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MIDDLEBY MARSHALL INC.
AND
ASBURY ASSOCIATES, INC.
FIRST AMENDMENT TO NOTE AGREEMENT
Dated as of March 1, 1996
Re: Note Agreement Dated as of January 1, 1995
and
$15,000,000 10.99% Senior Secured Notes
Due January 10, 2003
and
Warrant to Purchase Common Stock
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TABLE OF CONTENTS
SECTION HEADING PAGE
SECTION 1. Amendments to the Original Note Agreement 2
Section 1.1. Amendment to Section 5.11 of the Original Note Agreement 2
Section 1.2. Amendment to Section 5.12 of the Original Note Agreement 2
Section 1.3. Amendment to Section 5.14 of the Original Note Agreement 3
Section 1.4. Amendment to Section 5.15 of the Original Note Agreement 3
Section 1.5. Revisions to Section 5.22 of the Original Note Agreement 3
Section 1.6. Amendment to Section 5.22 of the Original Note Agreement 3
Section 1.7. Amendments to Section 8 of the Original Note Agreement 4
SECTION 2. CONDITIONS PRECEDENT 5
SECTION 3. VICTORY COMPANY REORGANIZATION 7
SECTION 4. PHILIPPINE REORGANIZATION 9
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SECTION 5. MIDDLEBY FACTORY SERVICE 12
SECTION 6. TAIWANESE DISTRIBUTION CHANGES 12
SECTION 7. JAPANESE DISTRIBUTION CHANGES 13
SECTION 8. REPRESENTATIONS AND WARRANTIES; ADDITIONAL OBLIGORS 13
SECTION 9. MISCELLANEOUS 14
Section 9.1. Effective Date 14
Section 9.2. Successors and Assigns 14
Section 9.3. Counterparts 14
Section 9.4. Fees and Expenses 14
Section 9.5. No Legend Required 14
Section 9.6. Governing Law 14
Schedule I -- Noteholder Identification
Exhibit A -- Amendment Agreement No. 2 to Intercreditor Agreement
Exhibit B -- Representations and Warranties of the Obligors
Exhibit C -- Form of Parent Support Letter
Exhibit D -- Form of Amended Note
Exhibit E -- Form of Victory Stock Pledge Agreement
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Exhibit F -- Form of Victory International Stock Pledge Agreement
Exhibit G -- Form of Amendment No. 2 to the Security Agreement
Exhibit H -- Form of MPC Guaranty
Exhibit I -- Form of MPC Stock Pledge Agreement
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Middleby Marshall Inc.
First Amendment to Note Agreement
MIDDLEBY MARSHALL INC.
AND
ASBURY ASSOCIATES, INC.
FIRST AMENDMENT TO NOTE AGREEMENT
Re: Note Agreement Dated as of January 1, 1995
and
$15,000,000 10.99% Senior Secured Notes
Due January 10, 2003
and
Warrant to Purchase Common Stock
Dated as of
March 1, l996
The Northwestern Mutual Life Insurance Company
720 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Ladies and Gentlemen:
Reference is made to the Note Agreement dated as of January 1, 1995 (the
"ORIGINAL NOTE AGREEMENT"), between and among Middleby Marshall Inc., a Delaware
corporation ("MMI"), Asbury Associates, Inc., a Florida corporation ("ASBURY";
Asbury and MMI each hereinafter sometimes individually referred to as an
"OBLIGOR" and collectively as the "ORIGINAL OBLIGORS"), and you, under and
pursuant to which $15,000,000 aggregate principal amount of Senior Notes Due
January 10, 2003 (the "NOTES") were originally issued. Capitalized terms not
otherwise defined herein shall have the respective meanings assigned thereto in
the Original Note Agreement.
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The Original Obligors desire to undertake the following, namely, (i) the
transfer of assets at the Victory Refrigeration Plant owned and operated by MMI
to Victory Refrigeration Company ("VICTORY"), a Delaware corporation and a
Wholly-owned Subsidiary of Victory International, Inc. ("VICTORY
INTERNATIONAL"), a Wholly-owned Subsidiary of MMI (the "VICTORY REORGANIZATION")
(each of Victory and Victory International being hereinafter sometimes
individually also referred to as an "OBLIGOR" and collectively with the Original
Obligors as the "OBLIGORS"), (ii) the reorganization of the ownership of MMI's
Philippine operations in a manner other than that contemplated by Section
5.22(A) of the Original Note Agreement (the "PHILIPPINE REORGANIZATION"), (iii)
the undertaking of certain operations in Florida and other states under the
tradename "Middleby Factory Service Company" (the "FACTORY SERVICE TRADENAME
CHANGES"), (iv) the organization of a Subsidiary under Japanese law to act as a
distributor of products in Japan, not less than 51% of the stock of which
Subsidiary shall be owned by MMI (the "JAPANESE DISTRIBUTION CHANGES"), and (v)
the organization of a Subsidiary under Taiwanese law to act as a distributor of
products in Taiwan, not less than 80% of the stock of which Subsidiary shall be
owned by MMI (the "TAIWANESE DISTRIBUTION CHANGES"). The Victory
Reorganization, the Philippine Reorganization, the Factory Service Tradename
Changes, the Japanese Distribution Changes and the Taiwanese Distribution
Changes are hereinafter collectively referred to as the "1996 CHANGES."
Pursuant to Section 7 of the Note Agreement, the holders of at least 51% in
aggregate principal amount of the outstanding Notes must consent to any
amendments of the Note Agreement or the Security Documents in connection with
the Obligors' accomplishing the 1996 Changes. Since you are the holder of 100%
in aggregate principal amount of the outstanding Notes, the Obligors hereby
request that you accept the amendments set forth below. On the Effective Date
(as hereinafter defined) this instrument shall
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constitute an agreement which amends and restates the Note Agreement in the
respects hereinafter set forth.
SECTION 1. AMENDMENTS TO THE ORIGINAL NOTE AGREEMENT.
SECTION 1.1. AMENDMENT TO SECTION 5.11 OF THE ORIGINAL NOTE AGREEMENT.
Section 5.11(a) of the Original Note Agreement shall be, and is hereby, amended
by deleting the period at the end of clause (9) thereof and replacing it with ";
and" and by adding a clause (10) thereto to read as follows:
(10) Indebtedness of MPC, FAB-Asia, the Japanese Subsidiary or the
Taiwanese Subsidiary PROVIDED that (i) FAB-Asia shall have no
Indebtedness except mortgage Indebtedness in an amount not to exceed
$500,000 outstanding on the Effective Date, (ii) no such Indebtedness
shall be secured by any Lien upon property or assets of any Obligor or
any other Subsidiary, and (iii) no Obligor or other Subsidiary shall
be liable with respect to such Indebtedness except to the extent that
any Guaranty by the Obligors of obligations incurred by, together with
the Investment of the Obligors or any other Subsidiary in and to, (x)
FAB-Asia or MPC shall not exceed $2,200,000 in the aggregate in U.S.
dollars at any time, (y) the Japanese Subsidiary shall not exceed
$600,000 in U.S. dollars at any time or (z) the Taiwanese Subsidiary
shall not exceed $200,000 in U.S. dollars at any time.
SECTION 1.2. AMENDMENT TO SECTION 5.12 OF THE ORIGINAL NOTE AGREEMENT.
Section 5.12 of the Original Note Agreement shall be, and is hereby, amended by
deleting the period at the end of clause
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(m) thereof and replacing it with "; and" and by adding a clause (n) thereto to
read as follows:
(n) Liens securing Indebtedness of MPC, FAB-Asia, the Japanese
Subsidiary or the Taiwanese Subsidiary, in each case incurred in
compliance with the applicable limitations set forth in Section
5.11(a)(10).
SECTION 1.3. AMENDMENT TO SECTION 5.14 OF THE ORIGINAL NOTE AGREEMENT.
Section 5.14 of the Original Note Agreement shall be, and is hereby, amended by
revising clause (a) thereof to read as follows:
(a) Investment by the Obligors and their respective Subsidiaries in
and to Subsidiaries, including any Investment in a corporation which,
after giving effect to such Investment, will become a Subsidiary of an
Obligor or one of its Wholly-owned Subsidiaries; PROVIDED that in no
event shall the Investment of the Obligors in and to, together with
any Guaranty by the Obligors of obligations incurred by, (i) FAB-Asia
or MPC exceed $2,200,000 in the aggregate in U.S. dollars at any time,
or (ii) the Japanese Subsidiary exceed $600,000 in U.S. dollars at any
time, or (iii) the Taiwanese Subsidiary exceed $200,000 in U.S.
dollars at any time; PROVIDED FURTHER, that in each case the
Investments described in clause (i), (ii) and (iii) above shall be
limited to the amounts set forth above without regard to whether the
Obligors would otherwise be permitted to make a greater Investment in
FAB-Asia, MPC, the Japanese Subsidiary or the Taiwanese
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Subsidiary within the limitations of clause (k) of this Section 5.14;
SECTION 1.4. AMENDMENT TO SECTION 5.15 OF THE ORIGINAL NOTE AGREEMENT.
Section 5.15(b) of the Original Note Agreement shall be, and is hereby, amended
by revising clause (1) thereof to read as follows:
(1) (x) the sale, lease, transfer or other disposition of assets of a
Subsidiary of MMI to MMI or a Wholly-owned Subsidiary of MMI and (y)
the transfer on December 29, 1995 of all tangible assets of MMI
located in the State of New Jersey to Victory; or
SECTION 1.5. REVISIONS TO SECTION 5.22 OF THE ORIGINAL NOTE AGREEMENT.
The documents and procedures set forth in Section 4 hereof with respect to the
Philippine Reorganization shall supersede the comparable provisions of Section
5.22(a) of the Original Note Agreement and fulfillment of the conditions set
forth in Section 4 hereof shall be deemed to constitute compliance with the
provisions of Section 5.22(a) of the Original Note Agreement.
SECTION 1.6. AMENDMENT TO SECTION 5.22 OF THE ORIGINAL NOTE AGREEMENT.
Section 5.22 of the Original Note Agreement shall be, and is hereby, amended by
revising clause (d) thereof to read as follows:
(d) MMI shall at all times, directly or indirectly, own not less than
(i) 51% of the issued and outstanding capital stock (and any
Securities convertible at any time and from time to time into the
capital stock) of the Japanese Subsidiary and of its Subsidiaries,
(ii) 40% of the outstanding capital stock (and any Securities
convertible at any time and from time to time into the capital stock)
of
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FAB-Asia and its Subsidiaries, (iii) 80% of the issued and outstanding
capital stock (and any Securities convertible at any time and from
time to time into the capital stock) of Asbury, MPC and the Taiwanese
Subsidiary and their respective Subsidiaries and (iv) 100% of the
issued and outstanding capital stock of each other Subsidiary, in each
case free and clear of all Liens, other than the Liens permitted by
Section 5.12(f) and (g) and in each case, other than directors'
qualifying shares.
Section 5.22 of the Original Note Agreement shall be, and is hereby, further
amended by adding thereto clause (e) to read as follows:
(e) MMI will not, and will not permit any of its Subsidiaries to,
enter into any agreement which would restrict any Subsidiary's ability
or right to pay dividends to, or make advances to or Investments in,
MMI or, if such Subsidiary is not directly owned by MMI, the "parent"
Subsidiary of such Subsidiary.
Section 5.22 of the Original Note Agreement shall be, and is hereby, further
amended by revising clause (c) thereof to read as follows:
(c) The Obligors will cause each of their respective Subsidiaries
which becomes a Subsidiary (other than the Japanese Subsidiary and the
Taiwanese Subsidiary) after the Closing Date to become a party to a
Subsidiary Guaranty within ten Business Days thereafter and to deliver
an opinion of counsel in form and substance satisfactory to the
holders of
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at least 51% in aggregate principal amount of outstanding Notes to the
effect set forth in clause (iv) of Section 5.22(a)(2) with respect to
such Subsidiary.
SECTION 1.7. AMENDMENTS TO SECTION 8 OF THE ORIGINAL NOTE AGREEMENT.
Section 8.1 of the Original Note Agreement shall be, and is hereby, amended by
adding thereto the following definitions:
"FINANCE COMPANY LOAN AGREEMENT" shall mean that certain Loan and
Security Agreement dated as of January 9, 1995 as amended March 28, 1996
among the Obligors, Sanwa Business Credit Corporation, as agent and lender,
and the Finance Company Lenders named therein.
"JAPANESE SUBSIDIARY" shall mean a Subsidiary yet to be created which
will be a corporation duly organized under the laws of Japan, and any
Person who succeeds to all, or substantially all, of the assets of such
Subsidiary.
"MPC" shall mean Middleby Philippines Corporation, a Republic of the
Philippines corporation, and any Person who succeeds to all, or
substantially all, of the assets and business of Middleby Philippines
Corporation.
"OBLIGORS" shall mean Asbury, MMI, Victory and Victory International.
"SECURITY DOCUMENTS" shall have the meaning assigned thereto in
Section 1.4 and shall also include each and every Subsidiary Guaranty and
Additional Pledge Agreement delivered pursuant to this Note Agreement and
shall include the Victory International Security Documents and the Victory
Security Documents.
"SUBSIDIARY GUARANTOR" shall mean MPC and each other Subsidiary of any
of the Obligors which becomes a party to any Subsidiary Guaranty delivered
pursuant to this Note Agreement.
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"TAIWANESE SUBSIDIARY" shall mean a Subsidiary yet to be created which
will be a corporation duly organized under the laws of Taiwan, and any
Person who succeeds to all, or substantially all, of the assets and
business of such Subsidiary.
"VICTORY" shall mean Victory Refrigeration Company, a Delaware
corporation, and any Person who succeeds to all, or substantially all, of
the assets and business of Victory Refrigeration Company.
"VICTORY INTERNATIONAL" shall mean Victory International, Inc., a
Delaware corporation and parent corporation of Victory, and any Person who
succeeds to all, or substantially all, of the assets and business of
Victory International, Inc.
"VICTORY INTERNATIONAL SECURITY DOCUMENTS" shall mean, collectively,
the Victory Stock Pledge Agreement and Amendment No. 2 to the Security
Agreement.
"VICTORY SECURITY DOCUMENTS" shall mean, collectively, the Amendment
No. 2 to the Security Agreement and the Victory Assumption of Mortgage.
SECTION 2. CONDITIONS PRECEDENT.
The effectiveness and validity of this Amendment to the Note Agreement is
subject to the satisfaction of the following conditions precedent:
(a) The Holders of the Notes shall have received the following, all
of which must be satisfactory in form and substance to such Holders:
(i) this First Amendment to Note Agreement and the Amended Note,
each duly executed by the Obligors;
(ii) an opinion of D'Ancona & Pflaum, special counsel to the
Obligors, to the effect that: (A) this First Amendment to Note
Agreement and the Amended Note
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have been duly authorized by all necessary corporate action on the
part of the Obligors, has been duly executed and delivered by the
Obligors and constitutes the legal, valid and binding contract of the
Obligors enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent conveyance or similar laws
affecting creditors' rights generally, and general principles of
equity (regardless of whether the application of such principles is
considered in a proceeding in equity or at law); (B) no approval,
consent or withholding of objection on the part of, or filing or
registration or qualification with, any governmental body, Federal,
state or local, is necessary in connection with the execution,
delivery and performance of this First Amendment to Note Agreement,
the Amended Note or any other agreements being delivered by the
Obligors in connection with the 1996 Changes; (C) the execution,
delivery and performance by the Obligors of this First Amendment to
Note Agreement, the Amended Note or any other agreement being
delivered in connection with the 1996 Changes do not conflict with or
result in the breach of any of the provisions of, or constitute a
default under or result in the creation or imposition of any Lien upon
any property of the Obligors pursuant to the Articles of Incorporation
or By-laws of the Obligors or any agreement, license or other
instrument known to such counsel to which either of the Obligors is a
party or by which either of such Obligors may be bound; and such
opinion shall cover such other matters relating to this First
Amendment to Note Agreement, the Amended Note and the 1996 Changes as
the Holders of the Notes may reasonably request.
(b) This First Amendment to Note Agreement shall have
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been executed and delivered by the Holders of all outstanding Notes.
(c) The Obligors shall have entered into amendments to the
Finance Company Loan Agreement in connection with the 1996 Changes.
(d) Amendment Agreement No. 2 to the Intercreditor Agreement in
the form of Exhibit A hereto shall have been executed and delivered by
the parties thereto.
(e) With respect to the Victory Reorganization, those contracts,
agreements, certificates and showings described in Section 3 hereof,
each of which will be in form and substance satisfactory to you and
your special counsel, shall have been delivered.
(f) With respect to the Philippine Reorganization, those
contracts, agreements, certificates and showings described in Section
4 hereof, each of which will be in form and substance satisfactory to
you and your special counsel, shall have been delivered.
(g) With respect to the Factory Service Tradename Changes, those
agreements and showings described in Section 5 hereof, each of which
will be in form and substance satisfactory to you and your special
counsel, shall have been delivered.
(h) The Parent Corporation shall have delivered its consent to
the 1996 Changes and reaffirmed its obligations under the Support
Agreement, by its execution and delivery of the Parent Support Letter
in the form of Exhibit C hereto.
SECTION 3. VICTORY COMPANY REORGANIZATION.
Prior to or simultaneously with the execution and delivery of this First
Amendment to Note Agreement, the Original Obligors shall have delivered, or
shall have caused Victory and Victory
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International, as the case may be, to deliver, the following:
(i) a Note delivered by the Obligors, in the form of Exhibit D hereto
(the "AMENDED NOTE") in exchange for the Note delivered on the initial
Closing Date;
(ii) a Stock Pledge Agreement between Victory International, as
pledgor and debtor, and First Security Bank of Utah, National Association
(the "SECURITY TRUSTEE"), as pledgee and secured party, in the form of
Exhibit E hereto, providing for the pledge and grant of a first and
perfected security interest in all the capital stock of Victory owned by
Victory International (the "VICTORY STOCK PLEDGE AGREEMENT"), as additional
security for the payment of the Notes and the performance of the
obligations of the Obligors under the Note Agreement and as additional
security for the payment of the Finance Company Indebtedness and
performance of the obligations of the Obligors under the Finance Company
Loan Agreement, all on an equal and PRO RATA basis, together with an
opinion of counsel to Victory International in form and substance
satisfactory to the Holders of the Notes covering the matters set forth in
Section 5.22(a)(3)(vi) of the Original Note Agreement, except that such
opinion shall be with respect to the Victory Pledge Agreement;
(iii) a Stock Pledge Agreement between MMI, as pledgor and debtor,
and the Security Trustee, as pledgee and secured party, in the form of
Exhibit F hereto, providing for a pledge and grant of a first and perfected
security interest in all the capital stock of Victory International owned
by MMI (the "VICTORY INTERNATIONAL STOCK PLEDGE AGREEMENT"), as additional
security for the payment of the Notes and the performance of the
obligations of the Obligors under the Note Agreement and as additional
security for the payment of the Finance Company Indebtedness and
performance of the obligations of the Obligors under the Finance Company
Loan Agreement, all on an
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equal and PRO RATA basis, together with an opinion of counsel to MMI in
form and substance satisfactory to the Holders of the Notes covering the
matters set forth in Section 5.22(a)(3)(vi) of the Original Note Agreement,
except that such opinion shall be with respect to the Victory International
Stock Pledge Agreement;
(iv) Amendment No. 2 to the Security Agreement dated as of the date
hereof pursuant to which Victory and Victory International, as debtors,
shall become parties to the Security Agreement, in the form of Exhibit G
hereto, and providing for the grant of a second and perfected security
interest in all property and assets of Victory and Victory International
(the "AMENDMENT NO. 2 TO THE SECURITY AGREEMENT"), subject thereto as
additional security for the payment of the Notes and the performance of
the obligations of the Obligors under the Note Agreement;
(v) the Victory Security Documents (and/or financing statements or
similar notices thereof if and to the extent permitted by applicable law)
shall have been recorded or filed for record in such public offices as
deemed necessary by the Holders of the Notes and their special counsel in
order to perfect the Lien and security interest granted or conveyed
thereby;
(vi) the Victory International Security Documents (and/or financing
statements or similar notices thereof if and to the extent permitted by
applicable law) shall have been recorded or filed for record in such public
offices as deemed necessary by the Holders of the Notes and their special
counsel in order to perfect the lien and security interest granted or
conveyed thereby;
(vii) an Assumption of Mortgage delivered by Victory (the "VICTORY
ASSUMPTION OF MORTGAGE") with respect to the Mortgage
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executed and delivered by MMI on the initial Closing Date with respect to
those properties of MMI then located in the State of New Jersey;
(viii) such documents and evidence with respect to Victory as the
Holders of the Notes may reasonably request in order to establish the
existence and good standing of Victory and the authorization of the
transactions contemplated by the Victory Reorganization and this First
Amendment to Note Agreement;
(ix) such documents and evidence with respect to Victory International
as the Holders of the Notes may reasonably request in order to establish
the existence in good standing of Victory International and the
authorization of the transactions contemplated by the Victory
Reorganization and this First Amendment to Note Agreement;
(x) an opinion of counsel to Victory in form and substance
satisfactory to the Holders of the Notes to the effect that: (A) Victory
is a corporation validly existing and in good standing under the laws of
the State of Delaware and has the corporate power and the corporate
authority to become an Obligor under the Note Agreement and the Notes and
to execute and deliver this First Amendment to Note Agreement, the Notes
and the Victory Security Documents (collectively, the "VICTORY
AGREEMENTS"), (B) the Victory Agreements have been duly authorized by all
necessary corporate action on the part of Victory, have been duly executed
and delivered by Victory and constitute the legal, valid and binding
contracts of Victory enforceable in accordance with their respective terms,
(C) no approval, consent or withholding of objection on the part of, or
filing, registration or qualification with any governmental,
quasi-governmental or judicial body is necessary in connection with the
execution, delivery and performance of the Victory Agreements by Victory,
(D) the execution, delivery and performance by Victory of the Victory
Agreements do not
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conflict with or result in any breach in any of the provisions of or
constitute a default under or result in the creation or imposition of any
Lien upon any property of Victory pursuant to the provisions of the charter
or by-laws of Victory or any law, agreement, license or instrument to which
Victory is a party or by which Victory may be bound, and (E) there is no
litigation pending or threatened which could reasonably be expected to
materially and adversely affect the properties, business, prospects,
profits or condition (financial or otherwise) of Victory or the ability of
Victory to perform its obligations under the Victory Agreements; and
(xi) an opinion of counsel to Victory International in form and
substance satisfactory to the Holders of the Notes to the effect that (A)
Victory International is a corporation validly existing and in good
standing under the laws of the State of Delaware and has the corporate
power and authority to become an Obligor under the Note Agreement and the
Notes and to execute and deliver this First Amendment to Note Agreement,
the Notes and the Victory International Security Documents (collectively,
the "VICTORY INTERNATIONAL AGREEMENTS"), (B) the Victory International
Agreements have been duly authorized by all necessary corporate action on
the part of Victory International, have been duly executed and delivered by
Victory International and constitute the legal, valid and binding contracts
of Victory International enforceable in accordance with their respective
terms, (C) no approval, consent to withholding of objections on the part
of, or filing, registration or qualification with any governmental,
quasi-governmental or judicial body is necessary in connection with the
execution, delivery and performance of the Victory International Agreements
by Victory International, (D) the execution, delivery and performance by
Victory International of the Victory International Agreements do not
conflict with
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or result in any breach of any of the provisions of or constitute a default
under or result in the creation or imposition of any Lien upon any property
of Victory International pursuant to the provisions of the charter or
by-laws of Victory International or any law, agreement, license or
instrument to which Victory International is a party or by which Victory
International may be bound, and (E) there is no litigation pending or
threatened which could reasonably be expected to materially and adversely
affect the properties, business, prospects, profits or conditions
(financial or otherwise) of Victory International or the ability of Victory
International to perform its obligations under the Victory International
Agreements.
SECTION 4. PHILIPPINE REORGANIZATION.
Prior to or simultaneously with the execution and delivery of this First
Amendment to Note Agreement, the Obligors shall have delivered, or shall have
caused FAB-Asia or MPC, as the case may be to deliver, the following:
(i) representations by the Obligors to the following effect:
(a) MMI owns and controls either directly or indirectly not less
than 40% of the capital stock (and any securities convertible at any
time and from time to time into capital stock) of FAB-Asia; Elizabeth
Asbury owns the remaining 60% of such capital stock, as required by
Philippine law; MMI holds options to purchase two-thirds of the stock
held by Elizabeth Asbury;
(b) MMI owns and controls directly or indirectly not less than
80% of the issued and outstanding capital stock (and any securities
convertible at any time and from time to time into capital stock) of
MPC (other than directors' qualifying shares); the remaining 20% of
such
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capital stock is owned and controlled by O. Neal Asbury;
(c) FAB-Asia is a holding company whose principal function is to
hold title to the land on which a new manufacturing facility is being
built for the MPC operations in the Philippines;
(d) FAB-Asia will lease the land upon which the manufacturing
operations are located to MPC; such ground lease remains in effect
until after January 10, 2003, the maturity date of the Notes;
(e) MMI has capitalized MPC and FAB-Asia in the aggregate amount
of approximately U.S. $2,200,000;
(f) MPC has substantially completed construction of the new
manufacturing facility located on the land it has leased from
FAB-Asia; such facility is usable for the purposes for which it was
constructed; and the office portion of the facility is scheduled to be
completed in April 1996;
(g) FAB-Asia has transferred all of its assets (other than (i)
the land on which the manufacturing facility is located, (ii) certain
equipment having a value of $160,000 which equipment FAB-Asia has
agreed to transfer to MPC not later than July 1, 1996 and (iii)
non-transferable tax credits, withholding taxes and organizational
costs of $90,000) and liabilities (other than the mortgage debt of
$500,000 relating to the purchase of the land) to MPC;
(h) PCI Bank has consented to the assumption by MPC of
FAB-Asia's existing mortgage loan from PCI Bank and the documentation
between PCI Bank, MPC and FAB-Asia provides that MPC shall be the
borrower thereunder; no additional approval, consent, or withholding
of objection from PCI Bank or any other Person is necessary to confirm
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that the credit line between PCI Bank and FAB-Asia is available at all
times to MPC;
(i) MPC is authorized to guaranty all outstanding indebtedness
of the Obligors, including the Notes; and
(j) The Philippine Board of Investments (the "BOI") has approved
MPC's application for tax incentives; the BOI has not been asked to
approve, nor is approval by BOI required for, the transfer of assets
from FAB-Asia to MPC;
(ii) a Subsidiary Guaranty from MPC (the "MPC GUARANTY") in form and
substance satisfactory to the Holders of the Notes and their special
counsel in the form of Exhibit H hereto;
(iii) such documents and evidence with respect to MPC and FAB-Asia as
the Holders of the Notes and their special counsel shall have requested in
order to establish the existence and good standing of MPC and FAB-Asia,
respectively;
(iv) a Stock Pledge Agreement between MMI, as pledgor and debtor,
and the Security Trustee, as pledgee and secured party, in the form of
Exhibit I hereto providing for the pledge and grant of a first and
perfected security interest in all the capital stock of MPC held by MMI
(the "MPC STOCK PLEDGE AGREEMENT"), as additional security for the payment
of the Notes and the performance of the obligations of the Obligors under
the Note Agreement and as additional security for the payment of the
Finance Company Indebtedness and performance of the obligations of the
Obligors under the Finance Company Loan Agreement, all on an equal and PRO
RATA basis, together with an opinion of counsel to MMI in form and
substance satisfactory to the Holders of the Notes covering the matters set
forth in Section 5.22(a)(vi) of the Note Agreement, except such opinion
shall be with respect to the MPC Stock Pledge Agreement;
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(v) an opinion of counsel to MPC in form and substance satisfactory
to the Holders of the Notes and their special counsel to the effect that
(A) MPC is a corporation validly existing and in good standing under the
laws of the Republic of the Philippines and has the corporate power and the
corporate authority to execute and deliver the MPC Guaranty, (B) the MPC
Guaranty has been duly authorized by all necessary corporate action on the
part of MPC, has been duly executed and delivered by MPC and constitutes
the legal, valid and binding contracts of MPC enforceable in accordance
with its terms, (C) no approval, consent or withholding of objection on the
part of, or filing, registration or qualification with any foreign or U.S.
governmental, quasi-governmental or judicial body is necessary in
connection with the execution, delivery and performance of the MPC Guaranty
by MPC, (D) the execution, delivery and performance by MPC of the MPC
Guaranty do not conflict with or result in any breach in any of the
provisions of or constitute a default under or result in the creation or
imposition of any Lien upon any property of MPC pursuant to the provisions
of the charter or by-laws of MPC or any law, agreement, license or
instrument to which MPC is a party or by which MPC may be bound, and (E)
there is no litigation pending or threatened which could reasonably be
expected to materially and adversely affect the properties, business,
prospects, profits or condition (financial or otherwise) of MPC or the
ability of MPC to perform its obligations under the MPC Guaranty; and
(vi) a copy of the approval of the BOI to MPC's application for tax
incentives, together an opinion of counsel to MPC to the effect that no
approval, consent or withholding of objection on the part of, or filing,
registration or qualification with, any Philippine governmental,
quasi-governmental or judicial body is necessary in connection
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with the transfer of assets from FAB-Asia to MPC.
SECTION 5. MIDDLEBY FACTORY SERVICE.
Prior to or simultaneously with the execution and delivery of this First
Amendment to Note Agreement, MMI shall have entered into amendments to the
Security Agreement Re: Patents and Trademarks so as to cause the tradename
"Middleby Factory Service Company" to be subject thereto and thereby provide for
the grant of a first and perfected security interest in the assumed name
"Middleby Factory Service Company", as security for the payment of the Notes and
the performance of the obligations of the Obligors under the Note Agreement.
SECTION 6. TAIWANESE DISTRIBUTION CHANGES.
In the event MMI shall determine to conduct any operations in Taiwan, it
shall conduct such operations through the Taiwanese Subsidiary and, in
connection therewith, before beginning any significant operations in Taiwan, the
Obligors shall have delivered, or shall have caused the Taiwanese Subsidiary to
deliver, the following:
(i) representations by the Obligors to the following effect:
(a) MMI owns and controls either directly or indirectly not
less than 80% of the capital stock (and any securities convertible at
any time and from time to time into capital stock) of the Taiwanese
Subsidiary; and
(b) MMI has capitalized the Taiwanese Subsidiary in an
amount not to exceed U.S. $200,000;
(ii) such documents and evidence with respect to the Taiwanese
Subsidiary as the Holders of the Notes and their special counsel shall have
requested in order to establish the existence and good standing of the
Taiwanese Subsidiary; and
(iii) a Stock Pledge Agreement between MMI, as pledgor and
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debtor, and the Security Trustee, as pledgee and secured party, in a form
comparable to the MPC Stock Pledge Agreement providing for the pledge and
grant of a first and perfected security interest in all the capital stock
of the Taiwanese Subsidiary (the "TAIWANESE SUBSIDIARY STOCK PLEDGE
AGREEMENT") held by MMI, as additional security for the payment of the
Notes and the performance of the obligations of the Obligors under the Note
Agreement and as additional security for the payment of the Finance Company
Indebtedness and performance of the obligations of the Obligors under the
Finance Company Loan Agreement, all on an equal and PRO RATA basis.
SECTION 7. JAPANESE DISTRIBUTION CHANGES.
In the event MMI shall determine to conduct any operations in Japan, it
shall conduct such operations through the Japanese Subsidiary and in connection
therewith before beginning any significant operations in Japan, the Obligor
shall have delivered, or shall have caused the Japanese Subsidiary to deliver,
the following:
(i) a representation by the Obligors to the following effect:
(a) MMI owns and controls either directly or indirectly not
less than 51% of the capital stock (and any security convertible at
any time and from time to time into capital stock) of the Japanese
Subsidiary; and
(b) MMI has capitalized the Japanese Subsidiary in an
amount not to exceed U.S. $600,000;
(ii) such documents and evidence with respect to the Japanese
Subsidiary as the Holders of the Notes and their special counsel shall have
requested in order to establish the existence and good standing of the
Japanese Subsidiary;
(iii) a Stock Pledge Agreement between MMI, as pledgor and debtor,
and the Security Trustee, as pledgee and secured
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party, in a form comparable to the MPC Stock Pledge Agreement providing for
the pledge and grant of a first and perfected security interest in all the
capital stock of the Japanese Subsidiary (the "JAPANESE SUBSIDIARY STOCK
PLEDGE AGREEMENT") held by MMI, as additional security for the payment of
the Notes and the performance of the obligations of the Obligors under the
Note Agreement and as additional security for the payment of the Finance
Company Indebtedness and performance of the obligations of the Obligors
under the Finance Company Loan Agreement, all on an equal and PRO RATA
basis.
SECTION 8. REPRESENTATIONS AND WARRANTIES; ADDITIONAL OBLIGORS.
The Obligors represent and warrant that all representations and warranties
set forth in Exhibit B to this First Amendment to Note Agreement, and those
representations and warranties set forth in Section 4 herein, are true and
correct as of the date hereof and are incorporated herein by reference with the
same force and effect as though herein set forth in full.
By the execution and delivery of this First Amendment to Note Agreement,
each of Victory and Victory International agrees and affirms that it shall be
deemed to be an "Obligor" for all purposes of the Note Agreement, the Notes and
the Security Documents.
By its execution and delivery of this First Amendment to the Note
Agreement, each of the Original Obligors agrees and affirms that each of MPC,
FAB-Asia, the Japanese Subsidiary and the Taiwanese Subsidiary shall be deemed
to constitute Subsidiaries for all purposes of the Note Agreement and all
Indebtedness and other obligations of such Subsidiary shall in all events be
subject to the provisions of the Note Agreement.
SECTION 9. MISCELLANEOUS.
SECTION 9.1. EFFECTIVE DATE; RATIFICATION. The amendments contemplated
by this First Amendment to Note Agreement shall be effective as of the date (the
"EFFECTIVE DATE") upon which (a) all
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conditions set forth in Section 2 hereof have been satisfied, (b) the Holder of
the Notes shall have received a copy of the agreements entered into by the
Obligors with the Finance Company Lenders with respect to the 1996 Changes, and
(c) the fees and expenses of Chapman and Cutler shall have been paid by the
Obligors. Except as amended herein, the terms and provisions of the Original
Note Agreement are hereby ratified, confirmed and approved in all respects.
SECTION 9.2. SUCCESSORS AND ASSIGNS. This First Amendment to Note
Agreement shall be binding upon the Obligors and their respective successors and
assigns and shall inure to the benefit of the Holders and to the benefit of
their successors and assigns, including each successive holder or holders of any
Notes.
SECTION 9.3. COUNTERPARTS. This First Amendment to Note Agreement may be
executed in any number of counterparts, each executed counterpart constituting
an original but all together one and the same instrument.
SECTION 9.4. FEES AND EXPENSES. Whether or not the Effective Date
occurs, the Company agrees to pay all reasonable fees and expenses of the
Holders and special counsel to the holders in connection with the preparation of
this First Amendment to Note Agreement.
SECTION 9.5. NO LEGEND REQUIRED. Any and all notices, requests,
certificates and other instruments may refer to the Original Note Agreement or
the Note Agreement dated as of January 1, 1995 without making specific reference
to this First Amendment to Note Agreement, but nevertheless all such references
shall be deemed to include this First Amendment to Note Agreement unless the
context shall otherwise require.
SECTION 9.6. GOVERNING LAW. This First Amendment to Note Agreement shall
be deemed contracts and instruments made under the laws of the State of
Illinois.
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IN WITNESS WHEREOF, the parties hereto have executed this First Amendment
to Note Agreement as of the day and year first above written.
MIDDLEBY MARSHALL INC.
By
Its Executive Vice President
ASBURY ASSOCIATES, INC.
By
Its Vice President
VICTORY REFRIGERATION COMPANY
By
Its Vice President
VICTORY INTERNATIONAL, INC.
By
Its Vice President
Accepted as of , 1996.
-----------
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
By
Its
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SCHEDULE I
PRINCIPAL AMOUNT OF
NAME OF NOTEHOLDER NOTES OUTSTANDING
The Northwestern Mutual Life Insurance Company $15,000,000
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REPRESENTATIONS AND WARRANTIES
Each Obligor represents and warrants to the Holder of the Notes as follows:
1. CORPORATE ORGANIZATION AND AUTHORITY. Each Obligor, and each
Subsidiary, is a corporation or partnership, as the case may be, duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization.
2. TRANSACTION IS LEGAL AND AUTHORIZED. The execution, delivery and
performance of the First Amendment to Note Agreement and the Amended Notes and
the transactions contemplated by the 1996 Changes and compliance by each Obligor
with all of the provisions of the First Amendment to Note Agreement and any
agreement contemplated by the 1996 Changes:
(a) are within the corporate powers of each Obligor;
(b) will not violate any provisions of any law or any order of any
court or governmental authority or agency and will not conflict with or
result in any breach of any of the terms, conditions or provisions of, or
constitute a default under the Certificate of Incorporation or By-laws of
any Obligor or any indenture or other agreement or instrument to which any
such Obligor is a party or by which it may be bound or result in the
imposition of any Liens or encumbrances on any property of any Obligor; and
(c) have been duly authorized by proper corporate action on the part
of each Obligor (no action by the stockholders of any Obligor being
required by law, by the Certificate of Incorporation or By-laws of any
Obligor or otherwise), executed and delivered by each Obligor and the First
Amendment to Note Agreement constitutes the legal, valid and binding
obligation, contract and agreement of each Obligor enforceable in
accordance with its terms, subject to bankruptcy,
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insolvency, fraudulent conveyance or similar laws affecting creditors'
rights generally, and general principles of equity (regardless of whether
the application of such principles is considered in a proceeding in equity
or at law).
3. NO DEFAULTS. No Default or Event of Default (as defined in the
Original Note Agreement) has occurred and is continuing. No Obligor is in
default in the payment of principal or interest on any Debt or is in default
under any instrument or instruments or agreements under and subject to which any
Debt has been issued, and no event has occurred and is continuing under the
provisions of any such instrument or agreement which with the lapse of time or
the giving of notice, or both, would constitute an event of default thereunder.
4. GOVERNMENTAL CONSENT. No approval, consent or withholding of
objection on the part of any regulatory body, state, Federal or local, is
necessary in connection with the execution and delivery by any Obligor of the
First Amendment to Note Agreement or the Notes or compliance by any Obligor with
any of the provisions of the First Amendment to Note Agreement or the Notes or
any of the agreements entered into in connection with the 1996 Changes.
5. Neither Victory nor Victory International owns or possesses any
patents, trademarks, tradenames, service marks, copyrights, trademarks or
trademark licenses. No patent, trademark, tradename, service mark, copyright,
trademark or trademark license is necessary for the present and planned future
conduct of the business of Victory or Victory International, except such
intellectual property as is currently owned or possessed by MMI. Neither
Victory nor Victory International will own or possess any intellectual property
unless it shall have subjected such property to the lien of a Patent and
Trademark Security Agreement and a Related Patent and Trademark Security
Agreement comparable to those executed and delivered by the Original Obligors on
the original Closing Date and shall have delivered such other
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documents, filings and showings in connection therewith as shall be deemed
reasonably necessary by the Noteholders and their special counsel.
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MIDDLEBY MARSHALL INC.
AND
ASBURY ASSOCIATES, INC.
10.99% Senior Secured Note
DUE JANUARY 10, 2003
PPN 59628# AA 2
NO. ____________, ____
$
MIDDLEBY MARSHALL INC., a Delaware corporation, ASBURY ASSOCIATES, INC., a
Florida corporation, VICTORY REFRIGERATION COMPANY, a Delaware corporation, and
VICTORY INTERNATIONAL, INC., a Delaware corporation (each an "OBLIGOR" and
collectively the "OBLIGORS") jointly and severally, for value received, hereby
promise to pay to
or registered assigns
on the tenth day of January, 2003
the principal amount of
DOLLARS ($ )
and to pay interest (computed on the basis of a 360-day year of twelve 30-day
months) on the principal amount from time to time remaining unpaid hereon at the
rate of 10.99% per annum from the date hereof until maturity, payable quarterly
on the tenth of January, April, July and October in each year (commencing on
April 10, 1995) and at maturity. The Obligors agree to pay interest on overdue
principal (including any overdue required or
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optional prepayment of principal) and premium, if any, and (to the extent
legally enforceable) on any overdue installment of interest, at the Overdue Rate
after the due date, whether by acceleration or otherwise, until paid. "OVERDUE
RATE" shall mean the lesser of (a) the maximum interest rate permitted by law
and (b) 12.99% per annum.
Both the principal hereof and interest hereon are payable at the principal
office of the Obligors c/o Middleby Marshall Inc. in Elgin, Illinois in coin or
currency of the United States of America which at the time of payment shall be
legal tender for the payment of public and private debts. If any amount of
principal, premium, if any, or interest on or in respect of this Note becomes
due and payable on any date which is not a Business Day, such amount shall be
payable on the immediately preceding Business Day. "BUSINESS DAY" means any day
other than a Saturday, Sunday or other day on which banks in Chicago, Illinois
are required by law to close or are customarily closed.
This Note is one of the 10.99% Senior Secured Notes due January 10, 2003
(the "NOTES") of the Obligors in the aggregate principal amount of $15,000,000
issued or to be issued under and pursuant to the terms and provisions of the
Note Agreement dated as of January 1, 1995, as amended by that certain First
Amendment to Note Agreement dated as of March 1, 1996 (as so amended, the "NOTE
AGREEMENT"), entered into by the Obligors with the original Purchaser therein
referred to and this Note and the holder hereof are entitled equally and ratably
with the holders of all other Notes outstanding under the Note Agreement to all
the benefits provided for thereby or referred to therein. Reference is hereby
made to the Note Agreement for a statement of such rights and benefits.
This Note and the holder hereof are entitled equally and ratably with the
holders of all other Notes to the rights and benefits provided pursuant to the
terms and provisions of the
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Subsidiary Guaranty, the Security Documents, the Support Agreement and the
Intercreditor Agreement (as each such term is defined in the Note Agreement).
Reference is hereby made to each of the foregoing for a statement of the nature
and extent of the benefits and security for the Notes afforded thereby and the
rights of the holders of the Notes and the Obligors in respect thereof.
This Note and the other Notes outstanding under the Note Agreement may be
declared due prior to their expressed maturity date and certain prepayments are
required to be made thereon, all in the events, on the terms and in the manner
and amounts as provided in the Note Agreement.
The Notes are not subject to prepayment or redemption at the option of the
Obligors prior to their expressed maturity dates except on the terms and
conditions and in the amounts and with the premium, if any, set forth in the
Note Agreement.
This Note is registered on the books of the Obligors and is transferable
only by surrender thereof at the principal office of Middleby Marshall Inc. in
Elgin, Illinois duly endorsed or accompanied by a written instrument of transfer
duly executed by the registered holder of this Note or its attorney duly
authorized in writing. Payment of or on account of principal, premium, if any,
and interest on this Note shall be made only to or upon the order in writing of
the registered holder.
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This Note and said Note Agreement are governed by and construed in
accordance with the laws of Illinois, including all matters of construction,
validity and performance.
MIDDLEBY MARSHALL INC.
By
Its
ASBURY ASSOCIATES, INC.
By
Its
VICTORY REFRIGERATION COMPANY
By
Its
VICTORY INTERNATIONAL, INC.
By
Its
THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY
JURISDICTION THEREOF AND MAY BE OFFERED, SOLD OR TRANSFERRED ONLY IF REGISTERED
PURSUANT TO PROVISIONS OF SUCH SECURITIES ACT OR IF AN EXEMPTION THEREFROM IS
AVAILABLE.
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