EXECUTION COPY
MIDDLEBY MARSHALL INC.
AND
ASBURY ASSOCIATES, INC.
SIXTH AMENDMENT TO NOTE AGREEMENT AND WAIVER
Note Agreement Dated as of January 1, 1995
$15,000,000 10.99% Senior Secured Notes
Due January 10, 2003
and
Warrant to Purchase Common Stock
THIS SIXTH AMENDMENT TO NOTE AGREEMENT AND WAIVER, dated as of March 31,
1999 (the or this "Sixth Amendment"), relates to the Note Agreement dated as of
January 1, 1995 (as heretofore amended, the "Original Note Agreement"), between
and among Middleby Marshall Inc., a Delaware corporation ("MMI") and Asbury
Associates, Inc., a Florida corporation ("Asbury"), (Asbury and MMI each
hereinafter sometimes individually referred to as an "Obligor" and collectively
as the "Obligors"), and The Northwestern Mutual Life Insurance Company (the
"Noteholder").
RECITALS:
A. The Obligors and the Noteholder have heretofore entered into the
Original Note Agreement, pursuant to which were issued the $15,000,000 10.99%
Senior Notes Due January 10, 2003 (the "Notes ") dated January 10, 1995. The
Noteholder is the holder of 100% of the outstanding principal amount of the
Notes.
B. The Obligors have requested that the Noteholder agree to (i) waive
certain covenant defaults under Sections 5.7(b), 5.8, 5.9(a) and 5.9(b) of the
Original Note Agreement and (ii) amend certain terms of the Original Note
Agreement.
C. Capitalized terms used herein shall have the respective meanings
ascribed thereto in the Original Note Agreement unless herein defined or the
context shall otherwise require.
NOW, THEREFORE, upon the full and complete satisfaction of the conditions
precedent to the effectiveness of this Sixth Amendment set forth in Section 3.1
hereof, and in consideration of good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, the Obligors and the Noteholder do
hereby agree as follows:
SECTION 1. AMENDMENTS.
1.1. Section 5.7(b) of the Original Note Agreement shall be and is hereby
amended in its entirety to read as follows:
(b) the ratio of (1) Consolidated Indebtedness to (2) EBITDA, measured at
the end of each fiscal quarter for the four (4) immediately preceding
fiscal quarters then ended, to exceed the following levels on each
date:
Maximum Level Period Ended
------------- ------------
5.75 April 3, 1999
5.75 July 3, 1999
5.00 October 2, 1999
4.00 January 1, 2000 and thereafter
provided, however, that for purposes of calculating EBITDA for the
preceding four quarters, non-recurring charges taken by MMI in the
third and fourth quarters of 1998 will be excluded from EBITDA; and
provided further, that, for purposes of testing compliance with this
covenant, the term (i) "Consolidated Indebtedness" shall include the
present value of all capital lease obligations of MMI and its
Subsidiaries, determined as of any date the ratio is to be determined,
and (ii) in the event that MMI or any of its Subsidiaries shall have
made an Acquisition involving any Person during any such fiscal
quarter, the term "EBITDA" shall include the allocable earnings before
interest, taxes, depreciation and amortization for the four (4) most
recently completed fiscal quarters of such Person determined in
accordance with GAAP, and, if GAAP is not applicable, determined in a
manner agreed to in writing by the holders of the Notes and MMI.
1.2. Section 5.8 of the Original Note Agreement shall be and is hereby
amended in its entirety to read as follows:
Section 5.8. Consolidated Tangible Net Worth. The Obligors will at all
times keep and maintain Consolidated Tangible Net Worth equal to or greater
than the sum of $24,000,000 plus an amount equal to 50% of Consolidated Net
Income earned during each of its fiscal quarters beginning with its fiscal
quarter commencing on January 3, 1999; provided that notwithstanding that
Consolidated Net income for any such elapsed fiscal quarter may be a
deficit figure, no reduction of the result thereof shall be made in the sum
to be maintained pursuant hereto.
1.3. Section 5.9 of the Original Note Agreement shall be and is hereby
amended in its entirety to read as follows:
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Section 5.9. Fixed Charges Coverage Ratio. (a) The Obligors will at all
times keep and maintain the ratio of Consolidated Net Income Available for
Fixed Charges (CNIAFC) for the immediately preceding four fiscal quarter
period to Consolidated Fixed Charges for the same four quarter period at
not less than:
Minimum Level Period Ended
------------- ------------
.75 April 3, 1999
.75 July 3, 1999
1.00 October 2, 1999
1.50 January 1, 2000
1.75 April 1, 2000 and thereafter
provided, however, that non-recurring charges taken by MMI in the third and
fourth quarters of fiscal 1998 will be excluded when calculating CNIAFC.
(b) The Obligors shall maintain a Consolidated Fixed Charge Coverage Ratio
measured at the end of each fiscal quarter for the four (4)
immediately preceding fiscal quarters then ended at not less than:
Minimum Level Period Ended
------------- ------------
1.00 April 3, 1999
1.00 July 3, 1999
1.00 October 2, 1999
1.00 January 1, 2000
1.25 April 1, 2000 and thereafter
In the event that MMI or any of its Subsidiaries shall have made an
Acquisition involving any Person during such immediate preceding fiscal
quarter, then for purposes of calculating the Consolidated Fixed Charge
Coverage Ratio, Consolidated Net Income shall include the allocable net
income (adjusted as provided in the definition of the term "Consolidated
Fixed Charge Coverage Ratio") of such Person for the four (4) most recently
completed fiscal quarters of such Person determined in accordance with
GAAP, and, if GAAP is not applicable, determined in a manner agreed to in
writing by the holders of the Notes and MMI.
SECTION 2. REPRESENTATIONS AND WARRANTIES.
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2.1. To induce the Noteholder to execute and deliver this Sixth Amendment,
each Obligor represents and warrants to the Noteholder (which representations
shall survive the execution and delivery of this Sixth Amendment) that:
(a) this Sixth Amendment has been duly authorized, executed and delivered
by it and this Sixth Amendment constitutes the legal, valid and
binding obligation, contract and agreement of such Obligor enforceable
against it in accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws or equitable principles relating to or limiting
creditors' rights generally;
(b) the Original Note Agreement, as amended by this Sixth Amendment,
constitutes the legal, valid and binding obligation, contract and
agreement of such Obligor enforceable against it in accordance with
its terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws or equitable
principles relating to or limiting creditors' rights generally;
(c) the execution, delivery and performance by such Obligor of this Sixth
Amendment (i) have been duly authorized by all requisite corporate
action and, if required, shareholder action, (ii) do not require the
consent or approval of any governmental or regulatory body or agency,
and (iii) will not (A) violate (1) any provision of law, statute, rule
or regulation or its certificate of incorporation or bylaws, (2) any
order of any court or any rule, regulation or order of any other
agency or government binding upon it, (B) violate or require any
consent under or with respect to any provision of the Revolving Credit
Agreement or the Revolving Credit Documents or any other material
indenture, agreement or other instrument to which it is a party or by
which its properties or assets are or may be bound, or (C) result in a
breach or constitute (alone or with due notice or lapse of time or
both) a default under any indenture, agreement or other instrument
referred to in clause (iii)(B) of this Section 2.1(c);
(d) as of the date hereof and after giving effect to this Sixth Amendment,
no Default or Event of Default has occurred which is continuing; and
(e) since October 3, 1998 there has been no material adverse change in the
business or financial conditions or prospects of any Obligor.
SECTION 3. CONDITIONS PRECEDENT; MISCELLANEOUS.
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3.1. This Sixth Amendment shall not become effective until each and every
one of the following conditions shall have been satisfied:
(a) executed counterparts of this Sixth Amendment, duly executed by the
Obligors shall have been delivered to the Noteholder;
(b) the Noteholder shall have received an amendment to the Revolving
Credit Agreement providing a waiver comparable to that provided in
Section 3.2 hereof, consenting to this Sixth Amendment and containing
covenant adjustments and other provisions as shall be in form and
substance satisfactory to the Noteholder;
(c) receipt by the Noteholder of an amount equal to 3/8 of 1% of the
outstanding principal balance of the Notes as consideration for the
Noteholder's execution and delivery of this Sixth Amendment; and
(d) the representations and warranties of the Obligors set forth in
Section 2 hereof are true and correct on and with respect to the date
hereof.
Upon satisfaction of the conditions herein, this Sixth Amendment shall be
effective as of the date first written above.
3.2. Upon and by virtue of this Amendment becoming effective as herein
contemplated, the failure of the Obligors to comply with the provisions of
Sections 5.8 (Consolidated Tangible Net Worth) and 5.9(a)(Fixed Charges Coverage
Ratio) of the Original Note Agreement for the period ended October 3, 1998, and
with the provisions of Sections 5.7(b) (Indebtedness Ratio), 5.8 (Consolidated
Tangible Net Worth), 5.9(a) and 5.9(b)(Fixed Charges Coverage Ratio) of the
Original Note Agreement for the period ending January 2, 1999, which failures
constitute a Default or Event of Default under the Original Note Agreement,
shall be deemed to have been waived by the Noteholder.
3.3. The Company understands and agrees that (i) the waiver contained in
Section 3.2 hereof pertains only to the Default or Event of Default therein
described and to the extent so described and not to any other Default or Event
of Default which may exist under, or any other matters arising in connection
with, the Original Note Agreement or the Notes, or to any rights, powers or
remedies that the Noteholder may have by virtue of any such other actions or
matters, and (ii) this Sixth Amendment does not constitute an agreement to
forbear from exercising any rights, powers or remedies the Noteholder may have
with respect to such other Default or Event of Default or other matters.
3.4. This Sixth Amendment shall be construed in connection with and as part
of the Original Note Agreement, and except as modified and expressly amended by
this Sixth Amendment, all terms, conditions and covenants contained in the
Original Note Agreement and the Notes are hereby ratified and shall be and
remain in full force and effect.
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3.5. Any and all notices, requests, certificates and other instruments
executed and delivered after the execution and delivery of this Sixth Amendment
may refer to the Original Note Agreement without making specific reference to
this Sixth Amendment but nevertheless all such references shall include this
Amendment unless the context otherwise requires.
3.6. This Sixth Amendment shall be governed by and construed in accordance
with Illinois law.
3.7. This Sixth Amendment may be executed in any number of counterparts,
each executed counterpart constituting an original, but all together one and the
same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Sixth Amendment
to Note Agreement as of the day and year first above written.
MIDDLEBY MARSHALL INC.
By /s/ John J. Hastings
-------------------------------
Its Executive Vice President
ASBURY ASSOCIATES, INC.
By /s/ John J. Hastings
-------------------------------
Its Vice President
Accepted as of March 31, 1999.
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
By /s/ Richard A. Strait
-------------------------------
Its Authorized Representative
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