the Lenders have executed a side letter agreement on the Closing Date pursuant to which the Agent and the Lenders have agreed to certain intercreditor arrangements, including but not limited to, certain arrangements regarding allocation of payments of the Obligations. The rights and duties of the Agent and the Lenders with respect to such matters, are subject to such agreement. 15.2 Replacement of Holdout Lender. (a) If any action to be taken by the Lender Group or Agent hereunder requires the unanimous consent, authorization, or agreement of all Lenders, and a Lender ("Holdout Lender") fails to give its consent, authorization, or agreement, then Agent, upon at least 5 Business Days prior irrevocable notice to the Holdout Lender, may permanently replace the Holdout Lender with one or more substitute Lenders (each, a "Replacement Lender"), and the Holdout Lender shall have no right to refuse to be replaced hereunder. Such notice to replace the Holdout Lender shall specify an effective date for such replacement, which date shall not be later than 15 Business Days after the date such notice is given. (b) Prior to the effective date of such replacement, the Holdout Lender and each Replacement Lender shall execute and deliver an Assignment and Acceptance Agreement, subject only to the Holdout Lender being repaid its share of the outstanding Obligations (including an assumption of its Pro Rata Share of the Risk Participation Liability and the payment of all fees by or otherwise due to such Holdout Lender as of the date of such replacement) without any premium or penalty of any kind whatsoever. If the Holdout Lender shall refuse or fail to execute and deliver any such Assignment and Acceptance Agreement prior to the effective date of such replacement, the Holdout Lender shall be deemed to have executed and delivered such Assignment and Acceptance Agreement. The replacement of any Holdout Lender shall be made in accordance with the terms of Section 14.1, provided, that, in no event shall any Lender be required to become a Replacement Lender. Until such time as the Replacement Lenders shall have acquired all of the Obligations, the Commitments, and the other rights and obligations of the Holdout Lender hereunder and under the other Loan Documents, the Holdout Lender shall remain obligated to make the Holdout Lender's Pro Rata Share of Advances and to purchased a participation in each Letter of Credit, in an amount equal to its Pro Rata Share of the Risk Participation Liability of such Letter of Credit. 15.3 No Waivers; Cumulative Remedies. No failure by Agent or any Lender to exercise any right, remedy, or option under this Agreement or any other Loan Document, or delay by Agent or any Lender in exercising the same, will operate as a waiver thereof. No waiver by Agent or any Lender will be effective unless it is in writing, and then only to the extent specifically stated. No waiver by Agent or any Lender on any occasion shall affect or diminish Agent's and each Lender's rights thereafter to require strict performance by Borrower of any provision of this Agreement. Agent's and each Lender's rights under this Agreement and the other Loan Documents will be cumulative and not exclusive of any other right or remedy that Agent or any Lender may have. 86 16. AGENT; THE LENDER GROUP. 16.1 Appointment and Authorization of Agent. Each Lender hereby designates and appoints Foothill as its representative under this Agreement and the other Loan Documents and each Lender hereby irrevocably authorizes Agent to take such action on its behalf under the provisions of this Agreement and each other Loan Document and to exercise such powers and perform such duties as are expressly delegated to Agent by the terms of this Agreement or any other Loan Document, together with such powers as are reasonably incidental thereto. Agent agrees to act as such on the express conditions contained in this Section 16. The provisions of this Section 16 are solely for the benefit of Agent, and the Lenders, and Borrower shall have no rights as a third party beneficiary of any of the provisions contained herein. Any provision to the contrary contained elsewhere in this Agreement or in any other Loan Document notwithstanding, Agent shall not have any duties or responsibilities, except those expressly set forth herein, nor shall Agent have or be deemed to have any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against Agent; it being expressly understood and agreed that the use of the word "Agent" is for convenience only, that Foothill is merely the representative of the Lenders, and only has the contractual duties set forth herein. Except as expressly otherwise provided in this Agreement, Agent shall have and may use its sole discretion with respect to exercising or refraining from exercising any discretionary rights or taking or refraining from taking any actions that Agent expressly is entitled to take or assert under or pursuant to this Agreement and the other Loan Documents. Without limiting the generality of the foregoing, or of any other provision of the Loan Documents that provides rights or powers to Agent, Lenders agree that Agent shall have the right to exercise the following powers as long as this Agreement remains in effect: (a) maintain, in accordance with its customary business practices, ledgers and records reflecting the status of the Obligations, the Collateral, the Collections, and related matters, (b) execute or file any and all financing or similar statements or notices, amendments, renewals, supplements, documents, instruments, proofs of claim, notices and other written agreements with respect to the Loan Documents, (c) make Advances, for itself or on behalf of Lenders as provided in the Loan Documents, (d) exclusively receive, apply, and distribute the Collections as provided in the Loan Documents, (e) open and maintain such bank accounts and cash management arrangements as Agent deems necessary and appropriate in accordance with the Loan Documents for the foregoing purposes with respect to the Collateral and the Collections, (f) perform, exercise, and enforce any and all other rights and remedies of the Lender Group with respect to Borrower, the Obligations, the Collateral, the Collections, or otherwise related to any of same as provided in the Loan Documents, and (g) incur and pay such Lender Group Expenses as Agent may deem necessary or appropriate for the performance and fulfillment of its functions and powers pursuant to the Loan Documents. 16.2 Delegation of Duties. Agent may execute any of its duties under this Agreement or any other Loan Document by or through agents, employees or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. Agent shall not be responsible for the negligence or misconduct of any agent or attorney-in-fact that it selects as long as such selection was made without gross negligence or willful misconduct. 87 16.3 Liability of Agent. None of the Agent-Related Persons shall (i) be liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Loan Document or the transactions contemplated hereby (except for its own gross negligence or willful misconduct), or (ii) be responsible in any manner to any of the Lenders for any recital, statement, representation or warranty made by Borrower or any Subsidiary or Affiliate of Borrower, or any officer or director thereof, contained in this Agreement or in any other Loan Document, or in any certificate, report, statement or other document referred to or provided for in, or received by Agent under or in connection with, this Agreement or any other Loan Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document, or for any failure of Borrower or any other party to any Loan Document to perform its obligations hereunder or thereunder. No Agent-Related Person shall be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the Books or properties of Borrower or the books or records or properties of any of Borrower's Subsidiaries or Affiliates. 16.4 Reliance by Agent. Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone message, statement or other document or conversation believed by it to be genuine and correct and to have been signed, sent, or made by the proper Person or Persons, and upon advice and statements of legal counsel (including counsel to Borrower or counsel to any Lender), independent accountants and other experts selected by Agent. Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless Agent shall first receive such advice or concurrence of the Lenders as it deems appropriate and until such instructions are received, Agent shall act, or refrain from acting, as it deems advisable. If Agent so requests, it shall first be indemnified to its reasonable satisfaction by Lenders against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action. Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Loan Document in accordance with a request or consent of the Lenders and such request and any action taken or failure to act pursuant thereto shall be binding upon all of the Lenders. 16.5 Notice of Default or Event of Default. Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default, except with respect to defaults in the payment of principal, interest, fees, and expenses required to be paid to Agent for the account of the Lenders, except with respect to the existence of Overadvances as to which the Agent has actual knowledge and to Events of Default of which Agent has actual knowledge, unless Agent shall have received written notice from a Lender or Borrower referring to this Agreement, describing such Default or Event of Default, and stating that such notice is a "notice of default." Agent promptly will notify the Lenders of its receipt of any such notice or of any Event of Default of which Agent has actual knowledge. If any Lender obtains actual knowledge of any Event of Default, such Lender promptly shall notify the other Lenders and Agent of such Event of Default. Each Lender shall be solely responsible for giving any notices to its Participants, if any. Subject to Section 16.4, Agent shall take such action with respect to such Default or Event of Default as may be requested by the Required Lenders in accordance with Section 9; provided, however, that unless and until Agent has received any such request, Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable. 88 16.6 Credit Decision. Each Lender acknowledges that none of the Agent-Related Persons has made any representation or warranty to it, and that no act by Agent hereinafter taken, including any review of the affairs of Borrower and its Subsidiaries or Affiliates, shall be deemed to constitute any representation or warranty by any Agent-Related Person to any Lender. Each Lender represents to Agent that it has, independently and without reliance upon any Agent-Related Person and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of Borrower and any other Person (other than the Lender Group) party to a Loan Document, and all applicable bank regulatory laws relating to the transactions contemplated hereby, and made its own decision to enter into this Agreement and to extend credit to Borrower. Each Lender also represents that it will, independently and without reliance upon any Agent-Related Person and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of Borrower and any other Person (other than the Lender Group) party to a Loan Document. Except for notices, reports, and other documents expressly herein required to be furnished to the Lenders by Agent, Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of Borrower and any other Person party to a Loan Document that may come into the possession of any of the Agent-Related Persons. 16.7 Costs and Expenses; Indemnification. Agent may incur and pay Lender Group Expenses to the extent Agent reasonably deems necessary or appropriate for the performance and fulfillment of its functions, powers, and obligations pursuant to the Loan Documents, including court costs, reasonable attorneys fees and expenses, costs of collection by outside collection agencies and auctioneer fees and costs of security guards or insurance premiums paid to maintain the Collateral, whether or not Borrower is obligated to reimburse Agent or Lenders for such expenses pursuant to the Loan Agreement or otherwise. Agent is authorized and directed to deduct and retain sufficient amounts from Collections received by Agent to reimburse Agent for such out-of-pocket costs and expenses prior to the distribution of any amounts to Lenders. In the event Agent is not reimbursed for such costs and expenses from Collections received by Agent, each Lender hereby agrees that it is and shall be obligated to pay to or reimburse Agent for the amount of such Lender's Pro Rata Share thereof. Whether or not the transactions contemplated hereby are consummated, the Lenders shall indemnify upon demand the Agent-Related Persons (to the extent not reimbursed by or on behalf of Borrower and without limiting the obligation of Borrower to do so), according to their Pro Rata Shares, from and against any and all Indemnified Liabilities; provided, however, that no Lender shall be liable for the payment to any Agent-Related Person of any portion of such Indemnified Liabilities resulting solely from such Person's gross negligence or willful misconduct nor shall any Lender be liable for the obligations of any Defaulting Lender in failing to make an Advance or other extension of credit hereunder. Without 89 limitation of the foregoing, each Lender shall reimburse Agent upon demand for such Lender's ratable share of any costs or out-of-pocket expenses (including attorneys fees and expenses) incurred by Agent in connection with the preparation, execution, delivery, administration, modification, amendment, or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, any other Loan Document, or any document contemplated by or referred to herein, to the extent that Agent is not reimbursed for such expenses by or on behalf of Borrower. The undertaking in this Section shall survive the payment of all Obligations hereunder and the resignation or replacement of Agent. 16.8 Agent in Individual Capacity. Foothill and its Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in, and generally engage in any kind of banking, trust, financial advisory, underwriting, or other business with Borrower and its Subsidiaries and Affiliates and any other Person (other than the Lender Group) party to any Loan Documents as though Foothill were not Agent hereunder, and, in each case, without notice to or consent of the other members of the Lender Group. The other members of the Lender Group acknowledge that, pursuant to such activities, Foothill or its Affiliates may receive information regarding Borrower or its Affiliates and any other Person (other than the Lender Group) party to any Loan Documents that is subject to confidentiality obligations in favor of Borrower or such other Person and that prohibit the disclosure of such information to the Lenders, and the Lenders acknowledge that, in such circumstances (and in the absence of a waiver of such confidentiality obligations, which waiver Agent will use its reasonable best efforts to obtain), Agent shall not be under any obligation to provide such information to them. The terms "Lender" and "Lenders" include Foothill in its individual capacity. 16.9 Successor Agent. Agent may resign as Agent upon 45 days notice to the Lenders. If Agent resigns under this Agreement, the Required Lenders shall appoint a successor Agent for the Lenders. If no successor Agent is appointed prior to the effective date of the resignation of Agent, Agent may appoint, after consulting with the Lenders, a successor Agent. If Agent has materially breached or failed to perform any material provision of this Agreement or of applicable law, the Required Lenders may agree in writing to remove and replace Agent with a successor Agent from among the Lenders. In any such event, upon the acceptance of its appointment as successor Agent hereunder, such successor Agent shall succeed to all the rights, powers, and duties of the retiring Agent and the term "Agent" shall mean such successor Agent and the retiring Agent's appointment, powers, and duties as Agent shall be terminated. After any retiring Agent's resignation hereunder as Agent, the provisions of this Section 16 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement. If no successor Agent has accepted appointment as Agent by the date which is 45 days following a retiring Agent's notice of resignation, the retiring Agent's resignation shall nevertheless thereupon become effective and the Lenders shall perform all of the duties of Agent hereunder until such time, if any, as the Lenders appoint a successor Agent as provided for above. 16.10 Lender in Individual Capacity. Any Lender and its respective Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory, underwriting or 90 other business with Borrower and its Subsidiaries and Affiliates and any other Person (other than the Lender Group) party to any Loan Documents as though such Lender were not a Lender hereunder without notice to or consent of the other members of the Lender Group. The other members of the Lender Group acknowledge that, pursuant to such activities, such Lender and its respective Affiliates may receive information regarding Borrower or its Affiliates and any other Person (other than the Lender Group) party to any Loan Documents that is subject to confidentiality obligations in favor of Borrower or such other Person and that prohibit the disclosure of such information to the Lenders, and the Lenders acknowledge that, in such circumstances (and in the absence of a waiver of such confidentiality obligations, which waiver such Lender will use its reasonable best efforts to obtain), such Lender shall not be under any obligation to provide such information to them. With respect to the Swing Loans and Agent Advances, Swing Lender shall have the same rights and powers under this Agreement as any other Lender and may exercise the same as though it were not the sub-agent of Agent. 16.11 Withholding Taxes. (a) If any Lender is a "foreign corporation, partnership or trust" within the meaning of the IRC and such Lender claims exemption from, or a reduction of, U.S. withholding tax under Sections 1441 or 1442 of the IRC, such Lender agrees with and in favor of Agent and Borrower, to deliver to Agent and Borrower promptly upon becoming a Lender: (i) if such Lender claims an exemption from withholding tax pursuant to its portfolio interest exception, (A) a statement of the Lender, signed under penalty of perjury, that it is not a (I) a "bank" as described in Section 881(c)(3)(A) of the IRC, (II) a 10% shareholder (within the meaning of Section 881(c)(3)(B) of the IRC), or (III) a controlled foreign corporation described in Section 881(c)(3)(C) of the IRC, and (B) a properly completed IRS Form W-8BEN, before the first payment of any interest under this Agreement and at any other time reasonably requested by Agent or Borrower; (ii) if such Lender claims an exemption from, or a reduction of, withholding tax under a United States tax treaty, properly completed IRS Form W-8BEN before the first payment of any interest under this Agreement and at any other time reasonably requested by Agent or Borrower; (iii) if such Lender claims that interest paid under this Agreement is exempt from United States withholding tax because it is effectively connected with a United States trade or business of such Lender, two properly completed and executed copies of IRS Form W-8ECI before the first payment of any interest is due under this Agreement and at any other time reasonably requested by Agent or Borrower; (iv) such other form or forms as may be required under the IRC or other laws of the United States as a condition to exemption from, or reduction of, United States withholding tax. Such Lender agrees promptly to notify Agent and Borrower of any change in circumstances which would modify or render invalid any claimed exemption or reduction. 91 (b) If any Lender claims exemption from, or reduction of, withholding tax under a United States tax treaty by providing IRS Form W-8BEN and such Lender sells, assigns, grants a participation in, or otherwise transfers all or part of the Obligations of Borrower to such Lender, such Lender agrees to notify Agent of the percentage amount in which it is no longer the beneficial owner of Obligations of Borrower to such Lender. To the extent of such percentage amount, Agent will treat such Lender's IRS Form W-8BEN as no longer valid. (c) If any Lender is entitled to a reduction in the applicable withholding tax, Agent may withhold from any interest payment to such Lender an amount equivalent to the applicable withholding tax after taking into account such reduction. If the forms or other documentation required by subsection (a) of this Section are not delivered to Agent, then Agent may withhold from any interest payment to such Lender not providing such forms or other documentation an amount equivalent to the applicable withholding tax. (d) If the IRS or any other Governmental Authority of the United States or other jurisdiction asserts a claim that Agent did not properly withhold tax from amounts paid to or for the account of any Lender (because the appropriate form was not delivered, was not properly executed, or because such Lender failed to notify Agent of a change in circumstances which rendered the exemption from, or reduction of, withholding tax ineffective, or for any other reason) such Lender shall indemnify and hold Agent harmless for all amounts paid, directly or indirectly, by Agent as tax or otherwise, including penalties and interest, and including any taxes imposed by any jurisdiction on the amounts payable to Agent under this Section, together with all costs and expenses (including attorneys fees and expenses). The obligation of the Lenders under this subsection shall survive the payment of all Obligations and the resignation or replacement of Agent. (e) All payments made by Borrower hereunder or under any note will be made without setoff, counterclaim, or other defense, except as required by applicable law and other than for Taxes (as defined below). All such payments will be made free and clear of, and without deduction or withholding for, any present or future taxes, levies, imposts, duties, fees, assessments or other charges of whatever nature now or hereafter imposed by any jurisdiction (other than the United States) or by any political subdivision or taxing authority thereof or therein (other than of the United States) with respect to such payments (but excluding, any tax imposed by any jurisdiction or by any political subdivision or taxing authority thereof or therein (i) measured by or based on the net income or net profits of a Lender, or (ii) to the extent that such tax results from a change in the circumstances of the Lender, including a change in the residence, place of organization, or principal place of business of the Lender, or a change in the branch or lending office of the Lender participating in the transactions set forth herein) and all interest, penalties or similar liabilities with respect thereto (all such non-excluded taxes, levies, imposts, duties, fees, assessments or other charges being referred to collectively as "Taxes"). If any Taxes are so levied or imposed, Borrower agrees to pay the full amount of such Taxes, and such additional amounts as may be necessary so that every payment of all amounts due under this Agreement or under any note, including any amount paid pursuant to this Section 16.11(e) after withholding or deduction for or on account of any Taxes, will not be less than the amount provided for herein; provided, however, that Borrower shall not be required to increase any such amounts payable to Agent or any Lender (i) that is not organized under the laws of the United States, if such Person fails to comply with the other requirements of this Section 16.11, or (ii) if 92 the increase in such amount payable results from Agent's or such Lender's own willful misconduct or gross negligence. Borrower will furnish to Agent as promptly as possible after the date the payment of any Taxes is due pursuant to applicable law certified copies of tax receipts evidencing such payment by Borrower. 16.12 Collateral Matters. (a) The Lenders hereby irrevocably authorize Agent, at its option and in its sole discretion, to release any Lien on any Collateral (i)upon the termination of the Commitments and payment and satisfaction in full by Borrower of all Obligations, (ii)constituting property being sold or disposed of if a release is required or desirable in connection therewith and if Borrower certifies to Agent that the sale or disposition is permitted under Section 7.4 of this Agreement or the other Loan Documents (and Agent may rely conclusively on any such certificate, without further inquiry), (iii) constituting property in which Borrower owned no interest at the time the security interest was granted or at any time thereafter, (iv) constituting property leased to Borrower under a lease that has expired or is terminated in a transaction permitted under this Agreement or (v) consisting of the Cliffstar Note, upon satisfaction of all terms and conditions for release of the Cliffstar Note contained in this Agreement and the other Loan Documents. Except as provided above, Agent will not execute and deliver a release of any Lien on any Collateral without the prior written authorization of (y) if the release is of any substantial portion of the Collateral, all of the Lenders, or (z) otherwise, the Required Lenders. Upon request by Agent or Borrower at any time, the Lenders will confirm in writing Agent's authority to release any such Liens on particular types or items of Collateral pursuant to this Section 16.12; provided, however, that (1) Agent shall not be required to execute any document necessary to evidence such release on terms that, in Agent's opinion, would expose Agent to liability or create any obligation or entail any consequence other than the release of such Lien without recourse, representation, or warranty, and (2) such release shall not in any manner discharge, affect, or impair the Obligations or any Liens (other than those expressly being released) upon (or obligations of Borrower in respect of) all interests retained by Borrower, including, the proceeds of any sale, all of which shall continue to constitute part of the Collateral. (b) Agent shall have no obligation whatsoever to any of the Lenders to assure that the Collateral exists or is owned by Borrower or is cared for, protected, or insured or has been encumbered, or that the Agent's Liens have been properly or sufficiently or lawfully created, perfected, protected, or enforced or are entitled to any particular priority, or to exercise at all or in any particular manner or under any duty of care, disclosure or fidelity, or to continue exercising, any of the rights, authorities and powers granted or available to Agent pursuant to any of the Loan Documents, it being understood and agreed that in respect of the Collateral, or any act, omission, or event related thereto, subject to the terms and conditions contained herein, Agent may act in any manner it may deem appropriate, in its sole discretion given Agent's own interest in the Collateral in its capacity as one of the Lenders and that Agent shall have no other duty or liability whatsoever to any Lender as to any of the foregoing, except as otherwise provided herein. 93 16.13 Restrictions on Actions by Lenders; Sharing of Payments. (a) Each of the Lenders agrees that it shall not, without the express consent of Agent, and that it shall, to the extent it is lawfully entitled to do so, upon the request of Agent, set off against the Obligations, any amounts owing by such Lender to Borrower or any deposit accounts of Borrower now or hereafter maintained with such Lender. Each of the Lenders further agrees that it shall not, unless specifically requested to do so by Agent, take or cause to be taken any action, including, the commencement of any legal or equitable proceedings, to foreclose any Lien on, or otherwise enforce any security interest in, any of the Collateral the purpose of which is, or could be, to give such Lender any preference or priority against the other Lenders with respect to the Collateral. (b) If, at any time or times any Lender shall receive (i) by payment, foreclosure, setoff, or otherwise, any proceeds of Collateral or any payments with respect to the Obligations arising under, or relating to, this Agreement or the other Loan Documents, except for any such proceeds or payments received by such Lender from Agent pursuant to the terms of this Agreement, or (ii)payments from Agent in excess of such Lender's ratable portion of all such distributions by Agent, such Lender promptly shall (1) turn the same over to Agent, in kind, and with such endorsements as may be required to negotiate the same to Agent, or in immediately available funds, as applicable, for the account of all of the Lenders and for application to the Obligations in accordance with the applicable provisions of this Agreement, or (2) purchase, without recourse or warranty, an undivided interest and participation in the Obligations owed to the other Lenders so that such excess payment received shall be applied ratably as among the Lenders in accordance with their Pro Rata Shares; provided, however, that if all or part of such excess payment received by the purchasing party is thereafter recovered from it, those purchases of participations shall be rescinded in whole or in part, as applicable, and the applicable portion of the purchase price paid therefor shall be returned to such purchasing party, but without interest except to the extent that such purchasing party is required to pay interest in connection with the recovery of the excess payment. 16.14 Agency for Perfection. Agent hereby appoints each other Lender as its agent (and each Lender hereby accepts such appointment) for the purpose of perfecting the Agent's Liens in assets which, in accordance with Article 9 of the Code can be perfected only by possession. Should any Lender obtain possession of any such Collateral, such Lender shall notify Agent thereof, and, promptly upon Agent's request therefor shall deliver such Collateral to Agent or in accordance with Agent's instructions. 16.15 Payments by Agent to the Lenders. All payments to be made by Agent to the Lenders shall be made by bank wire transfer or internal transfer of immediately available funds pursuant to such wire transfer instructions as each party may designate for itself by written notice to Agent. Concurrently with each such payment, Agent shall identify whether such payment (or any portion thereof) represents principal, premium, or interest of the Obligations. 16.16 Concerning the Collateral and Related Loan Documents. Each member of the Lender Group authorizes and directs Agent to enter into this Agreement and the other Loan Documents relating to the Collateral, for the benefit of the Lender Group. Each member of the Lender Group agrees that any action taken by Agent in accordance with the terms of this 94 Agreement or the other Loan Documents relating to the Collateral and the exercise by Agent of its powers set forth therein or herein, together with such other powers that are reasonably incidental thereto, shall be binding upon all of the Lenders. 16.17 Field Audits and Examination Reports; Confidentiality; Disclaimers by Lenders; Other Reports and Information. By becoming a party to this Agreement, each Lender: (a) is deemed to have requested that Agent furnish such Lender, promptly after it becomes available, a copy of each field audit or examination report (each a "Report" and collectively, "Reports") prepared by Agent, and Agent shall so furnish each Lender with such Reports, (b) expressly agrees and acknowledges that Agent does not (i) make any representation or warranty as to the accuracy of any Report, and (ii) shall not be liable for any information contained in any Report, (c) expressly agrees and acknowledges that the Reports are not comprehensive audits or examinations, that Agent or other party performing any audit or examination will inspect only specific information regarding Borrower and will rely significantly upon the Books, as well as on representations of Borrower's personnel, (d) agrees to keep all Reports and other material, non-public information regarding Borrower and its Subsidiaries and their operations, assets, and existing and contemplated business plans in a confidential manner; it being understood and agreed by Borrower that in any event such Lender may make disclosures (a) to counsel for and other advisors, accountants, and auditors to such Lender, (b) reasonably required by any bona fide potential or actual Assignee or Participant in connection with any contemplated or actual assignment or transfer by such Lender of an interest herein or any participation interest in such Lender's rights hereunder, (c) of information that has become public by disclosures made by Persons other than such Lender, its Affiliates, assignees, transferees, or Participants, or (d) as required or requested by any court, governmental or administrative agency, pursuant to any subpoena or other legal process, or by any law, statute, regulation, or court order; provided, however, that, unless prohibited by applicable law, statute, regulation, or court order, such Lender shall notify Borrower of any request by any court, governmental or administrative agency, or pursuant to any subpoena or other legal process for disclosure of any such non-public material information concurrent with, or where practicable, prior to the disclosure thereof, and (e) without limiting the generality of any other indemnification provision contained in this Agreement, agrees: (i) to hold Agent and any other Lender preparing a Report harmless from any action the indemnifying Lender may take or conclusion the indemnifying Lender may reach or draw from any Report in connection with any loans or other credit accommodations that the indemnifying Lender has made or may make to Borrower, or the indemnifying Lender's participation in, or the indemnifying Lender's purchase of, a loan or loans of Borrower, and (ii) to pay and protect, and indemnify, defend and hold Agent, and any such other Lender preparing a Report harmless from and against, the claims, actions, proceedings, damages, costs, expenses, and other amounts (including, attorneys fees and costs) incurred by 95 Agent and any such other Lender preparing a Report as the direct or indirect result of any third parties who might obtain all or part of any Report through the indemnifying Lender. In addition to the foregoing: (x) any Lender may from time to time request of Agent in writing that Agent provide to such Lender a copy of any report or document provided by Borrower to Agent that has not been contemporaneously provided by Borrower to such Lender, and, upon receipt of such request, Agent promptly shall provide a copy of same to such Lender, (y) to the extent that Agent is entitled, under any provision of the Loan Documents, to request additional reports or information from Borrower, any Lender may, from time to time, reasonably request Agent to exercise such right as specified in such Lender's notice to Agent, whereupon Agent promptly shall request of Borrower the additional reports or information reasonably specified by such Lender, and, upon receipt thereof from Borrower, Agent promptly shall provide a copy of same to such Lender, and (z) any time that Agent renders to Borrower a statement regarding the Loan Account, Agent shall send a copy of such statement to each Lender. 16.18 Several Obligations; No Liability. Notwithstanding that certain of the Loan Documents now or hereafter may have been or will be executed only by or in favor of Agent in its capacity as such, and not by or in favor of the Lenders, any and all obligations on the part of Agent (if any) to make any credit available hereunder shall constitute the several (and not joint) obligations of the respective Lenders on a ratable basis, according to their respective Commitments, to make an amount of such credit not to exceed, in principal amount, at any one time outstanding, the amount of their respective Commitments. Nothing contained herein shall confer upon any Lender any interest in, or subject any Lender to any liability for, or in respect of, the business, assets, profits, losses, or liabilities of any other Lender. Each Lender shall be solely responsible for notifying its Participants of any matters relating to the Loan Documents to the extent any such notice may be required, and no Lender shall have any obligation, duty, or liability to any Participant of any other Lender. Except as provided in Section 16.7, no member of the Lender Group shall have any liability for the acts or any other member of the Lender Group. No Lender shall be responsible to Borrower or any other Person for any failure by any other Lender to fulfill its obligations to make credit available hereunder, nor to advance for it or on its behalf in connection with its Commitment, nor to take any other action on its behalf hereunder or in connection with the financing contemplated herein. 17. GENERAL PROVISIONS. 17.1 Effectiveness. This Agreement shall be binding and deemed effective when executed by Borrower, Agent, and each Lender whose signature is provided for on the signature pages hereof. 17.2 Section Headings. Headings and numbers have been set forth herein for convenience only. Unless the contrary is compelled by the context, everything contained in each Section applies equally to this entire Agreement. 17.3 Interpretation. Neither this Agreement nor any uncertainty or ambiguity herein shall be construed against the Lender Group or Borrower, whether under any rule of construction or otherwise. On the contrary, this Agreement has been reviewed by all parties and shall be construed and interpreted according to the ordinary meaning of the words used so as to 96 accomplish fairly the purposes and intentions of all parties hereto. 17.4 Severability of Provisions. Each provision of this Agreement shall be severable from every other provision of this Agreement for the purpose of determining the legal enforceability of any specific provision. 17.5 Amendments in Writing. This Agreement only can be amended by a writing signed by Agent (on behalf of the requisite Lenders) and Borrower. 17.6 Counterparts; Telefacsimile Execution. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Agreement. Delivery of an executed counterpart of this Agreement by telefacsimile shall be equally as effective as delivery of an original executed counterpart of this Agreement. Any party delivering an executed counterpart of this Agreement by telefacsimile also shall deliver an original executed counterpart of this Agreement but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Agreement. The foregoing shall apply to each other Loan Document mutatis mutandis. 17.7 Revival and Reinstatement of Obligations. If the incurrence or payment of the Obligations by Borrower or the transfer to the Lender Group of any property should for any reason subsequently be declared to be void or voidable under any state or federal law relating to creditors' rights, including provisions of the Bankruptcy Code relating to fraudulent conveyances, preferences, or other voidable or recoverable payments of money or transfers of property (collectively, a "Voidable Transfer"), and if the Lender Group is required to repay or restore, in whole or in part, any such Voidable Transfer, or elects to do so upon the reasonable advice of its counsel, then, as to any such Voidable Transfer, or the amount thereof that the Lender Group is required or elects to repay or restore, and as to all reasonable costs, expenses, and attorneys fees of the Lender Group related thereto, the liability of Borrower automatically shall be revived, reinstated, and restored and shall exist as though such Voidable Transfer had never been made. 17.8 Integration. This Agreement, together with the other Loan Documents, reflects the entire understanding of the parties with respect to the transactions contemplated hereby and shall not be contradicted or qualified by any other agreement, oral or written, before the date hereof. 97 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered as of the date first above written. NORTHLAND CRANBERRIES, INC., a Wisconsin corporation, as Borrower By: /s/ ------------------------------------------ Title: --------------------------------------- FOOTHILL CAPITAL CORPORATION, a California corporation, as Agent and as a Lender By: /s/ ------------------------------------------ Title: --------------------------------------- ABLECO FINANCE LLC By: /s/ ------------------------------------------ Title: --------------------------------------- 98 TABLE OF CONTENTS 1. DEFINITIONS AND CONSTRUCTION ....................................... 2 1.1 Definitions .................................................. 2 1.2 Accounting Terms ............................................. 28 1.3 Code ......................................................... 28 1.4 Construction ................................................. 28 1.5 Schedules and Exhibits ....................................... 28 2. LOAN AND TERMS OF PAYMENT .......................................... 28 2.1 Revolver Advances ............................................ 28 2.2 Term Loans ................................................... 30 2.3 Borrowing Procedures and Settlements ......................... 31 2.4 Payments ..................................................... 37 2.5 Overadvances ................................................. 40 2.6 Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations ............................ 40 2.7 Cash Management .............................................. 41 2.8 Crediting Payments; Float Charge ............................. 42 2.9 Designated Account ........................................... 43 2.10 Maintenance of Loan Account; Statements of Obligations ....... 43 2.11 Fees ......................................................... 43 2.13 Capital Requirements ......................................... 47 3. CONDITIONS; TERM OF AGREEMENT ...................................... 47 3.1 Conditions Precedent to the Initial Extension of Credit ...... 47 3.2 Conditions Subsequent to the Initial Extension of Credit ..... 52 3.3 Conditions Precedent to all Extensions of Credit ............. 52 3.4 Term ......................................................... 53 3.5 Effect of Termination ........................................ 53 3.6 Early Termination by Borrower ................................ 53 4. CREATION OF SECURITY INTEREST ...................................... 54 4.1 Grant of Security Interest ................................... 54 4.2 Negotiable Collateral ........................................ 54 4.3 Collection of Accounts, General Intangibles, and Negotiable Collateral ........................................ 54 4.4 Delivery of Additional Documentation Required ................ 55 4.5 Power of Attorney ............................................ 55 4.6 Right to Inspect ............................................. 55 4.7 Control Agreements ........................................... 56 5. REPRESENTATIONS AND WARRANTIES ..................................... 56 5.1 No Encumbrances .............................................. 56 5.2 Eligible Accounts ............................................ 56 5.3 Eligible Inventory ........................................... 57 5.4 Equipment .................................................... 58 5.5 Location of Inventory and Equipment .......................... 58 5.6 Inventory Records ............................................ 58 5.7 Location of Chief Executive Office; FEIN ..................... 58 5.8 Due Organization and Qualification; Subsidiaries ............. 58 5.9 Due Authorization; No Conflict ............................... 59 5.10 Litigation ................................................... 60 5.11 No Material Adverse Change ................................... 60 5.12 Fraudulent Transfer .......................................... 61 5.13 Employee Benefits ............................................ 61 5.14 Environmental Condition ...................................... 61 5.15 Brokerage Fees ............................................... 61 5.17 Leases ....................................................... 61 5.18 DDAs ......................................................... 62 5.20 Indebtedness ................................................. 62 6. AFFIRMATIVE COVENANTS .............................................. 63 6.1 Accounting System ............................................ 63 6.2 Collateral Reporting ......................................... 63 6.3 Financial Statements, Reports, Certificates .................. 65 6.4 Return ....................................................... 67 6.5 Maintenance of Properties .................................... 67 6.6 Taxes ........................................................ 67 6.7 Insurance .................................................... 67 6.9 Compliance with Laws ......................................... 68 6.10 Leases ....................................................... 69 6.11 Brokerage Commissions ........................................ 69 6.12 Existence .................................................... 69 6.15 Disclosure Updates ........................................... 71 7. NEGATIVE COVENANTS ................................................. 71 7.1 Indebtedness ................................................. 71 7.2 Liens ........................................................ 72 7.3 Restrictions on Fundamental Changes .......................... 72 7.4 Disposal of Assets ........................................... 72 7.5 Change Name .................................................. 72 7.6 Guarantee .................................................... 72 7.7 Nature of Business ........................................... 72 7.8 Prepayments and Amendments ................................... 72 7.10 Consignments ................................................. 73 7.11 Distributions ................................................ 73 7.12 Accounting Methods ........................................... 73 7.13 Investments .................................................. 73 7.14 Transactions with Affiliates ................................. 73 7.15 Suspension ................................................... 74 7.16 [Intentionally Omitted] ...................................... 74 7.17 Use of Proceeds .............................................. 74 7.18 Change in Location of Chief Executive Office; Inventory and Equipment with Bailees ......................... 74 7.19 Securities Accounts .......................................... 74 7.20 Financial Covenants .......................................... 74 8. EVENTS OF DEFAULT .................................................. 76 9. THE LENDER GROUP'S RIGHTS AND REMEDIES ............................. 78 9.1 Rights and Remedies .......................................... 78 9.2 Remedies Cumulative .......................................... 80 10. TAXES AND EXPENSES ................................................. 81 11. WAIVERS; INDEMNIFICATION ........................................... 81 11.1 Demand; Protest .............................................. 81 11.2 The Lender Group's Liability for Collateral .................. 81 11.3 Indemnification .............................................. 81 12. NOTICES ............................................................ 82 13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER ......................... 84 14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS ......................... 85 14.1 Assignments and Participations ............................... 85 14.2 Successors ................................................... 87 15. AMENDMENTS; WAIVERS. ............................................... 87 15.1 Amendments and Waivers ....................................... 87 15.2 Replacement of Holdout Lender ................................ 89 15.3 No Waivers; Cumulative Remedies .............................. 89 16. AGENT; THE LENDER GROUP ............................................ 90 16.1 Appointment and Authorization of Agent ....................... 90 16.2 Delegation of Duties ......................................... 91 16.3 Liability of Agent ........................................... 91 16.4 Reliance by Agent ............................................ 91 16.5 Notice of Default or Event of Default ........................ 91 16.6 Credit Decision .............................................. 92 16.7 Costs and Expenses; Indemnification .......................... 92 16.8 Agent in Individual Capacity ................................. 93 16.9 Successor Agent .............................................. 93 16.10 Lender in Individual Capacity ................................ 94 16.11 Withholding Taxes ............................................ 94 16.12 Collateral Matters ........................................... 96 16.13 Restrictions on Actions by Lenders; Sharing of Payments ...... 97 16.14 Agency for Perfection ........................................ 98 16.15 Payments by Agent to the Lenders ............................. 98 16.16 Concerning the Collateral and Related Loan Documents ......... 98 16.17 Field Audits and Examination Reports; Confidentiality; Disclaimers by Lenders; Other Reports and Information ...................................... 98 16.18 Several Obligations; No Liability ............................ 99 17. GENERAL PROVISIONS ................................................. 100 17.1 Effectiveness ................................................ 100 17.2 Section Headings ............................................. 100 17.3 Interpretation ............................................... 100 17.4 Severability of Provisions ................................... 100 17.5 Amendments in Writing ........................................ 100 17.6 Counterparts; Telefacsimile Execution ........................ 100 17.7 Revival and Reinstatement of Obligations ..................... 101 17.8 Integration .................................................. 101 EXHIBITS AND SCHEDULES Exhibit A-1 Form of Assignment and Acceptance Exhibit B-1 Form of Borrowing Base Certificate Exhibit C-1 Form of Compliance Certificate Schedule C-1 Commitments Schedule E-1 Eligible Inventory Locations Schedule P-1 Permitted Liens Schedule R-1 Real Property Collateral Schedule 1.1 Liquidating Assets Schedule 2.7(a) Cash Management Banks Schedule 3.1(l) Cliffstar Payments Schedule 3.1(u) Tax Returns Schedule 3.2(d) Closing Date Material Changes Schedule 4.1 Excluded Collateral Schedule 5.5 Locations of Inventory and Equipment Schedule 5.7 Chief Executive Office; FEIN Schedule 5.8(b) Capitalization of Borrower Schedule 5.8(c) Capitalization of Borrower's Subsidiaries Schedule 5.10 Litigation Schedule 5.13 ERISA Schedule 5.14 Environmental Matters Schedule 5.15 Brokerage Fees Schedule 5.16 Intellectual Property Schedule 5.17 Leases Schedule 5.18 Demand Deposit Accounts Schedule 5.20 Permitted Indebtedness Schedule 5.21(a) Disclosure Notices regarding PACA EX-4.2 9 sdc74h.txt AMENDED AND RESTATED CREDIT AGREEMENT AMENDED AND RESTATED CREDIT AGREEMENT among NORTHLAND CRANBERRIES, INC., VARIOUS FINANCIAL INSTITUTIONS and U.S. BANK NATIONAL ASSOCIATION as Agent Dated as of November 6, 2001 NORTHLAND CRANBERRIES, INC. AMENDED AND RESTATED CREDIT AGREEMENT U.S. Bank National Association, as Agent Minneapolis, Minnesota and The Financial Institutions Identified Herein Gentlemen: Northland Cranberries, Inc. ("the Company"), the undersigned financial institutions (together with their respective successors and assigns, collectively, the "Banks"), and the Other Lenders entered into a Credit Agreement dated as of March 15, 1999 (said Credit Agreement, as amended from time to time prior to the date hereof, the "Original Credit Agreement"). Simultaneous with the transactions contemplated hereby, the Banks have entered into the Assignment, Assumption and Release Agreement and the Other Lenders have entered into the Exiting Bank Agreement pursuant to which the Banks and the Other Lenders have transferred to Sun Northland, LLC a percentage of their Revolving Credit Loans (as defined in the Original Credit Agreement) and L/C participations, interest accrued thereon and certain collateral securing such Revolving Credit Loans and L/C participations. Sun Northland, LLC has entered into an Assignment Agreement with the Company (the "Assignment Agreement") pursuant to which Sun Northland, LLC has agreed to assign all rights received under the Assignment, Assumption and Release Agreement and the Exiting Bank Agreement to the Company and the same will thereupon be cancelled and discharged and will no longer be obligations or liabilities of the Company under the Original Credit Agreement. The Banks have retained Revolving Credit Loans in the aggregate principal amount of $25,714,000 and certain collateral securing the same. The Company and the Banks desire to amend and restate the Original Credit Agreement to set forth the terms and conditions under which the Banks will continue to advance the principal amount of $25,714,000 to the Company. Capitalized terms used herein and not otherwise defined shall have the meanings assigned thereto in Section 9, below. ARTICLE I THE CREDIT 1.1. Conversion to Term Loan. As of the date hereof, the outstanding principal amount of the Revolving Credit Loans retained by the Banks under the Original Credit Agreement is $25,714,000. On the Effective Date, this $25,714,000 in Revolving Credit Loans shall be converted into a new term loan (the "Term Loan") in the initial principal amount $25,714,000. Each Bank's pro rata share of the Term Loan shall be the amount set forth below such Bank's name on the signature pages hereof. The Term Loan shall be evidenced by promissory notes to be executed and delivered by the Company to the Banks on the Effective Date, the form of which is attached hereto and made a part hereof as Exhibit 1.1 (the "Term Note(s)"), shall bear interest as specified in Section 2.1 hereof and shall be repayable as set forth in Article III hereof. 2 1.2. Release of Rights. Each Bank agrees that, as of the Effective Date and receipt of the consideration specified in the Assignment, Assumption and Release Agreement, it shall have no rights or claims against the Company, any of its Subsidiaries or any of their shareholders, officers, employees, directors or advisors (collectively, the "Releasees") with respect to the Original Credit Agreement or any document executed in connection therewith or any transaction relating thereto and hereby waives its rights to sue, make any claim or take any action against any Releasee with respect to any right, claim or liability occurring under the Original Credit Agreement or any transaction relating thereto that arose or occurred prior to the Effective Date; provided, however, that it is specifically acknowledged and agreed that nothing contained herein shall be deemed to be a release of, or otherwise deemed to limit the Banks' rights under, this Agreement and the Loan Documents executed in connection herewith. ARTICLE II INTEREST 2.1. Interest. (a) Rate of Interest. Interest shall accrue on the principal amount of the Term Loan outstanding at the end of each day at a fluctuating rate per annum equal to one percent (1.0%) plus the Base Rate as in effect from time to time. (b) Default Rate of Interest. At the option of Agent or Required Banks, upon the occurrence and during the continuation of an Event of Default, the principal amount of the Term Loan shall bear interest at a rate per annum equal to two percent (2.0%) plus the interest rate otherwise applicable thereto (the "Default Rate"). (c) Maximum Interest. In no event whatsoever shall the aggregate of all amounts deemed interest hereunder or under the Term Notes and charged or collected pursuant to the terms of this Agreement or pursuant to the Term Notes exceed the highest rate permissible under any law which a court of competent jurisdiction shall, in a final determination, deem applicable hereto. If any provisions of this Agreement or the Term Notes are in contravention of any such law, such provisions shall be deemed amended to conform thereto. 2.2. Computation. All interest on the indebtedness evidenced by the Term Notes and all fees, charges and commissions due hereunder shall be computed on the basis of a year of three hundred sixty (360) days for the actual number of days elapsed. 2.3. Taxes and Increased Costs. With respect to this Agreement and the Term Loan, if any Bank shall determine in good faith that any change after the date hereof in any applicable law, treaty, regulation or guideline (including, without limitation, Regulation D of the Board of Governors of the Federal Reserve System) or any new law, treaty, regulation or guideline, or any interpretation of any of the foregoing by any governmental authority charged with the administration thereof or any central bank or other fiscal, monetary or other authority having jurisdiction over such Bank or its lending branch or the Term Loan contemplated by this Agreement (whether or not having the force of law) shall: 3 (a) impose, increase, or deem applicable any reserve, special deposit or similar requirement against assets held by, or deposits in or for the account of, or loans by, or any other acquisition of funds or disbursements by, such Bank which is not in any instance already accounted for in computing the interest rate applicable to any such Term Note; (b) subject such Bank or any Term Note to any tax (including, without limitation, any United States of America interest equalization tax or similar tax however named applicable to the acquisition or holding of debt obligations and any interest or penalties with respect thereto), duty, charge, stamp tax, fee, deduction or withholding in respect of this Agreement or any Term Note, except such taxes as may be measured by the overall net income or gross receipts of such Bank or its lending branches and imposed by the jurisdiction, or any political subdivision or taxing authority thereof, in which such Bank's principal executive office or its lending branch is located; (c) change the basis of taxation of payments of principal or interest due from the Company to such Bank hereunder under a Term Note (other than by a change in taxation of the overall net income or gross receipts of such Bank); or (d) impose on such Bank any penalty with respect to the foregoing or any other condition regarding this Agreement or any Term Note; and such Bank shall determine that the result of any of the foregoing is to increase the cost (whether by incurring a cost or adding to a cost) to such Bank of creating or maintaining any Term Note or to reduce the amount of principal or interest received or receivable by such Bank (without benefit of, or credit for, any prorations, exemption, credits or other offsets available under any such laws, treaties, regulations, guidelines or interpretations thereof), then the Company shall pay on demand to such Bank from time to time as specified by such Bank such additional amounts as such Bank shall reasonably determine are sufficient to compensate and indemnify it for such increased cost or reduced amount; provided, however, that (i) such Bank shall promptly notify the Company of an event which might cause it to seek compensation, and the Company shall be obligated to pay only such compensation which is incurred or which arises after the date sixty (60) days prior to the date such notice is given, and (ii) the Company shall have no obligation to pay any amount that would otherwise be payable under this Section solely as a result of such Bank being in a regulatory classification that is lower than such Bank's regulatory classification on the date of this Agreement. If such Bank makes such a claim for compensation, it shall provide to the Company a written explanation of the circumstances giving rise to such claim and a certificate setting forth the computation of the increased cost or reduced amount as a result of any event mentioned herein in reasonable detail and such certificate shall be conclusive if reasonably determined. 4 ARTICLE III FEES, PAYMENTS, REDUCTIONS AND APPLICATIONS 3.1. Payments. The Term Loan shall be payable as follows: (a) Principal. The principal balance of the Term Loan shall be payable in installments as follows: (i) On the one (1) year anniversary of the Effective Date, an installment in the amount of $1,700,000 shall be paid; (ii) Commencing on December 1, 2002 and continuing on the first day of each month thereafter until and including October 1, 2006, installments in an amount equal to the Monthly Installment Amount in effect on the payment date shall be paid; and (iii) The remaining outstanding principal balance, and all interest accrued thereon, shall be due and payable in full on November 1, 2006. Principal payable on account of the Term Loan shall be payable by the Company to Agent for the ratable benefit of the Banks. (b) Interest. Interest accrued on the Term Loan shall be payable by the Company to Agent for the ratable benefit of the Banks upon the first calendar day of each month (for the immediately preceding month), computed through the last calendar day of the preceding month. The outstanding principal and interest accrued under the Term Note may become, or may be declared, immediately due and payable upon an Event of Default as provided in Article VIII hereof. 3.2. Voluntary Prepayments. Subject to the further provisions of this Section 3.2, the Company shall have the privilege of prepaying the Term Notes in whole or in part (but if in part then in an aggregate minimum amount of Fifty Thousand Dollars ($50,000)) at any time upon notice to the Agent (such notices, if received subsequent to 11:00 a.m. (Minneapolis time) on a given day, to be treated as though received at the opening of business on the next Business Day), by paying to the Agent (i) the principal amount to be prepaid, and (ii) if such prepayment prepays the Term Notes in full, accrued interest thereon to the date fixed for prepayment. Any such optional prepayment shall be applied to installments of principal due under the Term Notes in the inverse order of their installments. 3.3. Mandatory Prepayments. (a) Sale of Certain Collateral. If the Company at any time or times sells, transfers, conveys or otherwise disposes of any of the Liquidating Assets, the Company shall pay the Agent, for the ratable benefit of the Banks, within seven (7) days after such disposition and as a mandatory prepayment of the Term Loan, a sum equal to the 5 proceeds received by the Company from such disposition net of fees and expenses actually incurred in connection therewith. Notwithstanding the foregoing, if prior to the date on which the Company disposes of Liquidating Assets associated with the Bridgeton, New Jersey facility, the Company has paid the outstanding property taxes, interest and penalties as contemplated pursuant to Section 7.18 hereof, the Company shall be entitled to reduce the proceeds payable to the Bank upon the sale of such Liquidating Assets by the amount of such property taxes so paid by the Company. The applicable prepayments under this Section 3.3(a) shall be applied to installments of principal due under the Term Notes in the inverse order of their installments. (b) Cliffstar Note. After the Company has received Adjusted Cliffstar Payments aggregating Ten Million Dollars ($10,000,000), the Company shall thereafter, within one (1) Business Day after receipt by the Company of each Cliffstar Payment, pay the Agent for the ratable benefit of the Banks, as a mandatory prepayment of the Term Loan, a sum equal to the amount of the Adjusted Cliffstar Payment then received by the Company. The applicable prepayments shall be applied to installments of principal due under the Term Notes in the inverse order of their installments. 3.4. Agent Fee. On the Effective Date and on each annual anniversary thereof during which this Agreement is in effect, the Company shall pay to Agent an Agent fee in an amount equal to one-quarter percentage (.25%) of the aggregate principal amount of the Term Notes outstanding as of such payment date. 3.5. Place and Application. All payments of principal, interest, fees and other amounts due hereunder shall be made to the Agent at its office at 601 Second Avenue South, Minneapolis, Minnesota (or at such other place within the continental United States of America as the Agent may specify) in immediately available and freely transferable funds at the place of payment. All such payments shall be made without setoff or counterclaim and without reduction for, and free from, any and all present or future taxes, levies, imposts, duties, fees, charges, deductions, withholdings, restrictions or conditions of any nature imposed by any government or political subdivision or taxing authority thereof. Payments received by the Agent after 11:00 a.m. (Minneapolis time) shall be deemed received as of the opening of business on the next Business Day. 3.6. Capital Adequacy. If any Bank shall determine that the adoption after the date hereof of any applicable law, rule or regulation regarding capital adequacy, or any change in any existing law, rule or regulation, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof or compliance by such Bank (or its lending office) with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on such Bank's capital as a consequence of its obligations hereunder or credit extended by it hereunder to a level below that which such Bank could have achieved but for such adoption, change or compliance (taking into consideration such Bank's policies with respect to capital adequacy) by an amount deemed by such Bank to be material, then from time to time as specified by such Bank the Company shall pay such additional amount or amounts as will compensate such Bank for such reduction; provided, however, that (i) such Bank shall promptly 6 notify the Company of an event which might cause it to seek compensation, and the Company shall be obligated to pay only such compensation which is incurred or which arises after the date sixty (60) days prior to the date such notice is given, and (ii) the Company shall have no obligation to pay any amount that would otherwise be payable under this Section solely as a result of such Bank being in a regulatory classification that is lower than such Bank's regulatory classification on the date of this Agreement. A certificate of such Bank claiming compensation under this Section 3.5 and setting forth the additional amount or amounts to be paid to it hereunder in reasonable detail shall be conclusive if reasonably determined. In determining such amount, such Bank may use any reasonable averaging and attribution methods. ARTICLE IV THE COLLATERAL 4.1. Collateral. The Term Notes and the other obligations of the Company hereunder shall be secured by (i) valid and perfected first priority liens (subject to any Permitted Liens) on the real properties of the Company described on Schedule 4.1(a) attached hereto and all fixtures thereto pursuant to the terms of Amended and Restated Mortgages of even date herewith by the Company in favor of Agent for itself and for the benefit of the Banks, as the same be further amended and restated from time to time; (ii) valid and perfected first priority liens (subject only to any Permitted Liens) on the equipment described on Schedule 4.1(b) attached hereto and any equipment now or hereafter located on the real property described on Schedule 4.1(a) attached hereto and on the farm products and crops grown or to be grown on the real property described on Schedule 4.1(a) attached hereto and the Company's interest in the Environmental Indemnity Agreement with Michael A. Morello pursuant to the terms of an Amended and Restated Security Agreement of even date herewith by and between the Company and the Agent for itself and for the benefit of the Banks, as the same may be further amended or restated from time to time; and (iii) a valid and perfected priority lien (subject only to a prior lien granted to Foothill Capital under the Foothill Agreement which shall be limited to the extent set forth in the Intercreditor Agreement) in the Cliffstar Note and certain amounts payable to the Company under the Cliffstar Purchase Agreement pursuant to the terms of an Amended and Restated Collateral Pledge Agreement by the Company in favor of Agent for itself and for the benefit of the Banks and the Amended and Restated Security Agreement described above, as the same may be further amended or restated from time to time. 4.2. Further Assurances. The Company agrees that it will from time to time at the request of the Agent or the Banks execute and deliver such documents and do such acts and things as the Agent or the Banks may reasonably request in order to provide for or perfect such liens. ARTICLE V REPRESENTATIONS AND WARRANTIES In order to induce the Banks to enter into the Agreement and the Assignment, Assumption and Release Agreement, the Company represents and warrants to the Agent and the Banks on the Effective Date as follows: 7 5.1. Organization; Authority; Non-Contravention. Each of the Company and its Subsidiaries is a corporation duly organized and validly existing under the laws of the jurisdiction of its incorporation, has full and adequate power to carry on its business as now conducted, is duly licensed or qualified in all jurisdictions wherein the nature of its activities requires such licensing or qualifying and where the failure to be so licensed or qualified would have a material adverse effect on the Properties, business or operations of the Company and its Subsidiaries taken as a whole. The Company has full right and authority to enter into the Loan Documents, to encumber its assets as collateral security therefor, and to perform each and all of the matters and things herein and therein provided for and to make the borrowing herein provided for and to issue the Term Notes in evidence thereof. This Agreement does not, nor does the performance or observance by the Company of any of the matters or things provided for in the Loan Documents, contravene any provision of law or any charter or by-law provision or any indenture or material agreement of or affecting the Company or any of its Properties. 5.2. Subsidiaries. The Company has no Subsidiaries except Wildhawk, Inc., a Wisconsin corporation, W.S.C. Water Management Corp., a Wisconsin corporation, Northland Cranberries Sales Corp., a Virgin Islands corporation, Northland Insurance Center Inc., a Wisconsin corporation, NCI Foods, LLC, a Wisconsin limited liability company, Potomac Foods of Virginia, Inc., and PVFA Acquisition Corp., a Virginia corporation. 5.3. Financial Statements. The Company has heretofore delivered to the Agent a copy of the audit report of the Company and its Subsidiaries as of August 31, 2000, of the Company and unaudited consolidated financial statements (including a balance sheet and profit and loss statement) and its Subsidiaries as of, and for the period ending August 31, 2001. Such consolidated financial statements have been prepared in accordance with generally accepted accounting principles on a basis consistent, except as otherwise noted therein and except that the interim consolidated financial statements are subject to audit and year-end adjustments and for the absence of footnotes, with that of the previous fiscal year or period and fairly reflect the financial position of the Company as of the dates thereof, and the results of their operations for the periods covered thereby. The Company has no significant contingent liabilities other than as disclosed to the Agent or as indicated on said consolidated financial statements and since said date of August 31, 2001 and, except as disclosed on Schedule 5.3, there has been no Material Adverse Change of the Company or its Subsidiaries taken as a whole. 5.4. Litigation; Taxes; Consents. Except as disclosed on Schedule 5.4, there is no litigation or governmental proceeding pending, nor to the knowledge of the Company, threatened against the Company or any Subsidiary which if adversely determined would result in any material adverse change in the Properties, business or operations of the Company and its Subsidiaries taken as a whole. All United States of America federal income tax returns for the Company and its Subsidiaries required to be filed have been filed on a timely basis (after giving effect to any extensions), and all amounts required to be paid as shown by said returns have been paid. There are no pending or threatened objections to or controversies in respect of the United States of America federal income tax returns of the Company for any fiscal year which, if adversely determined, would have a material adverse effect on the Company's condition, financial or otherwise. No authorization, consent, license, exemption or filing or registration with any court or governmental department, agency or instrumentality, is or will be necessary to 8 the valid execution, delivery or performance by the Company of the Loan Documents to which they are a party, except for filings required to perfect the Agent's liens in the Collateral. 5.5. Regulation U. Neither the Company nor any Subsidiary is engaged in the business of extending credit for the purpose of purchasing or carrying "margin stock" (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System) and no part of the proceeds of any loan hereunder will be used to purchase or carry any margin stock or to extend credit to others for such a purpose. 5.6. No Default. No Event of Default is existing under this Agreement. 5.7. ERISA. Each of the Company and its Subsidiaries is in compliance in all material respects with ERISA to the extent applicable to it and has received no notice to the contrary from the PBGC or any other governmental entity or agency. 5.8. Security Interests. After giving effect to the transactions contemplated by this Agreement, the Sun Northland Purchase Agreement, the Assignment, Assumption and Release Agreement, the Exiting Bank Agreement and the Foothill Agreement, there are no security interests, liens or encumbrances on any of the Collateral except such as are permitted by Section 7.11 of this Agreement. 5.9. Accurate Information. No information, exhibit or report furnished by the Company or any Subsidiary to the Agent or any Bank in connection with the negotiation of the Loan Documents contained any material misstatement of fact or omitted to state a material fact or any fact necessary to make the statements contained therein not misleading in light of the circumstances in which made. The financial projections furnished by the Company to the Agent and the Banks contain to the Company's knowledge and belief, reasonable projections as of the date thereof of future results of consolidated operations and financial position of the Company after giving effect to the transactions contemplated by this Agreement, the Sun Northland Purchase Agreement, the Assignment, Assumption and Release Agreement, the Exiting Bank Agreement and the Foothill Agreement. 5.10. Enforceability. This Agreement and the other Loan Documents are legal, valid and binding agreements of the Company, enforceable against it in accordance with their terms, except as may be limited by (a) bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium or other similar laws or judicial decisions for the relief of debtors or the limitation of creditors' rights generally; and (b) any equitable principles relating to or limiting the rights of creditors generally. 5.11. No Default Under Other Agreements. After giving effect to the transactions contemplated by this Agreement, the Assignment, Assumption and Release Agreement, the Exiting Bank Agreement and the Foothill Agreement, and except with respect to payment defaults under the Nantucket and Cranberry Hill leases, neither the Company nor any Subsidiary is in default with respect to any note, indenture, loan agreement, mortgage, lease, deed, or other agreement to which it is a party or by which it or its Property is bound, which default would reasonably be expected to materially and adversely affect the Collateral, the repayment of the indebtedness, obligations and liabilities under the Loan Documents, the Agent's and the Banks' 9 rights under the Loan Documents or the Property, business, operations or condition (financial or otherwise) of the Company and its Subsidiaries taken as a whole. 5.12. Status Under Certain Laws. Neither the Company nor any of its Subsidiaries is an "investment company" or a person directly or indirectly controlled by or acting on behalf of an "investment company" within the meaning of the Investment Company Act of 1940, as amended, or a "holding company," or a "subsidiary company" of a "holding company," or an "affiliate" of a "holding company" or a "subsidiary company" of a "holding company," within the meaning of the Public Utility Holding Company Act of 1935, as amended. 5.13. Compliance with Laws. Except as set forth in Schedule 5.13 with respect to certain outstanding environmental matters, the Company and its Subsidiaries each are in compliance with the requirements of all federal, state and local laws, rules and regulations applicable to or pertaining to their Properties or business operations (including, without limitation, the Occupational Safety and Health Act of 1970, the Americans with Disabilities Act of 1990, and laws and regulations establishing quality criteria and standards for air, water, land and toxic or hazardous wastes and substances), non-compliance with which would reasonably be expected to have a material adverse effect on the financial condition, Properties, business or operations of the Company and its Subsidiaries taken as a whole. Except as set forth in Schedule 5.13 with respect to certain outstanding environmental matters, neither the Company nor any Subsidiary has received written notice to the effect that its operations are not in compliance with any of the requirements of applicable federal, state or local environmental, health and safety statutes and regulations or, to the Company's knowledge, are the subject of any governmental investigation evaluating whether any remedial action is needed to respond to a release of any toxic or hazardous waste or substance into the environment, which noncompliance or remedial action would have a material adverse effect on the financial condition, Properties, business or operations of the Company and its Subsidiaries taken as a whole. 5.14. Proforma Balance Sheet. After giving effect to the transactions contemplated by this Agreement, the Sun Northland Purchase Agreement, the Assignment, Assumption and Release Agreement, the Exiting Bank Agreement and the Foothill Agreement, the proforma balance sheet of the Company will be substantially in the form of Schedule 5.14 attached hereto. 5.15. Bank Stock. With respect to the 7,618,987 shares of the Class A common stock of the Company to be issued to the Banks pursuant to the Assignment, Assumption and Release Agreement (the "Bank Stock"), the Company hereby warrants and represents as follows: (a) All action on the part of the Company, its Board of Directors and its shareholders necessary for the authorization, issuance and delivery of the Bank Stock has been taken. (b) The Bank Stock will, when issued in accordance with the Assignment, Assumption and Release Agreement, be duly and validly issued, fully paid and non-assessable (except as provided in Section 180.0622(2)(b) of the Wisconsin Statues) and free and clear of all liens and restrictions on transfer other than as provided in the Stockholders Agreement. 10 (c) All consents, approvals, qualifications, orders or authorizations of, or filings with, any governmental authority, and all consents under any contracts, agreements or instruments by which the Company is bound or to which it is subject, and required in connection with its valid issuance and delivery of the Bank Stock, have been obtained or made. 5.16. Capitalization. After giving effect to the transactions contemplated by the Sun Northland Purchase Agreement, the Foothill Agreement, the Exiting Bank Agreement and the Assignment, Assumption and Release Agreement, the Company will have: (i) 49,827,788 shares of $.01 par value Class A common stock issued and outstanding, (ii) 1,668,885 shares of $.01 par value Class A Preferred Stock issued and outstanding, and (iii) 100 shares of $.01 par value Class B Preferred Stock issued and outstanding, all of which are owned of record and beneficially by the persons and in the amounts set forth in Schedule 5.16. Except as set forth in Schedule 5.16 and in the Stockholders Agreement, there are no outstanding preemptive, conversion, voting or other rights, options, warrants or agreements granted or issued by or binding upon the Company for the purchase or acquisition of any of its shares or other equity interests or otherwise providing for the "put" or "call" of any of its shares or other equity interests. Except as set forth in Schedule 5.16, there are no outstanding options to purchase, or any rights or warrants to subscribe for, or any commitments or agreements to issue or sell, or any securities or obligations convertible into, shares of the capital stock of the Company. 5.17. Acknowledgment of Cancellation and Discharge of Indebtedness. After giving effect to the transactions contemplated by the Exiting Bank Agreement and the Assignment, Assumption and Release Agreement, Sun Northland, LLC will have acquired rights in and to a percentage of the Revolving Credit Loans and L/C participations under the Original Credit Agreement, interest accrued thereon and collateral securing such Revolving Credit Loans and L/C participations. After giving effect to the transactions contemplated by the Sun Northland Purchase Agreement and the Assignment Agreement, (i) the Company will have acquired all rights in and to the Revolving Credit Loans and L/C participations, interest accrued thereon and collateral securing such Revolving Credit Loans and L/C participations transferred to Sun Northland, LLC under the Assignment, Assumption and Release Agreement and the Exiting Bank Agreement and such obligations will have been fully cancelled and discharged and no longer constitute liabilities or obligations of the Company under the Original Credit Agreement, and (ii) the Company has no rights as a lender or a "Bank" under the Original Credit Agreement with respect to the rights assigned under the Assignment, Assumption and Release Agreement and the Exiting Bank Agreement. ARTICLE VI CONDITIONS PRECEDENT This Agreement shall not become effective unless and until the following conditions precedent have been satisfied: 6.1. Credit Agreement. The Company, the Agent and each of the Banks which are a party hereto as of the date hereof shall have executed this Credit Agreement (such execution may be in several counterparts and the several parties hereto may execute on separate counterparts). 11 6.2. Other Loan Documents. The Agent shall have received the following (each to be properly executed and completed) and the same shall have been approved as to form and substance by the Agent: (a) the Term Notes; (b) each of the Collateral Documents described in Section 4.1, hereof; (c) commitments for mortgagees' policies of title insurance for each of the real properties of the Company listed on Schedule 4.1(a) attached hereto in minimum amounts acceptable to the Agent; (d) such mortgages, deeds of trust, assignments and financing statements as the Agent may require with respect to the Collateral; (e) copies, certified by the Secretary of the Company, of (i) the Articles of Incorporation and By-laws of the Company, and (ii) resolutions of the Board of Directors of the Company authorizing the issuance, execution and delivery of this Agreement and the other Loan Documents and the Bank Stock, and a certification of the names and titles of the representatives of the Company authorized to sign this Agreement and the other Loan Documents, together with true signatures of such representatives; and (f) copies (executed or certified, as may be appropriate) of all legal documents or proceedings taken in connection with the execution and delivery of this Credit Agreement and the other instruments and documents contemplated hereby to the extent the Agent or its counsel may reasonably request. 6.3. Opinion Letter. Legal matters incident to the execution and delivery of this Credit Agreement and the other instruments and documents contemplated hereby shall be satisfactory to the Agent and its counsel; and the Agent shall have received the favorable written opinion of counsel for the Company in form and substance satisfactory to the Agent and its counsel. 6.4. Representations True and Correct. Each of the representations and warranties set forth in Section 5 of this Agreement and in the other Loan Documents shall be true and correct in all material respects. 6.5. Insurance. The Company shall have purchased all insurance required by the Loan Documents and the Agent shall have received certificates of insurance naming the Agent as lender's loss payee and additional insured with respect to the Collateral for the insurance policies required pursuant to the terms of the Loan Documents, and evidence of the payment of all premiums therefor. 6.6. Good Standing Certificates. The Agent shall have received good standing certificates or certificates of status, as the case may be, certified by the appropriate secretaries of state or other appropriate parties relating to the Company for each of the states in which the Company is incorporated or qualified to do business. 12 6.7. Payment of Outstanding Fees/Expenses. The Company shall have paid all outstanding reasonable fees and expenses incurred by Agent and Banks on or prior to the date hereof including, without limitation reasonable fees and expenses incurred under the Original Credit Agreement and all reasonable costs and expenses of Agent and Banks in connection with the negotiation, preparation, execution, delivery and recording of this Agreement, the Term Notes, the Collateral Documents and the other instruments and documents to be delivered hereunder or in connection herewith. 6.8. No Default. The Company shall be in full compliance with all of the terms and conditions of this Credit Agreement and no Event of Default or Default shall have occurred and be continuing thereunder or shall result after giving effect to this Credit Agreement. 6.9. Foothill Agreement. The transactions contemplated by the Foothill Agreement shall have been consummated simultaneously with the closing of the transactions contemplated hereby. 6.10. Sun Northland Purchase Agreement; Assignment Agreement. The transactions contemplated by Sun Northland Purchase Agreement and the Assignment Agreement shall have been consummated simultaneously with the closing of the transactions contemplated hereby. 6.11. Assignment, Assumption and Release Agreement; Exiting Bank Agreement. The Banks, LaSalle Bank National Association and Sun Northland LLC shall have executed the Assignment, Assumption and Release Agreement and the transactions contemplated thereby shall have been consummated simultaneously with the closing of the transactions contemplated hereby including, without limitation, the delivery of the cash and the Bank Stock contemplated thereunder. The Other Lenders and Sun Northland LLC shall have executed the Exiting Bank Agreement and the transactions contemplated thereby shall have been consummated simultaneously with the closing of the transactions contemplated hereby. 6.12. Registration Agreement; Stockholders Agreement. The Company, the Banks, Sun Northland, LLC and Foothill Capital Corporation shall have executed a Stockholders Agreement and Registration Agreement in a form acceptable to the Banks. 6.13. Intercreditor Agreement. Foothill Capital Corporation, the Company and the Banks shall have entered into an Intercreditor Agreement setting forth the terms and conditions under which Foothill Capital Corporation will take a prior lien position in the Cliffstar Note until such time as the Company has received Adjusted Cliffstar Payments aggregating $10,000,000 and then shall release its lien on the Cliffstar Note, in a form acceptable to the Banks and Foothill Capital Corporation (the "Intercreditor Agreement"). 6.14. Copies of Agreements. The Company shall have received copies of the Sun Northland Purchase Agreement, the Foothill Agreement, the Exiting Bank Agreement, the Assignment Agreement and the Equitable Agreement and all agreements executed in connection therewith, duly executed by all parties thereto and certified as true, complete and correct copies by the Secretary of the Company. 6.15. Taxes. The Company shall have provided to the Agent evidence reasonably satisfactory to the Agent that all taxes upon the Collateral (including, without limitation, real 13 property taxes) have been paid in full except for unpaid real estate taxes on the Bridgeton, New Jersey property in the amount of $320,000 plus interest and penalties (which are estimated at $70,000). 6.16. Agent Fee. The Company shall have paid Agent the Agent fee contemplated under Section 3.4 hereof which is payable on the Effective Date. The date on which all of the conditions precedent listed above are either satisfied or waived is hereinafter referred to as the "Effective Date." ARTICLE VII COMPANY COVENANTS The Company agrees that, so long as any Term Note is outstanding, except to the extent compliance in any case or cases is waived in writing by the Required Banks: 7.1. Maintenance of Property. The Company shall and shall cause each of its Subsidiaries to keep and maintain all of their Properties necessary or useful in their businesses in good condition, and make all necessary renewals, replacements, additions, betterments and improvements thereto; provided, however, that nothing in this sentence shall prevent the Company or any Subsidiary from discontinuing the operation and maintenance of any of their Properties if such discontinuance is, in the judgment of the Company, desirable in the conduct of their business and not disadvantageous in any material respect to the Banks as holders of the Term Notes. In addition to the foregoing, the Company shall keep, maintain and operate all cranberry bogs constituting Collateral on a basis consistent with past practices including, without limitation, the cultivation and harvesting of cranberries on such bogs on a basis consistent with past practice. 7.2. Taxes. The Company shall and shall cause each of its Subsidiaries to duly pay and discharge all taxes, rates, assessments, fees and governmental charges upon or against the Company or any Subsidiary or against their respective Properties in each case before the same becomes delinquent and before penalties accrue thereon unless and to the extent that the same is being contested in good faith and by appropriate proceedings. 7.3. Maintenance of Insurance. The Company shall and shall cause each of its Subsidiaries to maintain insurance with insurers recognized as financially sound and reputable by prudent business persons in such forms and amounts and against such risks as is usually carried by companies engaged in similar business and owning similar Properties in the same general areas in which the Company and the Subsidiaries operate. The Agent, for itself and the benefit of the Banks, shall be named as lender's loss payee and mortgagee under any insurance policies which relate to the Collateral and additional insured with respect to the Company's and its Subsidiaries' liability insurance policies. The Company shall, at the Agent's request, provide copies to the Agent of all insurance policies and other material related thereto maintained by the Company or any Subsidiary from time to time with respect to the Collateral and liability insurance policies. 14 7.4. Financial Reports. The Company will maintain a standard and modern system of accounting in accordance with sound accounting practice and will furnish with reasonable promptness to the Agent and its duly authorized representatives such information respecting the business and financial condition of the Company and its Subsidiaries as may be reasonably requested and, without any request, will furnish to the Agent: (a) as soon as available, and in any event within thirty (30) days after the close of each monthly fiscal period of the Company (or, in the case of the November, 2001 monthly financials and in the case of any month which constitutes the last month of any fiscal quarter, forty-five (45) days after the close of such month), an unaudited, consolidated balance sheet and consolidated statements of income of the Company as at the end of and for such month and for the year to date period then ended, in reasonable detail, and, in the case of the quarterly financial statements, stating in comparative form the figures for the corresponding date and periods in the previous fiscal year, all prepared in accordance with generally accepted accounting principles, subject to year-end audit adjustments and the absence of footnotes; and (b) as soon as available, and in any event within forty five (45) days after the close of each quarterly fiscal period of the Company a copy of the Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission (the "SEC"); and (c) as soon as available, and in any event within one hundred twenty (120) days after the close of each fiscal year, a copy of the audit report for such year and accompanying consolidated financial statements, including balance sheet, reconciliation of change in stockholders' equity, profit and loss statement and statement of source and application of funds for the Company and its Subsidiaries showing in comparative form the figures for the previous fiscal year of the Company, all in reasonable detail, prepared and certified by Deloitte & Touche or other independent public accountants of nationally recognized standing selected by the Company and reasonably acceptable to the Agent; and (d) each of the consolidated financial statements furnished to the Agent pursuant to paragraphs (a), (b) and (c) above shall be accompanied by a Compliance Certificate in the form of Exhibit 7.4 attached hereto signed by its Chief Financial Officer; and (e) promptly upon their becoming available, copies of all registration statements and regular periodic reports, if any, which the Company shall have filed with the SEC or any governmental agency substituted therefor, or any national securities exchange, including copies of the Company's Annual Report on Form 10-K, including financial statements audited by Deloitte & Touche or other independent public accountants of nationally recognized standing selected by the Company and reasonably acceptable to the Agent; and (f) promptly upon the mailing thereof to the shareholders of the Company generally, copies of all consolidated financial statements, reports (including the Company's Annual Report to Shareholders) and proxy statements so mailed; and 15 (g) as soon as available, and in any event within thirty (30) days prior to the end of each fiscal year of the Company, a copy of the Company's consolidated business plan and operating projections for the following fiscal year, such plan to be in reasonable detail prepared by the Company and in form reasonably satisfactory to the Agent; and (h) as soon as available, and in any event within thirty (30) days after the close of each monthly fiscal period of the Company, a statement of sources and uses of funds by the Company for such month in a form reasonably acceptable to Agent; and (i) from time to time, as reasonably requested by Agent, reports regarding the accounts receivable and inventory of the Company as reasonably requested by Agent but in any event no different than similar reports then being provided by the Company to Foothill Capital Corporation under the Foothill Agreement. 7.5. Inspection. The Company shall permit the Agent, by its representatives and agents, and during an Event of Default, any of the Banks, to inspect any of its Properties and those of the Subsidiaries, corporate books and financial records of the Company, to examine and make copies of the books of accounts and other financial records of the Company, and to discuss the affairs, finances and accounts of the Company with, and to be advised as to the same by, its officers at such reasonable times and intervals as the Agent (or any of the Banks, after an Event of Default) may designate upon reasonable advance notice to the Company. Notwithstanding the foregoing, as long as there is no Event of Default, the Company shall not be obligated to permit Agent to make more than four (4) of such inspections in any calendar year (but shall allow unlimited inspections during an Event of Default). The Company shall only be obligated to pay the fees and expenses incurred by Agent or any Bank in connection with inspections conducted pursuant to this Section 7.5 during an Event of Default. 7.6. Consolidation and Merger. Neither the Company nor any Subsidiary will consolidate with or merge into any Person, without the prior written consent of the Required Banks, unless in the case of a consolidation or merger involving the Company or a Subsidiary (a) the Company or the Subsidiary, as the case may be, is the surviving entity, (b) the other party to such transaction is in the same or a related line of business as the Company, and (c) both before and after giving effect to such merger or consolidation, no Default or Event of Default shall have occurred and be continuing, and except that any Subsidiary may consolidate with or merge into the Company (provided that the Company shall be the continuing or surviving corporation) and except for any Permitted Acquisitions. 7.7. Transactions with Affiliates. Except for fees payable to Sun Capital Partners Management LLC not to exceed $1,000,000 in any fiscal year under the Management Services Agreement dated November 5, 2001, between the Company and Sun Capital Partners Management, LLC as in effect on the Effective Date, and the Company's guaranty of the obligations of Richard Teske to M&I Marshall & Ilsley Bank in the principal amount of $1,000,000, the Company will not enter into any transaction, including without limitation, the purchase, sale, lease or exchange of any Property, or the rendering of any service, with any Affiliate of the Company except in the ordinary course of and pursuant to the reasonable requirements of the Company's business and upon fair and reasonable terms no less favorable to the Company than would be obtained in a comparable arm's-length transaction with a Person not 16 an Affiliate of the Company; provided that no payment shall be made to Sun Capital Partners Management LLC under the foregoing Management Services Agreement unless the Company is in compliance with Section 7.10 hereof both before and after giving effect to such payment. 7.8. [Intentionally Deleted] 7.9. Interest Coverage Ratio. The Company shall maintain, (i) for the twelve (12) month period ending February 28, 2003, an Interest Coverage Ratio of not less than 1.2 to 1.0, and (ii) for each twelve (12) month period ending as of the last day of each fiscal quarter thereafter, an Interest Coverage Ratio of not less than 1.50 to 1.0. 7.10. Minimum EBITDA. The Company shall maintain EBITDA of not less than the required amount set forth in the following table for the applicable period set forth opposite thereto: Applicable Amount Applicable Period $ (987,028) For the 3 month period ending January 31, 2002 $ 386,998 For the 4 month period ending February 28, 2002 $ (373,332) For the 5 month period ending March 31, 2002 $ (317,848) For the 6 month period ending April 30, 2002 $ (322,906) For the 7 month period ending May 31, 2002 $ (623,186) For the 8 month period ending June 30, 2002 $ 940,486 For the 9 month period ending July 31, 2002 $ 1,919,009 For the 10 month period ending August 31, 2002 $ 2,198,273 For the 11 month period ending September 30, 2002 $ 2,663,940 For the 12 month period ending October 31, 2002 $ 2,544,056 For the 12 month period ending November 30, 2002 $ 5,123,200 For the 12 month period ending December 31, 2002 $ 6,100,983 For the 12 month period ending January 31, 2003 $ 5,849,227 For the 12 month period ending February 28, 2003 $ 7,689,471 For the 12 month period ending March 31, 2003 $ 8,576,212 For the 12 month period ending April 30, 2003 $ 9,776,655 For the 12 month period ending May 31, 2003 $ 11,480,678 For the 12 month period ending June 30, 2003 $ 10,993,723 For the 12 month period ending July 31, 2003 $ 11,260,402 For the 12 month period ending August 31, 2003 $ 12,518,959 For the12 month period ending September 30, 2003 $ 12,600,000 For the 12 month period ending October 31, 2003 and each rolling twelve month period (measured at the end of each fiscal month) thereafter 7.11. Liens. Neither the Company nor any Subsidiary will pledge, mortgage or otherwise encumber or subject to or permit to exist upon or be subjected to any lien, charge or security interest of any kind (including any conditional sale or other title retention agreement and any lease in the nature thereof excluding operating leases), on any Collateral at any time owned 17 by the Company or any Subsidiary other than the following (all of the following being hereinafter referred to as "Permitted Liens"): (a) liens, pledges, mortgages, security interests, or other charges granted to the Agent for the benefit of the Agent and the Banks; (b) liens, pledges, mortgages, security interests or other charges existing on real property or fixtures to the extent they secure indebtedness incurred to finance the purchase or construction of improvements; (c) mortgages, pledges, security interests or other encumbrances existing on the date hereof and disclosed in Schedule 7.11 attached hereto; (d) liens for taxes, assessments or governmental charges and liens incident to construction, which are either not delinquent or are being contested in good faith by appropriate proceedings which prevent foreclosure of such liens and for which adequate reserves have been provided, and easements, restrictions, minor title irregularities and similar matters which have no adverse effect upon the ownership and use of the affected Property by the Company or any Subsidiary; (e) purchase money liens or the interest of lessors under capitalized leases to the extent that such liens or security interests secure only the payment of all or a part of the purchase price of the property being acquired or purchased and do not extend to any other property or secure any other obligations; (f) the lien granted to Foothill Capital Corporation in the Cliffstar Note and the Cliffstar Purchase Agreement to the limited extent set forth in the Intercreditor Agreement; and (g) with respect to liens described in the foregoing clauses (b), (c) and (e), liens resulting from the refinancing of the related indebtedness, provided that the indebtedness secured thereby shall not be increased over the amount outstanding at the time of refinancing and the liens shall not cover additional assets of the Company or any Subsidiary. 7.12. Distributions. The Company will not make any distributions or declare or pay any dividends (in cash or other property, other than in common stock of the Company) on, or purchase, acquire, redeem or retire any of the Company's capital stock, of any class, whether now or hereafter outstanding, provided that so long as (i) no Event of Default exists or has occurred and is continuing, and (ii) Agent receives not less than ten (10) days' advance written notice, the Company may redeem employee-owned stock of the Company in an aggregate amount not to exceed $350,000 in any fiscal year upon such employee's termination of employment or death. The Company will not make any indemnification payment under Section 6 of the Sun Northland Purchase Agreement except pursuant to a promissory note subordinated to the Banks in a form, and with terms and conditions acceptable to, the Agent and any payment made by the Company's insurers or otherwise on behalf of the Company shall be advanced back to the Company pursuant to a Promissory Note subordinated to the Banks in a form and with terms and conditions acceptable to the Agent. 18 7.13. Investments, Loans, Advances and Acquisitions. Neither the Company nor any Subsidiary will make or retain any investment (whether through the purchase of stock, obligations or otherwise) in or make any loan or advance to, any other Person or acquire substantially as an entirety the Property or business of any other Person, other than: (a) investments in certificates of deposit having a maturity of one year or less issued by any of the Banks; (b) investments, loans and advances in or to any existing Subsidiary or Beaver Valley Cranberry Growers Association, provided that the respective amounts thereof shall not exceed the amounts disclosed to the Banks in the August 31, 2001 financial statements referred to in Section 5.3 hereof; (c) travel advances, entertainment and moving expenses and directors fees to officers, directors and employees of the Company or any Subsidiary in the ordinary course of business; (d) receivables arising in the ordinary course of the Company's and the Subsidiaries' businesses; (e) full faith and credit obligations of the United States of America and securities the payment of principal of and interest on is unconditionally guaranteed by the United States of America; provided that all such obligations and securities shall have a maturity of one year or less; (f) acquisitions of Cranberry Businesses, provided, that such acquisition has the effective written consent or prior approval of the board of directors (or equivalent governing body) of the Person being acquired; (g) loans and advances to Wildhawk, Inc. in an aggregate principal amount outstanding at any time not to exceed Five Hundred Thousand Dollars ($500,000); (h) investments in entities engaged in the Cranberry Business (other than a Permitted Acquisition which shall be governed by Section 7.13(f)) provided that the aggregate amount of such investments outstanding at any one time does not exceed Five Million Dollars ($5,000,000); and (i) other investments in an aggregate amount not to exceed Three Million Dollars ($3,000,000) at any one time outstanding. 7.14. Sale of Property. Neither the Company nor any Subsidiary will sell, lease, assign, transfer or otherwise dispose of (whether in one transaction or in a series of transactions) any Collateral to any other Person; provided, however, that so long as no Event of Default has occurred and is continuing, this Section shall not prohibit: 19 (a) sales of Liquidating Assets; (b) sales of inventory (including crops and severed vines) in the ordinary course of business; and (c) sales or leases of surplus, obsolete or worn-out machinery and equipment. 7.15. Notice of Suit or Adverse Change in Business. The Company shall, as soon as possible, and in any event within five (5) Business Days after an executive officer of the Company learns of the following, give written notice to the Agent of (a) any material proceeding(s) being instituted by or against the Company or any Subsidiary in any federal, state, local or foreign court or before any commission or other regulatory body (federal, state, local or foreign), (b) any Material Adverse Change, and (c) the occurrence of any Event of Default hereunder or any event of default under, and as defined in, the Foothill Agreement. 7.16. ERISA. The Company and each Subsidiary will promptly pay and discharge all obligations and liabilities arising under ERISA of a character which if unpaid or unperformed would result in the imposition of a lien against any of their respective Properties and will promptly notify the Agent of (a) the occurrence of any "reportable event" (as defined in ERISA) which might result in the termination by the PBGC of any Plan, (b) receipt of any notice from the PBGC of its intention to seek termination of any such Plan or appointment of a trustee therefor, and (c) its intention to terminate or withdraw from any Plan. Neither the Company nor any Subsidiary will terminate any such Plan or withdraw therefrom unless the Company shall be in compliance with all of the terms and conditions of this Agreement after giving effect to any liability to the PBGC resulting from such termination or withdrawal. 7.17. Compliance with Laws. The Company shall comply with the requirements of all applicable laws, rules, ordinances, regulations, orders and decrees of any governmental authority other than laws, rules, ordinances, regulations, orders and decrees the non-compliance with which, individually or in the aggregate, would not result in a Material Adverse Change. 7.18. Bridgeton, New Jersey Taxes. The Company acknowledges and agrees that there are past due real estate taxes outstanding as of the date hereof at the Bridgeton, New Jersey facility in the amount of $390,000 and that such taxes will be paid in full by the Company and evidence of payment of such real estate taxes delivered to Agent on or before February 5, 2002. 7.19. Zoning Letters. The Company shall use commercially reasonable efforts to provide Agent, within six (6) months from the date hereof, provide Agent zoning letters executed by the respective governing municipality of each of those parcels of real property constituting Collateral for which the Company executed Amended and Restated Mortgages in favor of Agent for itself and for the benefit of the Banks. Each zoning letter shall be in form and content reasonably acceptable to Agent and shall state (i) the subject premises, or some portion thereof, lies within the boundaries of the respective governing municipality's zoning district, if such a zoning district exists (and if the subject premises lie within more than one zoning district, the Company shall provide a letter from each zoning district); (ii) the zoning designation, if any, applicable to the subject premises; (iii) the use of the subject premises as a cranberry bog is permitted under the applicable zoning designation (or is a legal nonconforming use, a conditional 20 use, or is otherwise permitted under the applicable provisions of the zoning code); and (iv) the use of the subject premises as a cranberry bog complies with all zoning and use codes, ordinances, rules and regulations. If any information provided to Agent hereunder indicates that the use of the subject premises as a cranberry bog is not permitted as contemplated in clause (iii) hereof, the Company shall, within thirty (30) days, remedy such problem and provide evidence to Agent that such problem has been remedied and the subject premises may be used as a cranberry bog as contemplated in said clause (iii). 7.20. Special Assessments. Within thirty (30) days after the Effective Date, the Company shall deliver to Agent evidence of payment of all special assessments at the real properties described on Schedule 4.1(a) attached hereto or other documentation in a form which will enable Chicago Title Insurance to delete all special assessment exceptions from the title policies to be issued to Agent. ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES. 8.1. Events of Default. Any one or more of the following shall constitute an Event of Default: (a) Default in the payment within three (3) days when due of any principal of or interest on any Term Note, or in the payment within five (5) days when due of any costs, expenses or fees under this Agreement or any of the other Loan Documents, whether on demand or at the stated due date thereof or at any other time provided in this Agreement; (b) Default in the observance or performance of any covenant, condition, agreement or provision in Sections 7.6, 7.9, 7.10, 7.11, 7.12, 7.13, 7.14 or 7.18 of this Agreement, or of any provision of the Collateral Documents requiring the maintenance of insurance on the Collateral subject thereto or dealing with the use or remittance of proceeds of such Collateral; (c) Default in the observance or performance of any covenant, condition, agreement or provision in Sections 7.2, 7.3, 7.4 or 7.15 of this Agreement and such default shall continue for five (5) days after written notice thereof to the Company by the Agent; (d) Default in the observance or performance of any other covenant, condition, agreement or provision in this Agreement or in any of the other Loan Documents and such default shall continue for thirty (30) days after written notice thereof to the Company by the Agent; (e) Any default under the Foothill Agreement or the Equitable Agreement shall occur and be continuing and, as a result of such default, the obligations under the Foothill Notes, the Foothill Agreement or the Equitable Agreement shall have become or shall have been declared due and payable prior to the maturity thereof; 21 (f) Default shall occur under any evidence of indebtedness for borrowed money in an aggregate principal amount in excess of Two Million Five Hundred Thousand Dollars ($2,500,000) issued or assumed or guaranteed by the Company or any Subsidiary (other than indebtedness under the Foothill Agreement) or under any mortgage, agreement or other similar instrument under which the same may be issued or secured and such default shall continue for a period of time sufficient to permit the acceleration of maturity of any indebtedness evidenced thereby or outstanding thereunder; (g) Any representation or warranty made by the Company herein or in any of the other Loan Documents or in any statement or certificate furnished by it pursuant hereto or thereto proves untrue in any material respect as of the date of the issuance or making thereof; (h) Any judgment or judgments, writ or writs, or warrant or warrants of attachment, or any similar process or processes in an aggregate amount in excess of Five Hundred Thousand Dollars ($500,000) shall be entered or filed against the Company, any Subsidiary or against any of their respective Property or assets and remains unpaid, unvacated, unbended or unstayed for a period of thirty (30) days from the date of its entry; (i) The Company or any Subsidiary (other than Wildhawk, Inc. and W.S.C. Water Management Corp.) shall (i) have entered involuntarily against it an order for relief under the Bankruptcy Code of 1978, as amended, (ii) not pay, or admit in writing its inability to pay, its debts generally as they become due or suspend payment of its obligations, (iii) make an assignment for the benefit of creditors, (iv) apply for, seek, consent to, or acquiesce in, the appointment or a receiver, custodian, trustee, conservator, liquidator or similar official for it or any substantial part of its Property, (v) institute any proceeding seeking to have entered against it an order for relief under the Bankruptcy Code of 1978, as amended, to adjudicate it insolvent, or seeking dissolution, winding up, liquidation, reorganization, arrangement, marshalling of assets, adjustment or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors or fail to file an answer or other pleading denying the material allegations of any such proceeding filed against it, (vi) fail to contest in good faith any appointment or proceeding described in Section 8.1(j) hereof, or (vii) take any action in furtherance of any of the foregoing purposes; or (j) A custodian, receiver, trustee, conservator, liquidator or similar official shall be appointed for the Company, any Subsidiary (other than Wildhawk, Inc. and W.S.C. Water Management Corp.) or any substantial part of their respective Property, or a proceeding described in Section 8.1(i)(v) shall be instituted against the Company and such appointment continues undischarged or any such proceeding continues undismissed or unstayed for a period of sixty (60) days. (k) There shall occur a "Change in Control" with respect to the Company. For this purpose, a "Change in Control" means any of the following: 22 (i) Sun Capital Partners II LP shall cease to be the managing member of Sun Northland, LLC; (ii) Sun Northland, LLC shall cease to own, on a fully-diluted basis, more than fifty percent (50%) of the outstanding securities of the Company entitled generally to vote for the election of directors ("Voting Securities"); (iii) The Company merges with or into any Person, or any Person merges with or into the Company in a transaction in which the outstanding Voting Securities are converted into or exchanged for cash, securities or other property other than a transaction where the Voting Securities outstanding immediately prior to such transaction are converted into or exchanged for voting stock of the surviving or transferee Person and such voting stock constitutes a majority of the outstanding shares of voting stock of such surviving or transferee Person (immediately after giving effect to such issuance); or (iv) All or substantially all of the assets of the Company and its Subsidiaries, on a consolidated basis, are sold or disposed of. (l) Foothill Capital Corporation (or its successors or assigns) shall send a Foothill Notice (as defined in the Intercreditor Agreement) to Agent under Section 2.6(d) of the Intercreditor Agreement. Notwithstanding the provisions of 8.1(i), hereof, the liquidation and dissolution of Northland Cranberries Sales Corp., Potomac Foods of Virginia, Inc. and/or PVFA Acquisition Corp. shall not be deemed to be an Event of Default hereunder. 8.2. Remedies for Non-Bankruptcy Defaults. When any Event of Default, other than an Event of Default described in subsections (i) or (j) of Section 8.1 hereof, has occurred and is continuing, the Agent upon instruction of the Required Banks shall, by notice to the Company, declare the principal of and the accrued interest on the Term Notes then outstanding to be forthwith due and payable and thereupon said Term Notes, including both principal and interest, shall be and become immediately due and payable together with all other amounts payable under this Agreement without further demand, presentment, protest or notice of any kind. 8.3. Remedies for Bankruptcy Defaults. When any Event of Default described in subsections 8.1(i) or 8.1(j) has occurred and is continuing, then the then unpaid balance of the Term Notes, including both principal and interest, and all fees, charges and commissions payable hereunder, shall immediately become due and payable without presentment, demand, protest or notice of any kind, the obligation of the Banks to extend further credit pursuant to any of the terms hereof shall immediately terminate and the Bank may exercise all remedies available to it under the Collateral Documents. 23 ARTICLE IX DEFINITIONS. The following terms when used herein shall have the following meanings; such terms to be equally applicable to both the singular and plural of the terms defined (capitalized terms defined elsewhere in this Agreement to have the meanings so ascribed to them in all provisions of this Agreement). "Adjusted Cliffstar Payments" means all Cliffstar Payments other than payments attributable to interest accrued under the Cliffstar Note. "Adjustment Date" shall have the meaning set forth in Section 10.14 hereof. "Affiliate" shall mean any person, firm, corporation or entity (herein collectively called a "Person") directly or indirectly controlling or controlled by, or under direct or indirect common control with, another Person. A Person shall be deemed to control another Person for the purposes of this definition if such first Person possesses, directly or indirectly, the power to direct, or cause the direction of, the management and policies of the second Person, whether through the ownership of voting securities, common directors, trustees or officers, by contract or otherwise. "Agreement" shall mean this Amended and Restated Credit Agreement, as the same may be further supplemented and amended from time to time. "Annual Earnout Amount" has the meaning set forth in the Cliffstar Purchase Agreement. "Assignment Agreement" has the meaning set forth in the first paragraph of this Agreement. "Assignment, Assumption and Release Agreement" shall mean the Assignment, Assumption and Release Agreement by and between the Banks, LaSalle Bank National Association and Sun Northland, LLC dated as of the date hereof. "Assignment Certificate" shall have the meaning set forth in Section 10.14 hereof. "Average Total Debt" shall mean the arithmetic average of the Total Debt outstanding at the end of each of the fifteen (15) Business Days following, and each of the fifteen (15) days preceding (or such fewer number of days to the date hereof) the Funded Debt Determination Date. "Bank Stock" shall the meaning set forth in Section 5.15 hereof. "Base Rate" shall mean a fluctuating interest rate per annum at all times equal to the rate of interest announced by the Agent from time to time as its prime commercial rate with any change in such rate resulting from a change in said prime commercial rate to be effective as of the date of the relevant change in said prime commercial rate. The Agent may lend at rate higher or lower than or the same as the Base Rate. 24 "Business Day" shall mean any day (other than a Saturday or Sunday) on which banks are generally open for business in Minneapolis, Minnesota. "Cliffstar Note" means the Promissory Note dated March 8, 2000, issued by Cliffstar Corporation to the Company in the original principal amount of $28,000,000. "Cliffstar Payment" means any amount received by the Company after the date hereof (i) as a payment under the Cliffstar Note (whether for principal, interest or otherwise and whether as a regularly scheduled payment, a mandatory or voluntary prepayment, upon default or otherwise), (ii) as an Earnout Termination Payment, or (iii) as a payment on the Earnout Amount (including, without limitation, any Annual Earnout Amount). "Cliffstar Purchase Agreement" shall mean that certain Asset Purchase Agreement dated January 5, 2000, by and between Cliffstar Corporation and the Company, as amended by that certain first Amendment to Asset Purchase Agreement dated as of March 8, 2000. "Collateral" shall mean all property and rights that may from time to time secure the payment of any of the Company's indebtedness, obligations and liabilities to the Bank under any of the Loan Documents. "Collateral Documents" shall mean all mortgages, deeds of trust, security agreements, collateral pledge agreements, assignments, financing statements and other documents as shall from time to time secure any of the Term Notes and other obligations of the Company to the Bank. "Cranberry Businesses" shall mean the operation of cranberry bogs (and the development thereof) and the production, distribution, processing, marketing and brokering of cranberries, cranberry products and other fresh fruit or juice products. "Default Rate" shall have the meaning set forth in Section 2.1(b) hereof. "Earnout Amount" has the meaning set forth in the Cliffstar Purchase Agreement. "Earnout Termination Payment" has the meaning set forth in the Cliffstar Purchase Agreement. "EBITDA" shall mean, with respect to any fiscal period, the Company's and its Subsidiaries' consolidated net earnings (or loss), minus extraordinary gains and interest income, plus interest expense, income taxes, non-cash nonrecurring, unusual or extraordinary losses and depreciation and amortization for such period, as determined in accordance with generally accepted accounting principles consistently applied. "Effective Date" shall have the meaning set forth in Article VI hereof. "Equitable Agreement" shall mean the Intercreditor Agreement between the Company and Equitable Life Assurance Society of the United States. 25 "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as the same may, from time to time, be supplemented or amended. "Event of Default" shall mean any event or condition specified as such in Section 8.1 hereof and "Default" shall mean any event or condition which with the lapse of time, the giving of notice or both would constitute an Event of Default. "Exiting Bank Agreement" means that certain Assignment, Assumption and Release Agreement between the Other Lenders and Sun Northland LLC pursuant to which the Other Lenders assign to Sun/Northland LLC all of their Revolving Credit Loans and L/C participations under the Original Credit Agreement, all interest accrued thereon and certain collateral securing the same in a form acceptable to the Banks. "Foothill Agreement" means the Loan and Security Agreement between the Company and Foothill Capital Corporation dated the Effective Date. "Foothill Liens" means the liens and security interests granted in favor of Foothill Capital Corporation under the Foothill Agreement or pursuant to any other documents and agreements executed in connection therewith as in effect on the Effective Date. "Foothill Notes" means the promissory notes issued by the Company in favor of Foothill Capital Corporation under the Foothill Agreement. "Funded Debt" shall mean as of the date of determination, the Average Total Debt during the twelve (12) month period ending on the date of determination. "Funded Debt Determination Date" shall mean the date during the twelve-month period preceding the date of determination of Funded Debt on which Total Debt was the lowest. "Intercreditor Agreement" shall mean the Intercreditor Agreement described in Section 6.13 hereof. "Interest Coverage Ratio" shall mean, for any twelve (12) month period, the relationship, expressed as a numerical ratio, between (i) EBITDA for such period, and (ii) Interest Expense for such period. "Interest Expense" shall mean for any period all consolidated interest expense (whether paid or accrued) during such period (including that attributable to capitalized losses), all determined in accordance with generally accepted accounting principles consistently applied. "Liquidating Assets" means the real estate, fixtures and the equipment located thereon which is located in Plymouth County, Massachusetts, Eau Claire, Michigan and/or Bridgeton, New Jersey, which is included among the Collateral granted to the Banks. "Loan Documents" shall mean this Agreement, the Collateral Documents, the Term Notes, the Intercreditor Agreement, the Stockholders Agreement and the Registration Agreement. 26 "Material Adverse Change" means (a) a material adverse change in the business, prospects, operations, results of operations, assets, liabilities or condition (financial or otherwise) of the Company, (b) a material impairment of the Company's ability to perform its obligations under the Loan Documents or of the Banks' ability to enforce the Obligations or realize upon the Collateral, or (c) a material impairment of the enforceability or priority of the liens granted to Banks in the Collateral as a result of an action or failure to act on the part of the Company. "Monthly Installment Amount" shall mean $133,411.11; provided, however, that at such time as (a) the Company sells or otherwise disposes of all of the Liquidating Assets and timely applies the proceeds thereof to prepayment of the Term Notes as required under Section 3.3(a) hereof, and (b) the Company timely pays the installment due on the one (1) year anniversary of the Effective Date under Section 3.1(a) hereof, then the Monthly Installment Amount shall thereupon be decreased to an amount equal to the quotient of (i) the then outstanding principal balance of the Term Notes, divided by (ii) one hundred eighty (180) less the number of months elapsed since the Effective Date. "Other Lenders" shall mean Wells Fargo Bank Minnesota, N.A., Bank One, NA, M&I Marshall & Ilsley Bank and Bank of America, National Association. "PBGC" shall mean the Pension Benefit Guaranty Corporation. "Percentage" shall mean, as to any Bank, the percentage set forth below such Bank's name on the signature pages hereof, as adjusted by assignments pursuant to Section 10.14 hereof. "Permitted Liens" shall have the meaning specified in Section 7.11 hereof. "Permitted Property" shall mean all Property except receivables, crops, inventory and the Collateral. "Person" shall mean any individual, sole proprietorship, partnership, limited liability company, joint venture, trust, unincorporated organization, association, corporation, institution, entity, party or government (whether national, federal, state, provincial, county, city, municipal or otherwise, including, without limitation, any instrumentality, division, agency, body or department thereof). "Plan" shall mean any employee benefit plan covering any officers or employees of the Company, any benefits of which are, or are required to be, guaranteed by the PBGC. "Property" shall mean any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible. "Registration Agreement" means the Registration Agreement dated as of the date hereof by and among Sun Northland, LLC, the Banks other than LaSalle Bank National Association, the Company and Foothill Capital Corporation. "Required Banks" shall mean, as of any date of determination, Banks holding at least sixty-six and 2/3 percent (66-2/3%) of the Percentages. 27 "SEC" shall have the meaning specified in Section 7.4 hereof. "Set-off" shall have the meaning set forth in Section 10.13 hereof. "Stockholders Agreement" means the Stockholders Agreement dated as of the date hereof by and among Sun Northland, LLC, the Banks, the Company and Foothill Capital Corporation as contemplated under Section 6.12 hereof. "Subsidiary" shall mean collectively any corporation or other entity at least a majority of the outstanding voting shares or other equity interests of which is at the time owned directly or indirectly by the Company and/or its Subsidiaries. "Sun Northland Purchase Agreement" shall mean the Stock Purchase Agreement between the Company and Sun Northland, LLC dated the Effective Date. "Term Loan" shall have the meaning specified in Section 1.1 hereof. "Term Notes" shall have the meaning specified in Section 1.1 hereof. "Total Debt" shall mean (without duplication) all consolidated indebtedness for borrowed money of the Company and its Subsidiaries, and shall include indebtedness for borrowed money created, assumed or guaranteed by the Company either directly or indirectly, including the Foothill Notes and all amounts outstanding under this Agreement, including the aggregate principal amount of Term Notes outstanding. "UCC" shall mean the Uniform Commercial Code as the same may from time to time be in effect in the State of Wisconsin. ARTICLE X MISCELLANEOUS. 10.1. Holidays. If any principal of any of the Term Notes shall fall due on a Saturday, Sunday or on another day which is a legal holiday for lenders in the State of Minnesota, interest at the rates such Term Notes bear for the period prior to maturity shall continue to accrue on such principal from the stated due date thereof to and including the next succeeding Business Day on which the same is payable. 10.2. No Waiver, Cumulative Remedies. No delay or failure on the part of the Agent or the Banks in the exercise of any power or right shall operate as a waiver thereof, nor as an acquiescence in any Default or Event of Default nor preclude any other or further exercise thereof, or the exercise of any other power or right, and the rights and remedies hereunder of the Agent and the Banks are cumulative to, and not exclusive of, any rights or remedies which any of them would otherwise have. 10.3. Waivers, Modifications and Amendments. The Required Banks and the Company may, from time to time, enter into written amendments, supplements or modifications hereto for the purpose of adding provisions to any Loan Document or for the purpose of changing in any 28 manner the rights of the Banks or of the Company thereunder, and the Required Banks may execute and deliver to the Company a written instrument waiving, on such terms and conditions as the Required Banks may specify in such instrument, any of the requirements of any Loan Document or any Default or Event of Default and its consequences; provided, however, that no amendment, modification, termination, waiver or consent shall do any of the following unless the same shall be in writing and signed by all Banks: (a) reduce the amount of any payment of principal of or interest on any loan payable to the Banks hereunder; (b) postpone any date fixed for any payment of principal of or interest on any outstanding loan payable to the Banks hereunder; (c) change the definition of "Required Banks;" (d) amend this Section 10.3 or any other provision of this Agreement requiring the consent or other action of the Required Banks or all of the Banks; (e) release any guaranty; (f) release all or substantially all of the Collateral except the Liquidating Assets; or (g) consent to the assignment or transfer by the Company of any of its rights and obligations under this Agreement (provided that none of the foregoing shall be deemed to prohibit Required Banks, without the consent of all Banks, from agreeing to forbear from pursuing rights and remedies against the Company in the event of a default hereunder). In the case of any waiver, the Company and the Banks shall be restored to their former position and rights under the Loan Documents, and any Default or Event of Default waived shall be deemed to be cured and not continuing. However, no waiver of a Default or Event of Default shall extend to any subsequent or other Default or Event of Default, or impair any right consequent thereon. No amendment, supplement, modification, or waiver shall be effective except if in writing and duly executed by the Required Banks or each Bank, as applicable, the Agent and the Company. 10.4. Costs and Expenses. The Company agrees to pay on demand all reasonable out-of-pocket costs and expenses of the Agent and the Banks in connection with the negotiation, preparation, execution, delivery, recording and/or filing and/or release of this Agreement, the Term Notes and the Collateral Documents and the other instruments and documents to be delivered hereunder or thereunder or in connection with the transactions contemplated hereby or thereby or in connection with any consents hereunder or thereunder or waivers or amendments hereto or thereto, (excluding fees and expenses incurred in connection with any inspection conducted under Section 7.5 hereof unless such inspection is performed during an Event of Default), including the fees and expenses of counsel for the Agent with respect to all of the foregoing, and all recording, filing, title insurance or other fees, costs and taxes incident to perfecting a lien upon the collateral security for the Term Notes, and all reasonable costs and expenses (including reasonable attorneys' fees), incurred by the Agent, any security trustee for the Banks or any of the Banks in connection with a Default or the enforcement of this Agreement, the Term Notes or the Collateral Documents and the other instruments and documents to be delivered hereunder or thereunder. The Company agrees to indemnify and save the Agent and the Banks and any security trustee for the Banks harmless from any and all liabilities, losses, costs and expenses incurred by the Banks in connection with any action, suit or proceeding brought against the Banks or security trustee by any person which arises out of the transactions contemplated or financed hereby or by the Term Notes or Collateral Documents or out of any action or inaction by any of the Banks or any security trustee hereunder or thereunder, except for such thereof as is caused by the gross negligence or willful misconduct of the party indemnified. All amounts chargeable to the Company under this Section 10.4 shall be obligations secured by the Collateral. The provisions of this Section 10.4 hereof shall survive payment of the Notes. 29 10.5. Survival of Representations. All representations and warranties made herein or in the Collateral Documents or in certificates given pursuant hereto shall survive the execution and delivery of this Agreement, the Collateral Documents and the Term Notes, and shall continue in full force and effect with respect to the Effective Date. 10.6. Construction. The parties hereto acknowledge and agree that this Agreement shall not be construed more favorably in favor of one than the other based upon which party drafted the same, it being acknowledged that all parties hereto contributed substantially to the negotiation and preparation of this Agreement. 10.7. Accounting Principles. All computations of compliance with the terms hereof shall be made on the basis of generally accepted principles of accounting applied in a manner consistent with those used in the preparation of the audit report of the Company referred to in the first sentence of Section 5.3 hereof. 10.8. Addresses for Notices. All communications provided for herein shall be in writing and shall be deemed to have been given or made when served personally, where delivered using a reputable overnight courier service or three days after being deposited in the United States of America mail addressed, if to the Company, at 800 First Avenue South, Wisconsin Rapids, Wisconsin 54495-8020, Attention: John Swendrowski; if to the Agent at U.S. Bank National Association, 601 Second Avenue South, Minneapolis, Minnesota 55402-4302, Attention: Stephen Tornio; or, if to any of the Banks, at their addresses set forth on the signature pages hereto, or at such other address as shall be designated by any party hereto in a written notice given to each party pursuant to this Section 10.8. 10.9. Headings. Article and Section headings used in this Agreement are for convenience of reference only and are not a part of this Agreement for any other purpose. 10.10. Severability of Provisions. Any provision of this Agreement which is unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provision in any other jurisdiction. All rights, remedies and powers provided in this Agreement and the Term Notes may be exercised only to the extent that the exercise thereof does not violate any applicable mandatory provisions of law, and all the provisions of this Agreement and the Term Notes are intended to be subject to all applicable mandatory provisions of law which may be controlling and to be limited to the extent necessary so that they will not render this Agreement or the Term Notes invalid or unenforceable. 10.11. Counterparts. This Agreement may be executed in any number of counterparts, and by different parties hereto on separate counterparts, and all such counterparts taken together shall be deemed to constitute one and the same instrument. 10.12. Binding Nature, Governing Law, Etc. This Agreement shall be binding upon the Company and its successors and assigns, and shall inure to the benefit of the Agent and each of the Banks and the benefit of their respective successors and assigns, including any subsequent holder of an interest in the Term Notes. This Agreement, together with the Term Notes and Collateral Documents constitutes the entire understanding of the parties with respect to the 30 subject matter hereof and any prior agreements, whether written or oral, with respect thereto are superseded hereby except for prior understandings related to fees payable to the Banks. This Agreement, the Loan Documents and the rights and obligations of the parties thereto shall be governed by, and construed and interpreted in accordance with the internal laws of the State of Wisconsin. Venue for the settlement of disputes under this Agreement shall be in the United States District Court for the Eastern District of Wisconsin or the Circuit Court of Milwaukee County, Wisconsin. The Company consents to the exercise of jurisdiction by these courts and the vesting of venue therein. THE COMPANY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS TO ALL SUCH SERVICE OF PROCESS MADE BY MAIL OR BY MESSENGER DIRECTED TO IT AT THE ADDRESS SPECIFIED IN SECTION 10.8 HEREOF. 10.13. Rights of Banks. (a) The Company authorizes the Agent to disclose to any Bank any financial or other information pertaining to the Company. (b) If any Bank (each, a "Replaceable Bank") requests compensation pursuant to Sections 2.3 or 3.6 at a rate materially in excess of that requested by any other Bank, the Company may, with the consent of the Agent, which consent shall not be unreasonably withheld, propose that another lender (a "Replacement Bank") which lender may be an existing Bank, be substituted for and replace the Replaceable Bank for purposes of this Agreement. In the event a Replacement Bank is so substituted for the Replaceable Bank, then such substitution shall take place on a date acceptable to the Company, the Replaceable Bank and the Replacement Bank, as the case may be, but in no event later than the latest maturity date of any financial accommodations then outstanding hereunder, and such substitution shall take place through the execution of such instruments and documents as are required under Section 10.14(a) and (b) hereof. All expenses of the Bank incurred in connection with the foregoing shall be paid by the Company. (c) In the event the Bank or any Participant shall receive and retain any payment, whether by set-off or application of deposit balances or otherwise ("Set-off"), on or in respect of any loan or other obligation outstanding under this Agreement or the other Loan Documents in excess of its ratable share of payments on the Term Loan and other obligations then outstanding, then such Bank shall purchase for cash at face value, but without recourse, ratably from each of the other Banks such amount of such loan and other obligations held by each such other party (or interest therein) as shall be necessary to cause such Bank to share such excess payment ratably with all the other Banks; provided, however, that if any such purchase is made by any Bank, and if such excess payment or part thereof is thereafter recovered from such purchasing party, the related purchases from the other Banks shall be rescinded ratably and the purchase price restored as to the portion of such excess payment so recovered, but without interest. 10.14. Addition of Banks. Any Bank, at any time upon at least two (2) Business Days prior written notice to the Agent and the Company, may assign all or a portion (provided such portion is not less than One Million Dollars ($1,000,000) in the aggregate) of such Bank's Notes 31 and loans to a domestic or foreign bank (having a branch office in the United States of America), an insurance company or other financial institution (an "Applicant") on any date (the "Adjustment Date") selected by such Bank, but only so long as the Agent shall have provided its prior written approval of such proposed Applicant, which prior written approval will not be unreasonably withheld. Upon receipt of such approval and to confirm the status of each additional Bank as a party to this Agreement and to evidence the assignment in accordance herewith: (a) The Agent, the Company, the assigning bank and such Applicant shall, on or before the Adjustment Date, execute and deliver to the Agent an Assignment Certificate in substantially the form of Exhibit 10.14 (an "Assignment Certificate"); (b) The assigning bank or the Applicant shall pay the Agent a processing fee of Three Thousand Five Hundred Dollars ($3,500); (c) The Company will execute and deliver to the Agent, for delivery by the Agent in accordance with the terms of the Assignment Certificate, (i) a new Term Note payable to the order of the Applicant in amounts corresponding to the Percentage of the Term Note acquired by such Applicant, and (ii) a new Term Note payable to the order of the assigning Bank in an amount corresponding to the retained Percentage of the Term Loan. Such new Term Notes shall be in aggregate principal amounts equal to the aggregate principal amounts of the Term Note to be replaced, shall be dated the effective date of such assignment and shall otherwise be in the form of the Term Note to be replaced thereby. Such new Term Notes shall be issued in substitution for, but not in satisfaction or payment of, the Term Notes being replaced thereby and such new Term Note shall be treated as a Term Note for purposes of this Agreement. Upon the execution and delivery of such Assignment Certificate and such new Term Notes and the payment of the processing fee: (a) this Agreement shall be deemed to be amended to the extent, and only to the extent, necessary to reflect the addition of such additional Bank and the resulting adjustment of the Percentages arising therefrom; (b) the assigning Bank shall be relieved of all obligations hereunder to the extent of a reduction of the assigning Bank's Percentage; and (c) the additional Bank shall become a party hereto and shall be entitled to all rights, benefits and privileges accorded to a Bank herein and in each other Loan Document or other document or instrument executed pursuant hereto and subject to all obligations of a Bank hereunder, including, without limitation, the right to approve or disapprove actions which, in accordance with the terms hereof, require the approval of the Required Banks or all Banks. Promptly after the execution of any Assignment Certificate, a copy thereof shall be delivered by the Agent to each Bank and to the Company. In order to facilitate the addition of additional Banks hereto, the Company and the Banks shall cooperate fully with the Agent in connection therewith and shall provide all reasonable assistance requested by the Agent relating thereto, including, without limitation, the furnishing of such written materials and financial information regarding the Company as the Agent may reasonably request, the execution of such documents as the Agent may reasonably request with respect thereto, and the participation by officers of the Company, and the Banks in a meeting or teleconference call with any Applicant upon the request of the Agent. 32 10.15. WAIVER OF JURY TRIAL. THE COMPANY AND THE BANKS HEREBY IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY LOAN DOCUMENT OR ANY INSTRUMENT OR DOCUMENT DELIVERED HEREUNDER. 10.16. Confidentiality. Each of the Agent and the Banks agrees to keep confidential all non-public information provided to it by the Company or any Subsidiary pursuant to this Agreement that is designated by the Company or any Subsidiary as confidential; provided; however, that nothing contained herein shall prevent the Agent or any Bank from disclosing any such information (a) to the Agent, any other Bank or any affiliate of any Bank which agrees to comply with the provisions of this Section, (b) to any Applicant or prospective Applicant which agrees to comply with the provisions of this Section, (c) any of its employees, directors, agents, attorneys, accountants and other professional advisors, (d) upon request or demand of any governmental authority having jurisdiction over it, (e) in response to any order of any court or other governmental authority or as may otherwise be required pursuant to any law, rule or regulation, (f) if requested or required to do so in connection with any litigation or similar proceeding, (g) which has been publicly disclosed other than in breach of this Section, or (h) in connection with the exercise of any remedy hereunder or under any other Loan Document. ARTICLE XI THE AGENT. 11.1. Appointment and Authorization. Each Bank hereby irrevocably appoints U.S. Bank as Agent for the Banks under this Agreement and hereby authorizes the Agent to take such action as Agent on its behalf and to exercise such powers under this Agreement as are delegated to the Agent by the terms hereof, together with such powers as are reasonably incident thereto. The relationship between the Agent and the Banks is and shall be that of Agent and principal only, and nothing contained in this Agreement or any other Loan Document shall be construed to constitute the Agent as a trustee or fiduciary for any Bank or the Company. 11.2. Agent and Affiliates. In its capacity as a Bank hereunder, the Agent shall have the same rights and powers under this Agreement as any other Bank and may exercise or refrain from exercising the same as though it were not an Agent, and the agent and its affiliates may accept deposits from, lend money to, and generally engage in any kind of business with the Company or any Subsidiary or Affiliate of the Company as if it were not the Agent hereunder. The terms Bank and Banks as used in the Loan Documents, unless the context otherwise clearly requires, include the Agent in its individual capacity as a Bank. 11.3. Action by Agent. Except for action expressly required of the Agent hereunder, the Agent shall in all cases be fully justified in failing or refusing to act hereunder unless the Agent shall be indemnified to its reasonable satisfaction by the Banks against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. In all cases in which this Agreement does not require the Agent to take certain actions, the Agent shall be fully justified in using its discretion in failing to take or in taking any action hereunder. Without limiting the generality of the foregoing, the Agent shall not be required to 33 take any action with respect to any Event of Default, except as expressly provided in Section 8.2. The Agent shall be acting as an independent contractor hereunder and nothing herein shall be deemed to impose on the Agent any fiduciary obligations to the Banks or the Company. 11.4. Consultation with Experts. The Agent may consult with legal counsel, independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken by it in good faith in accordance with the advice of such counsel, accountants or experts. 11.5. Liability of Agent. Neither the Agent nor any of its directors, officers, agents or employees shall be liable for any action taken or not taken by it in connection herewith (i) with the consent or at the request of the Required Banks or (ii) in the absence of its own gross negligence or willful misconduct. Neither the Agent nor any of its directors, officers, agents or employees shall be responsible for or have any duty to ascertain, inquire into or verify (i) any statement, warranty or representation made in connection with this Agreement or any borrowing hereunder; (ii) the performance or observance of any of the covenants or agreements of the Borrowers; (iii) the satisfaction of any condition specified in Section 6, except receipt of items required to be delivered to the Agent; or (iv) the validity, effectiveness or genuineness of this Agreement, the Term Notes or any other instrument or writing furnished in connection herewith. The Agent shall not incur any liability by acting in reliance upon any notice, consent, certificate, request or statement (whether written or oral) or other document believed by it to be genuine or to be signed or sent by the proper party or parties and, in the case of legal matters, in relying on the advice of counsel (including counsel for the Company). The Agent may treat the Banks that are named herein as the holders of the Term Notes and the indebtedness contemplated herein unless and until the Agent receives notice of the assignment of the Term Note and the indebtedness held by a Bank hereunder pursuant to an assignment contemplated by Section 10.14 hereof. 11.6. Indemnification. Each Bank shall, ratably in accordance with its Percentage, indemnify the Agent (to the extent not reimbursed by the Company) against any cost, expenses (including reasonable counsels' fees and disbursements) , claims, demands, actions, losses, obligations, damages, penalties, judgments, suits or liability (except such as result from the Agent's gross negligence or willful misconduct) that the Agent may suffer or incur in connection with this Agreement or any action taken or omitted by the Agent hereunder. 11.7. Credit Decision. Each Bank acknowledges that it has, independently and without reliance upon the Agent or any other Bank, and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Bank also acknowledges that it will, independently and without reliance upon the Agent or any other Bank, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking any action under this Agreement. 11.8. Resignation or Removal of Agent and Successor Agent. Subject to the appointment and acceptance of a successor Agent as provided below, the Agent may resign at any time by giving written notice thereof to the Banks and the Company at any time. Upon any such resignation of the Agent, the Required Banks shall have the right to appoint, with the 34 consent of the Company, a successor Agent. If no successor Agent shall have been so appointed by the Required Banks, and shall have accepted such appointment, within thirty (30) days after, as the case may be, the retiring Agent's giving of notice of resignation, then the retiring Agent may, on behalf of the Banks, appoint a successor Agent, which shall be a commercial bank organized under the laws of the United States of America or of any state thereof that has a combined capital and surplus of at least Two Hundred Million Dollars ($200,000,000). Upon the acceptance of its appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations hereunder. After any retiring Agent's resignation hereunder as Agent, the provisions of this Section 11 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent. [Signatures on next page] 35 Upon your acceptance hereof in the manner hereinafter set forth, this Agreement shall be a contract between us for the purposes hereinabove set forth. Dated as of November 6, 2001. NORTHLAND CRANBERRIES, INC. By: /s/ John Swendrowski ----------------------------------------- John Swendrowski, Chief Executive Officer Accepted and agreed to as of the day and year last above written. U.S. BANK NATIONAL ASSOCIATION By: /s/ ----------------------------------------- Its: ---------------------------------------- Term Loan: $16,013,000 Percentage: 62.273470% Address: MPFP2516 601 Second Avenue South Minneapolis, Minnesota 55402-4302 Attention: Stephen Tornio, Vice President ST. FRANCIS BANK, F.S.B. By: /s/ ----------------------------------------- Its: ---------------------------------------- Term Loan: $2,857,000 Percentage: 11.110679% Address: 13400 Bishops Lane, Suite 190 Brookfield, Wisconsin 53005-6203 Attention: John Tans, Vice President/Commercial Banking 36 ARK CLO 2000-1 LIMITED By: /s/ ----------------------------------------- Its: ---------------------------------------- Term Loan: $6,844,000 Percentage: 26.615851% Address: c/o Patriarch Partners, LLC 40 Wall Street, 25th Floor New York, NY 10005 Attention: Dennis Dolan/Lynn Tilton and Address: c/o Woodside Capital 36 Bay State Road Cambridge, Massachusetts 02138 Attention: David Ray 37 LIST OF EXHIBITS Exhibit 1.1 Form of Term Note Exhibit 7.4 Form of Compliance Certificate Exhibit 10.14 Form of Assignment Certificate 38 LIST OF SCHEDULES Schedule 4.1(a) Company Real Property and Improvements Schedule 4.1(b) Equipment List Schedule 5.3 Material Adverse Change Since August 31, 2001 Schedule 5.4 Litigation; Taxes; Consents Schedule 5.13 Environmental Disclosures Schedule 5.14 Pro Forma Balance Sheet Schedule 5.16 Capitalization Schedule 7.11 Existing Liens 39 EX-4.3 10 sdc74i.txt STOCKHOLDERS' AGREEMENT STOCKHOLDERS' AGREEMENT THIS STOCKHOLDERS' AGREEMENT (this "Agreement") is made as of November 6, 2001, by and among (i) Sun Northland, LLC, a Delaware limited liability company ("Sun"), (ii) each of the Persons whose name appears on the signature page hereto or who otherwise hereafter becomes a party to this Agreement (the "Minority Stockholders"), and (iii) Northland Cranberries, Inc., a Wisconsin corporation (the "Company"). Certain other capitalized terms used herein are defined in Section 1. NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement hereby agree as follows: 1. Certain Definitions. The terms defined in this Section 1, whenever used in this Agreement, shall, unless the context clearly otherwise requires, have the following respective meanings: "Affiliate" of a Person shall mean any other Person, directly or indirectly controlling, controlled by or under common control with such Person. "Applicable Percentage" shall have the meaning set forth herein in Section 3.1(c). "Bank Group" shall mean U.S. Bank National Association, ARK CLO 2000-1 Limited, and St. Francis Bank, F.S.B. "Common Stock" shall mean the Class A Common Stock, $0.01 par value per share, of the Company as constituted on the date hereof and any stock into which any such common stock shall have been changed or any stock resulting from any reclassification of any such common stock. "Common Stock Equivalents" shall mean Common Stock and any securities convertible or exchangeable for shares of Common Stock. "Company" shall have the meaning set forth in the preamble of this Agreement. "Exempt Transfer", as applied to any Stockholder, shall mean (a) any sale or Transfer permitted by the Registration Agreement, (b) any Permitted Affiliate Sale, (c) in the case of an individual, any Transfer to a member of the Family of such Stockholder, if such individual agrees to be bound by the terms of this Agreement and executes a joinder hereto, or (d) any Transfer to another Stockholder. "Family", as applied to any individual, shall mean (a) the children of such individual (by birth or adoption), (b) the parents, spouse and siblings of such individual, (c) the children of such siblings, (d) any trust solely for the benefit of, or any partnership, limited liability company or other entity owned solely by, any one or more of such aforementioned individuals (so long as such individual has the exclusive right to control such trust or other entity) and (e) the estate of such individual. "Financing Agreement" shall mean the Loan and Security Agreement, dated as of November 6, 2001, by and among the Company, Foothill Capital Corporation (as arranger and administrative agent) and the lenders that are signatories thereto, as amended from time to time. "Minority Shares" shall mean shares of the Company's Common Stock owned or controlled by the Minority Stockholders. "Minority Stockholders" shall have the meaning set forth in the preamble. "Notice of Transfer" shall have the meaning set forth herein in Section 3.1(b). "Outside Offer" shall have the meaning set forth herein in Section 2.2(a). "Permitted Affiliate Sale" shall mean any sale by a holder of Common Stock to any one or more of its Affiliates or a fund or account managed by a holder of Common Stock or an Affiliate of such holder, if such Person agrees to be bound by the terms of this Agreement to the same extent as the transferor and executes a joinder hereto. "Person" shall mean an individual, a corporation, a limited liability company, an association, a joint-stock company, a business trust or other similar organization, a partnership, a joint venture, a trust, an unincorporated organization or a government or any agency, instrumentality or political subdivision thereof. "Prospective Purchaser" shall have the meaning set forth herein in Section 2.2(a). "Registration Agreement" shall mean that certain Registration Agreement, dated November 6, 2001, by and between the Company, Sun, and the other Persons listed on the signature page thereto. "Rights" shall have the meaning set forth in Section 4(a). "Securities Act" shall mean the Securities Act of 1933, as amended, or any successor federal statute, and the rules and regulations promulgated thereunder, all as amended, modified or supplemented from time to time. "Selling Stockholder" shall have the meaning set forth in Section 2.2(a). "Series A Preferred Stock" shall mean the Company's Series A Preferred Stock, par value $.01 per share. "Stockholder" shall mean Sun, the Minority Stockholders and each other Person who shall acquire any shares of Common Stock from the Company or the Minority Stockholders and their respective heirs, executors, successors and assigns in accordance with the terms and conditions of this Agreement. "Transfer" shall mean any sale, pledge, gift, assignment or other transfer. 2 "Unregistered Common Stock" shall mean any share of Common Stock which has not been registered under the Securities Act on Form S-1 or any similar long-form registration or on Form S-2 or S-3 or any similar short-form registration. "Warrants" shall mean the Common Stock Purchase Warrants (as amended, modified and supplemented from time to time) issued pursuant to the Financing Agreement; and "Warrant" means any one of the foregoing Warrants. 2. Restriction on Transfer of Common Stock by Minority Stockholders. 2.1 General. The Minority Stockholders shall not Transfer any shares of Common Stock or Warrants and the Company shall not register the Transfer of, or otherwise permit the Transfer of, any shares of Common Stock or Warrants by any Minority Stockholders (except in connection with an Exempt Transfer) unless (a) such Transfer has been consummated in accordance with the terms hereof and (b) the new holder thereof shall first have become a party to this Agreement and shall have agreed in writing to be bound by all of the terms and conditions hereof applicable to the Minority Stockholders. Any Transfer of Common Stock or Warrants by any Minority Stockholder which is not consummated in accordance with this Agreement shall be void. Sun shall not Transfer any shares of its Common Stock Equivalents and the Company shall not register the Transfer of, or otherwise permit the Transfer of, any shares of Common Stock Equivalents by Sun unless such Transfer is an Exempt Transfer, is pursuant to Section 3.1 or Section 3.2, or is otherwise in accordance with the terms hereof. Any Transfer of Common Stock Equivalents by Sun which is not consummated in accordance with this Agreement shall be void. 2.2 Limited Right to Dispose of Interest. (a) Bona Fide Offer to Purchase Interest. Except in connection with an Exempt Transfer, if any Minority Stockholders (or any of his, her or its transferees) shall at any time desire to Transfer all or any part of his, her or its shares of Unregistered Common Stock or Warrants, as permitted under the terms of this Agreement, such Person (the "Selling Stockholder") shall first obtain a bona fide written offer which such Selling Stockholder desires to accept (the "Outside Offer") to purchase all or any portion of such Selling Stockholder's Unregistered Common Stock or Warrants for a fixed cash price payable in full at the closing of such transaction. The Outside Offer shall set forth its date, the proposed purchase price, the number of shares of Unregistered Common Stock or Warrants proposed to be purchased, and the other terms and conditions upon which the purchase is proposed to be made, as well as the name and address of the Prospective Purchaser. "Prospective Purchaser", as used herein, shall mean the prospective record owner or owners of the shares of Unregistered Common Stock or Warrants which are the subject of the Outside Offer and all other Persons proposed to have a beneficial interest in such Unregistered Common Stock or Warrants. The Selling Stockholder shall transmit copies of the Outside Offer to the Company and Sun within five (5) days after the Selling Stockholder's receipt of the Outside Offer. (b) Option of Company and Sun. (i) As a result of the foregoing transmittal of the Outside Offer, the Selling Stockholder shall be deemed to have offered in writing to sell all, but not less than all, of 3 such Selling Stockholder's Unregistered Common Stock or Warrants to the Company which are proposed to be purchased in the Outside Offer at the price and upon the terms set forth in the Outside Offer. For a period of twenty (20) days after such deemed offer by the Selling Stockholder to the Company, the Company shall have the option, exercisable by written notice to the Selling Stockholder, to accept the Selling Stockholder's offer, in whole and not in part, as to the Selling Stockholder's Unregistered Common Stock or Warrants. (ii) If the Company does not exercise its option set forth in the preceding Section 2.2(b)(i), the Selling Stockholder shall be deemed to have offered in writing to sell all, but not less than all, of such Selling Stockholder's Unregistered Common Stock or Warrants to Sun which are proposed to be sold in the Outside Offer at the price and upon the terms set forth in the Outside Offer. For a period of ten (10) days after such deemed offer by the Selling Stockholder to Sun, Sun shall have the option, exercisable by written notice to the Selling Stockholder, to accept the Selling Stockholder's offer, in whole and not in part, as to the Selling Stockholder's Unregistered Common Stock or Warrants. (c) Acceptance of the Bona Fide Offer. If, at the end of the option periods described in Section 2.2(b) hereof, the option has not been exercised either by the Company or Sun to purchase all of the Selling Stockholder's Unregistered Common Stock or Warrants proposed to be purchased in the Outside Offer, the Selling Stockholder shall be free for a period of sixty (60) days thereafter to Transfer up to the number of shares of his, her or its Unregistered Common Stock or Warrants proposed to be purchased in the Outside Offer to the Prospective Purchaser at the price and upon the terms and conditions set forth in the Outside Offer, provided that the Prospective Purchaser is not a Person that, directly or indirectly (whether as sole proprietor, partner, manager, consultant, director, officer, employee or agent), owns, manages, operates, controls, finances, engages or participates in the ownership, management, operation or control of any Person that competes with the Company. If such Unregistered Common Stock or Warrants is not so transferred within the sixty (60) day period, the Selling Stockholder shall not be permitted to sell such Unregistered Common Stock or Warrants without again complying with this Section 2.2. (d) Notwithstanding anything contained in this Agreement to the contrary, the restrictions on the Transfer of Unregistered Common Stock or Warrants set forth in this Section 2.2 shall not apply to Sun or any of its Affiliates. 3. Tag-Along Rights; Drag-Along Rights. 3.1. Tag-Along Rights. Subject to Section 3.1(f): (a) If Sun at any time proposes to Transfer any shares of Common Stock Equivalents, then, as a condition precedent thereto, Sun shall afford the Minority Stockholders the right to participate in such Transfer in accordance with this Section 3.1. (b) If Sun wishes to Transfer any shares of Common Stock Equivalents, it shall give written notice to the Minority Stockholders (a "Notice of Transfer") not less than twenty (20) nor more than thirty (30) days prior to any proposed Transfer of any such shares. Each such Notice of Transfer shall: 4 (i) specify in reasonable detail (A) the number of shares of Common Stock Equivalents which Sun proposes to Transfer, (B) the identity of the proposed transferee or transferees of such shares, (C) the time within which, the price per share at which, and all other terms and conditions upon which, Sun proposes to Transfer such shares of Common Stock Equivalents, and (D) the percentage of the Common Stock Equivalents then owned by Sun (calculated on a fully-diluted basis) which Sun proposes to Transfer to such proposed transferee or transferees and (E) a representation that such proposed transferees have been informed of the tag-along rights provided for in this Section 3.1 and have agreed to purchase shares of Common Stock Equivalents in accordance with the terms hereof; (ii) make explicit reference to this Section 3.1 and state that the right of the Minority Stockholders to participate in such Transfer under this Section 3.1 shall expire unless exercised within twenty (20) days after receipt of such Notice of Transfer; and (iii) contain an irrevocable offer by Sun to the Minority Stockholders to participate in the proposed Transfer to the extent provided in Section 3.1(c). (c) Each Minority Stockholder shall have the right to participate in the proposed Transfer by transferring to the proposed transferee or transferees up to that number of shares of Common Stock owned by such Minority Stockholders which is equal to the Applicable Percentage (as hereinafter defined) (or, if such Minority Stockholders shall elect, any lesser percentage) of the shares of Common Stock Equivalents proposed to be transferred by Sun, at the same price per share and on the same terms and conditions as are applicable to the proposed Transfer by Sun (and, if and to the extent such Minority Stockholders shall exercise such right, then the number of shares of Common Stock Equivalents to be sold by Sun in such transaction shall be correspondingly reduced). As used herein, the term "Applicable Percentage" as applied to a Minority Stockholder on any date shall mean a fraction (expressed as a percentage), the numerator of which is the aggregate of the number of shares of Common Stock owned by such Minority Stockholder on such date and the denominator of which is total number of shares of Common Stock Equivalents (assuming exercise of all Warrants) owned by Sun and the Minority Stockholders on such date. (d) A Minority Stockholders must notify Sun, within twenty (20) days after receipt of the Notice of Transfer, if he, she or it desires to accept such offer and to Transfer any shares of Common Stock owned by such Person in accordance with this Section 3.1. The failure of a Minority Stockholder to provide such notice within such 20-day period shall, for the purposes of this Section 3.1, be deemed to constitute a waiver by such Person of his, her or its right to sell any of his, her or its shares of Common Stock in connection with the proposed Transfer described in such Notice of Transfer. Sun will use its commercially reasonable efforts to obtain the agreement of the prospective transferee or transferees to the participation of the Minority Stockholders in such proposed Transfer, and Sun shall not Transfer any of its shares to such prospective transferee if such transferee shall not agree to the participation of the Minority Stockholders in such proposed Transfer. The Minority Stockholders shall not be obligated to sell any shares of Common Stock pursuant to this Section 3.1. Any and all sales of Common Stock by any of the Minority Stockholders pursuant to this Section 3.1 shall be made either concurrently with or prior to the sale of Common Stock Equivalents by Sun. 5 (e) If the Transfer described in any Notice of Transfer is not consummated within ninety (90) days following the date upon which such Notice of Transfer is given or if there is any change in the terms pursuant to which such Transfer is to be consummated, then, prior to consummating such Transfer, Sun must again comply with the provisions of this Section 3.1. (f) Notwithstanding anything to the contrary contained in this Section 3.1, the Minority Stockholders shall not have any rights pursuant to this Section 3.1 to participate in any Exempt Transfer by Sun. 3.2 Drag-Along Rights. (a) If at any time following the date hereof, Sun shall enter into an agreement to sell a majority of the Common Stock Equivalents of the Company to any Person or group of Persons who are not affiliated with Sun, then Sun may require that the Minority Stockholders sell the same percentage of their Common Stock Equivalents to such transferee or transferees as the percentage of Common Stock then owned by Sun which Sun proposes to Transfer to such proposed transferee or transferees at the same price per share and on the same terms and conditions as are applicable to the proposed sale by Sun. (b) In order to exercise the rights under Section 3.2(a), Sun must give notice to the Minority Stockholders not less than 10-days prior to the proposed date upon which the contemplated sale is to be effected. In addition, Sun shall furnish to the Minority Stockholders all such agreements, documents and instruments to be executed in connection with such transaction and shall afford the Minority Stockholders a reasonable period of time (but in any event not less than 5 business days) within which to review such agreements, documents and instruments. 4. Preemptive Rights. (a) Notice and Exercise. The Company shall, prior to any proposed issuance by the Company to Sun or its Affiliates of any shares of capital stock or securities representing the right to acquire shares of capital stock ("Rights") (other than debt securities with no equity feature), offer to the Minority Stockholders by written notice the right, for a period of 20-days from the date on which such notice is postmarked, hand delivered or faxed, to purchase for cash at an amount equal to the price or other consideration for which such capital stock or Rights are to be issued, a number of such shares of capital stock or Rights so that, after giving effect to such issuance (and the conversion, exercise and exchange into or for (whether directly or indirectly) shares of capital stock of all Rights), each such Minority Stockholder will continue to maintain his, her or its same percentage equity ownership (assuming the exercise in full of all Warrants) in the Company represented by the shares of Common Stock owned by each such Minority Stockholder as of the date of such notice. (b) Exceptions. Notwithstanding any other provision of this Agreement to the contrary, the preemptive rights of the Minority Stockholders pursuant to this Section 4 shall not apply to securities issued (A) upon conversion or exchange of any of the shares of the Company's Series A Preferred Stock to Common Stock, (B) upon exercise of any of the Warrants, (C) as a stock dividend or upon any subdivision of shares of Common Stock, 6 (D) pursuant to subscriptions, warrants, options, convertible securities, or other rights, issued, or to be issued, under any stock incentive plan approved by the Company's Board of Directors and in place from time to time for the benefit of the Company's directors, employees, consultants or independent contractors or (E) to any Person other than Sun or its Affiliates. (c) Acceptance. The Company's written notice to the Minority Stockholders shall describe the capital stock or Rights proposed to be issued by the Company to Sun or its Affiliates and specify the number of shares, price and payment terms. Each Minority Stockholder may accept the Company's offer as to the full number of shares of capital stock or Rights offered to him, her or it or any lesser number, by written notice thereof given by him, her or it to the Company prior to the expiration of the aforesaid 20-day period, in which event the Company shall promptly sell and each Minority Stockholder shall buy, upon the terms specified, the number of shares of capital stock or Rights agreed to be purchased by such Person. The Company shall be free at any time prior to ninety (90) days after the date of its notice of offer to the Minority Stockholders, to offer and sell to Sun or its Affiliates or any third party or parties the remainder of such capital stock or Rights proposed to be issued by the Company (including but not limited to the securities not agreed by the Minority Stockholders to be purchased by them), at a price and on payment terms no less favorable to the Company than those specified in such notice of offer to the Minority Stockholders. However, if such third party sale or sales are not consummated within such ninety (90) day period, the Company shall not sell such capital stock or Rights as shall not have been purchased within such period without again complying with this Section 4. 5. Voting. (a) Each Minority Stockholders agrees to vote the shares of Common Stock owned or controlled by it, him or her in the manner specified by Sun with respect to: (i) any sale of all or substantially all of the assets of the Company or any of its subsidiaries to a Person not an Affiliate of Sun; (ii) any acquisition, merger or consolidation involving the Company or any of its subsidiaries in which a Person (or group of Persons acting in concert) not an Affiliate (or Affiliates) of Sun shall own in excess of 50% of the surviving corporation of such acquisition, merger or consolidation; (iii) any transaction to which Section 3.1 or Section 3.2 applies; (iv) the election of the members of the Company's board of directors; and (v) any other matter on which the stockholders of a Wisconsin corporation generally have a right to vote. (b) Each Minority Stockholders hereby grant to Sun an irrevocable proxy to vote all shares of Common Stock now or hereafter owned or controlled by each of them in accordance with the agreements contained in this Section 5. 6. Legends. So long as any shares of Common Stock are subject to the provisions of this Agreement, all certificates or instruments representing such securities (including the Warrants) shall bear a legend in substantially the following form: THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO THE TERMS OF THE STOCKHOLDERS' AGREEMENT DATED AS OF NOVEMBER 6, 2001 AMONG THE ISSUER HEREOF AND CERTAIN OTHER PERSONS, A TRUE AND 7 CORRECT COPY OF WHICH IS ON FILE AT THE ISSUER'S CHIEF EXECUTIVE OFFICE AND, UPON WRITTEN REQUEST TO THE ISSUER, A COPY THEREOF WILL BE MAILED OR OTHERWISE PROVIDED WITHOUT CHARGE WITHIN TEN (10) DAYS OF RECEIPT OF SUCH REQUEST TO APPROPRIATELY INTERESTED PERSONS. THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS. 7. Termination of this Agreement. This Agreement shall terminate on the last to occur of (a) the date on which Sun and its Affiliates no longer owns or controls at least 50% of the Common Stock on a fully diluted basis and (b) the date on which Sun and its Affiliates no longer controls the Company's Board of Directors. 8. Notices. All communications provided for herein shall be in writing and and sent (a) by facsimile if the sender on the same day sends a confirming copy of of such communication by a recognized overnight delivery service (charges prepaid), (b) by a recognized overnight delivery service (charges prepaid), or (c) by messenger. The respective addresses of the parties hereto for the purposes of this Agreement are set forth on Exhibit A attached hereto. Any party may change its address (or facsimile number) by notice to each of the other parties in accordance with this Section 8. The date of giving or making of any such communication shall be, in the case of clauses (a) and (c), the date of the receipt; and, in the case of clause (b), the business day next following the date such communication is sent. 9. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective heirs, executors, successors and assigns, who, upon acceptance thereof, shall, without further action, be (i) entitled to enforce the applicable provisions and enjoy the applicable benefits hereof and (ii) bound by the terms and conditions hereof. 10. Amendment and Waiver. Except as otherwise provided herein, no modification, amendment, or waiver of any provision of this Agreement will be effective unless such modification, amendment, or waiver is approved in writing by the Company, each member of the Bank Group, Sun, and the holders of at least a majority of the Minority Stockholders; provided that execution of a joinder hereto shall not be considered a modification, amendment or waiver of any of the provisions of this Agreement. The failure of any party to enforce any of the provisions of this Agreement will in no way be construed as a waiver of such provisions and will 8 not affect the right of such party thereafter to enforce each and every provision of this Agreement in accordance with its terms. 11. Remedies. Any Person having rights under any provision of this Agreement shall be entitled to enforce their rights under this Agreement specifically to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights existing in their favor; provided, however the parties hereto stipulate that the remedies at law of any party hereto in the event of any default or threatened default by any other party hereto in the performance of or compliance with the terms hereof are not and will not be adequate and that, to the fullest extent permitted by law, such terms may be specifically enforced (without posting a bond or other security) by a decree for the specific performance thereof, whether by an injunction against violation thereof or otherwise. 12. Governing Law; Jurisdiction; Waiver of Jury Trial. This Agreement shall be governed by and construed in accordance with the domestic laws of the State of Wisconsin without giving effect to any choice or conflict of law provision or rule (whether of the State of Wisconsin or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Wisconsin. Each party hereto submits to the jurisdiction of any state or federal court sitting in Milwaukee, Wisconsin, in any action or proceeding arising out of or relating to this Agreement and agrees that all claims in respect of the action or proceeding may be heard and determined in any such court. Each party also agrees not to bring any action or proceeding arising out of or relating to this Agreement in any other court. Each party hereto waives any defense of inconvenient forum to the maintenance of any action or proceeding so brought and waives any bond, surety, or other security that might be required of any other party with respect thereto. Any party may make service on any other party by sending or delivering a copy of the process to the party to be served at the address and in the manner provided for the giving of notices in Section 8 above. Nothing in this Section 12, however, shall affect the right of any party to bring any action or proceeding arising out of or relating to this Agreement in any other court or to serve legal process in any other manner permitted by law or at equity. Each party agrees that a final judgment in any action or proceeding so brought shall be conclusive and may be enforced by suit on the judgment or in any other manner provided by law or at equity. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY SUIT, ACTION OR OTHER PROCEEDING INSTITUTED BY OR AGAINST SUCH PARTY IN RESPECT OF ITS, HIS OR HER OBLIGATIONS HEREUNDER OR THE TRANSACTIONS CONTEMPLATED HEREBY. 13. Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal, or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality, or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed, and enforced in such jurisdiction as if such invalid, illegal, or unenforceable provision had never been contained herein. 14. Entire Agreement. Except as otherwise expressly set forth herein, this Agreement, those documents expressly referred to herein, and the other documents of even date herewith embody the complete agreement and understanding among the parties and supersede and 9 preempt any prior understandings, agreements, or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way. 15. Counterparts. This Agreement may be executed in separate counterparts each of which will be an original and all of which taken together shall constitute one and the same agreement. 16. Descriptive Headings. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. 17. Mandatory Conversion. The Company agrees to take all actions reasonably necessary, including increasing the number of authorized shares of Common Stock, to convert the Series A Preferred Stock to Common Stock, as soon as reasonably practicable after execution of this Agreement. Sun agrees to vote its Common Stock Equivalents in favor of such increase in the authorized number of shares of Common Stock. 18. Sale of Securities to Affiliate. Prior to any proposed issuance by the Company of any Common Stock Equivalents to any Affiliate of Sun, the Company shall require that such Affiliate agree to be bound by the terms of this Agreement to the same extent as Sun and execute a joinder hereto. [The remainder of this page is left blank intentionally.] 10 IN WITNESS WHEREOF, the parties hereto have executed this Stockholders' Agreement on the day and year first above written. NORTHLAND CRANBERRIES, INC. By: /s/ --------------------------------- Name: Title: SUN NORTHLAND, LLC By: /s/ --------------------------------- Name: Title: Manager FOOTHILL CAPITAL CORPORATION By: /s/ --------------------------------- Name: Title: ST. FRANCIS BANK, F.S.B. By: /s/ --------------------------------- Name: Title: ARK CLO 2000-1 LIMITED By: /s/ --------------------------------- Name: Title: 11 [Continuation of Stockholders' Agreement Signature Page] U.S. BANK NATIONAL ASSOCIATION By: /s/ --------------------------------- Name: Title: ABLECO HOLDING LLC By: /s/ --------------------------------- Name: Title: 12 Exhibit A Addresses for Notices (a) If to the Company, to it at: Northland Cranberries, Inc. 800 First Avenue South P.O. Box 8020 Wisconsin Rapids, WI 54495 Attention: Chief Executive Officer Telecopy No.: (715) 422-6844 with a copy to: Sun Capital Advisors II, L. P. 5200 Town Center Circle, Suite 470 Boca Raton, Florida 33486 Attention: Marc J. Leder Rodger R. Krouse C. Deryl Couch, Esq. Telecopy No.: (561) 394-0540 (b) If to Sun Northland, LLC, to it at: c/o Sun Capital Advisors II, L. P. 5200 Town Center Circle, Suite 470 Boca Raton, Florida 33486 Attention: Marc J. Leder Rodger R. Krouse C. Deryl Couch, Esq. Telecopy No.: (561) 394-0540 with a copy to: Kirkland & Ellis 200 East Randolph Drive Chicago, Illinois 60601 Attention: Douglas C. Gessner Telecopy No.: (312) 861-2200 13 Exhibit A (Continued) (c) If to Minority Stockholders, to them at: Foothill Capital Corporation 2450 Colorado Avenue Suite 3000 West Santa Monica, California 90404 Attn: Business Finance Division Manager Telecopy No.:________________ with a copy to: Otterbourg, Steindler, Houston & Rosen, P.C. 230 Park Avenue New York, New York 10169 Attn: Mitchell M. Brand, Esq. Telecopy No.: (212) 682-6104 Ableco Holding LLC 450 Park Avenue, 28th Floor New York, New York 10022 Attn: Eric F. Miller Telecopy No.: (212) 758-5305 with a copy to: Schulte Roth & Zabel, LLP 919 Third Avenue New York, New York 10022 Attn: Frederic L. Ragucci, Esq. Telecopy No.: (212) 593-5955 St. Francis Bank, F.S.B. 13400 Bishops Lane, Suite 190 Brookfield, WI 53005-6203 Attn: John Tans Telecopy No.: (262) 787-8778 14 Exhibit A (Continued) ARK CLO 2000-1 Limited c/o Patriarch Partners, LLC 40 Wall Street, 25th Floor New York, NY 10005 Attn: Dennis Dolan/Lynn Tilton Telecopy No.: (561) 279-0888 ARK CLO 2000-1 Limited c/o Woodside Capital 36 Bay State Road Cambridge, MA 02138 Attn: David Ray Telecopy No.: (617) 547-5162 U.S. Bank National Association MPFP2516 601 Second Avenue South Minneapolis, MN 55402-4302 Attn: Stephen Tornio Telecopy No.: (612) 973-2148 15 EX-4.4 11 sdc74j.txt REGISTRATION AGREEMENT REGISTRATION AGREEMENT THIS REGISTRATION AGREEMENT (this "Agreement") is made as of November 6, 2001, by and among Northland Cranberries, Inc., a Wisconsin corporation (the "Company"), Sun Northland, LLC, a Delaware limited liability company ("Sun"), and each of the other Persons listed on the signature pages attached hereto (the "Other Investors"). Sun and the Other Investors are collectively referred to herein as the "Stockholders," and are individually referred to herein as a "Stockholder." Otherwise undefined capitalized terms used herein are defined in Section 9 hereof. NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement hereby agree as follows: 1. Demand Registrations. (a) Requests for Registration. At any time, the holders of at least a majority of the Sun Registrable Securities may request registration under the Securities Act of all or any portion of such Sun Registrable Securities on Form S-1 or any similar long-form registration ("Long-Form Registrations") or, if available, on Form S-2 or S-3 or any similar short-form registration ("Short-Form Registrations"). All registrations requested pursuant to this Section 1(a) are referred to herein as "Demand Registrations." Each request for a Demand Registration shall specify the approximate number of Registrable Securities requested to be registered and the anticipated per share price range for such offering. Within ten days after receipt of any such request, the Company shall give written notice of such requested registration to all other holders of Registrable Securities and, subject to Section 1(d) below, will include in such registration, in addition to the Sun Registrable Securities that are requested to be registered pursuant hereto, all other Registrable Securities with respect to which the Company has received written requests for inclusion therein within 15 days after the receipt of the Company's notice. (b) Long-Form Registrations. The holders of a majority of the Sun Registrable Securities shall be entitled to request a maximum of four (4) Long-Form Registrations. The Company will pay all Registration Expenses (as defined below in Section 5) in connection with each such Long-Form Registration. All Long-Form Registrations shall be underwritten registrations. (c) Short-Form Registrations. In addition to the Long-Form Registrations provided pursuant to Section 1(b), the holders of a majority of the Sun Registrable Securities shall be entitled to request an unlimited number of Short-Form Registrations in which the Company will pay all Registration Expenses. Demand Registrations will be Short-Form Registrations whenever the Company is permitted to use any applicable short form. The Company shall use its best efforts to make Short-Form Registrations on Form S-3 available for the sale of Registrable Securities, if the Company is so eligible. The Company shall not be obligated to effect a Short-Form Registration through an underwritten offering. (d) Priority on Demand Registrations. The Company will not include in any Demand Registration any securities which are not Registrable Securities without the prior written consent of the holders of a majority of the Registrable Securities included in such registration. If a Demand Registration is an underwritten offering and the managing underwriters advise the Company in writing that, in their opinion, the number of Registrable Securities and, if permitted hereunder, other securities requested to be included in such offering, exceeds the number of Registrable Securities and other securities, if any, which can be sold therein without adversely affecting the marketability, proposed offering price, timing, distribution method or probability of success of the offering, the Company will include in such registration (i) first, the number of Registrable Securities requested to be included in such registration which in the opinion of such underwriters can be sold without adverse effect, pro rata among the respective holders thereof on the basis of the number of Registrable Securities owned by each such holder, and (ii) second, other securities requested to be included in such Demand Registration, pro rata among the holders of such securities on the basis of the number of such securities owned by each such holder. (e) Restrictions on Demand Registrations. The Company will not be obligated to effect any Demand Registration within six months after the effective date of a previous Long-Form Registration with respect to the Company. The Company may postpone, for up to six months (from the date of the request), the filing or the effectiveness of a registration statement for a Demand Registration if (i) the Company's board of directors believes that such Demand Registration would reasonably be expected to have an adverse effect on any proposal or plan by the Company or any Subsidiary thereof to engage in any underwritten public offering of its securities for its own account, acquisition of assets (other than in the ordinary course of business) or any stock purchase, merger, consolidation, tender offer, reorganization, or similar transaction, or (ii) the Company is in possession of material nonpublic information concerning it or its business and affairs and the Company's board of directors determines in good faith that the prompt public disclosure of such information in a registration statement would reasonably be expected to have an adverse effect on the Company; provided, however, that in any such events, the holders of Registrable Securities initially requesting such Demand Registration will be entitled to withdraw such request and, if such request is withdrawn, such Demand Registration shall be treated as if it had never been made in the first instance, and the Company will pay all Registration Expenses in connection with such registration. The Company may delay a Demand Registration hereunder only once in any 12-month period. (f) Selection of Underwriters. The holders of a majority of the Registrable Securities initially requesting registration hereunder will have the right to select the investment banker(s) and manager(s) to administer the offering under such Demand Registration, subject to the Company's approval, which will not be unreasonably withheld. (g) Other Registration Rights. Except as provided in this Agreement, the Company will not grant to any Persons the right to request that the Company register any equity securities of the Company, or any securities convertible into or exchangeable or exercisable for any such securities, without the prior written consent of the holders of at least a majority of the Registrable Securities. 2 2. Piggyback Registrations. (a) Right to Piggyback. Whenever the Company proposes to register any of its equity securities under the Securities Act (other than pursuant to a Demand Registration or a registration on Form S-4 or S-8 or any successor or similar forms) and the registration form to be used may be used in compliance with applicable law for the registration of Registrable Securities (a "Piggyback Registration"), whether or not for sale for its own account, the Company will give prompt written notice to all holders of Registrable Securities of its intention to effect such a registration and, subject to Sections 2(c) and 2(d) below, will include in such registration all Registrable Securities with respect to which the Company has received written requests for inclusion therein within 20 days after the receipt of the Company's notice. (b) Piggyback Expenses. In all Piggyback Registrations, the Registration Expenses of the holders of Registrable Securities will be paid by the Company. (c) Priority on Primary Registrations. If a Piggyback Registration is an underwritten primary registration on behalf of the Company, and the managing underwriters advise the Company in writing (with a copy to each party hereto requesting registration of Registrable Securities) that, in their opinion, the number of securities requested to be included in such registration exceeds the number which can be sold in such offering without adversely affecting the marketability, proposed offering price, timing, distribution method or probability of success of the offering, then the Company will include in such registration (i) first, the securities that the Company proposes to sell, (ii) second, the Registrable Securities requested to be included in such registration, pro rata among the holders thereof on the basis of the number of Registrable Securities owned by each such holder, and (iii) third, other securities requested to be included in such registration pro rata among the holders of such securities on the basis of the number of such other securities owned by each such holder. (d) Priority on Secondary Registrations. If a Piggyback Registration is an underwritten secondary registration on behalf of holders of the Company's securities (it being understood that secondary registrations on behalf of holders of Registrable Securities are addressed in Section 1 above rather than in this Section 2(d)), and the managing underwriters advise the Company in writing that, in their opinion, the number of securities requested to be included in such registration exceeds the number which can be sold in such offering without adversely affecting the marketability, proposed offering price, timing, distribution method or probability of success of the offering, then the Company will include in such registration (i) first, the securities requested to be included therein by the holders requesting such registration, (ii) second, the Registrable Securities requested to be included in such registration, pro rata among the holders of such Registrable Securities on the basis of the number of Registrable Securities owned by each such requesting holder, and (iii) third, other securities requested to be included in such registration pro rata among the holders of such other securities on the basis of the number of such securities owned by each such holder. (e) Selection of Underwriters. If any Piggyback Registration is an underwritten offering, then the selection of the investment banker(s) and manager(s) for the offering shall be made at the Company's sole discretion. 3 (f) Withdrawal by Company. If, at any time after giving notice of its intention to register any of its securities as set forth in Section 2(a) and before the effective date of such registration statement filed in connection with such registration, the Company shall determine, for any reason, not to register such securities, the Company may, at its sole discretion, give written notice of such determination to each holder of Registrable Securities and thereupon shall be relieved of its obligation to register any Registrable Securities in connection with such registration (but not from its obligation to pay the Registration Expenses in connection therewith as provided herein). 3. Holdback Agreements. (a) Each holder of Registrable Securities agrees not to effect any public sale or distribution (including sales pursuant to Rule 144) of equity securities of the Company, or any securities, options, or rights convertible into or exchangeable or exercisable for such securities, during the seven days before and the 180-day period beginning on the effective date of any underwritten public offering of the Company's equity securities (including Demand and Piggyback Registrations) (except as part of such underwritten registration), unless the underwriters managing the registered public offering otherwise agree. If any holder of Registrable Securities is released from the requirements of this Section 3(a), all other holders of Registrable Securities shall be released from the requirements of this Section 3(a) on the same terms and conditions as such holder. (b) The Company agrees (i) not to effect any public sale or distribution of its equity securities, or any securities convertible into or exchangeable or exercisable for such securities, during the seven days before and during the 180-day period beginning on the effective date of any underwritten public offering of the Company's equity securities (including Demand and Piggyback Registrations) (except as part of such underwritten registration or pursuant to registrations on Form S-4 or S-8 or any successor form), unless the underwriters managing the registered public offering otherwise agree, and (ii) to cause each holder of its Common Stock, or any securities convertible into or exchangeable or exercisable for Common Stock, purchased or otherwise acquired from the Company at any time after the date of this Agreement (other than in a registered public offering, including, without limitation, an offering registered on Form S-8 or any successor form) to agree not to effect any public sale or distribution (including sales pursuant to Rule 144) of any such securities during any such period (except as part of such underwritten registration, if otherwise permitted), unless the underwriters managing the registered public offering otherwise agree. 4. Registration Procedures. Whenever the holders of Registrable Securities have requested that any Registrable Securities be registered pursuant to this Agreement, the Company will use its best efforts to effect the registration and the sale of such Registrable Securities in accordance with the intended method of disposition thereof and, pursuant thereto, the Company will as expeditiously as possible: (a) prepare and (within 60 days after the end of the period within which requests for registration may be given to the Company) file with the Securities and Exchange Commission a registration statement with respect to such Registrable Securities and thereafter use its best efforts to cause such registration statement to become effective (provided that, before 4 filing a registration statement or prospectus or any amendments or supplements thereto, the Company will furnish to the counsel selected by the holders of a majority of the Registrable Securities covered by such registration statement copies of all such documents proposed to be filed, which documents will be subject to review of such counsel); (b) prepare and file with the Securities and Exchange Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective for a period of either (i) not less than six months (subject to extension pursuant to Section 7(b)) or, if such registration statement relates to an underwritten offering, such longer period as in the opinion of counsel for the underwriters a prospectus is required by law to be delivered in connection with sales of Registrable Securities by an underwriter or dealer, or (ii) such shorter period as will terminate when all of the securities covered by such registration statement during such period have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof set forth in such registration statement (but, in any event, not before the expiration of any longer period required under the Securities Act), and to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement until such time as all of such securities have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof set forth in such registration statement; (c) furnish to each seller of Registrable Securities such number of copies of such registration statement, each amendment and supplement thereto, the prospectus included in such registration statement (including each preliminary prospectus), and such other documents as such seller may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such seller; (d) use its best efforts to register or qualify such Registrable Securities under such other securities or blue sky laws of such jurisdictions as any seller reasonably requests and do any and all other acts and things which may be reasonably necessary or advisable to enable such seller to consummate the disposition in such jurisdictions of the Registrable Securities owned by such seller (provided that the Company will not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this subsection, (ii) subject itself to taxation in any such jurisdiction, or (iii) consent to general service of process in any such jurisdiction); (e) notify each seller of such Registrable Securities, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, upon discovery that, or upon the discovery of the happening of any event as a result of which, the prospectus included in such registration statement contains an untrue statement of a material fact or omits any fact necessary to make the statements therein not misleading in the light of the circumstances under which they were made, and, at the request of any such seller, the Company will prepare and furnish to such seller a reasonable number of copies of a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus will not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein not misleading in the light of the circumstances under which they were made; 5 (f) use best efforts to cause all such Registrable Securities to be listed on each securities exchange on which similar securities issued by the Company are then listed and, if not so listed, to be listed on a securities exchange or the National Association of Securities Dealers ("NASD") automated quotation system and, if listed on the NASD automated quotation system, use its best efforts to secure designation of all such Registrable Securities covered by such registration statement as a "national market system security" of The Nasdaq Stock Market within the meaning of Rule 11Aa2-1 of the Securities and Exchange Commission or, failing that, to secure The Nasdaq Stock Market's authorization for such Registrable Securities and, without limiting the generality of the foregoing, to arrange for at least two market makers to register as such with respect to such Registrable Securities with the NASD; (g) use best efforts to provide a transfer agent and registrar for all such Registrable Securities not later than the effective date of such registration statement; (h) enter into such customary agreements (including underwriting agreements in customary form) and take all such other actions as the holders of a majority of the Registrable Securities being sold or the underwriters, if any, reasonably request in order to expedite or facilitate the disposition of such Registrable Securities (including, without limitation, effecting a stock split, combination of shares, recapitalization, or reorganization); (i) make available for inspection by any seller of Registrable Securities, any underwriter participating in any disposition pursuant to such registration statement, and any attorney, accountant, or other agent retained by any such seller or underwriter, all financial and other records, pertinent corporate and business documents and properties of the Company as shall be necessary to enable them to exercise their due diligence responsibility, and cause the Company's officers, directors, employees, agents, representatives, and independent accountants to supply all such information reasonably requested by any such seller, underwriter, attorney, accountant, or agent; (j) otherwise use its best efforts to comply with all applicable rules and regulations of the Securities and Exchange Commission, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least 12 months, beginning with the first day of the Company's first full calendar quarter after the effective date of the registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder; (k) permit any holder of Registrable Securities which holder, in its sole and exclusive judgment, might be deemed to be an underwriter or a controlling person of the Company to participate in the preparation of such registration or comparable statement and to require the insertion therein of material, furnished to the Company in writing, which in the reasonable judgment of such holder and its counsel should be included; (l) in the event of the issuance of any stop order suspending the effectiveness of a registration statement, or of any order suspending or preventing the use of any related prospectus or suspending the qualification of any securities included in such registration statement for sale in any jurisdiction, the Company will use its reasonable best efforts promptly to obtain the withdrawal of such order; 6 (m) use its reasonable best efforts to cause such Registrable Securities covered by such registration statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the sellers thereof to consummate the disposition of such Registrable Securities; (n) use best efforts to obtain a cold comfort letter from the Company's independent public accountants in customary form and covering such matters of the type customarily covered by cold comfort letters, which letter shall be addressed to the underwriters, and the Company shall use its reasonable best efforts to cause such cold comfort letter to also be addressed to the holders of such Registrable Securities; and (o) use best efforts to obtain an opinion from the Company's outside counsel in customary form and covering such matters of the type customarily covered by such opinions, which opinion shall be addressed to the underwriters and the holders of such Registrable Securities. If any such registration or comparable statement refers to any holder by name or otherwise as the holder of any securities of the Company and if such holder, in its sole and exclusive judgment, is or might be deemed to be an underwriter or a controlling person of the Company, such holder shall have the right to require (i) the insertion therein of language, in form and substance satisfactory to such holder and presented to the Company in writing, to the effect that the holding by such holder of such securities is not to be construed as a recommendation by such holder of the investment quality of the Company's securities covered thereby, and that such holding does not imply that such holder shall assist in meeting any future financial requirements of the Company, or (ii) in the event that such reference to such holder by name or otherwise is not required by the Securities Act or any similar federal or state statute then in force, the deletion of the reference to such holder; provided that, with respect to this clause (ii), such holder shall furnish to the Company an opinion of counsel to such effect, which opinion and counsel shall be reasonably satisfactory to the Company. The Company may require each seller of Registrable Securities as to which any registration is being effected to furnish the Company with such information regarding such seller and the distribution of such securities as the Company may from time to time reasonably request in writing. 5. Registration Expenses. (a) All expenses incident to the Company's performance of or compliance with this Agreement, including, without limitation, all registration and filing fees, fees and expenses of compliance with securities or blue sky laws, printing expenses, messenger and delivery expenses, fees and disbursements of custodians, fees and disbursements of counsel for the Company, and all independent certified public accountants, underwriters (excluding discounts and commissions), and other Persons retained by the Company (all such expenses being herein called "Registration Expenses"), will be borne as provided in this Agreement, except that the Company will, in any event, pay its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit or quarterly review, the expense of any liability insurance, and the expenses and fees for listing the securities to be registered on each securities exchange on which similar securities issued by the Company are then listed or, if none are so 7 listed, on a securities exchange or the NASD automated quotation system. The Company shall have no obligation to pay any underwriting discounts or selling commissions attributable to the Registrable Securities being sold by the holders thereof, which underwriting discounts or selling commissions shall be borne by such holders. (b) In connection with each Demand Registration and each Piggyback Registration, the Company shall reimburse the holders of Registrable Securities included in such registration for the reasonable fees and disbursements of one counsel chosen by the holders of a majority of the Registrable Securities included in such registration, and if a majority of the Registrable Securities include in such registration are not Other Registrable Securities then one counsel chosen by the holders are a majority of the Other Registrable Securities included in such registration. (c) To the extent Registration Expenses are not required to be paid by the Company, each holder of securities included in any registration hereunder will pay those Registration Expenses allocable to the registration of such holder's securities so included, and any Registration Expenses not so allocable will be borne by all sellers of securities included in such registration in proportion to the aggregate selling price of each seller's securities to be so registered. 6. Indemnification. (a) The Company agrees to indemnify and hold harmless, to the full extent permitted by law, each holder of Registrable Securities, its officers, directors, member, agents, and employees and each Person who controls such holder (within the meaning of the Securities Act) against any and all losses, claims, damages, liabilities, joint or several, together with reasonable costs and expenses (including reasonable attorney's fees), to which such indemnified party may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages, or liabilities (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of, are based upon, are caused by, or result from (i) any untrue or alleged untrue statement of material fact contained (A) in any registration statement, prospectus, or preliminary prospectus or any amendment thereof or supplement thereto, or (B) in any application or other document or communication (in this Section 6 collectively called an "application") executed by or on behalf of the Company or based upon written information furnished by or on behalf of the Company filed in any jurisdiction in order to qualify any securities covered by such registration statement under the "blue sky" or securities laws thereof, or (ii) any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, and the Company will reimburse such holder and each such director, officer, member, agent and employee for any legal or any other expenses incurred by them in connection with investigating or defending any such loss, claim, liability, action, or proceeding; provided, however, that the Company shall not be liable in any such case to the extent that any such loss, claim, damage, liability (or action or proceeding in respect thereof), or expense arises out of, is based upon, is caused by, or results from an untrue statement or alleged untrue statement, or omission or alleged omission, made in such registration statement, any such prospectus or preliminary prospectus or any amendment or supplement thereto, or in any application, in reliance upon, and in conformity with, written information prepared and furnished to the Company by such holder expressly for use therein or by such 8 holder's failure to deliver a copy of the registration statement or prospectus or any amendments or supplements thereto after the Company has furnished such holder with a sufficient number of copies of the same. In connection with any underwritten offering, the Company will indemnify such underwriters, their officers and directors, and each Person who controls such underwriters (within the meaning of the Securities Act) to the same extent as provided above with respect to the indemnification of the holders of Registrable Securities. (b) In connection with any registration statement in which a holder of Registrable Securities is participating, each such holder will furnish to the Company in writing such information and affidavits as the Company reasonably requests for use in connection with any such registration statement or prospectus and, to the full extent permitted by law, will indemnify and hold harmless the other holders of Registrable Securities and the Company, and their respective directors, officers, agents, and employees and each other Person who controls the Company (within the meaning of the Securities Act) against any losses, claims, damages, liabilities, joint or several, together with reasonable costs and expenses (including reasonable attorney's fees), to which such indemnified party may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages, or liabilities (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of, are based upon, are caused by, or result from (i) any untrue or alleged untrue statement of material fact contained in the registration statement, prospectus or preliminary prospectus or any amendment thereof or supplement thereto or in any application, or (ii) any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that such untrue statement or omission is made in such registration statement, any such prospectus or preliminary prospectus or any amendment or supplement thereto, or in any application, in reliance upon and in conformity with written information prepared and furnished to the Company by such holder expressly for use therein; provided, however, that the obligation to indemnify will be individual to each holder and will be limited to the net amount of proceeds received by such holder from the sale of Registrable Securities pursuant to such registration statement. (c) Any Person entitled to indemnification hereunder will (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that the failure to give prompt notice shall not impair any Person's right to indemnification hereunder to the extent such failure has not prejudiced the indemnifying party), and (ii) unless in such indemnified party's reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, the indemnifying party will not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent will not be unreasonably withheld). An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim will not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim. 9 (d) The indemnifying party shall not, except with the approval of each indemnified party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to each indemnified party of a release from all liability in respect to such claim or litigation without any payment or consideration provided by such indemnified party. (e) If the indemnification provided for in this Section 6 is unavailable to, or is insufficient to hold harmless, an indemnified party under the provisions above in respect to any losses, claims, damages, or liabilities referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the sellers of Registrable Securities and any other sellers participating in the registration statement on the other hand from the sale of Registrable Securities pursuant to the registered offering of securities as to which indemnity is sought, or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company on the one hand and of the sellers of Registrable Securities and any other sellers participating in the registration statement on the other hand in connection with the registration statement on the other in connection with the statement or omissions which resulted in such losses, claims, damages, or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the sellers of Registrable Securities and any other sellers participating in the registration statement on the other hand shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) to the Company bear to the total net proceeds from the offering (before deducting expenses) to the sellers of Registrable Securities and any other sellers participating in the registration statement. The relative fault of the Company on the one hand and of the sellers of Registrable Securities and any other sellers participating in the registration statement on the other hand shall be determined by reference to, among other things, whether the untrue or alleged omission to state a material fact relates to information supplied by the Company or by the sellers of Registrable Securities or other sellers participating in the registration statement and the parties' relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission. (f) The Company and the sellers of Registrable Securities agree that it would not be just and equitable if contribution pursuant to this Section 6 were determined by pro rata allocation (even if the sellers of Registrable Securities were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an indemnified party as a result of the losses, claims, damages, and liabilities referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 6, no seller of Registrable Securities shall be required to contribute any amount in excess of the net proceeds received by such seller from the sale of Registrable Securities covered by the registration statement filed pursuant hereto. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. 10 (g) The indemnification and contribution by any such party provided for under this Agreement shall be in addition to any other rights to indemnification or contribution which any indemnified party may have pursuant to law or contract and will remain in full force and effect regardless of any investigation made or omitted by or on behalf of the indemnified party or any officer, director, or controlling Person of such indemnified party and will survive the transfer of securities. 7. Participation in Underwritten Registrations. (a) No Person may participate in any registration hereunder which is underwritten unless such Person (i) enters into and agrees to sell such Person's securities on the basis provided in customary underwriting arrangements approved by the Person or Persons entitled hereunder to approve such arrangements (including, without limitation, pursuant to the terms of any over-allotment or "green shoe" option requested by the managing underwriter(s); provided that no holder of Registrable Securities will be required to sell more than the number of Registrable Securities that such holder has requested the Company to include in any registration), and (ii) completes and executes all customary questionnaires, powers of attorney, indemnities, underwriting agreements, and other documents reasonably required under the terms of such underwriting arrangements. (b) Each Person that is participating in any registration hereunder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 4(e) above, or upon any suspension by the Company, pursuant to a written insider trading compliance program of the Company, of the ability of all "insiders" covered by such program to transact in the Company's securities because of the existence of material non-public information, each holder of Registrable Securities included in any registration shall immediately discontinue disposition of such Registrable Securities pursuant to the Registration Statement covering such Registrable Securities until such holder receives the supplemented or amended prospectus contemplated by Section 4(e) or the restriction on the ability of "insiders" to transact in the Company's securities is removed, as applicable, and, if so directed by the Company, each such holder will deliver to the Company all copies, other than permanent file copies then in such holder's possession, of the most recent prospectus covering such Registrable Securities at the time of receipt of such notice. In the event that the Company shall give any such notice, the applicable time period mentioned in Section 4(b) during which a Registration Statement is to remain effective shall be extended by the number of days during the period from and including the date of the giving of such notice pursuant to this Section 7 to and including the date when each seller of a Registrable Security covered by such registration statement shall have received the copies of the supplemented or amended prospectus contemplated by Section 4(e). 8. Current Public Information. At all times after the Company has filed a registration statement with the Securities and Exchange Commission pursuant to the requirements of either the Securities Act or the Securities Exchange Act, the Company will file all reports required to be filed by it under the Securities Act and the Securities Exchange Act and the rules and regulations adopted by the Securities and Exchange Commission thereunder, and will take such further action as any holder or holders of Registrable Securities may reasonably request, all to the extent required to enable such holders to sell Registrable Securities pursuant to Rule 144 adopted by the Securities and Exchange Commission under the Securities Act (as such 11 rule may be amended from time to time) or any similar rule or regulation hereafter adopted by the Securities and Exchange Commission. 9. Definitions "Bank Group" shall mean U.S. Bank National Association, ARK CLO 2000-1 Limited, and St. Francis Bank, F.S.B. "Common Stock" shall mean the Class A Common Stock, $0.01 par value per share, of the Company as constituted on the date hereof and any stock into which any such common stock shall have been changed or any stock resulting from any reclassification of any such common stock. "NASD" shall have the meaning set forth in Section 3(f). "Other Registrable Securities" means (i) all shares of Common Stock of the Company originally issued, directly or indirectly, to any Other Investor, (ii) all shares of Common Stock of the Company issued or issuable, directly or indirectly, with respect to the securities referred to in clause (i) above upon exercise, conversion, or exchange or by way of stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation, or other reorganization, and (iii) any other shares of Common Stock of the Company held by Persons holding securities described in clauses (i) and (ii) above. As to any particular Other Registrable Securities, such securities shall cease to be Other Registrable Securities when they have (a) been distributed to the public pursuant to an offering registered under the Securities Act, (b) been sold to the public through a broker, dealer, or market maker in compliance with Rule 144 under the Securities Act (or any similar rule then in force), (c) been repurchased by the Company or any Subsidiary thereof or purchased or otherwise acquired by Sun, and, if such Other Registrable Securities are purchased or otherwise acquired by Sun, then such Other Registrable Securities shall be deemed Sun Registrable Securities, (d) been otherwise transferred, new certificates for them not bearing a legend restricting further transfer shall have been delivered by the Company and subsequent public distribution of them shall not require registration under the Securities Act, or (e) ceased to be outstanding. For purposes of this Agreement, a Person shall be deemed to be a holder of Other Registrable Securities, and the Other Registrable Securities shall be deemed to be in existence, whenever such Person has the right to acquire, directly or indirectly, such Other Registrable Securities (upon conversion or exercise in connection with a transfer of securities or otherwise, but disregarding any restrictions or limitations upon the exercise of such right other than vesting), whether or not such acquisition has actually been effected, and such Person shall be entitled to exercise the rights of a holder of Other Registrable Securities hereunder. "Person" shall mean an individual, a corporation, a limited liability company, an association, a joint-stock company, a business trust or other similar organization, a partnership, a joint venture, a trust, an unincorporated organization or a government or any agency, instrumentality or political subdivision thereof. "Registrable Securities" means, collectively, the Sun Registrable Securities and the Other Registrable Securities. 12 "Securities Act" shall mean the Securities Act of 1933, as amended, or any successor federal statute, and the rules and regulations promulgated thereunder, all as amended, modified or supplemented from time to time. "Securities and Exchange Commission" includes any governmental body or agency succeeding to the functions thereof. "Securities Exchange Act" means the Securities Exchange Act of 1934, as amended, or any similar federal law then in force. "Subsidiary" or "Subsidiaries" means, with respect to any Person, any corporation, limited liability company, partnership, association, or other business entity of which (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers, or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of such Person or a combination thereof, or (ii) if a limited liability company, partnership, association, or other business entity, a majority of the partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by any Person or one or more Subsidiaries of such Person or a combination thereof. For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a limited liability company, partnership, association, or other business entity if such Person or Persons shall be allocated a majority of limited liability company, partnership, association, or other business entity gains or losses or shall be or control any managing director or general partner of such limited liability company, partnership, association, or other business entity. "Sun Registrable Securities" means (i) all shares of Common Stock of the Company originally issued, directly or indirectly, to Sun, (ii) all shares of Common Stock of the Company issued or issuable, directly or indirectly, with respect to the securities referred to in clause (i) above upon exercise, conversion, or exchange or by way of stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation, or other reorganization, and (iii) all other shares of Common Stock of the Company held by Persons holding securities described in clauses (i) and (ii) above. As to any particular Sun Registrable Securities, such securities shall cease to be Sun Registrable Securities when they have (a) been distributed to the public pursuant to an offering registered under the Securities Act, (b) been sold to the public through a broker, dealer, or market maker in compliance with Rule 144 under the Securities Act (or any similar rule then in force), (c) been repurchased by the Company or any Subsidiary thereof or purchased or otherwise acquired by any employee of the Company, and, if such Sun Registrable Securities are purchased or otherwise acquired by any employee of the Company, then such Sun Registrable Securities shall be deemed Other Registrable Securities, (d) been otherwise transferred, new certificates for them not bearing a legend restricting further transfer shall have been delivered by the Company and subsequent public distribution of them shall not require registration under the Securities Act, or (e) ceased to be outstanding. For purposes of this Agreement, a Person shall be deemed to be a holder of Sun Registrable Securities, and the Sun Registrable Securities shall be deemed to be in existence, whenever such Person has the right to acquire directly or indirectly such Sun Registrable Securities (upon conversion or exercise in connection with a transfer of securities or otherwise, but disregarding any restrictions or limitations upon the exercise of such right), whether or not such acquisition 13 has actually been effected, and such Person shall be entitled to exercise the rights of a holder of Sun Registrable Securities hereunder. 10. Miscellaneous. (a) No Inconsistent Agreements. The Company will not hereafter enter into any agreement with respect to the Company's securities which is inconsistent with or violates the rights granted to the holders of Registrable Securities in this Agreement. (b) Adjustments Affecting Registrable Securities. The Company will not take any action, or permit any change to occur, with respect to the Company's securities which would materially and adversely affect the ability of the holders of Registrable Securities to include such Registrable Securities in a registration undertaken pursuant to this Agreement or which would adversely affect the marketability of such Registrable Securities in any such registration (including, without limitation, effecting a stock split, combination of shares, or other recapitalization). (c) Amendment and Waiver. Except as otherwise provided herein, no modification, amendment, or waiver of any provision of this Agreement will be effective unless such modification, amendment, or waiver is approved in writing by the Company, each member of the Bank Group, Sun, and the holders of at least a majority of the Other Registrable Securities; provided that execution of a joinder hereto shall not be considered a modification, amendment or waiver of any of the provisions of this Agreement. The failure of any party to enforce any of the provisions of this Agreement will in no way be construed as a waiver of such provisions and will not affect the right of such party thereafter to enforce each and every provision of this Agreement in accordance with its terms. (d) Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal, or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality, or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed, and enforced in such jurisdiction as if such invalid, illegal, or unenforceable provision had never been contained herein. (e) Entire Agreement. Except as otherwise expressly set forth herein, this Agreement, those documents expressly referred to herein, and the other documents of even date herewith embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements, or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way. (f) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective heirs, executors, successors and assigns. In addition, and whether or not any express assignment shall have been made, the provisions of this Agreement which are for the benefit of the holders of Registrable Securities (or any portion thereof) as such shall be for the benefit of, and enforceable by, any subsequent holder of any Registrable Securities (or of such portion thereof). 14 (g) Counterparts. This Agreement may be executed in separate counterparts each of which will be an original and all of which taken together shall constitute one and the same agreement. (h) Remedies. Any Person having rights under any provision of this Agreement shall be entitled to enforce their rights under this Agreement specifically to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights existing in their favor; provided, however the parties hereto stipulate that the remedies at law of any party hereto in the event of any default or threatened default by any other party hereto in the performance of or compliance with the terms hereof are not and will not be adequate and that, to the fullest extent permitted by law, such terms may be specifically enforced (without posting a bond or other security) by a decree for the specific performance thereof, whether by an injunction against violation thereof or otherwise. (i) Notices. All communications provided for herein shall be in writing and sent (a) by facsimile if the sender on the same day sends a confirming copy of such communication by a recognized overnight delivery service (charges prepaid), (b) by a recognized overnight delivery service (charges prepaid), or (c) by messenger. The respective addresses of the parties hereto for the purposes of this Agreement are set forth on Exhibit A attached hereto. Any party may change its address (or facsimile number) by notice to each of the other parties in accordance with this Section 10(i). The date of giving or making of any such communication shall be, in the case of clauses (a) and (c), the date of the receipt; and, in the case of clause (b), the business day next following the date such communication is sent. (j) Governing Law; Jurisdiction; Waiver of Jury Trial. This Agreement shall be governed by and construed in accordance with the domestic laws of the State of Wisconsin without giving effect to any choice or conflict of law provision or rule (whether of the State of Wisconsin or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Wisconsin. Each party hereto submits to the jurisdiction of any state or federal court sitting in Milwaukee, Wisconsin, in any action or proceeding arising out of or relating to this Agreement and agrees that all claims in respect of the action or proceeding may be heard and determined in any such court. Each party also agrees not to bring any action or proceeding arising out of or relating to this Agreement in any other court. Each party hereto waives any defense of inconvenient forum to the maintenance of any action or proceeding so brought and waives any bond, surety, or other security that might be required of any other party with respect thereto. Any party may make service on any other party by sending or delivering a copy of the process to the party to be served at the address and in the manner provided for the giving of notices in Section 10(i) above. Nothing in this Section 10(j), however, shall affect the right of any party to bring any action or proceeding arising out of or relating to this Agreement in any other court or to serve legal process in any other manner permitted by law or at equity. Each party agrees that a final judgment in any action or proceeding so brought shall be conclusive and may be enforced by suit on the judgment or in any other manner provided by law or at equity. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY SUIT, ACTION OR OTHER PROCEEDING INSTITUTED BY OR AGAINST SUCH PARTY IN RESPECT OF ITS, HIS OR HER OBLIGATIONS HEREUNDER OR THE TRANSACTIONS CONTEMPLATED HEREBY. 15 (k) No Strict Construction. The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any party. (l) Business Days. If any time period for giving notice or taking action hereunder expires on a day which is a Saturday, Sunday or legal holiday in the state in which the Company's chief executive office is located, the time period shall automatically be extended to the business day immediately following such Saturday, Sunday or legal holiday. (m) Descriptive Headings. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. * * * * * 16 IN WITNESS WHEREOF, the parties hereto have executed this Registration Agreement on the day and year first above written. NORTHLAND CRANBERRIES, INC. By: /s/ --------------------------------- Name: Title: SUN NORTHLAND, LLC By: /s/ --------------------------------- Name: Title: Manager FOOTHILL CAPITAL CORPORATION By: /s/ --------------------------------- Name: Title: ST. FRANCIS BANK, F.S.B. By: /s/ --------------------------------- Name: Title: 17 [Continuation of Registration Agreement Signature Page] ARK CLO 2000-1 LIMITED By: /s/ --------------------------------- Name: Title: U.S. BANK NATIONAL ASSOCIATION By: /s/ --------------------------------- Name: Title: 18 [Continuation of Registration Agreement Signature Page] ABLECO HOLDING LLC By: /s/ --------------------------------- Name: Title: 19 Exhibit A Addresses for Notices (a) If to the Company, to it at: Northland Cranberries, Inc. 800 First Avenue South P.O. Box 8020 Wisconsin Rapids, WI 54495 Attention: Chief Executive Officer Telecopy No.: (715) 422-6844 with a copy to: Sun Capital Advisors II, L. P. 5200 Town Center Circle, Suite 470 Boca Raton, Florida 33486 Attention: Marc J. Leder Rodger R. Krouse C. Deryl Couch, Esq. Telecopy No.: (561) 394-0540 and a copy to: Foley & Lardner 777 East Wisconsin Avenue Milwaukee, Wisconsin 53202 Attention: Jeffrey J. Jones Steven R. Barth Telecopy No.: (414) 297-4900 20 Exhibit A (Continued) (b) If to Sun Northland, LLC, to it at: c/o Sun Capital Advisors II, L. P. 5200 Town Center Circle, Suite 470 Boca Raton, Florida 33486 Attention: Marc J. Leder Rodger R. Krouse C. Deryl Couch, Esq. Telecopy No.: (561) 394-0540 with a copy to: Kirkland & Ellis 200 East Randolph Drive Chicago, Illinois 60601 Attention: Douglas C. Gessner Telecopy No.: (312) 861-2200 (c) If to Other Investors, to it at: Foothill Capital Corporation 2450 Colorado Avenue Suite 3000 West Santa Monica, California 90404 Attn: Business Finance Division Manager Telecopy No.: ________________ with a copy to: Otterbourg, Steindler, Houston & Rosen, P.C. 230 Park Avenue New York, New York 10169 Attn: Mitchell M. Brand, Esq. Telecopy No.: (212) 682-6104 21 Exhibit A (Continued) Ableco Holding LLC 450 Park Avenue, 28th Floor New York, New York 10022 Attn: Eric F. Miller Telecopy No.: (212) 758-5305 with a copy to: Schulte Roth & Zabel, LLP 919 Third Avenue New York, New York 10022 Attn: Frederic L. Ragucci, Esq. Telecopy No.: (212) 593-5955 St. Francis Bank, F.S.B. 13400 Bishops Lane, Suite 190 Brookfield, WI 53005-6203 Attn: John Tans Telecopy No.: (262) 787-8778 ARK CLO 2000-1 Limited c/o Patriarch Partners, LLC 40 Wall Street, 25th Floor New York, NY 10005 Attn: Dennis Dolan/Lynn Tilton Telecopy No.: (561) 279-0888 ARK CLO 2000-1 Limited c/o Woodside Capital 36 Bay State Road Cambridge, MA 02138 Attn: David Ray Telecopy No.: (617) 547-5162 22 U.S. Bank National Association MPFP2516 601 Second Avenue South Minneapolis, MN 55402-4302 Attn: Stephen Tornio Telecopy No.: (612) 973-2148 23 EX-4.5 12 sdc74k.txt COMMON STOCK PURCHASE WARRANT THIS WARRANT AND ANY SECURITIES ACQUIRED UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS. THIS WARRANT AND SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH THE CONDITIONS SPECIFIED IN THIS WARRANT AND IN THE STOCKHOLDERS' AGREEMENT, DATED AS OF NOVEMBER 6, 2001 BETWEEN NORTHLAND CRANBERRIES, INC. AND THE OTHER PARTIES SIGNATORY THERETO, COPIES OF WHICH WILL BE MADE AVAILABLE UPON REQUEST. NORTHLAND CRANBERRIES, INC. COMMON STOCK PURCHASE WARRANT No. W-1 November 6, 2001 Warrant to Purchase 2,543,053.00 Shares of Common Stock NORTHLAND CRANBERRIES, INC., a Wisconsin corporation (the "Company"), for value received, hereby certifies that Foothill Capital Corporation, or its registered assigns (the "Holder"), is entitled to purchase from the Company 2,543,053.00 (the "Initial Warrant Quantity") duly authorized, validly issued, fully paid and nonassessable (except as otherwise provided in Section 180.0622(2)(b) of the Wisconsin Business Corporation Law) shares of Class A Common Stock, par value $.01 per share, of the Company (the "Common Stock"), at a purchase price of $.01 per share; provided, that such purchase price shall not be less than the par value of the Common Stock, at any time or from time to time on or after November 6, 2001 (the "Exercise Date"), but prior to 5:00 P.M., Milwaukee, Wisconsin time, on November 6, 2011 (the "Expiration Date"), all subject to the terms, conditions and adjustments set forth below in this Warrant. 1. DEFINITIONS. As used herein, unless the context otherwise requires, the following terms shall have the meanings indicated: "Additional Shares of Common Stock" shall mean all shares (including treasury shares) of Common Stock issued or sold (or, pursuant to Section 3.3 or 3.4, deemed to be issued) by the Company after the date hereof, whether or not subsequently reacquired or retired by the Company, other than: (a) shares issued upon the exercise of this Warrant, (b) such number of additional shares as may become issuable upon the exercise of this Warrant by reason of adjustments required pursuant to the anti-dilution provisions applicable to this Warrant as in effect on the date hereof, (c) shares, warrants, options and other securities issued by the Company at any time to the Holder or any Affiliate thereof, (d) (i) shares issued upon the exercise of options granted or to be granted under the Company's stock option plans as in effect on the date hereof or under any other employee stock option or purchase plan or plans adopted or assumed after such date by the Company's Board of Directors provided in each case that the exercise or purchase price or other consideration for any such share shall not be less than 85% of the fair market value of the Common Stock (as determined in the reasonable business judgment of the Company's Board of Directors) on the date of the grant, and (ii) such additional number of shares as may become issuable pursuant to the terms of any such plans or agreements by reason of adjustments required pursuant to antidilution provisions applicable to such securities in order to reflect any subdivision or combination of Common Stock, by reclassification or otherwise, or any dividend on Common Stock payable in Common Stock, (e) shares or rights to acquire shares issues in connection with the bona fide acquisition of a business by the Company from an unaffiliated third party, and (f) shares or rights to acquire shares issued in connection with debt financings or lease arrangements entered into on an arms'-length basis with unaffiliated third parties. "Affiliate" means a Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, another Person. "Business Day" shall mean any day other than a Saturday or a Sunday or any day on which national banks are authorized or required by law to close. Any reference to "days" (unless Business Days are specified) shall mean calendar days. "Commission" shall mean the Securities and Exchange Commission or any successor agency having jurisdiction to enforce the Securities Act. "Common Stock" shall have the meaning assigned to it in the introduction to this Warrant, such term to include any stock into which such Common Stock shall have been changed or any stock resulting from any reclassification of such Common Stock, and all other stock of any class or classes (however designated) of the Company the holders of which have the right, without limitation as to amount, either to all or to a share of the balance of current dividends and liquidating dividends after the payment of dividends and distributions on any shares entitled to preference. "Company" shall have the meaning assigned to it in the introduction to this Warrant, such term to include any corporation or other entity which shall succeed to or assume the obligations of the Company hereunder in compliance with Section 4. 2 "Convertible Securities" shall mean any evidences of indebtedness, shares of stock (other than Common Stock) or other securities directly or indirectly convertible into or exchangeable for Additional Shares of Common Stock. "Current Market Price" shall mean, on any date specified herein, the average of the daily Market Price during the 10 consecutive trading days commencing 15 trading days before such date, except that, if on any such date the shares of Common Stock are not listed or admitted for trading on any national securities exchange or quoted in the over-the-counter market, the Current Market Price shall be the Market Price on such date. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended from time to time, and the rules and regulations thereunder, or any successor statute. "Exercise Date" shall have the meaning assigned to it in the introduction to this Warrant. "Expiration Date" shall have the meaning assigned to it in the introduction to this Warrant. "Fair Value" shall mean, on any date specified herein (i) in the case of cash, the dollar amount thereof, (ii) in the case of a security, the Current Market Price, and (iii) in all other cases, the fair value thereof (as of a date which is within 20 days of the date as of which the determination is to be made) determined in good faith by the Company. "Holder" shall have the meaning assigned to it in the introduction to this Warrant. "Initial Warrant Quantity" shall have the meaning set forth in the Preamble. "Market Price" shall mean, on any date specified herein, the amount per share of the Common Stock, equal to (i) the last reported sale price of such Common Stock, regular way, on such date or, in case no such sale takes place on such date, the average of the closing bid and asked prices thereof regular way on such date, in either case as officially reported on the principal national securities exchange on which such Common Stock is then listed or admitted for trading, (ii) if such Common Stock is not then listed or admitted for trading on any national securities exchange but is designated as a national market system security by the NASD, the last reported trading price of the Common Stock on such date, (iii) if there shall have been no trading on such date or if the Common Stock is not so designated, the average of the closing bid and asked prices of the Common Stock on such date as shown by the NASD automated quotation system, or (iv) if such Common Stock is not then listed or admitted for trading on any national exchange or quoted in the over-the-counter market, the fair value thereof (as of a date which is within 20 days of the date as of which the determination is to be made) determined in good faith by the Company. "NASD" shall mean the National Association of Securities Dealers, Inc. "Options" shall mean any rights, options or warrants to subscribe for, purchase or otherwise acquire either Additional Shares of Common Stock or Convertible Securities. 3 "Other Securities" shall mean any stock (other than Common Stock) and other securities of the Company or any other Person (corporate or otherwise) which the holders of this Warrant at any time shall be entitled to receive, or shall have received, upon the exercise of this Warrant, in lieu of or in addition to Common Stock, or which at any time shall be issuable or shall have been issued in exchange for or in replacement of Common Stock or Other Securities pursuant to Section 4 or otherwise. "Person" shall mean any individual, firm, partnership, corporation, trust, joint venture, association, joint stock company, limited liability company, unincorporated organization or any other entity or organization, including a government or agency or political subdivision thereof, and shall include any successor (by merger or otherwise) of such entity. "Purchase Price" shall mean $.01 per share. "Registration Rights Agreement" shall mean the Registration Agreement dated as of November 6, 2001, between the Company, Sun Northland, LLC and the other parties signatory thereto, as amended from time to time in accordance with its terms. "Restricted Securities" shall mean (i) any Warrants bearing the applicable legend set forth in Section 9.1, (ii) any shares of Common Stock (or Other Securities) issued or issuable upon the exercise of this Warrant which are (or, upon issuance, will be) evidenced by a certificate or certificates bearing the applicable legend set forth in such Section, and (iii) any shares of Common Stock (or Other Securities) issued subsequent to the exercise of this Warrant as a dividend or other distribution with respect to, or resulting from a subdivision of the outstanding shares of Common Stock (or other Securities) into a greater number of shares by reclassification, stock splits or otherwise, or in exchange for or in replacement of the Common Stock (or Other Securities) issued upon such exercise, which are evidenced by a certificate or certificates bearing the applicable legend set forth in such Section. "Securities Act" shall mean the Securities Act of 1933, as amended from time to time, and the rules and regulations thereunder, or any successor statute. "Stockholders Agreement" shall mean the Stockholders Agreement dated as of November 6, 2001, between the Company, Sun Northland, LLC, and the other parties signatory thereto, as amended from time to time in accordance with its terms. "Transfer Agent" shall have the meaning set forth in Section 10. "Warrant" shall mean this warrant to purchase 2,543,053.00 shares of Common Stock issued as of November 6, 2001 and registered in the Warrant Register as Warrant No. 1. "Warrant Register" shall have the meaning set forth in Section 11.1. "Warrant Quantity" initially shall mean the Initial Warrant Quantity (as defined in the first paragraph of this Warrant), which amount shall be subject to adjustment and readjustment from time to time as provided in Section 3, and, as so adjusted or readjusted, shall remain in effect until a further adjustment or readjustment is required by Section 3. 4 2. EXERCISE OF WARRANT. 2.1. Manner of Exercise; Payment of the Purchase Price. (a) This Warrant may be exercised by the Holder hereof, in whole or in part, at any time or from time to time on or after the Exercise Date through the Expiration Date, by surrendering to the Company at its principal office this Warrant, with the form of Election to Purchase Shares attached hereto as Exhibit A (or a reasonable facsimile thereof) duly executed by the Holder and accompanied by payment of the Purchase Price for the number of shares of Common Stock specified in such form. (b) Payment of the Purchase Price may be made as follows (or by any combination of the following): (i) in United States currency by cash or delivery of a certified check or bank draft payable to the order of the Company or by wire transfer to the Company, (ii) by cancellation of such number of the shares of Common Stock otherwise issuable to the Holder upon such exercise as shall be specified in such Election to Purchase Shares, such that the excess of the aggregate Current Market Price of such specified number of shares on the date of exercise over the portion of the Purchase Price attributable to such shares shall equal the Purchase Price attributable to the shares of Common Stock to be issued upon such exercise, in which case such amount shall be deemed to have been paid to the Company and the number of shares issuable upon such exercise shall be reduced by such specified number, or (iii) by surrender to the Company for cancellation certificates representing shares of Common Stock of the Company owned by the Holder (properly endorsed for transfer in blank) having a Current Market Price on the date of Warrant exercise equal to the Purchase Price. 2.2. When Exercise Effective. Each exercise of this Warrant shall be deemed to have been effected immediately prior to the close of business on the Business Day on which this Warrant shall have been surrendered to, and the Purchase Price shall have been received by, the Company as provided in Section 2.1, and at such time the Person or Persons in whose name or names any certificate or certificates for shares of Common Stock (or Other Securities) shall be issuable upon such exercise as provided in Section 2.3 shall be deemed to have become the holder or holders of record thereof for all purposes. 2.3. Delivery of Stock Certificates, etc.; Charges, Taxes and Expenses. (a) As soon as practicable after each exercise of this Warrant, in whole or in part, and in any event within five Business Days thereafter, the Company shall cause to be issued in the name of and delivered to the Holder hereof or, subject to Section 9, as the Holder may direct, (i) a certificate or certificates for the number of shares of Common Stock (or Other Securities) to which the Holder shall be entitled upon such exercise plus, in lieu of issuance of any fractional share to which the Holder would otherwise be entitled, if any, a check for the amount of cash equal to the same fraction multiplied by the Current Market Price per share on the date of Warrant exercise, and (ii) in case such exercise is for less than all of the shares of Common Stock purchasable under this Warrant, a new Warrant or Warrants of like tenor, for the balance of the shares of Common Stock purchasable hereunder. 5 (b) Issuance of certificates for shares of Common Stock upon the exercise of this Warrant shall be made without charge to the Holder hereof for any issue or transfer tax or other incidental expense, in respect of the issuance of such certificates, all of which such taxes and expenses shall be paid by the Company. 2.4. Tax Basis. The Company and the Holder shall mutually agree as to the tax basis of this Warrant for purposes of the Internal Revenue Code of 1986, as amended, and the treatment of this Warrant under such Code by each of the Company and the Holder shall be consistent with such agreement. 3. ADJUSTMENT OF COMMON STOCK ISSUABLE UPON EXERCISE. 3.1. General; Warrant Quantity. This Warrant evidences the right to purchase a number of shares of Common Stock equal to the Warrant Quantity, subject to adjustment and readjustment as provided in this Section 3. 3.2. Adjustment of Warrant Quantity. 3.2.1. Issuance of Additional Shares of Common Stock. In case the Company at any time or from time to time after the date hereof shall issue or sell Additional Shares of Common Stock (including Additional Shares of Common Stock deemed to be issued pursuant to Section 3.3 or 3.4) without consideration or for consideration per share less than the Current Market Price in effect immediately prior to such issue or sale, then, in each such case, subject to Section 3.8, the Warrant Quantity shall be increased, concurrently with such issue or sale, to an amount determined by multiplying such Warrant Quantity by a fraction (a) the numerator of which shall be the number of shares of Common Stock outstanding immediately after such issue or sale, provided that, for the purposes of this Section 3.2.1, (i) immediately after any Additional Shares of Common Stock are deemed to have been issued pursuant to Section 3.3 or 3.4, such Additional Shares shall be deemed to be outstanding, and (ii) treasury shares shall not be deemed to be outstanding, and (b) the denominator of which shall be the sum of (x) the number of shares of Common Stock outstanding immediately prior to such issue or sale and (y) the number of shares of Common Stock which the aggregate consideration received by the Company for the total number of such Additional Shares of Common Stock so issued or sold would purchase at such Current Market Price. 3.2.2. Extraordinary Dividends and Distributions. In case the Company at any time or from time to time after the date hereof shall declare, order, pay or make a dividend or other distribution (including, without limitation, any distribution of other or additional stock or other securities or property or Options by way of dividend or spin-off, reclassification, recapitalization or similar corporate rearrangement) on the Common Stock other than a dividend payable in Additional Shares of Common Stock, then, in each such case, the Company shall pay to the Holder of this Warrant, at the time such dividend or distribution is paid to the holders of the Common Stock, an amount equal to the product of (i) the Warrant Quantity and (ii) the Fair Value at such time of such dividend or distribution applicable to one share of Common Stock. 6 3.3. Treatment of Options and Convertible Securities. In case the Company at any time or from time to time after the date hereof shall issue, sell, grant or assume, or shall fix a record date for the determination of holders of any class of securities of the Company entitled to receive, any Options or Convertible Securities (whether or not the rights thereunder are immediately exercisable), then, and in each such case, the maximum number of Additional Shares of Common Stock (as set forth in the instrument relating thereto, without regard to any provisions contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or, in the case of Convertible Securities and Options therefor, the conversion or exchange of such Convertible Securities, shall be deemed to be Additional Shares of Common Stock issued as of the time of such issue, sale, grant or assumption or, in case such a record date shall have been fixed, as of the close of business on such record date (or, if the Common Stock trades on an ex-dividend basis, on the date prior to the commencement of ex-dividend trading), provided, that, such Additional Shares of Common Stock shall not be deemed to have been issued unless the consideration per share (determined pursuant to Section 3.5) of such shares would be less than the Current Market Price in effect on the date of and immediately prior to such issue, sale, grant or assumption or immediately prior to the close of business on such record date (or, if the Common Stock trades on an ex-dividend basis, on the date prior to the commencement of ex-dividend trading), as the case may be, and provided, further, that in any such case in which Additional Shares of Common Stock are deemed to be issued: (a) whether or not the Additional Shares of Common Stock underlying such Options or Convertible Securities are deemed to be issued, no further adjustment of the Warrant Quantity shall be made upon the subsequent issue or sale of Convertible Securities or shares of Common Stock upon the exercise of such Options or the conversion or exchange of such Convertible Securities, except in the case of any such Options or Convertible Securities which contain provisions requiring an adjustment, subsequent to the date of the issue or sale thereof, of the number of Additional Shares of Common Stock issuable upon the exercise of such Options or the conversion or exchange of such Convertible Securities by reason of (x) a change of control of the Company, (y) the acquisition by any Person or group of Persons of any specified number or percentage of the voting securities of the Company or (z) any similar event or occurrence, each such case to be deemed hereunder to involve a separate issuance of Additional Shares of Common Stock, Options or Convertible Securities, as the case may be; (b) if such Options or Convertible Securities by their terms provide, with the passage of time or otherwise, for any increase in the consideration payable to the Company, or decrease in the number of Additional Shares of Common Stock issuable, upon the exercise, conversion or exchange thereof (by change of rate or otherwise), the Warrant Quantity computed upon the original issue, sale, grant or assumption thereof (or upon the occurrence of the record date, or date prior to the commencement of ex-dividend trading, as the case may be, with respect thereto), and any subsequent adjustments based thereon, shall, upon any such increase or decrease becoming effective, be recomputed to reflect such increase or decrease insofar as it affects such Options, or the rights of conversion or exchange under such Convertible Securities, which are outstanding at such time; (c) upon the expiration (or purchase by the Company and cancellation or retirement) of any such Options which shall not have been exercised or the expiration of any rights of conversion or exchange under any such Convertible Securities which (or purchase by 7 the Company and cancellation or retirement of any such Convertible Securities the rights of conversion or exchange under which) shall not have been exercised, the Warrant Quantity computed upon the original issue, sale, grant or assumption thereof (or upon the occurrence of the record date, or date prior to the commencement of ex-dividend trading, as the case may be, with respect thereto), and any subsequent adjustments based thereon, shall, upon such expiration (or such cancellation or retirement, as the case may be), be recomputed as if: (i) in the case of Options for Common Stock or Convertible Securities, the only Additional Shares of Common Stock issued or sold were the Additional Shares of Common Stock, if any, actually issued or sold upon the exercise of such Options or the conversion or exchange of such Convertible Securities and the consideration received therefor was the consideration actually received by the Company for the issue, sale, grant or assumption of all such Options, whether or not exercised, plus the consideration actually received by the Company upon such exercise, or for the issue or sale of all such Convertible Securities which were actually converted or exchanged, plus the additional consideration, if any, actually received by the Company upon such conversion or exchange, and (ii) in the case of Options for Convertible Securities, only the Convertible Securities, if any, actually issued or sold upon the exercise of such Options were issued at the time of the issue or sale, grant or assumption of such Options, and the consideration received by the Company for the Additional Shares of Common Stock deemed to have then been issued was the consideration actually received by the Company for the issue, sale, grant or assumption of all such Options, whether or not exercised, plus the consideration deemed to have been received by the Company (pursuant to Section 3.5) upon the issue or sale of such Convertible Securities with respect to which such Options were actually exercised; (d) no readjustment pursuant to subdivision (b) or (c) above shall have the effect of decreasing the Warrant Quantity by an amount in excess of the amount of the adjustment thereof originally made in respect of the issue, sale, grant or assumption of such Options or Convertible Securities; and (e) in the case of any such Options which expire by their terms not more than 30 days after the date of issue, sale, grant or assumption thereof, no adjustment of the Warrant Quantity shall be made until the expiration or exercise of all such Options, whereupon such adjustment shall be made in the manner provided in subdivision (c) above. 3.4. Treatment of Stock Dividends, Stock Splits, etc. In case the Company at any time or from time to time after the date hereof shall declare or pay any dividend on the Common Stock payable in Common Stock, or shall effect a subdivision of the outstanding shares of Common Stock into a greater number of shares of Common Stock (by reclassification or otherwise than by payment of a dividend in Common Stock), then, and in each such case, Additional Shares of Common Stock shall be deemed to have been issued (a) in the case of any such dividend, immediately after the close of business on the record date for the determination of holders of any class of securities entitled to receive such dividend, or (b) in the case of any such 8 subdivision, at the close of business on the day immediately prior to the day upon which such corporate action becomes effective. 3.5. Computation of Consideration. For the purposes of this Section 3, (a) the consideration for the issue or sale of any Additional Shares of Common Stock shall, irrespective of the accounting treatment of such consideration, (i) insofar as it consists of cash, be computed at the amount of cash received by the Company, without deducting any expenses paid or incurred by the Company or any commissions or compensations paid or concessions or discounts allowed to underwriters, dealers or others performing similar services in connection with such issue or sale, (ii) insofar as it consists of property (including securities) other than cash, be computed at the Fair Value thereof at the time of such issue or sale, and (iii) in case Additional Shares of Common Stock are issued or sold together with other stock or securities or other assets of the Company for a consideration which covers both, be the portion of such consideration so received, computed as provided in clauses (i) and (ii) above, allocable to such Additional Shares of Common Stock, such allocation to be determined in the same manner that the Fair Value of property not consisting of cash or securities is to be determined as provided in the definition of 'Fair Value' herein; (b) Additional Shares of Common Stock deemed to have been issued pursuant to Section 3.3, relating to Options and Convertible Securities, shall be deemed to have been issued for a consideration per share determined by dividing: (i) the total amount, if any, received and receivable by the Company as consideration for the issue, sale, grant or assumption of the Options or Convertible Securities in question, plus the minimum aggregate amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration) payable to the Company upon the exercise in full of such Options or the conversion or exchange of such Convertible Securities or, in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities, in each case computing such consideration as provided in the foregoing subdivision (a), by (ii) the maximum number of shares of Common Stock (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or the conversion or exchange of such Convertible Securities; and 9 (c) Additional Shares of Common Stock deemed to have been issued pursuant to Section 3.4, relating to stock dividends, stock splits, etc., shall be deemed to have been issued for no consideration. 3.6. Adjustments for Combinations, etc. In case the outstanding shares of Common Stock shall be combined or consolidated, by reclassification or otherwise, into a lesser number of shares of Common Stock, the Warrant Quantity in effect immediately prior to such combination or consolidation shall, concurrently with the effectiveness of such combination or consolidation, be proportionately decreased. 3.7. Dilution in Case of Other Securities. In case any Other Securities shall be issued or sold or shall become subject to issue or sale upon the conversion or exchange of any stock (or Other Securities) of the Company (or any issuer of Other Securities or any other Person referred to in Section 4) or to subscription, purchase or other acquisition pursuant to any Options issued or granted by the Company (or any such other issuer or Person) for a consideration such as to dilute, on a basis consistent with the standards established in the other provisions of this Section 3, the purchase rights granted by this Warrant, then, and in each such case, the computations, adjustments and readjustments provided for in this Section 3 with respect to the Warrant Quantity shall be made as nearly as possible in the manner so provided and applied to determine the amount of Other Securities from time to time receivable upon the exercise of this Warrant, so as to protect the Holder of this Warrant against the effect of such dilution. 3.8. De Minimis Adjustments. If the amount of any adjustment of the Warrant Quantity required pursuant to this Section 3 would be less than one tenth (1/10) of one percent (1%) of the Warrant Quantity in effect at the time such adjustment is otherwise so required to be made, such amount shall be carried forward and adjustment with respect thereto made at the time of and together with any subsequent adjustment which, together with such amount and any other amount or amounts so carried forward, shall aggregate a change in the Warrant Quantity of at least one tenth (1/10) of one percent (1%) of such Warrant Quantity. All calculations under this Warrant shall be made to the nearest one-tenth of a share. 3.9. Abandoned Dividend or Distribution. If the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or other distribution (which results in an adjustment to the Warrant Quantity under the terms of this Warrant) and shall, thereafter, and before such dividend or distribution is paid or delivered to shareholders entitled thereto, legally abandon its plan to pay or deliver such dividend or distribution, then any adjustment made to the Warrant Quantity by reason of the taking of such record shall be reversed, and any subsequent adjustments, based thereon, shall be recomputed. 4. CONSOLIDATION, MERGER, ETC. 4.1. Adjustments for Consolidation, Merger, Sale of Assets, Reorganization, etc. In case the Company after the date hereof (a) shall consolidate with or merge into any other Person and shall not be the continuing or surviving corporation of such consolidation or merger, or (b) shall permit any other Person to consolidate with or merge into the Company and the Company shall be the continuing or surviving Person but, in connection with such consolidation or merger, the Common Stock or Other Securities shall be changed into or exchanged for stock 10 or other securities of any other Person or cash or any other property, or (c) shall transfer all or substantially all of its properties and assets to any other Person, or (d) shall effect a capital reorganization or reclassification of the Common Stock or Other Securities (other than a capital reorganization or reclassification resulting in the issue of Additional Shares of Common Stock for which adjustment in the Warrant Quantity is provided in Section 3.2.1 or 3.2.2), then, and in the case of each such transaction, proper provision shall be made so that, upon the basis and the terms and in the manner provided in this Warrant, the Holder of this Warrant, upon the exercise hereof at any time after the consummation of such transaction, shall be entitled to receive (at the aggregate Purchase Price in effect at the time of such consummation for all Common Stock or Other Securities issuable upon such exercise immediately prior to such consummation), in lieu of the Common Stock or Other Securities issuable upon such exercise prior to such consummation, the highest amount of securities, cash or other property to which such Holder would actually have been entitled as a shareholder upon such consummation if such Holder had exercised this Warrant immediately prior thereto, subject to adjustments (subsequent to such consummation) as nearly equivalent as possible to the adjustments provided for in Sections 3 through 5 other than the adjustments contemplated by Section 3.2.1); provided, that, if a purchase, tender or exchange offer shall have been made to and accepted by the holders of more than 50% of the outstanding shares of Common Stock, and if the Holder so designates in a notice given to the Company on or before the date immediately preceding the date of the consummation of such transaction, the Holder of this Warrant shall be entitled to receive the highest amount of securities, cash or other property to which it would actually have been entitled as a shareholder if the Holder of this Warrant had exercised this Warrant prior to the expiration of such purchase, tender or exchange offer and accepted such offer, subject to adjustments (from and after the consummation of such purchase, tender or exchange offer) as nearly equivalent as possible to the adjustments provided for in Section 3 through 5. 4.2. Assumption of Obligations. Notwithstanding anything contained in this Warrant to the contrary, the Company shall not effect any of the transactions described in clauses (a) through (d) of Section 4.1 unless, prior to the consummation thereof, each Person (other than the Company) which may be required to deliver any stock, securities, cash or property upon the exercise of this Warrant as provided herein shall assume, by written instrument delivered to, and reasonably satisfactory to, the Holder of this Warrant, (a) the obligations of the Company under this Warrant (and if the Company shall survive the consummation of such transaction, such assumption shall be in addition to, and shall not release the Company from, any continuing obligations of the Company under this Warrant), and (b) the obligation to deliver to the Holder such shares of stock, securities, cash or property as, in accordance with the foregoing provisions of this Section 4, the Holder may be entitled to receive. 5. OTHER DILUTIVE EVENTS. In case any event shall occur as to which the provisions of Section 3 or Section 4 hereof are not strictly applicable or if strictly applicable would not fairly protect the purchase rights of the Holder in accordance with the essential intent and principles of such Sections, then, in each such case, the Board of Directors of the Company shall make an adjustment in the application of such provisions, in accordance with such essential intent and principles, so as to preserve, without dilution, the purchase rights represented by this Warrant. 11 6. REPORT. In each case of any adjustment or readjustment in the shares of Common Stock (or Other Securities) issuable upon the exercise of this Warrant, the Company at its sole expense shall promptly compute such adjustment or readjustment in accordance with the terms of this Warrant and prepare a report, signed by the Chairman of the Board, President or one of the Vice Presidents of the Company setting forth such adjustment or readjustment and showing in reasonable detail the method of calculation thereof and the facts upon which such adjustment or readjustment is based, including a statement of (a) the consideration received or to be received by the Company for any Additional Shares of Common Stock issued or sold or deemed to have been issued, (b) the number of shares of Common Stock outstanding or deemed to be outstanding, and (c) the Warrant Quantity in effect immediately prior to such issue or sale and as adjusted and readjusted (if required by Section 3) on account thereof. 7. CERTAIN COVENANTS OF COMPANY. In the event of: (a) any taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, or any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right, or (b) any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company, any consolidation or merger involving the Company and any other Person, any transaction or series of transactions by the Company in which more than 50% of the voting securities of the Company are transferred to another Person, or any transfer, sale or other disposition of all or substantially all the assets of the Company to any other Person, or (c) any voluntary or involuntary dissolution, liquidation or winding-up of the Company, the Company shall mail to each holder of a Warrant a notice specifying (i) the date or expected date on which any such record is to be taken for the purpose of such dividend, distribution or right, and the amount and character of such dividend, distribution or right, and (ii) the date or expected date on which any such reorganization, reclassification, recapitalization, consolidation, merger, transfer, sale, disposition, dissolution, liquidation or winding-up is to take place and the time, if any such time is to be fixed, as of which the holders of record of Common Stock (or Other Securities) shall be entitled to exchange their shares of Common Stock (or Other Securities) for the securities or other property deliverable upon such reorganization, reclassification, recapitalization, consolidation, merger, transfer, dissolution, liquidation or winding-up. Such notice shall be given at least 20 days prior to the date therein specified. 8. REGISTRATION OF COMMON STOCK. If any shares of Common Stock required to be reserved for purposes of exercise of this Warrant require registration with or approval of any governmental authority under any federal or state law (other than the Securities Act) before such shares may be issued upon exercise, the Company shall, at its expense and as expeditiously as possible, use its commercially reasonable efforts to cause such shares to be duly registered or approved, as the case may be. 12 9. RESTRICTIONS ON TRANSFER. 9.1. Restrictive Legends. Except as otherwise permitted by this Section 9, each Warrant (including each Warrant issued upon the transfer of any Warrant) shall be stamped or otherwise imprinted with a legend in substantially the following form: "THIS WARRANT AND ANY SECURITIES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS. THIS WARRANT AND SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH THE CONDITIONS SPECIFIED IN THIS WARRANT AND IN THE STOCKHOLDERS' AGREEMENT, DATED AS OF NOVEMBER 6, 2001, BETWEEN NORTHLAND CRANBERRIES, INC. AND THE OTHER PARTIES SIGNATORY THERETO, COPIES OF EACH OF WHICH WILL BE MADE AVAILABLE UPON REQUEST." Except as otherwise permitted by this Section 9, each certificate for Common Stock (or Other Securities) issued upon the exercise of any Warrant, and each certificate issued upon the transfer of any such Common Stock (or Other Securities), shall be stamped or otherwise imprinted with a legend in substantially the following form: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS. SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH THE CONDITIONS SPECIFIED IN THE STOCKHOLDERS' AGREEMENT, DATED AS OF NOVEMBER 6, 2001, BETWEEN NORTHLAND CRANBERRIES, INC. AND THE OTHER PARTIES SIGNATORY THERETO, COPIES OF WHICH ARE AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE AND WILL BE FURNISHED TO THE HOLDER OF SUCH SECURITIES UPON WRITTEN REQUEST AND WITHOUT CHARGE." 9.2. Transfer to Comply With the Securities Act. Restricted Securities may not be sold, assigned, pledged, hypothecated, encumbered or in any manner transferred or disposed of, in whole or in part, except in compliance with the provisions of the Securities Act and state securities or Blue Sky laws and the terms and conditions hereof. 13 9.3. Termination of Restrictions. The restrictions imposed by this Section 9 on the transferability of Restricted Securities shall cease and terminate as to any particular Restricted Securities (a) when a registration statement with respect to the sale of such securities shall have been declared effective under the Securities Act and such securities shall have been disposed of in accordance with such registration statement, (b) when such securities are sold pursuant to Rule 144 (or any similar provision then in force) under the Securities Act, or (c) when, in the opinion of both counsel for the Holder and counsel for the Company, such restrictions are no longer required or necessary in order to protect the Company against a violation of the Securities Act upon any sale or other disposition of such securities without registration thereunder. Whenever such restrictions shall cease and terminate as to any Restricted Securities, the Holder shall be entitled to receive from the Company, without expense, new securities of like tenor not bearing the applicable legends required by Section 9.1. 10. RESERVATION OF STOCK, ETC. The Company shall at all times reserve and keep available, solely for issuance and delivery upon exercise of this Warrant, the number of shares of Common Stock (or Other Securities) from time to time issuable upon exercise of all Warrants at the time outstanding. All shares of Common Stock (or Other Securities) issuable upon exercise of any Warrants shall be duly authorized and, when issued upon such exercise, shall be validly issued and, in the case of shares, fully paid and nonassessable, with no liability on the part of the holders thereof (except as otherwise provided in Section 180.0622(2)(b) of the Wisconsin Business Corporation Law), and, in the case of all securities, shall be free from all taxes, liens, security interests, encumbrances, preemptive rights and charges. The transfer agent for the Common Stock, which may be the Company ("Transfer Agent"), and every subsequent Transfer Agent for any shares of the Company's capital stock issuable upon the exercise of any of the purchase rights represented by this Warrant, are hereby irrevocably authorized and directed at all times until the Expiration Date to reserve such number of authorized and unissued shares as shall be requisite for such purpose. The Company shall keep copies of this Warrant on file with the Transfer Agent for the Common Stock and with every subsequent Transfer Agent for any shares of the Company's capital stock issuable upon the exercise of the rights of purchase represented by this Warrant. The Company shall supply such Transfer Agent with duly executed stock certificates for such purpose. 11. REGISTRATION AND TRANSFER OF WARRANTS, ETC. 11.1. Warrant Register; Ownership of Warrants. Each Warrant issued by the Company shall be numbered and shall be registered in a warrant register (the "Warrant Register") as it is issued and transferred, which Warrant Register shall be maintained by the Company at its principal office or, at the Company's election and expense, by a Transfer Agent. The Company shall be entitled to treat the registered Holder of any Warrant on the Warrant Register as the owner in fact thereof for all purposes and shall not be bound to recognize any equitable or other claim to or interest in such Warrant on the part of any other Person, and shall not be affected by any notice to the contrary, except that, if and when any Warrant is properly assigned in blank, the Company may (but shall not be obligated to) treat the bearer thereof as the owner of such Warrant for all purposes. Subject to Section 9, a Warrant, if properly assigned, may be exercised by a new holder without a new Warrant first having been issued. 14 11.2. Transfer of Warrants. This Warrant may not be sold, assigned or in any manner transferred or disposed of, in whole or in part, without the prior written consent of the Company; provided, however, that this Warrant is transferable, in whole (but not in part), without the prior written consent of the Company to any Affiliate of the Holder. 11.3. Replacement of Warrants. On receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of any such loss, theft or destruction of this Warrant, on delivery of an indemnity agreement reasonably satisfactory in form and amount to the Company or, in the case of any such mutilation, on surrender of such Warrant to the Company at its principal office and cancellation thereof, the Company at its expense shall execute and deliver, in lieu thereof, a new Warrant of like tenor. 11.4. Adjustments To Purchase Price and Number of Shares. Notwithstanding the number or kind of shares of Common Stock purchasable upon exercise of this Warrant, any Warrant theretofore or thereafter issued may continue to express the same number and kind of shares of Common Stock as are stated in this Warrant, as initially issued. 11.5. Fractional Shares. Notwithstanding any adjustment pursuant to Section 3 in the number of shares of Common Stock covered by this Warrant or any other provision of this Warrant, the Company shall not be required to issue fractions of shares upon exercise of this Warrant or to distribute certificates which evidence fractional shares. In lieu of fractional shares, the Company shall make payment to the Holder, at the time of exercise of this Warrant as herein provided, in an amount in cash equal to such fraction (after aggregation of all shares and fractional shares to be issued upon such exercise) multiplied by the Current Market Price of a share of Common Stock on the date of Warrant exercise. 12. Remedies; Specific Performance. The Company stipulates that there would be no adequate remedy at law to the Holder of this Warrant in the event of any default or threatened default by the Company in the performance of or compliance with any of the terms of this Warrant and accordingly, the Company agrees that, in addition to any other remedy to which the Holder may be entitled at law or in equity, the Holder shall be entitled to seek to compel specific performance of the obligations of the Company under this Warrant, without the posting of any bond, in accordance with the terms and conditions of this Warrant in any court of the United States or any State thereof having jurisdiction, and if any action should be brought in equity to enforce any of the provisions of this Warrant, the Company shall not raise the defense that there is an adequate remedy at law. Except as otherwise provided by law, a delay or omission by the Holder hereto in exercising any right or remedy accruing upon any such breach shall not impair the right or remedy or constitute a waiver of or acquiescence in any such breach. No remedy shall be exclusive of any other remedy. All available remedies shall be cumulative. 13. No Rights or Liabilities as Shareholder. Nothing contained in this Warrant shall be construed as conferring upon the Holder hereof any voting or other rights as a shareholder of the Company or as imposing any obligation on the Holder to purchase any securities or as imposing any liabilities on the Holder as a shareholder of the 15 Company, whether such obligation or liabilities are asserted by the Company or by creditors of the Company. 14. Notices. All notices and other communications (and deliveries) provided for or permitted hereunder shall be made in writing by hand delivery, facsimile, any courier guaranteeing overnight delivery or first class registered or certified mail, return receipt requested, postage prepaid, addressed as follows: If to the Company: Northland Cranberries, Inc. 800 First Avenue South P.O. Box 8020 Wisconsin Rapids, WI 54495 Attn: Chief Executive Officer Fax No. (715) 422-6844 with copies to: Sun Capital Advisors II, LP 5200 Town Center Circle, Suite 470 Boca Raton, Florida 33486 Attn: C. Deryl Couch, Esq. Fax No. (562) 394-0540 and Kirkland & Ellis 200 East Randolph Drive Chicago, Illinois 60601 Attn: Douglas C. Gessner, Esq. Fax No. (312) 861-2200 If to Holder: Foothill Capital Corporation 2450 Colorado Avenue Suite 3000 West Santa Monica, California 90404 Attn: Business Finance Division Manager Fax No. ________________ with copies to: Otterbourg, Steindler, Houston & Rosen, P.C. 230 Park Avenue New York, New York 10169 Attn: Mitchell M. Brand, Esq. Fax No. 212-682-6104 All such notices and communications (and deliveries) shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; when receipt is acknowledged, if sent by facsimile; on the next Business Day, if timely delivered to a courier guaranteeing overnight delivery; and five days after being deposited in the mail, if sent first class 16 registered or certified mail, return receipt requested, postage prepaid; provided, that, the exercise of any Warrant shall be effective in the manner provided in Section 2. 15. AMENDMENTS. This Warrant and any term hereof may not be amended, modified, supplemented or terminated, and waivers or consents to departures from the provisions hereof may not be given, except by written instrument duly executed by the party against which enforcement of such amendment, modification, supplement, termination or consent to departure is sought. 16. DESCRIPTIVE HEADINGS, ETC. The headings in this Warrant are for convenience of reference only and shall not limit or otherwise affect the meaning of terms contained herein. Unless the context of this Warrant otherwise requires: (1) words of any gender shall be deemed to include each other gender; (2) words using the singular or plural number shall also include the plural or singular number, respectively; (3) the words "hereof", "herein" and "hereunder" and words of similar import when used in this Warrant shall refer to this Warrant as a whole and not to any particular provision of this Warrant, and Section and paragraph references are to the Sections and paragraphs of this Warrant unless otherwise specified; (4) the word "including" and words of similar import when used in this Warrant shall mean "including, without limitation," unless otherwise specified; (5) "or" is not exclusive; and (6) provisions apply to successive events and transactions. 17. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER. THE VALIDITY OF THIS WARRANT, THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF, AND THE RIGHTS OF THE PARTIES HERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR RELATED HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF WISCONSIN. THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS WARRANT SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN MILWAUKEE, WISCONSIN. THE PARTIES WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 17. THE PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS WARRANT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. THE COMPANY AND HOLDER REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS WARRANT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT. 17 18. REGISTRATION RIGHTS AGREEMENT. The shares of Common Stock (and Other Securities) issuable upon exercise of this Warrant (or upon conversion of any shares of Common Stock issued upon such exercise) shall constitute Other Registrable Securities (as such term is defined in the Registration Rights Agreement). Subject to the limitations on transfer of rights under this Warrant and the Registration Rights Agreement, each holder of this Warrant shall be entitled to all of the benefits afforded to a holder of any such Other Registrable Securities under the Registration Rights Agreement and such holder, by its acceptance of this Warrant, agrees to be bound by and to comply with the terms and conditions of the Registration Rights Agreement applicable to such holder as a holder of such Other Registrable Securities. 20. COSTS AND ATTORNEYS' FEES. In the event that any action, suit or other proceeding is instituted concerning or arising out of this Warrant, the Company agrees and the Holder, by taking and holding this Warrant agrees, that the prevailing party shall recover from the non-prevailing party all of such prevailing party's costs and reasonable attorneys' fees incurred in each and every such action, suit or other proceeding, including any and all appeals or petitions therefrom. [Remainder of page intentionally left blank] 18 IN WITNESS WHEREOF, the Company has executed and delivered this Common Stock Purchase Warrant as of the date first above written. NORTHLAND CRANBERRIES, INC. By: /s/ M. Steven Liff --------------------------------------- Name: M. Steven Liff Title: Vice President 19 EXHIBIT A to Common Stock Purchase Warrant FORM OF ELECTION TO PURCHASE SHARES The undersigned hereby irrevocably elects to exercise the Warrant to purchase ____ shares of Class A Common Stock, par value $0.01 per share ("Common Stock"), of NORTHLAND CRANBERRIES, INC. and hereby [makes payment of $________ therefor] [or] [makes payment therefor by reduction pursuant to Section 2.1(b)(ii) of the Warrant of the number of shares of Common Stock otherwise issuable to the Holder upon Warrant exercise by ___ shares] [or] [makes payment therefor by delivery of the following Common Stock Certificates of the Company (properly endorsed for transfer in blank) for cancellation by the Company pursuant to Section 2.1(b)(iii) of the Warrant, certificates of which are attached hereto for cancellation [list certificates by number and amount]]. The undersigned hereby requests that certificates for such shares be issued and delivered as follows: ISSUE TO: ----------------------------------------------------------------------- (NAME) - - -------------------------------------------------------------------------------- (ADDRESS, INCLUDING ZIP CODE) - - -------------------------------------------------------------------------------- (SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER) DELIVER TO: --------------------------------------------------------------------- (NAME) - - -------------------------------------------------------------------------------- (ADDRESS, INCLUDING ZIP CODE) If the number of shares of Common Stock purchased (and/or reduced) hereby is less than the number of shares of Common Stock covered by the Warrant, the undersigned requests that a new Warrant representing the number of shares of Common Stock not so purchased (or reduced) be issued and delivered as follows: ISSUE TO: ----------------------------------------------------------------------- (NAME OF HOLDER) - - -------------------------------------------------------------------------------- (ADDRESS, INCLUDING ZIP CODE) DELIVER TO: --------------------------------------------------------------------- (NAME OF HOLDER) - - -------------------------------------------------------------------------------- (ADDRESS, INCLUDING ZIP CODE) Dated: , 20 [NAME OF HOLDER] -------------- --- By: --------------------------------- Name: Title 20 EX-4.6 13 sdc74l.txt COMMON STOCK PURCHASE WARRANT THIS WARRANT AND ANY SECURITIES ACQUIRED UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS. THIS WARRANT AND SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH THE CONDITIONS SPECIFIED IN THIS WARRANT AND IN THE STOCKHOLDERS' AGREEMENT, DATED AS OF NOVEMBER 6, 2001 BETWEEN NORTHLAND CRANBERRIES, INC. AND THE OTHER PARTIES SIGNATORY THERETO, COPIES OF WHICH WILL BE MADE AVAILABLE UPON REQUEST. NORTHLAND CRANBERRIES, INC. COMMON STOCK PURCHASE WARRANT No. W-2 November 6, 2001 Warrant to Purchase 2,543,053.00 Shares of Common Stock NORTHLAND CRANBERRIES, INC., a Wisconsin corporation (the "Company"), for value received, hereby certifies that Ableco Holding LLC, or its registered assigns (the "Holder"), is entitled to purchase from the Company 2,543,053.00 (the "Initial Warrant Quantity") duly authorized, validly issued, fully paid and nonassessable (except as otherwise provided in Section 180.0622(2)(b) of the Wisconsin Business Corporation Law) shares of Class A Common Stock, par value $.01 per share, of the Company (the "Common Stock"), at a purchase price of $.01 per share; provided, that such purchase price shall not be less than the par value of the Common Stock, at any time or from time to time on or after November 6, 2001 (the "Exercise Date"), but prior to 5:00 P.M., Milwaukee, Wisconsin time, on November 6, 2011 (the "Expiration Date"), all subject to the terms, conditions and adjustments set forth below in this Warrant. 1. DEFINITIONS. As used herein, unless the context otherwise requires, the following terms shall have the meanings indicated: "Additional Shares of Common Stock" shall mean all shares (including treasury shares) of Common Stock issued or sold (or, pursuant to Section 3.3 or 3.4, deemed to be issued) by the Company after the date hereof, whether or not subsequently reacquired or retired by the Company, other than: (a) shares issued upon the exercise of this Warrant, (b) such number of additional shares as may become issuable upon the exercise of this Warrant by reason of adjustments required pursuant to the anti-dilution provisions applicable to this Warrant as in effect on the date hereof, (c) shares, warrants, options and other securities issued by the Company at any time to the Holder or any Affiliate thereof, (d) (i) shares issued upon the exercise of options granted or to be granted under the Company's stock option plans as in effect on the date hereof or under any other employee stock option or purchase plan or plans adopted or assumed after such date by the Company's Board of Directors provided in each case that the exercise or purchase price or other consideration for any such share shall not be less than 85% of the fair market value of the Common Stock (as determined in the reasonable business judgment of the Company's Board of Directors) on the date of the grant, and (ii) such additional number of shares as may become issuable pursuant to the terms of any such plans or agreements by reason of adjustments required pursuant to antidilution provisions applicable to such securities in order to reflect any subdivision or combination of Common Stock, by reclassification or otherwise, or any dividend on Common Stock payable in Common Stock, (e) shares or rights to acquire shares issues in connection with the bona fide acquisition of a business by the Company from an unaffiliated third party, and (f) shares or rights to acquire shares issued in connection with debt financings or lease arrangements entered into on an arms'-length basis with unaffiliated third parties. "Affiliate" means a Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, another Person. "Business Day" shall mean any day other than a Saturday or a Sunday or any day on which national banks are authorized or required by law to close. Any reference to "days" (unless Business Days are specified) shall mean calendar days. "Commission" shall mean the Securities and Exchange Commission or any successor agency having jurisdiction to enforce the Securities Act. "Common Stock" shall have the meaning assigned to it in the introduction to this Warrant, such term to include any stock into which such Common Stock shall have been changed or any stock resulting from any reclassification of such Common Stock, and all other stock of any class or classes (however designated) of the Company the holders of which have the right, without limitation as to amount, either to all or to a share of the balance of current dividends and liquidating dividends after the payment of dividends and distributions on any shares entitled to preference. "Company" shall have the meaning assigned to it in the introduction to this Warrant, such term to include any corporation or other entity which shall succeed to or assume the obligations of the Company hereunder in compliance with Section 4. 2 "Convertible Securities" shall mean any evidences of indebtedness, shares of stock (other than Common Stock) or other securities directly or indirectly convertible into or exchangeable for Additional Shares of Common Stock. "Current Market Price" shall mean, on any date specified herein, the average of the daily Market Price during the 10 consecutive trading days commencing 15 trading days before such date, except that, if on any such date the shares of Common Stock are not listed or admitted for trading on any national securities exchange or quoted in the over-the-counter market, the Current Market Price shall be the Market Price on such date. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended from time to time, and the rules and regulations thereunder, or any successor statute. "Exercise Date" shall have the meaning assigned to it in the introduction to this Warrant. "Expiration Date" shall have the meaning assigned to it in the introduction to this Warrant. "Fair Value" shall mean, on any date specified herein (i) in the case of cash, the dollar amount thereof, (ii) in the case of a security, the Current Market Price, and (iii) in all other cases, the fair value thereof (as of a date which is within 20 days of the date as of which the determination is to be made) determined in good faith by the Company. "Holder" shall have the meaning assigned to it in the introduction to this Warrant. "Initial Warrant Quantity" shall have the meaning set forth in the Preamble. "Market Price" shall mean, on any date specified herein, the amount per share of the Common Stock, equal to (i) the last reported sale price of such Common Stock, regular way, on such date or, in case no such sale takes place on such date, the average of the closing bid and asked prices thereof regular way on such date, in either case as officially reported on the principal national securities exchange on which such Common Stock is then listed or admitted for trading, (ii) if such Common Stock is not then listed or admitted for trading on any national securities exchange but is designated as a national market system security by the NASD, the last reported trading price of the Common Stock on such date, (iii) if there shall have been no trading on such date or if the Common Stock is not so designated, the average of the closing bid and asked prices of the Common Stock on such date as shown by the NASD automated quotation system, or (iv) if such Common Stock is not then listed or admitted for trading on any national exchange or quoted in the over-the-counter market, the fair value thereof (as of a date which is within 20 days of the date as of which the determination is to be made) determined in good faith by the Company. "NASD" shall mean the National Association of Securities Dealers, Inc. "Options" shall mean any rights, options or warrants to subscribe for, purchase or otherwise acquire either Additional Shares of Common Stock or Convertible Securities. 3 "Other Securities" shall mean any stock (other than Common Stock) and other securities of the Company or any other Person (corporate or otherwise) which the holders of this Warrant at any time shall be entitled to receive, or shall have received, upon the exercise of this Warrant, in lieu of or in addition to Common Stock, or which at any time shall be issuable or shall have been issued in exchange for or in replacement of Common Stock or Other Securities pursuant to Section 4 or otherwise. "Person" shall mean any individual, firm, partnership, corporation, trust, joint venture, association, joint stock company, limited liability company, unincorporated organization or any other entity or organization, including a government or agency or political subdivision thereof, and shall include any successor (by merger or otherwise) of such entity. "Purchase Price" shall mean $.01 per share. "Registration Rights Agreement" shall mean the Registration Agreement dated as of November 6, 2001, between the Company, Sun Northland, LLC and the other parties signatory thereto, as amended from time to time in accordance with its terms. "Restricted Securities" shall mean (i) any Warrants bearing the applicable legend set forth in Section 9.1, (ii) any shares of Common Stock (or Other Securities) issued or issuable upon the exercise of this Warrant which are (or, upon issuance, will be) evidenced by a certificate or certificates bearing the applicable legend set forth in such Section, and (iii) any shares of Common Stock (or Other Securities) issued subsequent to the exercise of this Warrant as a dividend or other distribution with respect to, or resulting from a subdivision of the outstanding shares of Common Stock (or other Securities) into a greater number of shares by reclassification, stock splits or otherwise, or in exchange for or in replacement of the Common Stock (or Other Securities) issued upon such exercise, which are evidenced by a certificate or certificates bearing the applicable legend set forth in such Section. "Securities Act" shall mean the Securities Act of 1933, as amended from time to time, and the rules and regulations thereunder, or any successor statute. "Stockholders Agreement" shall mean the Stockholders Agreement dated as of November 6, 2001, between the Company, Sun Northland, LLC, and the other parties signatory thereto, as amended from time to time in accordance with its terms. "Transfer Agent" shall have the meaning set forth in Section 10. "Warrant" shall mean this warrant to purchase 2,543,053.00 shares of Common Stock issued as of November 6, 2001 and registered in the Warrant Register as Warrant No. 2. "Warrant Register" shall have the meaning set forth in Section 11.1. "Warrant Quantity" initially shall mean the Initial Warrant Quantity (as defined in the first paragraph of this Warrant), which amount shall be subject to adjustment and readjustment from time to time as provided in Section 3, and, as so adjusted or readjusted, shall remain in effect until a further adjustment or readjustment is required by Section 3. 4 2. EXERCISE OF WARRANT. 2.1. Manner of Exercise; Payment of the Purchase Price. (a) This Warrant may be exercised by the Holder hereof, in whole or in part, at any time or from time to time on or after the Exercise Date through the Expiration Date, by surrendering to the Company at its principal office this Warrant, with the form of Election to Purchase Shares attached hereto as Exhibit A (or a reasonable facsimile thereof) duly executed by the Holder and accompanied by payment of the Purchase Price for the number of shares of Common Stock specified in such form. (b) Payment of the Purchase Price may be made as follows (or by any combination of the following): (i) in United States currency by cash or delivery of a certified check or bank draft payable to the order of the Company or by wire transfer to the Company, (ii) by cancellation of such number of the shares of Common Stock otherwise issuable to the Holder upon such exercise as shall be specified in such Election to Purchase Shares, such that the excess of the aggregate Current Market Price of such specified number of shares on the date of exercise over the portion of the Purchase Price attributable to such shares shall equal the Purchase Price attributable to the shares of Common Stock to be issued upon such exercise, in which case such amount shall be deemed to have been paid to the Company and the number of shares issuable upon such exercise shall be reduced by such specified number, or (iii) by surrender to the Company for cancellation certificates representing shares of Common Stock of the Company owned by the Holder (properly endorsed for transfer in blank) having a Current Market Price on the date of Warrant exercise equal to the Purchase Price. 2.2. When Exercise Effective. Each exercise of this Warrant shall be deemed to have been effected immediately prior to the close of business on the Business Day on which this Warrant shall have been surrendered to, and the Purchase Price shall have been received by, the Company as provided in Section 2.1, and at such time the Person or Persons in whose name or names any certificate or certificates for shares of Common Stock (or Other Securities) shall be issuable upon such exercise as provided in Section 2.3 shall be deemed to have become the holder or holders of record thereof for all purposes. 2.3. Delivery of Stock Certificates, etc.; Charges, Taxes and Expenses. (a) As soon as practicable after each exercise of this Warrant, in whole or in part, and in any event within five Business Days thereafter, the Company shall cause to be issued in the name of and delivered to the Holder hereof or, subject to Section 9, as the Holder may direct, (i) a certificate or certificates for the number of shares of Common Stock (or Other Securities) to which the Holder shall be entitled upon such exercise plus, in lieu of issuance of any fractional share to which the Holder would otherwise be entitled, if any, a check for the amount of cash equal to the same fraction multiplied by the Current Market Price per share on the date of Warrant exercise, and (ii) in case such exercise is for less than all of the shares of Common Stock purchasable under this Warrant, a new Warrant or Warrants of like tenor, for the balance of the shares of Common Stock purchasable hereunder. 5 (b) Issuance of certificates for shares of Common Stock upon the exercise of this Warrant shall be made without charge to the Holder hereof for any issue or transfer tax or other incidental expense, in respect of the issuance of such certificates, all of which such taxes and expenses shall be paid by the Company. 2.4. Tax Basis. The Company and the Holder shall mutually agree as to the tax basis of this Warrant for purposes of the Internal Revenue Code of 1986, as amended, and the treatment of this Warrant under such Code by each of the Company and the Holder shall be consistent with such agreement. 3. ADJUSTMENT OF COMMON STOCK ISSUABLE UPON EXERCISE. 3.1. General; Warrant Quantity. This Warrant evidences the right to purchase a number of shares of Common Stock equal to the Warrant Quantity, subject to adjustment and readjustment as provided in this Section 3. 3.2. Adjustment of Warrant Quantity. 3.2.1. Issuance of Additional Shares of Common Stock. In case the Company at any time or from time to time after the date hereof shall issue or sell Additional Shares of Common Stock (including Additional Shares of Common Stock deemed to be issued pursuant to Section 3.3 or 3.4) without consideration or for consideration per share less than the Current Market Price in effect immediately prior to such issue or sale, then, in each such case, subject to Section 3.8, the Warrant Quantity shall be increased, concurrently with such issue or sale, to an amount determined by multiplying such Warrant Quantity by a fraction (a) the numerator of which shall be the number of shares of Common Stock outstanding immediately after such issue or sale, provided that, for the purposes of this Section 3.2.1, (i) immediately after any Additional Shares of Common Stock are deemed to have been issued pursuant to Section 3.3 or 3.4, such Additional Shares shall be deemed to be outstanding, and (ii) treasury shares shall not be deemed to be outstanding, and (b) the denominator of which shall be the sum of (x) the number of shares of Common Stock outstanding immediately prior to such issue or sale and (y) the number of shares of Common Stock which the aggregate consideration received by the Company for the total number of such Additional Shares of Common Stock so issued or sold would purchase at such Current Market Price. 3.2.2. Extraordinary Dividends and Distributions. In case the Company at any time or from time to time after the date hereof shall declare, order, pay or make a dividend or other distribution (including, without limitation, any distribution of other or additional stock or other securities or property or Options by way of dividend or spin-off, reclassification, recapitalization or similar corporate rearrangement) on the Common Stock other than a dividend payable in Additional Shares of Common Stock, then, in each such case, the Company shall pay to the Holder of this Warrant, at the time such dividend or distribution is paid to the holders of the Common Stock, an amount equal to the product of (i) the Warrant Quantity and (ii) the Fair Value at such time of such dividend or distribution applicable to one share of Common Stock. 6 3.3. Treatment of Options and Convertible Securities. In case the Company at any time or from time to time after the date hereof shall issue, sell, grant or assume, or shall fix a record date for the determination of holders of any class of securities of the Company entitled to receive, any Options or Convertible Securities (whether or not the rights thereunder are immediately exercisable), then, and in each such case, the maximum number of Additional Shares of Common Stock (as set forth in the instrument relating thereto, without regard to any provisions contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or, in the case of Convertible Securities and Options therefor, the conversion or exchange of such Convertible Securities, shall be deemed to be Additional Shares of Common Stock issued as of the time of such issue, sale, grant or assumption or, in case such a record date shall have been fixed, as of the close of business on such record date (or, if the Common Stock trades on an ex-dividend basis, on the date prior to the commencement of ex-dividend trading), provided, that, such Additional Shares of Common Stock shall not be deemed to have been issued unless the consideration per share (determined pursuant to Section 3.5) of such shares would be less than the Current Market Price in effect on the date of and immediately prior to such issue, sale, grant or assumption or immediately prior to the close of business on such record date (or, if the Common Stock trades on an ex-dividend basis, on the date prior to the commencement of ex-dividend trading), as the case may be, and provided, further, that in any such case in which Additional Shares of Common Stock are deemed to be issued: (a) whether or not the Additional Shares of Common Stock underlying such Options or Convertible Securities are deemed to be issued, no further adjustment of the Warrant Quantity shall be made upon the subsequent issue or sale of Convertible Securities or shares of Common Stock upon the exercise of such Options or the conversion or exchange of such Convertible Securities, except in the case of any such Options or Convertible Securities which contain provisions requiring an adjustment, subsequent to the date of the issue or sale thereof, of the number of Additional Shares of Common Stock issuable upon the exercise of such Options or the conversion or exchange of such Convertible Securities by reason of (x) a change of control of the Company, (y) the acquisition by any Person or group of Persons of any specified number or percentage of the voting securities of the Company or (z) any similar event or occurrence, each such case to be deemed hereunder to involve a separate issuance of Additional Shares of Common Stock, Options or Convertible Securities, as the case may be; (b) if such Options or Convertible Securities by their terms provide, with the passage of time or otherwise, for any increase in the consideration payable to the Company, or decrease in the number of Additional Shares of Common Stock issuable, upon the exercise, conversion or exchange thereof (by change of rate or otherwise), the Warrant Quantity computed upon the original issue, sale, grant or assumption thereof (or upon the occurrence of the record date, or date prior to the commencement of ex-dividend trading, as the case may be, with respect thereto), and any subsequent adjustments based thereon, shall, upon any such increase or decrease becoming effective, be recomputed to reflect such increase or decrease insofar as it affects such Options, or the rights of conversion or exchange under such Convertible Securities, which are outstanding at such time; (c) upon the expiration (or purchase by the Company and cancellation or retirement) of any such Options which shall not have been exercised or the expiration of any rights of conversion or exchange under any such Convertible Securities which (or purchase by 7 the Company and cancellation or retirement of any such Convertible Securities the rights of conversion or exchange under which) shall not have been exercised, the Warrant Quantity computed upon the original issue, sale, grant or assumption thereof (or upon the occurrence of the record date, or date prior to the commencement of ex-dividend trading, as the case may be, with respect thereto), and any subsequent adjustments based thereon, shall, upon such expiration (or such cancellation or retirement, as the case may be), be recomputed as if: (i) in the case of Options for Common Stock or Convertible Securities, the only Additional Shares of Common Stock issued or sold were the Additional Shares of Common Stock, if any, actually issued or sold upon the exercise of such Options or the conversion or exchange of such Convertible Securities and the consideration received therefor was the consideration actually received by the Company for the issue, sale, grant or assumption of all such Options, whether or not exercised, plus the consideration actually received by the Company upon such exercise, or for the issue or sale of all such Convertible Securities which were actually converted or exchanged, plus the additional consideration, if any, actually received by the Company upon such conversion or exchange, and (ii) in the case of Options for Convertible Securities, only the Convertible Securities, if any, actually issued or sold upon the exercise of such Options were issued at the time of the issue or sale, grant or assumption of such Options, and the consideration received by the Company for the Additional Shares of Common Stock deemed to have then been issued was the consideration actually received by the Company for the issue, sale, grant or assumption of all such Options, whether or not exercised, plus the consideration deemed to have been received by the Company (pursuant to Section 3.5) upon the issue or sale of such Convertible Securities with respect to which such Options were actually exercised; (d) no readjustment pursuant to subdivision (b) or (c) above shall have the effect of decreasing the Warrant Quantity by an amount in excess of the amount of the adjustment thereof originally made in respect of the issue, sale, grant or assumption of such Options or Convertible Securities; and (e) in the case of any such Options which expire by their terms not more than 30 days after the date of issue, sale, grant or assumption thereof, no adjustment of the Warrant Quantity shall be made until the expiration or exercise of all such Options, whereupon such adjustment shall be made in the manner provided in subdivision (c) above. 3.4. Treatment of Stock Dividends, Stock Splits, etc. In case the Company at any time or from time to time after the date hereof shall declare or pay any dividend on the Common Stock payable in Common Stock, or shall effect a subdivision of the outstanding shares of Common Stock into a greater number of shares of Common Stock (by reclassification or otherwise than by payment of a dividend in Common Stock), then, and in each such case, Additional Shares of Common Stock shall be deemed to have been issued (a) in the case of any such dividend, immediately after the close of business on the record date for the determination of holders of any class of securities entitled to receive such dividend, or (b) in the case of any such 8 subdivision, at the close of business on the day immediately prior to the day upon which such corporate action becomes effective. 3.5. Computation of Consideration. For the purposes of this Section 3, (a) the consideration for the issue or sale of any Additional Shares of Common Stock shall, irrespective of the accounting treatment of such consideration, (i) insofar as it consists of cash, be computed at the amount of cash received by the Company, without deducting any expenses paid or incurred by the Company or any commissions or compensations paid or concessions or discounts allowed to underwriters, dealers or others performing similar services in connection with such issue or sale, (ii) insofar as it consists of property (including securities) other than cash, be computed at the Fair Value thereof at the time of such issue or sale, and (iii) in case Additional Shares of Common Stock are issued or sold together with other stock or securities or other assets of the Company for a consideration which covers both, be the portion of such consideration so received, computed as provided in clauses (i) and (ii) above, allocable to such Additional Shares of Common Stock, such allocation to be determined in the same manner that the Fair Value of property not consisting of cash or securities is to be determined as provided in the definition of 'Fair Value' herein; (b) Additional Shares of Common Stock deemed to have been issued pursuant to Section 3.3, relating to Options and Convertible Securities, shall be deemed to have been issued for a consideration per share determined by dividing: (i) the total amount, if any, received and receivable by the Company as consideration for the issue, sale, grant or assumption of the Options or Convertible Securities in question, plus the minimum aggregate amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration) payable to the Company upon the exercise in full of such Options or the conversion or exchange of such Convertible Securities or, in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities, in each case computing such consideration as provided in the foregoing subdivision (a), by (ii) the maximum number of shares of Common Stock (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or the conversion or exchange of such Convertible Securities; and 9 (c) Additional Shares of Common Stock deemed to have been issued pursuant to Section 3.4, relating to stock dividends, stock splits, etc., shall be deemed to have been issued for no consideration. 3.6. Adjustments for Combinations, etc. In case the outstanding shares of Common Stock shall be combined or consolidated, by reclassification or otherwise, into a lesser number of shares of Common Stock, the Warrant Quantity in effect immediately prior to such combination or consolidation shall, concurrently with the effectiveness of such combination or consolidation, be proportionately decreased. 3.7. Dilution in Case of Other Securities. In case any Other Securities shall be issued or sold or shall become subject to issue or sale upon the conversion or exchange of any stock (or Other Securities) of the Company (or any issuer of Other Securities or any other Person referred to in Section 4) or to subscription, purchase or other acquisition pursuant to any Options issued or granted by the Company (or any such other issuer or Person) for a consideration such as to dilute, on a basis consistent with the standards established in the other provisions of this Section 3, the purchase rights granted by this Warrant, then, and in each such case, the computations, adjustments and readjustments provided for in this Section 3 with respect to the Warrant Quantity shall be made as nearly as possible in the manner so provided and applied to determine the amount of Other Securities from time to time receivable upon the exercise of this Warrant, so as to protect the Holder of this Warrant against the effect of such dilution. 3.8. De Minimis Adjustments. If the amount of any adjustment of the Warrant Quantity required pursuant to this Section 3 would be less than one tenth (1/10) of one percent (1%) of the Warrant Quantity in effect at the time such adjustment is otherwise so required to be made, such amount shall be carried forward and adjustment with respect thereto made at the time of and together with any subsequent adjustment which, together with such amount and any other amount or amounts so carried forward, shall aggregate a change in the Warrant Quantity of at least one tenth (1/10) of one percent (1%) of such Warrant Quantity. All calculations under this Warrant shall be made to the nearest one-tenth of a share. 3.9. Abandoned Dividend or Distribution. If the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or other distribution (which results in an adjustment to the Warrant Quantity under the terms of this Warrant) and shall, thereafter, and before such dividend or distribution is paid or delivered to shareholders entitled thereto, legally abandon its plan to pay or deliver such dividend or distribution, then any adjustment made to the Warrant Quantity by reason of the taking of such record shall be reversed, and any subsequent adjustments, based thereon, shall be recomputed. 4. CONSOLIDATION, MERGER, ETC. 4.1. Adjustments for Consolidation, Merger, Sale of Assets, Reorganization, etc. In case the Company after the date hereof (a) shall consolidate with or merge into any other Person and shall not be the continuing or surviving corporation of such consolidation or merger, or (b) shall permit any other Person to consolidate with or merge into the Company and the Company shall be the continuing or surviving Person but, in connection with such consolidation or merger, the Common Stock or Other Securities shall be changed into or exchanged for stock 10 or other securities of any other Person or cash or any other property, or (c) shall transfer all or substantially all of its properties and assets to any other Person, or (d) shall effect a capital reorganization or reclassification of the Common Stock or Other Securities (other than a capital reorganization or reclassification resulting in the issue of Additional Shares of Common Stock for which adjustment in the Warrant Quantity is provided in Section 3.2.1 or 3.2.2), then, and in the case of each such transaction, proper provision shall be made so that, upon the basis and the terms and in the manner provided in this Warrant, the Holder of this Warrant, upon the exercise hereof at any time after the consummation of such transaction, shall be entitled to receive (at the aggregate Purchase Price in effect at the time of such consummation for all Common Stock or Other Securities issuable upon such exercise immediately prior to such consummation), in lieu of the Common Stock or Other Securities issuable upon such exercise prior to such consummation, the highest amount of securities, cash or other property to which such Holder would actually have been entitled as a shareholder upon such consummation if such Holder had exercised this Warrant immediately prior thereto, subject to adjustments (subsequent to such consummation) as nearly equivalent as possible to the adjustments provided for in Sections 3 through 5 other than the adjustments contemplated by Section 3.2.1); provided, that, if a purchase, tender or exchange offer shall have been made to and accepted by the holders of more than 50% of the outstanding shares of Common Stock, and if the Holder so designates in a notice given to the Company on or before the date immediately preceding the date of the consummation of such transaction, the Holder of this Warrant shall be entitled to receive the highest amount of securities, cash or other property to which it would actually have been entitled as a shareholder if the Holder of this Warrant had exercised this Warrant prior to the expiration of such purchase, tender or exchange offer and accepted such offer, subject to adjustments (from and after the consummation of such purchase, tender or exchange offer) as nearly equivalent as possible to the adjustments provided for in Section 3 through 5. 4.2. Assumption of Obligations. Notwithstanding anything contained in this Warrant to the contrary, the Company shall not effect any of the transactions described in clauses (a) through (d) of Section 4.1 unless, prior to the consummation thereof, each Person (other than the Company) which may be required to deliver any stock, securities, cash or property upon the exercise of this Warrant as provided herein shall assume, by written instrument delivered to, and reasonably satisfactory to, the Holder of this Warrant, (a) the obligations of the Company under this Warrant (and if the Company shall survive the consummation of such transaction, such assumption shall be in addition to, and shall not release the Company from, any continuing obligations of the Company under this Warrant), and (b) the obligation to deliver to the Holder such shares of stock, securities, cash or property as, in accordance with the foregoing provisions of this Section 4, the Holder may be entitled to receive. 5. OTHER DILUTIVE EVENTS. In case any event shall occur as to which the provisions of Section 3 or Section 4 hereof are not strictly applicable or if strictly applicable would not fairly protect the purchase rights of the Holder in accordance with the essential intent and principles of such Sections, then, in each such case, the Board of Directors of the Company shall make an adjustment in the application of such provisions, in accordance with such essential intent and principles, so as to preserve, without dilution, the purchase rights represented by this Warrant. 11 6. REPORT. In each case of any adjustment or readjustment in the shares of Common Stock (or Other Securities) issuable upon the exercise of this Warrant, the Company at its sole expense shall promptly compute such adjustment or readjustment in accordance with the terms of this Warrant and prepare a report, signed by the Chairman of the Board, President or one of the Vice Presidents of the Company setting forth such adjustment or readjustment and showing in reasonable detail the method of calculation thereof and the facts upon which such adjustment or readjustment is based, including a statement of (a) the consideration received or to be received by the Company for any Additional Shares of Common Stock issued or sold or deemed to have been issued, (b) the number of shares of Common Stock outstanding or deemed to be outstanding, and (c) the Warrant Quantity in effect immediately prior to such issue or sale and as adjusted and readjusted (if required by Section 3) on account thereof. 7. CERTAIN COVENANTS OF COMPANY. In the event of: (a) any taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, or any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right, or (b) any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company, any consolidation or merger involving the Company and any other Person, any transaction or series of transactions by the Company in which more than 50% of the voting securities of the Company are transferred to another Person, or any transfer, sale or other disposition of all or substantially all the assets of the Company to any other Person, or (c) any voluntary or involuntary dissolution, liquidation or winding-up of the Company, the Company shall mail to each holder of a Warrant a notice specifying (i) the date or expected date on which any such record is to be taken for the purpose of such dividend, distribution or right, and the amount and character of such dividend, distribution or right, and (ii) the date or expected date on which any such reorganization, reclassification, recapitalization, consolidation, merger, transfer, sale, disposition, dissolution, liquidation or winding-up is to take place and the time, if any such time is to be fixed, as of which the holders of record of Common Stock (or Other Securities) shall be entitled to exchange their shares of Common Stock (or Other Securities) for the securities or other property deliverable upon such reorganization, reclassification, recapitalization, consolidation, merger, transfer, dissolution, liquidation or winding-up. Such notice shall be given at least 20 days prior to the date therein specified. 8. REGISTRATION OF COMMON STOCK. If any shares of Common Stock required to be reserved for purposes of exercise of this Warrant require registration with or approval of any governmental authority under any federal or state law (other than the Securities Act) before such shares may be issued upon exercise, the Company shall, at its expense and as expeditiously as possible, use its commercially reasonable efforts to cause such shares to be duly registered or approved, as the case may be. 12 9. Restrictions on Transfer. 9.1. Restrictive Legends. Except as otherwise permitted by this Section 9, each Warrant (including each Warrant issued upon the transfer of any Warrant) shall be stamped or otherwise imprinted with a legend in substantially the following form: "THIS WARRANT AND ANY SECURITIES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS. THIS WARRANT AND SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH THE CONDITIONS SPECIFIED IN THIS WARRANT AND IN THE STOCKHOLDERS' AGREEMENT, DATED AS OF NOVEMBER 6, 2001, BETWEEN NORTHLAND CRANBERRIES, INC. AND THE OTHER PARTIES SIGNATORY THERETO, COPIES OF EACH OF WHICH WILL BE MADE AVAILABLE UPON REQUEST." Except as otherwise permitted by this Section 9, each certificate for Common Stock (or Other Securities) issued upon the exercise of any Warrant, and each certificate issued upon the transfer of any such Common Stock (or Other Securities), shall be stamped or otherwise imprinted with a legend in substantially the following form: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS. SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH THE CONDITIONS SPECIFIED IN THE STOCKHOLDERS' AGREEMENT, DATED AS OF NOVEMBER 6, 2001, BETWEEN NORTHLAND CRANBERRIES, INC. AND THE OTHER PARTIES SIGNATORY THERETO, COPIES OF WHICH ARE AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE AND WILL BE FURNISHED TO THE HOLDER OF SUCH SECURITIES UPON WRITTEN REQUEST AND WITHOUT CHARGE." 9.2. Transfer to Comply With the Securities Act. Restricted Securities may not be sold, assigned, pledged, hypothecated, encumbered or in any manner transferred or disposed of, in whole or in part, except in compliance with the provisions of the Securities Act and state securities or Blue Sky laws and the terms and conditions hereof. 13 9.3. Termination of Restrictions. The restrictions imposed by this Section 9 on the transferability of Restricted Securities shall cease and terminate as to any particular Restricted Securities (a) when a registration statement with respect to the sale of such securities shall have been declared effective under the Securities Act and such securities shall have been disposed of in accordance with such registration statement, (b) when such securities are sold pursuant to Rule 144 (or any similar provision then in force) under the Securities Act, or (c) when, in the opinion of both counsel for the Holder and counsel for the Company, such restrictions are no longer required or necessary in order to protect the Company against a violation of the Securities Act upon any sale or other disposition of such securities without registration thereunder. Whenever such restrictions shall cease and terminate as to any Restricted Securities, the Holder shall be entitled to receive from the Company, without expense, new securities of like tenor not bearing the applicable legends required by Section 9.1. 10. RESERVATION OF STOCK, ETC. The Company shall at all times reserve and keep available, solely for issuance and delivery upon exercise of this Warrant, the number of shares of Common Stock (or Other Securities) from time to time issuable upon exercise of all Warrants at the time outstanding. All shares of Common Stock (or Other Securities) issuable upon exercise of any Warrants shall be duly authorized and, when issued upon such exercise, shall be validly issued and, in the case of shares, fully paid and nonassessable, with no liability on the part of the holders thereof (except as otherwise provided in Section 180.0622(2)(b) of the Wisconsin Business Corporation Law), and, in the case of all securities, shall be free from all taxes, liens, security interests, encumbrances, preemptive rights and charges. The transfer agent for the Common Stock, which may be the Company ("Transfer Agent"), and every subsequent Transfer Agent for any shares of the Company's capital stock issuable upon the exercise of any of the purchase rights represented by this Warrant, are hereby irrevocably authorized and directed at all times until the Expiration Date to reserve such number of authorized and unissued shares as shall be requisite for such purpose. The Company shall keep copies of this Warrant on file with the Transfer Agent for the Common Stock and with every subsequent Transfer Agent for any shares of the Company's capital stock issuable upon the exercise of the rights of purchase represented by this Warrant. The Company shall supply such Transfer Agent with duly executed stock certificates for such purpose. 11. REGISTRATION AND TRANSFER OF WARRANTS, ETC. 11.1. Warrant Register; Ownership of Warrants. Each Warrant issued by the Company shall be numbered and shall be registered in a warrant register (the "Warrant Register") as it is issued and transferred, which Warrant Register shall be maintained by the Company at its principal office or, at the Company's election and expense, by a Transfer Agent. The Company shall be entitled to treat the registered Holder of any Warrant on the Warrant Register as the owner in fact thereof for all purposes and shall not be bound to recognize any equitable or other claim to or interest in such Warrant on the part of any other Person, and shall not be affected by any notice to the contrary, except that, if and when any Warrant is properly assigned in blank, the Company may (but shall not be obligated to) treat the bearer thereof as the owner of such Warrant for all purposes. Subject to Section 9, a Warrant, if properly assigned, may be exercised by a new holder without a new Warrant first having been issued. 14 11.2. Transfer of Warrants. This Warrant may not be sold, assigned or in any manner transferred or disposed of, in whole or in part, without the prior written consent of the Company; provided, however, that this Warrant is transferable, in whole (but not in part), without the prior written consent of the Company to any Affiliate of the Holder. 11.3. Replacement of Warrants. On receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of any such loss, theft or destruction of this Warrant, on delivery of an indemnity agreement reasonably satisfactory in form and amount to the Company or, in the case of any such mutilation, on surrender of such Warrant to the Company at its principal office and cancellation thereof, the Company at its expense shall execute and deliver, in lieu thereof, a new Warrant of like tenor. 11.4. Adjustments To Purchase Price and Number of Shares. Notwithstanding the number or kind of shares of Common Stock purchasable upon exercise of this Warrant, any Warrant theretofore or thereafter issued may continue to express the same number and kind of shares of Common Stock as are stated in this Warrant, as initially issued. 11.5. Fractional Shares. Notwithstanding any adjustment pursuant to Section 3 in the number of shares of Common Stock covered by this Warrant or any other provision of this Warrant, the Company shall not be required to issue fractions of shares upon exercise of this Warrant or to distribute certificates which evidence fractional shares. In lieu of fractional shares, the Company shall make payment to the Holder, at the time of exercise of this Warrant as herein provided, in an amount in cash equal to such fraction (after aggregation of all shares and fractional shares to be issued upon such exercise) multiplied by the Current Market Price of a share of Common Stock on the date of Warrant exercise. 12. REMEDIES; SPECIFIC PERFORMANCE. The Company stipulates that there would be no adequate remedy at law to the Holder of this Warrant in the event of any default or threatened default by the Company in the performance of or compliance with any of the terms of this Warrant and accordingly, the Company agrees that, in addition to any other remedy to which the Holder may be entitled at law or in equity, the Holder shall be entitled to seek to compel specific performance of the obligations of the Company under this Warrant, without the posting of any bond, in accordance with the terms and conditions of this Warrant in any court of the United States or any State thereof having jurisdiction, and if any action should be brought in equity to enforce any of the provisions of this Warrant, the Company shall not raise the defense that there is an adequate remedy at law. Except as otherwise provided by law, a delay or omission by the Holder hereto in exercising any right or remedy accruing upon any such breach shall not impair the right or remedy or constitute a waiver of or acquiescence in any such breach. No remedy shall be exclusive of any other remedy. All available remedies shall be cumulative. 13. NO RIGHTS OR LIABILITIES AS SHAREHOLDER. Nothing contained in this Warrant shall be construed as conferring upon the Holder hereof any voting or other rights as a shareholder of the Company or as imposing any obligation on the Holder to purchase any securities or as imposing any liabilities on the Holder as a shareholder of the 15 Company, whether such obligation or liabilities are asserted by the Company or by creditors of the Company. 14. NOTICES. All notices and other communications (and deliveries) provided for or permitted hereunder shall be made in writing by hand delivery, facsimile, any courier guaranteeing overnight delivery or first class registered or certified mail, return receipt requested, postage prepaid, addressed as follows: If to the Company: Northland Cranberries, Inc. 800 First Avenue South P.O. Box 8020 Wisconsin Rapids, WI 54495 Attn: Chief Executive Officer Fax No. (715) 422-6844 with copies to: Sun Capital Advisors II, LP 5200 Town Center Circle, Suite 470 Boca Raton, Florida 33486 Attn: C. Deryl Couch, Esq. Fax No. (562) 394-0540 and Kirkland & Ellis 200 East Randolph Drive Chicago, Illinois 60601 Attn: Douglas C. Gessner, Esq. Fax No. (312) 861-2200 If to Holder: Ableco Holding LLC 450 Park Avenue, 28th Floor New York, New York 10022 Attn: Eric F. Miller Telecopy No.: 212-758-5305 with a copy to: Schulte Roth & Zabel, LLP 919 Third Avenue New York, New York 10022 Attn: Frederic L. Ragucci, Esq. Telecopy No.: 212-593-5955 All such notices and communications (and deliveries) shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; when receipt is acknowledged, if sent by facsimile; on the next Business Day, if timely delivered to a courier guaranteeing overnight delivery; and five days after being deposited in the mail, if sent first class registered or certified mail, return receipt requested, postage prepaid; provided, that, the exercise of any Warrant shall be effective in the manner provided in Section 2. 16 15. AMENDMENTS. This Warrant and any term hereof may not be amended, modified, supplemented or terminated, and waivers or consents to departures from the provisions hereof may not be given, except by written instrument duly executed by the party against which enforcement of such amendment, modification, supplement, termination or consent to departure is sought. 16. DESCRIPTIVE HEADINGS, ETC. The headings in this Warrant are for convenience of reference only and shall not limit or otherwise affect the meaning of terms contained herein. Unless the context of this Warrant otherwise requires: (1) words of any gender shall be deemed to include each other gender; (2) words using the singular or plural number shall also include the plural or singular number, respectively; (3) the words "hereof", "herein" and "hereunder" and words of similar import when used in this Warrant shall refer to this Warrant as a whole and not to any particular provision of this Warrant, and Section and paragraph references are to the Sections and paragraphs of this Warrant unless otherwise specified; (4) the word "including" and words of similar import when used in this Warrant shall mean "including, without limitation," unless otherwise specified; (5) "or" is not exclusive; and (6) provisions apply to successive events and transactions. 17. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER. THE VALIDITY OF THIS WARRANT, THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF, AND THE RIGHTS OF THE PARTIES HERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR RELATED HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF WISCONSIN. THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS WARRANT SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN MILWAUKEE, WISCONSIN. THE PARTIES WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 17. THE PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS WARRANT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. THE COMPANY AND HOLDER REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS WARRANT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT. 18. REGISTRATION RIGHTS AGREEMENT. The shares of Common Stock (and Other Securities) issuable upon exercise of this Warrant (or upon conversion of any 17 shares of Common Stock issued upon such exercise) shall constitute Other Registrable Securities (as such term is defined in the Registration Rights Agreement). Subject to the limitations on transfer of rights under this Warrant and the Registration Rights Agreement, each holder of this Warrant shall be entitled to all of the benefits afforded to a holder of any such Other Registrable Securities under the Registration Rights Agreement and such holder, by its acceptance of this Warrant, agrees to be bound by and to comply with the terms and conditions of the Registration Rights Agreement applicable to such holder as a holder of such Other Registrable Securities. 20. COSTS AND ATTORNEYS' FEES. In the event that any action, suit or other proceeding is instituted concerning or arising out of this Warrant, the Company agrees and the Holder, by taking and holding this Warrant agrees, that the prevailing party shall recover from the non-prevailing party all of such prevailing party's costs and reasonable attorneys' fees incurred in each and every such action, suit or other proceeding, including any and all appeals or petitions therefrom. [Remainder of page intentionally left blank] 18 IN WITNESS WHEREOF, the Company has executed and delivered this Common Stock Purchase Warrant as of the date first above written. NORTHLAND CRANBERRIES, INC. By: /s/ M. Steven Liff --------------------------------- Name: M. Steven Liff Title: Vice President 19 EXHIBIT A to Common Stock Purchase Warrant FORM OF ELECTION TO PURCHASE SHARES The undersigned hereby irrevocably elects to exercise the Warrant to purchase ____ shares of Class A Common Stock, par value $0.01 per share ("Common Stock"), of NORTHLAND CRANBERRIES, INC. and hereby [makes payment of $________ therefor] [or] [makes payment therefor by reduction pursuant to Section 2.1(b)(ii) of the Warrant of the number of shares of Common Stock otherwise issuable to the Holder upon Warrant exercise by ___ shares] [or] [makes payment therefor by delivery of the following Common Stock Certificates of the Company (properly endorsed for transfer in blank) for cancellation by the Company pursuant to Section 2.1(b)(iii) of the Warrant, certificates of which are attached hereto for cancellation [list certificates by number and amount]]. The undersigned hereby requests that certificates for such shares be issued and delivered as follows: ISSUE TO: ----------------------------------------------------------------------- (NAME) - - -------------------------------------------------------------------------------- (ADDRESS, INCLUDING ZIP CODE) - - -------------------------------------------------------------------------------- (SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER) DELIVER TO: --------------------------------------------------------------------- (NAME) - - -------------------------------------------------------------------------------- (ADDRESS, INCLUDING ZIP CODE) If the number of shares of Common Stock purchased (and/or reduced) hereby is less than the number of shares of Common Stock covered by the Warrant, the undersigned requests that a new Warrant representing the number of shares of Common Stock not so purchased (or reduced) be issued and delivered as follows: ISSUE TO: ----------------------------------------------------------------------- (NAME OF HOLDER) - - -------------------------------------------------------------------------------- (ADDRESS, INCLUDING ZIP CODE) DELIVER TO: --------------------------------------------------------------------- (NAME OF HOLDER) - - -------------------------------------------------------------------------------- (ADDRESS, INCLUDING ZIP CODE) Dated: , 20 [NAME OF HOLDER] -------------- --- By: --------------------------------- Name: Title EX-4.7 14 sdc74m.txt ARTICLES OF AMEND. TO ARTICLES OF INCORPORATION ARTICLES OF AMENDMENT of NORTHLAND CRANBERRIES, INC. 1. The name of the Corporation is Northland Cranberries, Inc. 2. Article 4 of the Articles of Incorporation is hereby amended to include the following text after the last paragraph thereof: "(7) Reverse Stock Split Effective as of the close of business on the date of filing of this Amendment to the Articles of Incorporation (the "Effective Time"), provided that such date is on or prior to January 30, 2002, the filing of this Amendment shall effect a reverse stock split pursuant to which (a) each four (4) shares of Class A Common Stock issued and outstanding shall be combined into one (1) validly issued, fully paid and nonassessable share of Class A Common Stock, and (b) each four (4) shares of Class B Common Stock issued and outstanding shall be combined into one (1) validly issued, fully paid and nonassessable share of Class B Common Stock. The number of authorized shares and the par value of the Class A Common Stock and the Class B Common Stock shall not be affected by the reverse stock split. The Corporation shall not issue fractional shares or scrip of either Class A or Class B Common Stock as a result of the reverse stock split. Instead, fractional shares of Class A and Class B Common Stock resulting from such reverse stock split shall be rounded up to the next whole number. The Corporation shall require each holder of record of issued and outstanding shares of Class A or Class B Common Stock at the Effective Time (the "Pre-Split Shares") to surrender for cancellation the certificate representing such shares and receive certificates that the Corporation shall issue representing the shares into which such Pre-Split Shares have been converted." 3. The foregoing amendment to the Corporation's Articles of Incorporation was submitted to the Corporation's shareholders by the Board of Directors of the Corporation and was adopted by such shareholders on January 30, 2001 in accordance with Section 180.1003 of the Wisconsin Business Corporation Law. Executed on behalf of the Corporation on this 2nd day of November, 2001. By: /s/ John Swendrowski --------------------------------- John Swendrowski Chairman and Chief Executive Officer - - --------------- This instrument was drafted by and should be returned to Peter C. Underwood of the firm of Foley & Lardner, 777 East Wisconsin Avenue, Milwaukee, Wisconsin 53202. EX-4.8 15 sdc74n.txt ARTICLES OF AMEND. TO ARTICLES OF INCORPORATION ARTICLES OF AMENDMENT relating to SERIES A PREFERRED STOCK of NORTHLAND CRANBERRIES, INC. --------------------------------------------------------- Pursuant to Sections 180.0602 and 180.1002 of the Wisconsin Business Corporation Law --------------------------------------------------------- I, John Swendrowski, Chairman of the Board and Chief Executive Officer of Northland Cranberries, Inc., a corporation organized and existing under the Wisconsin Business Corporation Law (the "Corporation"), in accordance with the provisions of Sections 180.0602 and 180.1002 thereof, DO HEREBY CERTIFY THAT: A. Pursuant to the authority conferred upon the Board of Directors of the Corporation by its Articles of Incorporation, as amended, and in accordance with Sections 180.0602 and 180.1002 of the Wisconsin Business Corporation Law, said Board of Directors adopted resolutions on November 1, 2001, creating a series of Preferred Stock, $.01 par value per share, of the Corporation, designated as Series A Preferred Stock. B. Said resolutions of the Board of Directors of the Corporation creating the series designated as Series A Preferred Stock provide that said series shall have such designation and number of shares and such preferences, limitations and relative rights as are set forth in the paragraphs below: Series A Preferred Stock 1. Designation and Amount. The Corporation is authorized to issue a series of Preferred Stock, which is hereby designated as "Series A Preferred Stock." The number of shares of Series A Preferred Stock shall be limited to Two Million (2,000,000). The par value of the Series A Preferred Stock shall be $.01 per share. 2. Dividends. If and when the Board of Directors declares a cash dividend on the shares of Class A Common Stock, then the holders of Series A Preferred Stock shall be entitled to receive, out of funds legally available therefor, a cash dividend per share equal to the amount such holders would have received had such holder converted his or its Series A Preferred Stock into Class A Common Stock immediately prior to such distribution. 3. Liquidation, Dissolution or Winding Up. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the holders of shares of Series A Preferred Stock then outstanding shall be entitled to receive out of the assets of the Corporation available for distribution to its shareholders, in money or money's worth, after and subject to the payment in full of all amounts required to be distributed to the holders of any other Preferred Stock of the Corporation ranking on liquidation prior and in preference to the Series A Preferred Stock (such Preferred Stock being referred to hereinafter as "Senior Preferred Stock"; provided that the Series B Preferred Stock ranks junior to the Series A Preferred Stock and is therefore not Senior Preferred Stock) upon such liquidation, dissolution or winding up, an amount equal to the amount such holder would have received had such holder converted its Series A Preferred Stock into Class A Common Stock immediately prior to such distribution. The merger or consolidation of the Corporation into or with another corporation, the merger or consolidation of any other corporation into or with the Corporation, or the sale of all or substantially all the assets of the Corporation shall not be deemed to be a liquidation, dissolution or winding up of the Corporation for purposes of this Section 3. 4. Voting. Each issued and outstanding share of Series A Preferred Stock shall be entitled to the number of votes equal to the number of shares of Class A Common Stock into which each such share of Series A Preferred Stock is convertible (as adjusted from time to time pursuant to Section 5 and Section 6 hereof), at each meeting of shareholders of the Corporation (or pursuant to any action by written consent) with respect to any and all matters presented to the shareholders of the Corporation for their action or consideration. Except as provided by law or by the provisions establishing any other series of Preferred Stock, holders of Series A Preferred Stock shall vote together with the holders of Common Stock as a single class. 5. Mandatory Conversion. Immediately upon the effectiveness of an amendment to the Corporation's Articles of Incorporation which has the effect of increasing the number of shares of Class A Common Stock that the Corporation is authorized to issue to a number sufficient to provide for the issuance of shares of Class A Common Stock upon conversion of all of the then issued and outstanding shares of Series A Preferred Stock in accordance with the terms hereof, each share of Series A Preferred Stock shall be automatically converted into fully-paid and nonassessable (except as provided by Section 180.0622(2)(b) of the Wisconsin Business Corporation Law) shares of Class A Common Stock. The number of shares of Class A Common Stock into which each share of Series A Preferred Stock is convertible shall equal the Conversion Rate in effect at such time. The initial Conversion Rate shall be twenty-five (25), subject to adjustment as provided in Section 6 hereof. Upon such automatic conversion, all shares of Series A Preferred Stock which shall have been converted as herein provided shall no longer be deemed to be outstanding and all rights with respect to such shares, including the rights, if any, to receive notices and to vote, shall forthwith cease and terminate. 6. Anti-Dilution Provisions. (a) The Conversion Rate shall be subject to adjustment from time to time in accordance with this Section 6. (b) In case the Corporation shall at any time (i) subdivide the outstanding Class A Common Stock or (ii) issue a dividend on its outstanding Class A Common Stock payable in shares of Class A Common Stock, the Conversion Rate in effect immediately prior to such dividend or combination shall be proportionately increased by the same ratio as the subdivision or dividend. In case the Corporation shall at any time combine its outstanding Class A Common Stock, the Conversion Rate in effect immediately prior to such combination shall be proportionately decreased by the same ratio as the combination. (c) If any capital reorganization or reclassification of the capital stock of the Corporation, or consolidation or merger of the Corporation with another corporation, or the sale of all or substantially all of its assets to another corporation, shall be effected in such a way that holders of 2 Class A Common Stock shall be entitled to receive stock, securities, cash or other property with respect to or in exchange for Class A Common Stock, then, as a condition of such reorganization, reclassification, consolidation, merger or sale, lawful and adequate provision shall be made whereby the holders of the Series A Preferred Stock shall have the right to acquire and receive upon conversion of the Series A Preferred Stock such shares of stock, securities, cash or other property issuable or payable (as part of the reorganization, reclassification, consolidation, merger or sale) with respect to or in exchange for such number of outstanding shares of Class A Common Stock as would have been received upon conversion of the Series A Preferred Stock at the Conversion Rate then in effect. 7. No Sinking Fund. Shares of Series A Preferred Stock shall not be entitled to any sinking fund. 8. Other Terms. Shares of Series A Preferred Stock shall be subject to the other terms, provisions and restrictions set forth in the Articles of Incorporation with respect to the shares of Preferred Stock of the Corporation. C. No shares of Series A Preferred Stock have been issued as of the date hereof. D. The amendment creating the Series A Preferred Stock was adopted by the Board of Directors of the Corporation in accordance with Section 180.1002 of the Wisconsin Business Corporation Law and shareholder action was not required. E. These Articles of Amendment shall be effective as of 9:01 a.m. on November 5, 2001. IN WITNESS WHEREOF, the undersigned has executed and subscribed these Articles of Amendment on behalf of the Corporation and does affirm the foregoing as true this 2nd day of November, 2001. NORTHLAND CRANBERRIES, INC. By: John Swendrowski ------------------------------- John Swendrowski Chairman of the Board and Chief Executive Officer - - ----------------- This instrument was drafted by and should be returned to Peter C. Underwood of the firm of Foley & Lardner, 777 East Wisconsin Avenue, Milwaukee, Wisconsin 53202. 3 EX-4.9 16 sdc74o.txt ARTICLES OF AMEND. TO ARTICLES OF INCORPORATION ARTICLES OF AMENDMENT relating to SERIES B PREFERRED STOCK of NORTHLAND CRANBERRIES, INC. --------------------------------------------------------- Pursuant to Sections 180.0602 and 180.1002 of the Wisconsin Business Corporation Law --------------------------------------------------------- I, John Swendrowski, Chairman of the Board and Chief Executive Officer of Northland Cranberries, Inc., a corporation organized and existing under the Wisconsin Business Corporation Law (the "Corporation"), in accordance with the provisions of Sections 180.0602 and 180.1002 thereof, DO HEREBY CERTIFY THAT: A. Pursuant to the authority conferred upon the Board of Directors of the Corporation by its Articles of Incorporation, as amended, and in accordance with Sections 180.0602 and 180.1002 of the Wisconsin Business Corporation Law, said Board of Directors adopted resolutions on November 1, 2001, creating a series of Preferred Stock, $.01 par value per share, of the Corporation, designated as Series B Preferred Stock. B. Said resolutions of the Board of Directors of the Corporation creating the series designated as Series B Preferred Stock provide that said series shall have such designation and number of shares and such preferences, limitations and relative rights as are set forth in the paragraphs below: Series B Preferred Stock 1. Designation and Amount. The Corporation is authorized to issue a series of Preferred Stock, which is hereby designated as "Series B Preferred Stock". The number of shares of Series B Preferred Stock shall be limited to 100 shares. The par value of the Series B Preferred Stock shall be $.01 per share. 2. Dividends. The corporation will not pay dividends to the holders of the Series B Preferred Stock. 3. Liquidation, Dissolution or Winding Up. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the holders of shares of Series B Preferred Stock then outstanding shall be entitled to receive out of the assets of the Corporation available for distribution to its shareholders, in money or money's worth, after and subject to the payment in full of all amounts required to be distributed to the holders of any other Preferred Stock of the Corporation ranking on liquidation prior and in preference to the Series B Preferred Stock (including, without limitation, the Series A Preferred Stock), upon such liquidation, dissolution or winding up, an amount equal to the Liquidation Value of each such Series B Preferred Stock. 4. Voting. Except as otherwise provided herein and as otherwise required by applicable law, the Series B Preferred Stock shall have no voting rights; provided that each holder of Series B Preferred Stock shall be entitled to notice of all stockholders meetings at the same time and in the same manner as notice is given to all stockholders entitled to vote at such meetings. 5. Redemptions. (a) Redemption in Connection With Sun Exit Event. If a Sun Exit Event has occurred, the Corporation will redeem each issued and outstanding share of Series B Preferred Stock from each holder of the Series B Preferred Stock at a price per share equal to a fraction, the numerator of which is the Formula Amount and the denominator of which is one hundred (100). (b) Redemption Payments. For each share of Series B Preferred Stock which is to be redeemed hereunder, the Corporation shall be obligated within five days of the Redemption Date to pay to the holders thereof (upon surrender by such holders at the Corporation's principal office of the certificate representing such share of Series B Preferred Stock) an amount in immediately available funds equal to the amount calculated in accordance with Section 5(a). If the funds of the Corporation legally available for redemption of Series B Preferred Stock on the Redemption Date are insufficient to redeem the Series B Preferred Stock, those funds which are legally available shall be used to redeem the Series B Preferred Stock, unless such use would result in a breach by Corporation of any of its financing agreements. At any time thereafter when additional funds of the Corporation are legally available for the redemption of the Series B Preferred Stock, and such use would not result in a breach by the Corporation of any of its financing agreements, such funds shall immediately be used to redeem the balance of the Series B Preferred Stock which the Corporation has become obligated to redeem on the Redemption Date but which it has not redeemed and, until such balance has been so redeemed in full, no Junior Securities of the Corporation shall be redeemed and no dividends shall be paid thereon. If within 30 days of the Redemption Date the Corporation has not paid the holders of Series B Preferred Stock the full amount calculated in accordance with Section 5(a), the amount not paid within 30 day period shall accrue simple interest at the rate of the lesser of 12% per annum or the prime rate (as announced within Wells Fargo at its principal office in San Francisco as its "prime rate") plus 4% per annum. 6. No Sinking Fund. Shares of Series B Preferred Stock shall not be entitled to any sinking fund. 7. Other Terms. Shares of Series B Preferred Stock shall be subject to the other terms, provisions and restrictions set forth in the Articles of Incorporation with respect to the shares of Preferred Stock of the Corporation. 8. Definitions. The following terms shall have the meanings specified: 2 "Formula Amount" means: (a) if Sun's IRR is less than or equal to forty percent (40%), zero. (b) If Sun's IRR is greater than forty percent (40%) but less than or equal to fifty percent (50%), ten percent (10%) of the difference between the aggregate amount of Sun Proceeds minus what the aggregate amount of Sun Proceeds would have been had Sun's IRR been forty percent (40%); (c) If Sun's IRR is greater than fifty percent (50%) but less than or equal to sixty percent (60%), the sum of (i) fifteen percent (15%) of the difference between the aggregate amount of Sun Proceeds minus what the aggregate amount of Sun Proceeds would have been had Sun's IRR been fifty percent (50%), plus (ii) ten percent (10%) of the difference between what the aggregate amount of Sun Proceeds would have been had Sun's IRR been fifty percent (50%) minus what the aggregate amount of Sun Proceeds would have been had Sun's IRR been forty percent (40%); (d) If Sun's IRR is greater than sixty percent (60%) but less than or equal to seventy percent (70%), the sum of (i) twenty percent (20%) of the difference between the aggregate amount of Sun Proceeds minus what the aggregate amount of Sun Proceeds would have been had Sun's IRR been sixty percent (60%), plus (ii) fifteen percent (15%) of the difference between what the aggregate amount of Sun Proceeds would have been had Sun's IRR been sixty percent (60%) minus what the aggregate amount of Sun Proceeds would have been had Sun's IRR been fifty percent (50%), plus (iii) ten percent (10%) of the difference between what the aggregate amount of Sun Proceeds would have been had Sun's IRR been fifty percent (50%) minus what the aggregate amount of Sun Proceeds would have been had Sun's IRR been forty percent (40%); (e) If Sun's IRR is greater than seventy percent (70%) but less than or equal to eighty percent (80%), the sum of (i) twenty five percent (25%) of the difference between the aggregate amount of Sun Proceeds minus what the aggregate amount of Sun Proceeds would have been had Sun's IRR been seventy percent (70%), plus (ii) twenty percent (20%) of the difference between what the aggregate amount of Sun Proceeds would have been had Sun's IRR been seventy percent (70%) minus what the aggregate amount of Sun Proceeds would have been had Sun's IRR been sixty percent (60%), plus (iii) fifteen percent (15%) of the difference between what the aggregate amount of Sun Proceeds would have been had Sun's IRR been sixty percent (60%) minus what the aggregate amount of Sun Proceeds would have been had Sun's IRR been fifty percent (50%), plus (iv) ten percent (10%) of the difference between what the aggregate amount of Sun Proceeds would have 3 been had Sun's IRR been fifty percent (50%) minus what the aggregate amount of Sun Proceeds would have been had Sun's IRR been forty percent (40%); and (f) If Sun's IRR is greater than eighty percent (80%), the sum of (i) thirty percent (30%) of the difference between the aggregate amount of Sun Proceeds minus what the aggregate amount of Sun Proceeds would have been had Sun's IRR been eighty percent (80%), plus (ii) twenty five percent (25%) of the difference between what the aggregate amount of Sun Proceeds would have been had Sun's IRR been eighty percent (80%) minus what the aggregate amount of Sun Proceeds would have been had Sun's IRR been seventy percent (70%), plus (iii) twenty percent (20%) of the difference between what the aggregate amount of Sun Proceeds would have been had Sun's IRR been seventy percent (70%) minus what the aggregate amount of Sun Proceeds would have been had Sun's IRR been sixty percent (60%), plus (iv) fifteen percent (15%) of the difference between what the aggregate amount of Sun Proceeds would have been had Sun's IRR been sixty percent (60%) minus what the aggregate amount of Sun Proceeds would have been had Sun's IRR been fifty percent (50%), plus (v) ten percent (10%) of the difference between what the aggregate amount of Sun Proceeds would have been had Sun's IRR been fifty percent (50%) minus what the aggregate amount of Sun Proceeds would have been had Sun's IRR been forty percent (40%). "Junior Securities" means, collectively, the Corporation's Class A Common Stock, par value $.01 per share, and any capital stock of any class of the Corporation hereafter authorized which is not limited to a fixed sum or percentage of par or stated value in respect to the rights of the holders thereof to participate in dividends or in the distribution of assets upon any liquidation, dissolution or winding up of the Corporation; the Corporation's Series A Preferred Stock are not Junior Securities, and rank senior in preference to the Series B Preferred Stock. "Liquidation Value" means the par value. "Person" means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof. "Redemption Date" means the date of the Sun Exit Event. "Sun" means Sun Northland, LLC. "Sun Exit Event" means the consummation of a transaction the result of which is (a) that immediately following such transaction neither Sun nor its affiliates owns or controls 4 securities possessing at least 10% of the voting power of the Corporation or (b) the distribution of assets to holders of the Corporation's capital stock upon the sale of all or substantially all of the assets of the Corporation. "Sun's IRR" means, as of any measurement date, the interest rate (compounded annually) which, when used as the discount rate to calculate the net present value as of the date hereof of the sum of (i) the aggregate amount of all Sun Proceeds and (ii) the aggregate amount of all Sun Investments, causes such net present value to equal zero. For purposes of the net present value calculation, (A) Sun Proceeds shall be positive numbers, (B) Sun Investments shall be negative numbers, (C) the Sun Proceeds and Sun Investments shall be deemed to have been received or made on the first day of the month nearest to the actual date of such receipt or payment, and (D) "the aggregate amount of all Sun Proceeds" shall be net of all fees and expenses of any kind whatsoever, including without limitation investment banking fees or management service fees paid or payable to, or reimbursement of expenses of, Sun or any of its affiliates. "Sun Investments" means, as of any measurement date, the total amount of cash, cash equivalents, promissory obligations, or the fair market value of any other property (as determined by the Board of Directors of the Corporation in the exercise of their good faith judgement) invested by Sun or its affiliates in the securities of the Corporation; provided that the amount of the Sun Investment on the date hereof is $7,000,000. "Sun Proceeds" means, as of any measurement date, total amount of cash received by Sun or its affiliates in connection with a sale of securities of the Corporation or dividend, interest or other distribution made by the Corporation with respect to securities of the Corporation; provided that in the event Sun or its affiliates receives property other than cash in connection with any of the foregoing, such property shall become Sun Proceeds on the date that it is sold, exchanged, transferred or otherwise converted into cash. C. No shares of Series B Preferred Stock have been issued as of the date hereof. D. The amendment creating the Series B Preferred Stock was adopted by the Board of Directors of the Corporation in accordance with Section 180.1002 of the Wisconsin Business Corporation Law and shareholder action was not required. 5 IN WITNESS WHEREOF, the undersigned has executed and subscribed these Articles of Amendment on behalf of the Corporation and does affirm the foregoing as true this 2nd day of November, 2001. NORTHLAND CRANBERRIES, INC. By: /s/ John Swendrowski -------------------------------- John Swendrowski Chairman of the Board and Chief Executive Officer - - ------------------- This instrument was drafted by and should be returned to Peter C. Underwood of the firm of Foley & Lardner, 777 East Wisconsin Avenue, Milwaukee, Wisconsin 53202. 6 EX-99.1 17 sdc74p.txt MANAGEMENT SERVICES AGREEMENT MANAGEMENT SERVICES AGREEMENT This MANAGEMENT SERVICES AGREEMENT (the "Agreement"), dated as of the 6th day of November, 2001 (the "Effective Date"), is entered into by and between Northland Cranberries, Inc., a Wisconsin corporation with offices at 800 First Avenue South, Wisconsin Rapids, Wisconsin, 54495 (the "Company"), and Sun Capital Partners Management, LLC, a Delaware limited liability company with offices at 5200 Town Center Circle, Suite 470, Boca Raton, Florida 33486 (the "Manager"). WHEREAS, the Company desires to receive financial and management consulting services from the Manager and to obtain the benefit of the experience of the Manager in business and financial management; WHEREAS, the Manager desires to provide financial and management consulting services to the Company pursuant to the terms of this Agreement; and WHEREAS, the compensation arrangements set forth in this Agreement are designed to compensate the Manager for providing such financial and management consulting services to the Company; NOW, THEREFORE, in consideration of the mutual agreements hereinafter set forth, the parties hereto agree as follows: 1. Agreement; Term. (a) The Company hereby retains the Manager to perform, and the Manager agrees to render to the Company, on the terms herein set forth, management and consulting services regarding the business of the Company and such other services relating to the Company as may from time to time be reasonably requested by the Board of Directors (the "Board") or executive officers of the Company. Without limiting the generality of the foregoing, the parties currently contemplate that these services shall include advice regarding improvements to the Company's financial reporting, accounting and management information systems and staffing. (b) It is expressly understood and agreed that the Manager shall devote only so much time, and shall consult with and advise the officers and managers of the Company only to such extent and at such times and places as may be mutually convenient to the Company and the Manager. The Manager shall be free to provide similar services to such other business enterprises or activities as the Manager may deem fit without any limitation or restriction whatsoever; provided, however, that the Company's confidential information shall not be used to the Company's detriment. (c) The term of this Agreement shall commence as of the Effective Date and shall terminate on the earlier of (i) the seventh anniversary of the Effective Date or (ii) the date on which Sun Northland, LLC and its affiliates no longer owns at least 50% of the voting power of the Company. 2. Compensation and Expenses. (a) For the services to be rendered by the Manager hereunder, the Manager shall receive an annual fee (the "Management Fee") equal to the greater of (i) $400,000 or (ii) 6% of the Company's EBITDA (as such term is hereinafter defined), computed without taking into consideration the fees payable under this Section 2, as determined by the Company's regular auditors, or in the absence thereof, by the Company's Board of Directors, with respect to each fiscal year; provided that the Management Fee shall not exceed $1,000,000 in any fiscal year unless approved by a majority of the members of the Company's Board of Directors who are not affiliates of the Manager. The Company shall pay the Management Fee in quarterly installments in advance, subject to the proviso above, equal to the greater of (i) $100,000 or (ii) 6% of EBITDA (as such term is hereinafter defined) for the second immediately preceding quarter, computed without taking into consideration the fees payable under this Section 2. At the end of each fiscal year during the term of this Agreement, an amount shall be paid to the Manager based on any adjustments made to the calculation of EBITDA described above as a result of an audit of the Company's financial statements. On the date hereof, the Company shall pay the Manager $27,472.52, representing the pro rata portion of the Management Fee for the quarter ending November 30, 2001. For purposes of this Agreement, the term "EBITDA" means, for any period, the sum of the amounts for such period of (A) net income (or loss) after taxes of the Company and its subsidiaries on a consolidated basis ("Net Income"), plus (B) interest expense which has been deducted in the determination of Net Income, plus (C) federal, state and local taxes which have been deducted in determining Net Income, plus (D) depreciation and amortization expenses which have been deducted in determining Net Income, plus (E) extraordinary losses which have been deducted in the determination of Net Income, minus (F) extraordinary gains which have been included in the determination of Net Income. Each item used in calculating EBITDA shall be determined in accordance with generally accepted accounting principles, consistent with that used in prior periods. (b) The Company shall reimburse the Manager for the cost of all reasonable out-of-pocket fees and expenses incurred by the Manager and its affiliates in the performance of the services hereunder and all matters related thereto. (c) The Manager shall also be entitled to additional customary and reasonable fees for investment banking services provided to the Company or to any of its direct or indirect subsidiaries or shareholders, including, without limitation, refinancings, restructurings, equity or debt offerings, acquisitions, mergers, consolidations, business combinations, sales and divestitures. In the event that at any time during the term hereof, there shall occur a refinancing, restructuring, equity or debt offering, acquisition, merger, consolidation, business combination, sale or divestiture of all or substantially all of the assets, or the outstanding shares of the capital stock, of or involving the Company or any of the Company's direct or indirect subsidiaries or shareholders, the Company shall pay the Manager a fee, in cash, equal to 1% of the aggregate consideration (including assumed debt and long-term liabilities) paid to or by the Company or to or by any of its direct or indirect subsidiaries or shareholders in consideration for the Manager's performance of investment banking services in connection with such transaction. The Manager 2 and the Company acknowledge and agree that the Manager shall be entitled to receive an investment banking fee equal to $700,000. 3. Relationship of the Parties. The Manager is providing services hereunder as an independent contractor, retaining control and responsibility for its operations and personnel. Nothing in this Agreement shall be deemed to constitute the parties hereto joint venturers, partners or participants in an unincorporated business or other separate entity, nor in any manner create any employer-employee relationship between the Company on the one hand, and the Manager or any of the Manager's employees on the other hand. 4. Board of Directors and Officers. Nothing in this Agreement shall be construed to relieve the directors or officers of the Company from the performance of their respective duties or limit the exercise of their powers in accordance with the Company's Articles of Incorporation or Bylaws, any applicable provisions of the applicable corporate law, or otherwise. The activities of Company shall at all times be subject to the control and direction of its Board of Directors and officers. The Company reserves the right to make all decisions with regard to any matter upon which the Manager has rendered its advice and consultation. 5. Limitation of Liability. Neither the Manager nor any of its affiliates, partners, members, officers, employees or agents shall be liable to the Company or any of its subsidiaries or affiliates for any loss, liability, damage or expense arising out of or in connection with the performance of services contemplated by this Agreement, unless such loss, liability, damage or expense shall be proven to result directly from the gross negligence or willful misconduct of the Manager. In no event will the Manager or any of its affiliates be liable to the Company for special, indirect, punitive or consequential damages, including, without limitation, loss of profits or lost business, even if the Company has been advised of the possibility of such damages. Under no circumstances will the Manager's liability exceed, in the aggregate, the fees actually paid to the Manager hereunder. 6. Indemnification. The Company shall reimburse, defend, indemnify and hold the Manager, and its employees, officers, agents, members and managers, harmless from and against any damage, loss, liability, deficiency, diminution in value, action, suit, claim, proceeding, investigation, audit, demand, assessment, fine, judgment, cost and other expense (including, without limitation, reasonable legal fees and expenses) arising out of, related to or in connection with (a) any act or omission of the Company or the Manager, except to the extent involving the willful misconduct, bad faith or gross negligence of the Manager, or (b) any act or omission made at the direction of the Company. 7. Notices. Any notice, request, demand or other communication permitted or required to be given hereunder shall be in writing, shall be sent by one of the following means to the addressee at the address set forth in the preamble to this Agreement (or at such other address as shall be designated hereunder by notice to the other party hereto, effective upon actual receipt) and shall be deemed conclusively to have been given: (a) on the first business day following the day timely deposited with a nationally recognized overnight delivery service, with the cost of delivery prepaid for the account of the sender; (b) on the fifth business day following the day duly sent be certified or registered United States mail, postage prepaid and return receipt 3 requested; or (c) if delivered by other means, when actually received by the addressee on a business day (or on the next business day if received after the close of normal business hours or on any non-business day). 8. Assignment; Successors and Assigns. This Agreement and the rights, duties and obligations of the Company hereunder may not be assigned or delegated by the Company without the prior written consent of the Manager. This Agreement and the rights, duties and obligations of the Manager hereunder may not be assigned or delegated by the Manager, other than to an affiliate of the Manager, without the prior written consent of the Company. All covenants, promises and agreements by or on behalf of the parties contained in this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, legal representatives, successors and assigns. 9. Amendments. No amendment, supplement or waiver of any provision of this Agreement shall be effective unless the same shall be in writing and signed by the Manager and the Company (in the case of an amendment or supplement) or by the waiving party (in the case of a waiver). 10. Applicable Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without giving effect to principles of conflicts of law or choice of law that would compel the application of the substantive laws of any other jurisdiction. 11. Section Headings. The headings of each section are contained herein for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement. 12. Entire Agreement. This Agreement sets forth the entire agreement of the parties hereto with regard to the subject matter hereof and supersedes and replaces all prior agreements, understandings and representations, oral or written, with regard to such matters. 13. Severability. If any provision of this Agreement or application thereof under any circumstances is adjudicated to be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect any other provision or application of this Agreement which can be given effect without the invalid or unenforceable provision or application and shall not invalidate or render unenforceable such provision or application in any other jurisdiction. If any provision is held void, invalid or unenforceable with respect to particular circumstances, it shall nevertheless remain in full force and effect in all other circumstances. 14. Counterparts. This Agreement may be executed in counterparts, each of which shall be an original, and both of which together shall constitute one and the same document. 4 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. SUN CAPITAL PARTNERS MANAGEMENT, LLC By: /s/ --------------------------------- Name: Title: NORTHLAND CRANBERRIES, INC. By: /s/ --------------------------------- Name: Title: 5 EX-99.2 18 sdc74q.txt STOCK OPTION PLAN NORTHLAND CRANBERRIES, INC. 2001 STOCK OPTION PLAN ARTICLE I Purpose of Plan The 2001 Stock Option Plan (the "Plan") of Northland Cranberries, Inc. (the "Company"), adopted by the Board of Directors of the Company on November 6, 2001, for executive and other key employees and consultants of the Company, is intended to advance the best interests of the Company by providing those persons who have a substantial responsibility for its management and growth with additional incentives by allowing them to acquire an ownership interest in the Company and thereby encouraging them to contribute to the success of the Company and to remain in its employ. The availability and offering of stock options under the Plan also increases the Company's ability to attract and retain individuals of exceptional managerial talent upon whom, in large measure, the sustained progress, growth and profitability of the Company depends. ARTICLE II Definitions For purposes of the Plan, except where the context clearly indicates otherwise, the following terms shall have the meanings set forth below: "Board" shall mean the Board of Directors of the Company. "Cause" shall mean with respect to a Participant (i) conviction of a felony, (ii) acts of moral turpitude, (iii) willful action taken for the purpose of harming the Company, (iv) the engaging in an act or acts of substantial dishonesty or unethical business conduct, in any case materially harming the Company, (v) gross negligence or reckless activity in the conduct of the business of the Company (including, without limitation, a material breach of any Company employee manual now existing or hereinafter instituted), or (vi) material abandonment of duties with respect to the Company. "Change of Control" shall mean the occurrence of any of the following events: (a) the acquisition, other than solely from the Company, by any individual, entity or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Securities Exchange Act of 1934, as amended), other than the Company or an employee benefit plan of the Company, of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended) of more than 50% of the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Voting Securities"); or (b) a reorganization, merger, consolidation or recapitalization of the Company (a "Business Combination"), other than a Business Combination in which more than 50% of the combined voting power of the outstanding voting securities of the surviving or resulting entity immediately following the Business Combination is held by the persons who, immediately prior to the Business Combination, were the holders of the Voting Securities; or (c) a complete liquidation or dissolution of the Company, or a sale of all or substantially all of the Company's assets. "Code" shall mean the Internal Revenue Code of 1986, as amended, and any successor statute. "Committee" shall mean the committee of the Board which may be designated by the Board to administer the Plan. The Committee shall be composed of two or more directors as appointed from time to time to serve by the Board. "Common Stock" shall mean the Company's Class A Common Stock, par value $.01 per share, or if the outstanding Common Stock is hereafter changed into or exchanged for different stock or securities of the Company, such other stock or securities. "Company" shall mean Northland Cranberries, Inc., a Wisconsin corporation, and (except to the extent the context requires otherwise) any subsidiary corporation of Northland Cranberries, Inc. as such term is defined in Section 425(f) of the Code. "Disability" shall mean the inability, due to illness, accident, injury, physical or mental incapacity or other disability, of any Participant to carry out effectively his duties and obligations to the Company or to participate effectively and actively in the management of the Company for a period of at least 90 consecutive days or for shorter periods aggregating at least 120 days (whether or not consecutive) during any twelve-month period, as determined in the reasonable judgment of the Board. "Fair Market Value" shall mean, as of any applicable date: (i) if the principal securities market on which the Common Stock is traded is a national securities exchange or The Nasdaq National Market ("NNM"), the closing price of the Common Stock on such exchange or NNM, as the case may be, or if no sale of the Common Stock shall have occurred on such date, on the next preceding date on which there was a reported sale; (ii) if the Common Stock is not traded on a national securities exchange or NNM, the closing price on such date as reported by The Nasdaq SmallCap Market, or if no sale of the Common Stock shall have occurred on such date, on the next preceding date on which there was a reported sale; (iii) if the principal securities market on which the Common Stock is traded is not a national securities exchange, NNM or The Nasdaq SmallCap Market, the average of the bid and asked prices reported by the National Quotation Bureau, Inc.; (iv) if not reported by the National Quotation Board, the closing price of a share of Common Stock on the date of grant as reported on the OTC Bulletin Board; or (v) if the price of the Common Stock is 2 not so reported, the Fair Market Value of the Common Stock as determined in good faith by the Committee or the Board. "Options" shall have the meaning set forth in Article IV. "Participant" shall mean any executive or other key employee of the Company or consultant to the Company who has been selected to participate in the Plan by the Committee or the Board. "Person" means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof. ARTICLE III Administration The Plan shall be administered by the Committee; provided that if for any reason the Committee shall not have been appointed by the Board, all authority and duties of the Committee under the Plan shall be vested in and exercised by the Board. Subject to the limitations of the Plan, the Committee shall have the sole and complete authority to: (i) select Participants, (ii) grant Options (as defined in Article IV below) to Participants in such forms and amounts as it shall determine, (iii) impose such limitations, restrictions and conditions upon such Options as it shall deem appropriate, (iv) interpret the Plan and adopt, amend and rescind administrative guidelines and other rules and regulations relating to the Plan, (v) correct any defect or omission or reconcile any inconsistency in the Plan or in any Option granted hereunder and (vi) make all other determinations and take all other actions necessary or advisable for the implementation and administration of the Plan. The Committee's determinations on matters within its authority shall be conclusive and binding upon the Participants, the Company and all other Persons. All expenses associated with the administration of the Plan shall be borne by the Company. The Committee may, as approved by the Board and to the extent permissible by law, delegate any of its authority hereunder to such persons as it deems appropriate. ARTICLE IV Limitation on Aggregate Shares The number of shares of Common Stock with respect to which options may be granted under the Plan (the "Options") and which may be issued upon the exercise thereof shall not exceed, in the aggregate, 4,889,081(1) shares; provided that the type and the aggregate number of - - --------------------- (1) Represents the difference between 5,084,606 (5% of the number of fully-diluted post-closing shares) and 195,525 (the number of options issued and outstanding as of the closing, taking into account to 1 for 4 reverse stock split). 3 shares which may be subject to Options shall be subject to adjustment in accordance with the provisions of paragraph 6.8 below, and further provided that to the extent any Options expire unexercised or are canceled, terminated or forfeited in any manner without the issuance of Common Stock thereunder, such shares shall again be available under the Plan. The 4,889,081 shares of Common Stock available under the Plan may be either authorized and unissued shares, treasury shares or a combination thereof, as the Committee shall determine. ARTICLE V Awards 5.1 Options. The Committee may grant Options to Participants in accordance with this Article V. 5.2 Form of Option. Options granted under this Plan shall be nonqualified stock options and are not intended to be "incentive stock options" within the meaning of Section 422A of the Code or any successor provision. 5.3 Exercise Price. The option exercise price per share of Common Stock shall be fixed by the Committee at not less than 100% of the Fair Market Value of a share of Common Stock on the date of grant. 5.4 Exercisability. Options shall be exercisable at such time or times as the Committee shall determine at or subsequent to grant. 5.5 Payment of Exercise Price. Options shall be exercised in whole or in part by written notice to the Company (to the attention of the Company's Secretary) accompanied by payment in full of the option exercise price. Payment of the option exercise price shall be made in cash (including check, bank draft or money order) or, in the discretion of the Committee, by delivery of a promissory note (if in accordance with policies approved by the Board). 5.6 Terms of Options. The Committee shall determine the term of each Option, which term shall in no event exceed ten years from the date of grant. 4 ARTICLE VI General Provisions 6.1 Conditions and Limitations on Exercise. Options may be made exercisable in one or more installments, upon the happening of certain events, upon the passage of a specified period of time, upon the fulfillment of certain conditions or upon the achievement by the Company of certain performance goals, as the Committee shall decide in each case when the Options are granted. 6.2 Consequences of a Change of Control. (a) Unless otherwise determined by the Board, immediately prior to a Change of Control that is, in the Board's determination, primarily for cash, all outstanding Options which have been granted under the Plan and which are not exercisable as of the effective date of the Change of Control shall automatically accelerate and become exercisable upon the effective date of the Change of Control; provided, that any exercise of such accelerated Options shall be contingent upon the actual consummation of the Change of Control. (b) Unless otherwise determined by the Board, upon a Change of Control that the Board determines is not primarily for cash as described in subsection (a) above, each outstanding Option shall be assumed by the Acquiring Corporation (as defined below) or parent thereof or replaced with a comparable option or right to purchase shares of the capital stock, or equity equivalent instrument, of the Acquiring Corporation or parent thereof, or other comparable rights (such assumed and comparable options and rights, together, the "Replacement Options"); provided, however, that if the Acquiring Corporation or parent thereof does not intend to grant Replacement Options, then unless otherwise determined by the Board all outstanding Options which have been granted under the Plan and which are not exercisable as of the effective date of the Change of Control shall automatically accelerate and become exercisable immediately prior to the effective date of the Change of Control; provided, that any exercise of such accelerated Options shall be contingent upon the actual consummation of the Change of Control. The term "Acquiring Corporation" means the surviving, continuing, successor or purchasing corporation, as the case may be. Notwithstanding anything in the Plan to the contrary, the Board shall have discretion, in the applicable Option Agreement (as defined below) or an amendment thereof, to provide for the acceleration of Options upon a Change of Control. The Board may determine in its discretion (but shall not be obligated to do so) that in lieu of the issuance of Replacement Options, all holders of outstanding Options which are exercisable immediately prior to a Change of Control (including those that become exercisable under Section 6.2(a) or this Section 6.2(b)) will be required to surrender them in exchange for a payment, in cash or Common Stock as determined by the Board, of an amount equal to the amount (if any) by which the then Fair Market Value of Common Stock subject to unexercised Options exceeds the exercise price of those Options, with such payment to take place as of the date of the Change of Control or such other date as the Board may prescribe. (c) Any Options that are not assumed or replaced by Replacement Options, exercised or cashed out prior to or concurrent with a Change of Control will terminate effective upon the Change of Control or at such other time as the Board deems appropriate. 5 (d) Notwithstanding anything in the Plan to the contrary, in the event of a Change of Control, no action described in the Plan shall be taken (including, without limitation, actions described in subsections (a), (b) and (c) above) if such actions would make the Change of Control ineligible for desired accounting or tax treatment and if, in the absence of such actions, the Change of Control would qualify for such treatment and the Company intends to use such treatment with respect to such Change of Control. 6.3 Written Agreement. Each Option granted hereunder to a Participant shall be embodied in a written agreement (an "Option Agreement") which shall be signed by the Participant and by the Chairman or the President of the Company for and in the name and on behalf of the Company and shall be subject to the terms and conditions of the Plan prescribed in the Agreement (including, but not limited to, (i) the right of the Company and such other Persons as the Committee shall designate ("Designees") to repurchase from each Participant, and such Participant's transferees, all shares of Common Stock issued or issuable to such Participant on the exercise of an Option in the event of such Participant's termination of employment, (ii) rights of first refusal granted to the Company and Designees, (iii) holdback and other registration right restrictions in the event of a public registration of any equity securities of the Company and (iv) any other terms and conditions which the Committee shall deem necessary and desirable). 6.4 Listing, Registration and Compliance with Laws and Regulations. Options shall be subject to the requirement that if at any time the Committee shall determine, in its discretion, that the listing, registration or qualification of the shares subject to the Options upon any securities exchange or under any state or federal securities or other law or regulation, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition to or in connection with the granting of the Options or the issuance or purchase of shares thereunder, no Options may be granted or exercised, in whole or in part, unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Committee. The holders of such Options shall supply the Company with such certificates, representations and information as the Company shall request and shall otherwise cooperate with the Company in obtaining such listing, registration, qualification, consent or approval. In the case of officers and other Persons subject to Section 16(b) of the Securities Exchange Act of 1934, as amended, the Committee may at any time impose any limitations upon the exercise of an Option that, in the Committee's discretion, are necessary or desirable in order to comply with such Section 16(b) and the rules and regulations thereunder. If the Company, as part of an offering of securities or otherwise, finds it desirable because of federal or state regulatory requirements to reduce the period during which any Options may be exercised, the Committee, may, in its discretion and without the Participant's consent, so reduce such period on not less than 15 days written notice to the holders thereof. 6.5 Nontransferability. Options may not be transferred other than by will or the laws of descent and distribution and, during the lifetime of the Participant, may be exercised only by such Participant (or his legal guardian or legal representative). In the event of the death of a Participant, exercise of Options granted hereunder shall be made only: 6 (i) by the executor or administrator of the estate of the deceased Participant or the Person or Persons to whom the deceased Participant's rights under the Option shall pass by will or the laws of descent and distribution; and (ii) to the extent that the deceased Participant was entitled thereto at the date of his death, unless otherwise provided by the Committee in such Participant's Option Agreement. 6.6 Expiration of Options. (a) Normal Expiration. In no event shall any part of any Option be exercisable after the date of expiration thereof (the "Expiration Date"), as determined by the Committee pursuant to paragraph 5.6 above. (b) Early Expiration Upon Termination of Employment. Except as otherwise provided by the Committee in the Option Agreement, any portion of a Participant's Option that was not vested and exercisable on the date of the termination of such Participant's employment shall expire and be forfeited as of such date, and any portion of a Participant's Option that was vested and exercisable on the date of the termination of such Participant's employment shall expire and be forfeited as of such date, except that: (i) if any Participant dies or becomes subject to any Disability, such Participant's Option shall expire 180 days after the date of his death or Disability, but in no event after the Expiration Date, (ii) if any Participant retires (with the approval of the Board), his Option shall expire 90 days after the date of his retirement, but in no event after the Expiration Date, and (iii) if any Participant is discharged other than for Cause, such Participant's Option shall expire 30 days after the date of his discharge, but in no event after the Expiration Date. 6.7 Withholding of Taxes. The Company shall be entitled, if necessary or desirable, to withhold from any Participant from any amounts due and payable by the Company to such Participant (or secure payment from such Participant in lieu of withholding) the amount of any withholding or other tax due from the Company with respect to any shares issuable under the Options, and the Company may defer such issuance unless indemnified to its satisfaction. 6.8 Adjustments. In the event of a reorganization, recapitalization, stock dividend or stock split, or combination or other change in the shares of Common Stock, the Board or the Committee may, in order to prevent the dilution or enlargement of rights under outstanding Options, make such adjustments in the number and type of shares authorized by the Plan, the number and type of shares covered by outstanding Options and the exercise prices specified therein as may be determined to be appropriate and equitable. 6.9 Rights of Participants. Nothing in this Plan or in any Option Agreement shall interfere with or limit in any way the right of the Company to terminate any Participant's employment at any time (with or without Cause), nor confer upon any Participant any right to continue in the employ of the Company for any period of time or to continue his present (or any other) rate of compensation, and except as otherwise provided under this Plan or by the Committee 7 in the Option Agreement, in the event of any Participant's termination of employment (including, but not limited to, the termination by the Company without Cause) any portion of such Participant's Option that was not previously vested and exercisable shall expire and be forfeited as of the date of such termination. No employee shall have a right to be selected as a Participant or, having been so selected, to be selected again as a Participant. 6.10 Amendment, Suspension and Termination of Plan. The Board or the Committee may suspend or terminate the Plan or any portion thereof at any time and may amend it from time to time in such respects as the Board or the Committee may deem advisable; provided that no such amendment shall be made without stockholder approval to the extent such approval is required by law, agreement or the rules of any exchange upon which the Common Stock is listed, and no such amendment, suspension or termination shall impair the rights of Participants under outstanding Options without the consent of the Participants affected thereby. No Options shall be granted hereunder after the tenth anniversary of the adoption of the Plan. 6.11 Amendment, Modification and Cancellation of Outstanding Options. The Committee may amend or modify any Option in any manner to the extent that the Committee would have had the authority under the Plan initially to grant such Option; provided that no such amendment or modification shall impair the rights of any Participant under any Option without the consent of such Participant. With the Participant's consent, the Committee may cancel any Option and issue a new Option to such Participant. 6.12 Indemnification. In addition to such other rights of indemnification as they may have as members of the Board or the Committee, the members of the Committee shall be indemnified by the Company against all costs and expenses reasonably incurred by them in connection with any action, suit or proceeding to which they or any of them may be party by reason of any action taken or failure to act under or in connection with the Plan or any Option granted thereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Company) or paid by them in satisfaction of a judgment in any such action, suit or proceeding; provided that any such Committee member shall be entitled to the indemnification rights set forth in this paragraph 6.12 only if such member has acted in good faith and in a manner that such member reasonably believed to be in or not opposed to the best interests of the Company and, with respect to any criminal action or proceeding, had no reasonable cause to believe that such conduct was unlawful, and further provided that upon the institution of any such action, suit or proceeding a Committee member shall give the Company written notice thereof and an opportunity, at its own expense, to handle and defend the same before such Committee member undertakes to handle and defend it on his own behalf. * * * * 8 -----END PRIVACY-ENHANCED MESSAGE-----