NORTHLAND CRANBERRIES, INC.
FIRST AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT
Xxxxxx Trust and Savings Bank
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
Reference is hereby made to that certain Amended and Restated Credit
Agreement dated as of October 3, 1997 (the "Credit Agreement"), between
Northland Cranberries, Inc., a Wisconsin corporation (the "Company"), and you
(the "Bank"). All capitalized terms used herein without definition shall have
the same meanings herein as such terms have in the Credit Agreement. Reference
is also made to that certain letter dated as of May 20, 1998 from the Bank to
the Company (and consented and agreed to by the Participants) pursuant to which
the Bank and the Participants consented to the formation of a wholly-owned
Subsidiary of the Company to acquire substantially all of the assets of Minot
Food Packers, Inc. on the terms and conditions set forth therein (such letter,
as the same has been amended, being referred to as the "Consent Letter").
In connection with the Consent Letter, the Company has requested that the
Bank make certain amendments to the Credit Agreement and the Bank is willing to
do so under the terms and conditions set forth in this agreement (herein, this
"Amendment"). Upon the effectiveness of this Amendment, this Amendment shall
constitute the New Amendment referred to in the Consent Letter.
1. AMENDMENTS TO CREDIT AGREEMENT.
Upon the satisfaction of the conditions precedent set forth in Section 2
of this Amendment, the Credit Agreement shall be and hereby is further amended
as follows:
(a) The definition of the term "Senior Funded Debt Ratio" appearing in
Section 9 of the Credit Agreement shall be amended in its entirety to read as
follows:
""Senior Funded Debt Ratio" shall mean, as of any time the same is
to be determined, the ratio of the aggregate outstanding principal
amount of the Company's Funded Debt at such time to the Company's
EBITDA for the four fiscal quarters of the Company most recently
ended (but for the fiscal quarter ending May 31, 1998, such
determination shall utilize an annualized EBITDA derived from the
Company's EBITDA for the three fiscal quarters then ended). For
purposes of this definition, the "Company's Funded Debt" and the
"Company's EBITDA" shall, as of any time the same is to be
determined, include (without duplication) the Funded Debt at such
time and EBITDA for the four fiscal quarters most recently ended,
respectively, of any Person acquired by the Company in accordance
with the terms of this Agreement at any time during the Company's
most recently ended four fiscal quarter period."
(b) Section 9 of the Credit Agreement shall be amended by inserting the
following new definition in the appropriate alphabetical order:
""Material Subsidiary" means Minot Food Packers,
Inc., a New Jersey corporation ("Minot")."
(c) Section 7 of the Credit Agreement shall be amended and restated in its
entirety to read as follows:
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"SECTION 7. COMPANY COVENANTS
The Company agrees that, so long as any credit is available to or in
use by the Company hereunder, except to the extent compliance in any
case or cases is waived in writing by the Bank:
Section 7.1. Maintenance of Property. The Company will, and
will cause each Material Subsidiary to, keep and maintain all of its
Properties necessary or useful in its business in good condition,
and make all necessary renewals, replacements, additions,
betterments and improvements thereto; provided, however, that
nothing in this Section shall prevent the Company or any Material
Subsidiary from discontinuing the operation and maintenance of any
of its Properties if such discontinuance is, in its judgment,
desirable in the conduct of its business and not disadvantageous in
any material respect to the Bank as holder of the Notes.
Section 7.2. Taxes. The Company will, and will cause each
Material Subsidiary to, duly pay and discharge all taxes, rates,
assessments, fees and governmental charges upon or against the
Company, such Material 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.
Section 7.3. Maintenance of Insurance. The Company will, and
will cause each Material Subsidiary 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 it
operates. The Bank shall be named as loss payee under any insurance
policies which relate to the Collateral. The Company shall, at the
Bank's request, provide copies to the Bank of all insurance policies
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and other material related thereto maintained by the Company and the
Material Subsidiaries from time to time.
Section 7.4. Financial Reports. The Company will, and will
cause each Material Subsidiary to, maintain a standard and modern
system of accounting in accordance with sound accounting practice
and will furnish with reasonable promptness to the Bank and its duly
authorized representatives such information respecting the business
and financial condition of the Company and its Material Subsidiaries
as may be reasonably requested and, without any request, will
furnish to the Bank:
(a) as soon as available, and in any event within 45 days
after the close of each quarterly fiscal period of the Company a
copy of the form 10-Q quarterly report to the Securities and
Exchange Commission (the "SEC"); and
(b) as soon as available, and in any event within 90 days
after the close of each fiscal year, a copy of the audit report for
such year and accompanying 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 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
(c) each of the financial statements furnished to the Bank
pursuant to paragraphs (a) and (b) above shall be accompanied by a
Compliance Certificate in the form
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of Exhibit E attached hereto signed by its Vice President-Finance;
and
(d) 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 form 10-K annual report, including financial
statements audited by Deloitte & Touche or other independent public
accountants of nationally recognized standing selected by the
Company;
(e) promptly upon the mailing thereof to the shareholders of
the Company generally, copies of all financial statements, reports
and proxy statements so mailed; and
(f) as soon as available, and in any event within 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
Bank.
Section 7.5. Inspection. The Company shall, and shall cause
each Material Subsidiary to, permit the Bank, by its representatives
and agents (who may be accompanied by any of the Participants), to
inspect any of the Properties, corporate books and financial records
of the Company and each Material Subsidiary, to examine and make
copies of the books of accounts and other financial records of the
Company and each Material Subsidiary, and to discuss the affairs,
finances and accounts of the Company and each Material Subsidiary
with, and to be advised as to the same by, its officers at such
reasonable times and intervals as the Bank may designate upon
reasonable advance notice to the Company and such Material
Subsidiary, as the case
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may be. So long as no Event of Default shall have occurred and be
continuing, the Bank shall perform not more than one field audit of
the Collateral per year. The Company shall pay to the Bank from time
to time upon demand a reasonable amount, but not to exceed $2,000
per audit, to compensate the Bank for its fees, charges and expenses
in connection with the field audits of the Collateral.
Section 7.6. Consolidation and Merger. The Company will not,
and will not permit any Material Subsidiary to, consolidate with or
merge into any Person, without the prior written consent of the
Bank, unless (a) the Company 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.
Section 7.7. Transactions with Affiliates. The Company will
not, and will not permit any Material Subsidiary to, 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, or such
Material Subsidiary's, business and upon fair and reasonable terms
no less favorable to the Company, or such Material Subsidiary as the
case may be, than would be obtained in a comparable arm's-length
transaction with a Person not an Affiliate of the Company.
Section 7.8. Minimum Net Worth. The
Company will at all times during the periods
indicated below maintain Net Worth in an amount not
less than:
(a) $73,000,000 from August 31, 1997 through
August 30, 1998;
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(b) $78,000,000 on August 31, 1998; and
(c) during each fiscal quarter of the Company thereafter, an
amount equal to the sum of (i) the minimum amount required to be
maintained during the immediately preceding fiscal quarter of the
Company plus (ii) an amount equal to 50% of the Net Income of the
Company and the Material Subsidiaries for the fiscal quarter of the
Company then ended, plus (iii) an amount equal to 75% of the net
cash proceeds of the issuance of capital stock or other equity
securities of the Company that are not applied as required by
Section 3.4(a) of this Agreement.
Section 7.9. Fixed Charge Coverage Ratio. The Company will
not, as of the last day of each fiscal quarter indicated below,
permit its Fixed Charge Coverage Ratio to be less than 1.25 to 1 on
the last day of the fiscal quarters ending on May 31, 1998 and
August 31, 1998, and 1.5 to 1 on the last day of each fiscal quarter
ending thereafter.
Section 7.10. Funded Debt to Net Worth
Ratio. The Company will not permit the ratio of its
Funded Debt to Net Worth to exceed 2.0 to 1 at any
time.
Section 7.11. Net Income. The Company and its Subsidiaries
will not have a net loss of more than $2,000,000 for each of the
fiscal quarters of the Company ending on or before August 31, 1997,
will not have a net loss of more than $1,500,000 for each fiscal
quarter ending during the period from September 1, 1997 through and
including February 28, 1998 and will not have a net loss of more
than $1,000,000 for any fiscal quarter ending thereafter.
Section 7.12. Liens. The Company will not, nor will it permit
any Material Subsidiary to, pledge, mortgage or otherwise encumber
or subject to or permit to exist upon or be subjected to any lien,
charge or
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security interest of any kind (including any conditional sale or
other title retention agreement and any lease in the nature
thereof), on any of its Properties of any kind or character at any
time owned by the Company or such Material Subsidiary, as the case
may be, other than:
(a) liens, pledges or deposits for workmen's compensation,
unemployment insurance, old age benefits or social security
obligations, taxes, assessments, statutory obligations or other
similar charges, good faith deposits made in connection with
tenders, contracts or leases to which the Company or any Material
Subsidiary is a party or other deposits required to be made in the
ordinary course of business, provided in each case the obligation
secured is not overdue or, if overdue, is being contested in good
faith by appropriate proceedings and adequate reserves have been
provided therefor in accordance with generally accepted accounting
principles and that the obligation is not for borrowed money,
customer advances, trade payables, or obligations to agricultural
producers;
(b) the pledge of Property for the purpose of securing an
appeal or stay or discharge in the course of any legal proceedings,
provided that the aggregate amount of liabilities of the Company or
any Material Subsidiary so secured by a pledge of Property permitted
under this subsection (b) including interest and penalties thereon,
if any, shall not be in excess of $500,000 at any one time
outstanding;
(c) liens, pledges, mortgages, security interests, or other
charges granted to the Bank for the benefit of the Bank and the
Participants;
(d) liens, pledges, mortgages, security interests or other
charges existing on Permitted Property to the extent they secure
indebtedness incurred to finance the purchase or construction of
improvements;
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(e) liens on property existing at the time of their
acquisition or liens to secure the payment of all or any part of the
purchase price of such property or to secure any indebtedness
incurred for the purpose of financing all or any part of the
purchase price thereof provided such liens encumber only the
property being acquired, purchased or financed and do not extend to
any other property or secure any other obligations;
(f) liens on Permitted Property of a corporation existing at
the time such corporation is purchased by, merged into or
consolidated with the Company or at the time of a sale, lease or
other disposition of the land, buildings and/or equipment of a
corporation or firm as an entirety or substantially as an entirety
to the Company or any Material Subsidiary;
(g) mortgages, pledges, security interests or other
encumbrances existing on the date hereof and disclosed on the
financial statements referred to in Section 5.3 hereof or in
Schedule 7.12 attached hereto;
(h) 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
Material Subsidiary;
(i) liens on Permitted Property securing indebtedness
permitted under Section 7.13 hereof; and
(j) liens on the Company's Wisconsin Rapids, Wisconsin office
building and land referred to in Section 7.22 hereof.
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Section 7.13. Borrowings and Guaranties. The Company will not,
nor will it permit any Material Subsidiary to, issue, incur, assume,
create or have outstanding any indebtedness for borrowed money
(including as such all indebtedness representing the deferred
purchase price of Property and all obligations of the Company or any
Material Subsidiary with respect to letters of credit and banker's
acceptances) or customer advances, nor be or remain liable, whether
as endorser, surety, guarantor or otherwise, for or in respect of
any liability or indebtedness of any other Person other than:
(a) indebtedness of the Company arising under or pursuant to
this Agreement or the other Loan Documents and any Material
Subsidiary's guarantee of such indebtedness;
(b) the liability of the Company or any Material Subsidiary
arising out of the endorsement for deposit or collection of
commercial paper received in the ordinary course of business;
(c) indebtedness of the Company existing on the date hereof
and disclosed to the Bank in the August 31, 1996 financial
statements referred to in Section 5.3 hereof;
(d) indebtedness not otherwise permitted by this Section 7.13
which is incurred, directly or indirectly, to finance the
acquisition of Property;
(e) Funded Debt;
(f) indebtedness of Minot owing to the
Company; and
(g) renewals, extensions and refinancings of and amendments to
each of the foregoing.
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Section 7.14. Investments, Loans, Advances and Acquisitions.
The Company will not, nor will it permit any Material Subsidiary to,
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 the
Bank;
(b) investments, loans and advances in or to any existing
wholly-owned Subsidiary, provided that the respective amounts
thereof shall not exceed the amounts disclosed to the Bank in the
August 31, 1996 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
in the ordinary course of business;
(d) receivables arising in the ordinary course of the
Company's or a Material Subsidiary's business;
(e) full faith and credit obligations of the United States and
securities the payment of principal of and interest on is
unconditionally guaranteed by the United States; provided that all
such obligations and securities shall have a maturity of one year or
less;
(f) acquisition of Cranberry Businesses by the Company,
provided, that (i) such acquisition has the effective written
consent or prior approval of the board of directors (or equivalent
governing body) of the Person being acquired, (ii) the aggregate
cash consideration paid by the Company for the acquisition of
cranberry bogs after October 3, 1997 shall not exceed $5,000,000 in
each fiscal year without the prior written consent of
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the Bank and the Participants and (iii) the Company grants to the
Bank a first priority lien on the subject bogs;
(g) investments in entities engaged in the
Cranberry Business; and
(h) investments in an amount not to exceed $5,000,000 in a
Subsidiary or joint venture engaged in developing cranberry growing
properties in the Republic of Ireland;
(i) loans and advances to Wildhawk, Inc. in an aggregate
principal amount outstanding at any time not to exceed $500,000; and
(j) the Company's investment in Minot.
Section 7.15. Sale of Property. The Company will not, nor will
it permit any Material Subsidiary to, sell, lease, assign, transfer
or otherwise dispose of (whether in one transaction or in a series
of transactions) all or a material part of its Property to any other
Person; provided, however, that so long as no Event of Default or
Default has occurred and is continuing, this Section shall not
prohibit:
(a) sales of inventory (including crops and
severed vines) in the ordinary course of business;
(b) sales or leases of surplus, obsolete or worn-out machinery
and equipment; and
(c) the sale/leaseback transactions permitted by Section
7.21(ii) hereof.
For purposes of this Section, "Material Part" shall mean 5% or more
of the lesser of the book or fair market value of the Property of
the Company and the Material Subsidiaries taken as a whole.
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Section 7.16. Distributions. The Company will not, nor will it
permit any Material Subsidiary to, directly or indirectly, (a)
declare, make or incur any liability to pay any dividend on or make
any other distribution in respect of any class or series of its
capital stock (other than dividends payable solely in its capital
stock) or (b) purchase, repurchase or otherwise acquire or retire
any of its capital stock; provided, however, that so long as no
Default or Event of Default shall have occurred and be continuing
the Company may (i) repurchase its capital stock provided the
aggregate amount expended for such repurchases does not exceed
$2,000,000, (ii) pay dividends in an amount not to exceed $0.04 per
share during each fiscal quarter of the Company's fiscal years
ending August 31, 1997 and August 31, 1998, and (iii) during each
fiscal quarter of the Company ending after August 31, 1998, pay
dividends in an amount not to exceed 50% of the Company's Net Income
for the period beginning September 1, 1998 and ending on the last
day of the most recent fiscal quarter.
Section 7.17. Notice of Suit or Adverse Change in Business.
The Company shall, and shall cause each Material Subsidiary to, as
soon as possible, and in any event within five Business Days after
the Company or such Material Subsdiary learns of the following, give
written notice to the Bank of (a) any material proceeding(s) being
instituted or threatened to be instituted by or against the Company
or any Material 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 in the
business, Property or condition, financial or otherwise, (including,
without limitation, any material loss or depreciation in the value
of the Collateral) of the Company or any Material Subsidiary and (c)
the occurrence of any Default or Event of Default hereunder.
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Section 7.18. ERISA. The Company will, and will cause each
Material Subsidiary to, 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 its Property and will promptly notify the Bank 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 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 Material Subsidiary will terminate any such Plan or
withdraw therefrom unless it shall be in compliance with all of the
terms and conditions of this Agreement after giving effect to any
liability to PBGC resulting from such termination or withdrawal.
Section 7.19. Use of Proceeds. The Company shall use the
proceeds of the Term Loan Two solely to finance the acquisition and
construction of fixed assets constituting the concentrating plant
and equipment located at the Company's facilities in Wisconsin
Rapids, Wisconsin, and to reimburse the Company for sums already
expended by the Company in connection therewith; the Company shall
use the proceeds of the Term Loan Three solely to finance the
acquisition of the bog in Hanson, Massachusetts; and the Company
shall use the proceeds of the Term Loan One and all Revolving Credit
Loans made hereunder solely for lawful corporate purposes.
Section 7.20. Subsidiaries. The Company
will not, nor will it permit any Material Subsidiary
to, directly or indirectly, create or acquire any
Subsidiaries without prior approval of the Bank,
except for the Ireland operation.
Section 7.21. Intentionally Omitted.
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Section 7.22. Capital Expenditures. The Company will not, nor
will it permit any Material Subsidiary to, expend or become
obligated for capital expenditures as determined in accordance with
generally accepted accounting principles (excluding amounts spent on
cranberry bog acquisitions to the extent permitted by Section
7.14(f) hereof and excluding up to $1,500,000 of amounts actually
expended by the Company for the purchase and renovation of its
Wisconsin Rapids, Wisconsin office building) in an aggregate amount
in excess of $6,000,000 during any fiscal year of the Company."
2. CONDITIONS PRECEDENT.
The effectiveness of this Amendment is subject to the satisfaction of all
of the following conditions precedent:
(a) The Company and the Bank shall have executed and delivered this
Amendment and the Participants shall have consented to this Amendment in
the space provided for that purpose below.
(b) Minot Food Packers, Inc. ("Minot") shall have executed and
delivered to the Bank a Guaranty of the Company's obligations under the
Credit Agreement which Guaranty shall be in form and substance
satisfactory to the Bank.
(c) The Bank shall have received copies (executed or certified, as
may be appropriate) of all legal documents or proceedings taken in
connection with the execution and delivery of this Amendment and the other
instruments and documents contemplated hereby to the extent the Bank or
its counsel may reasonably request, including without limitation, copies
of resolutions adopted by the board of directors of Minot (certified by
the secretary or assistant secretary of Minot) authorizing the execution
and delivery of its Guaranty.
(d) Legal matters incident to the execution and delivery of this
Amendment and the other instruments and documents contemplated hereby
shall be satisfactory to the Bank and its counsel and the Bank shall have
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received the favorable written opinion of counsel for Minot in form and
substance satisfactory to the Bank.
3. EXISTING DEFAULT AND WAIVER.
The Company acknowledges that it is in default of its obligations under
Section 7.22 of the Credit Agreement by reason of its exceeding the maximum
permitted amount of capital expenditures for its fiscal year ending on or about
August 31, 1998 (the "Existing Default"). Upon the effectiveness of this
Amendment as set forth in Section 2 hereof, the Bank hereby waives the Existing
Default. The foregoing waiver is limited to the matter specifically described
herein.
4. REPRESENTATIONS.
In order to induce the Bank to execute and deliver this Amendment, the
Company hereby represents to the Bank that as of the date hereof, the
representations and warranties set forth in Section 5 of the Credit Agreement
are and shall be and remain true and correct in all material respects (except
that the representations contained in Section 5.3 shall be deemed to refer to
the most recent financial statements of the Company delivered to the Bank) and
no Default (other than the Existing Default) or Event of Default has occurred
and is continuing under the Credit Agreement or shall result after giving effect
to this Amendment.
5. MISCELLANEOUS.
(a) Except as specifically amended herein, the Credit Agreement shall
continue in full force and effect in accordance with its original terms.
Reference to this specific Amendment need not be made in the Credit Agreement,
the Notes, or any other instrument or document executed in connection therewith,
or in any certificate, letter or communication issued or made pursuant to or
with respect to the Credit Agreement, any reference in any of such items to the
Credit Agreement being sufficient to refer to the Credit Agreement as amended
hereby.
(b) The Company agrees to pay on demand all costs and expenses of or
incurred by the Bank in connection with the negotiation, preparation, execution
and delivery of this Amendment, including the fees and expenses of counsel for
the Bank.
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(c) This Amendment may be executed in any number of counterparts, and by
the different parties on different counterpart signature pages, all of which
taken together shall constitute one and the same agreement. Any of the parties
hereto may execute this Amendment by signing any such counterpart and each of
such counterparts shall for all purposes be deemed to be an original. This
Amendment shall be governed by the internal laws of the State of Illinois.
[Signature Pages Follow]
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Dated as of this 30th day of September, 1998.
NORTHLAND CRANBERRIES, INC.
By
Its
Accepted and agreed to in Chicago, Illinois as of the date and year last
above written.
XXXXXX TRUST AND SAVINGS BANK
By
Its Vice President
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Consented and agreed to as of the date and year last above written.
MERCANTILE BANK NATIONAL ASSOCIATION
By
Its
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION
By
Its
FIRSTAR BANK MILWAUKEE, N.A.
By
Its
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By
Its
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