------------------------------------------------------------------------------
------------------------------------------------------------------------------
MIDDLEBY MARSHALL INC.
AND
▇▇▇▇▇▇ ASSOCIATES, INC.
FIFTH AMENDMENT TO NOTE AGREEMENT
Dated as of March 18, 1998
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
------------------------------------------------------------------------------
------------------------------------------------------------------------------
TABLE OF CONTENTS
SECTION HEADING PAGE
SECTION 1. AMENDMENTS TO THE ORIGINAL NOTE AGREEMENT . . . . . . . . . . . . . .2
Section 1.1. Amendment to Section 1.4. of the Original Note Agreement . . . .2
Section 1.2. Amendment to Section 5 of the Original Note Agreement. . . . . .3
Section 1.3. Amendment to Section 6 of the Original Note Agreement. . . . . 26
Section 1.4. Amendment to Section 8 of the Original Note Agreement. . . . . 31
Section 1.5. Amendment to Schedule II of the Original Note Agreement. . . . 34
SECTION 2. WAIVER, CONSENTS AND RELEASE. . . . . . . . . . . . . . . . . . . . 35
Section 2.1. Waivers and Consents.. . . . . . . . . . . . . . . . . . . . . 35
Section 2.2. Release. . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 2.3. Limitation on Waivers. . . . . . . . . . . . . . . . . . . . . 35
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE OBLIGORS. . . . . . . . . . . 35
Section 3.1. Representation . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 4. CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 5. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 5.1. Effective Date; Ratification . . . . . . . . . . . . . . . . . 38
Section 5.2. Successors and Assigns . . . . . . . . . . . . . . . . . . . . 38
Section 5.3. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 5.4. Fees and Expenses. . . . . . . . . . . . . . . . . . . . . . . 38
Section 5.5. No Legend Required . . . . . . . . . . . . . . . . . . . . . . 38
Section 5.6. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . 38
Exhibit A -- Form of Revolving Credit Agreement
Exhibit B -- Form of Parent Support Letter
-▇-
▇▇▇▇▇▇▇▇ MARSHALL INC.
AND
▇▇▇▇▇▇ ASSOCIATES, INC.
FIFTH 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 18, l998
The Northwestern Mutual Life Insurance Company
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Reference is made to the Note Agreement dated as of January 1, 1995 (the
"1995 NOTE AGREEMENT"), between and among Middleby Marshall Inc., a Delaware
corporation ("MMI"), ▇▇▇▇▇▇ Associates, Inc., a Florida corporation ("▇▇▇▇▇▇";
▇▇▇▇▇▇ and MMI each hereinafter sometimes individually referred to as an
"OBLIGOR" and collectively as the "OBLIGORS"), and you (the "NOTEHOLDER"), under
and pursuant to which $15,000,000 aggregate principal amount of Senior Notes Due
January 10, 2003 (the "NOTES") were originally issued.
Reference is further made to the First Amendment to Note Agreement dated
as of March 1, 1996 (the "FIRST AMENDMENT"), the Second Amendment to Note
Agreement dated as of May 31, 1996 (the "SECOND AMENDMENT"), the Third Amendment
to Note Agreement dated as of August 15, 1996 (the "THIRD AMENDMENT"), and the
Second Amendment to Note Agreement dated as of January 15, 1997 (the "FOURTH
AMENDMENT"; the 1995 Note Agreement, the First Amendment, the Second Amendment,
the Third Amendment and the Fourth Amendment are hereinafter referred to as the
"ORIGINAL NOTE AGREEMENT"), between and among the Obligors, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇, Inc. ("▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇"), a Wholly-owned Subsidiary of MMI,
and Victory Refrigeration Company ("VICTORY"), a Delaware corporation and a
Wholly-owned Subsidiary of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ and the Noteholder, under and
pursuant to which the 1995 Note Agreement was amended. All of the assets and
liabilities of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ and Victory were liquidated pursuant to the
terms of the Victory Operating Assets Sale Agreement and Victory Real Assets
Sale Agreement (as each such term is defined in the Fourth Amendment).
Capitalized terms not otherwise defined herein shall have the respective
meanings assigned thereto in the Original Note Agreement.
The Obligors desire to undertake the following, namely, (i) the
refinancing of the existing Finance Company Loan Agreement (the "RE-FINANCING")
with an unsecured Multicurrency Credit Agreement (the "REVOLVING CREDIT
AGREEMENT") among Bank of America National Trust and Savings Association ("BANK
OF AMERICA"), MMI and its Subsidiaries, (ii) the release of the collateral
security granted to the Noteholder as described in the Original Note Agreement
(the "NOTE AGREEMENT SECURITY RELEASE") and (iii) the amending of certain terms
of the Original Note Agreement. The Re-financing, the Note Agreement Security
Release and such amending of the Original Note Agreement are hereinafter
collectively referred to as the "1998 CHANGES."
Pursuant to Section 7 of the Original Note Agreement, the holders of at
least 51% in aggregate principal amount of the outstanding Notes must consent to
any amendments of the Original Note Agreement or the Security Documents in
connection with the Obligors' accomplishing the 1998 Changes. Since the
Noteholder is the holder of 100% in aggregate principal amount of the
outstanding Notes, the Obligors hereby request that it accept the amendments set
forth below. On the Effective Date (as hereinafter defined) this instrument
shall constitute an agreement which amends the Original Note Agreement in the
respects hereinafter set forth.
SECTION 1. AMENDMENTS TO THE ORIGINAL NOTE AGREEMENT
SECTION 1.1. AMENDMENT TO SECTION 1.4. OF THE ORIGINAL NOTE AGREEMENT.
Section 1.4 of the Original Note Agreement shall be, and is hereby, amended
in its entirety to read as follows:
"SECTION 1.4. SECURITY FOR THE NOTES. The Notes will be
entitled to the benefit of the following contracts and agreements,
each of which will be in form and substance satisfactory to you
and your special counsel:
A Support Agreement dated as of January 10, 1995
from the Parent Corporation to the holders of the Notes
pursuant to which the Parent Corporation will, INTER ALIA,
enter into certain covenants and agreements for the benefit
of the holders of the Notes (the "SUPPORT AGREEMENT"), as
additional security for the payment of the Notes and
performance of the obligations of the Obligors under this
Agreement.
The enforcement of the rights and benefits in
respect of this Note Agreement and the Security Documents
will be subject to an Intercreditor Agreement dated as of
March 18, 1998 in form and substance satisfactory to you
and your special counsel (the "INTERCREDITOR AGREEMENT") to
be entered into by Bank of America and the Obligors with
you."
-2-
SECTION 1.2. AMENDMENT TO SECTION 5 OF THE ORIGINAL NOTE AGREEMENT.
Section 5 of the Original Note Agreement shall be, and is hereby, amended in its
entirety to read as follows:
SECTION 5. OBLIGORS' COVENANTS.
From and after the Effective Date and continuing so long as any
amount remains unpaid on any Note:
SECTION 5.1. CORPORATE EXISTENCE, ETC. Each Obligor will
preserve and keep in full force and effect, and will cause each of
its respective Subsidiaries to preserve and keep in full force and
effect, its corporate existence and all licenses and permits
necessary to the proper conduct of its business, PROVIDED that the
foregoing shall not prevent any transaction permitted by Section
5.15.
SECTION 5.2. INSURANCE. Each Obligor will maintain, and
will cause each of its Subsidiaries to maintain, insurance
coverage by financially sound and reputable insurers and in such
forms and amounts and against such risks as are customary for
corporations of established reputation engaged in the same or a
similar business and owning and operating similar properties.
SECTION 5.3. TAXES, CLAIMS FOR LABOR AND MATERIALS;
COMPLIANCE WITH LAWS. (a) Each Obligor will promptly pay and
discharge, and will cause each of its respective Subsidiaries
promptly to pay and discharge, all lawful taxes, assessments and
governmental charges or levies imposed upon such obligor or such
Subsidiary, respectively, or upon or in respect of all or any part
of the property or business of such Obligor or such Subsidiary,
all respective trade accounts payable in accordance with usual and
customary business terms, and all claims for work, labor or
materials, which if unpaid might become a Lien upon any property
of such Obligor or such Subsidiary; PROVIDED such Obligor or such
Subsidiary shall not be required to pay any such tax, assessment,
charge, levy, account payable or claim if (1) the validity,
applicability or amount thereof is being contested in good faith
by appropriate actions or proceedings which will prevent the
forfeiture or sale of any property of such Obligor or such
Subsidiary or any material interference with the use thereof by
such Obligor or such Subsidiary, and (2) such Obligor or such
Subsidiary shall set aside on its books, reserves deemed by it to
be adequate with respect thereto.
(b) Each Obligor will promptly comply and will cause
each of its respective Subsidiaries to promptly comply with all
-3-
laws, ordinances or governmental rules and regulations to which it
is subject, including, without limitation, the Occupational Safety
and Health Act of 1970, as amended, ERISA and all Environmental
Laws, the violation of which could materially and adversely affect
the properties, business, prospects, profits or condition
(financial or otherwise) of any Obligor and any of its
Subsidiaries or the ability of any Obligor to perform its
obligations in respect of the Notes or contained in this
Agreement, or would result in any Lien not permitted under Section
5.12.
SECTION 5.4. MAINTENANCE, ETC. Each Obligor will
maintain, preserve and keep, and will cause each of its respective
Subsidiaries to maintain, preserve and keep, its properties which
are used or useful in the conduct of its business (whether owned
in fee or a leasehold interest) in good repair and working order
and from time to time will make all necessary repairs,
replacements, renewals and additions so that at all times the
efficiency thereof shall be maintained.
SECTION 5.5. NATURE OF BUSINESS. No Obligor nor any of
its respective Subsidiaries will engage in any business if, as a
result, the general nature of the business, taken on a
consolidated basis, which would then be engaged in by the Obligors
and their Subsidiaries would be substantially changed from the
general nature of the business engaged in by the Obligors and
their Subsidiaries on the date of this Agreement.
SECTION 5.6. LIMITATION ON CAPITAL EXPENDITURES. The
Obligors will not, and will not permit any of their respective
Subsidiaries to, make any Capital Expenditure if the cost of such
Capital Expenditure, together with the cost of all other Capital
Expenditures of the Obligors and their respective Subsidiaries
during the fiscal year in which such Capital Expenditure is to be
made would exceed the lesser of (a) $8,600,000 or (b) the amount
permitted under the Revolving Credit Agreement.
SECTION 5.7. INDEBTEDNESS RATIO. The Obligors will not at
any time permit:
(a) the ratio of Consolidated Funded Debt to
Consolidated Total Capitalization to exceed:
-4-
RATIO OF CONSOLIDATED
FUNDED DEBT TO
CONSOLIDATED TOTAL
DURING THE PERIOD CAPITALIZATION
April 1, 1997 through January 3, 1998 .70 to 1.00
January 4, 1998 and thereafter .50 to 1.00
(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 be more
than 3.5: 1.0; PROVIDED 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.
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 (a) an amount equal
to 90% of Consolidated Tangible Net Worth as of January 3, 1998
PLUS (b) an amount equal to 50% of Consolidated Net Income earned
during each of its fiscal quarters beginning with its fiscal
quarter commencing January 4, 1998; 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.
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 for the
immediately preceding four fiscal quarter period to Consolidated
Fixed Charges for such four fiscal quarter period at not less
than:
-5-
DURING THE PERIOD MINIMUM LEVEL
March 30, 1997 through 1.75 to 1.00
January 3, 1998
1998 Fiscal Year and each 2.00 to 1.00
Fiscal Year thereafter
(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,
of not less than 1.25: 1.00. 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 5.10. LIMITATION ON OPERATING LEASES. The Obligors
will not, and will not permit any of their respective Subsidiaries
to, become obligated as lessee under any Operating Lease if, at
the time of entering into such Operating Lease and after giving
effect thereto, the aggregate Rentals paid or to be paid during
any Fiscal Year under the Operating Lease in question and under
all other Operating Leases under which either Obligor or any of
their respective Subsidiaries is then a lessee would exceed:
DURING THE PERIOD MAXIMUM RENTALS
1995 Fiscal Year $1,250,000
1996 Fiscal Year $1,500,000
1997 Fiscal Year $1,750,000
1998 Fiscal Year $2,500,000
1999 Fiscal Year $2,875,000
2000 Fiscal Year $3,300,000
2001 Fiscal Year $3,800,000
2002 Fiscal Year $4,375,000
2003 Fiscal Year $5,000,000
-6-
SECTION 5.11. LIMITATIONS ON INDEBTEDNESS. (a) The
Obligors will not, and will not permit any of their respective
Subsidiaries to, create, assume, guarantee or otherwise incur or
in any manner be or become liable in respect of any Indebtedness,
except:
(1) Indebtedness evidenced by the Notes and a Subsidiary
Guaranty;
(2) Indebtedness of the Obligors and of their respective
Subsidiaries outstanding as of the Effective Date and described on
SCHEDULE II hereto;
(3) Indebtedness issued and outstanding, including
Contingent Obligations under letters of credit, under the
Revolving Credit Agreement, as from time to time supplemented,
amended, renewed or extended and including any replacement
thereof; PROVIDED that such Indebtedness outstanding at any time
for each Subsidiary shall not exceed the amounts set forth on
SCHEDULE III or if less, the maximum amount as may be permitted
under Exhibit G of the Revolving Credit Agreement as in effect
from to time to time; PROVIDED, FURTHER, that any such supplement,
amendment, renewal, extension or replacement does not (i) increase
the amount of Indebtedness outstanding thereunder, (ii) increase
the interest rate or rates payable pursuant thereto, (iii) include
any business or financial covenants not included in the Revolving
Credit Agreement on the Effective Date or (iv) make any amendment
or modification that cannot be so amended or modified by Bank of
America in accordance with the terms of Section 5.19 or
(v) otherwise materially and adversely affect the business,
property, assets, operations, condition (financial or otherwise)
or prospects of the Obligors and their respective Subsidiaries
taken as whole AND PROVIDED FURTHER that after giving effect to
any such supplement, amendment, renewal, extension or replacement,
any financial institution which becomes a party thereto shall have
agreed in writing to be bound by the terms of the Intercreditor
Agreement;
(4) Indebtedness of MMI and ▇▇▇▇▇▇ evidenced by the Bank
Guaranty and representing guaranties of obligations under or in
connection with the Revolving Credit Agreement;
(5) Indebtedness of the Obligors and of their respective
Subsidiaries secured by Liens permitted by Sections 5.12(f), (g)
and (h);
-7-
(6) additional Indebtedness in an aggregate principal
amount at any one time outstanding not to exceed $1,000,000;
(7) other Indebtedness of a Subsidiary to MMI or to any
other Subsidiaries which shall not exceed, in each case at any one
time outstanding $1,000,000 for MMI's fiscal year ending on or
about December 31, 1998, $2,000,000 for Middleby's fiscal year
ending on or about December 31, 1999 and $3,000,000 for MMI's
fiscal year ending on or about December 31, 2000 and each fiscal
year thereafter;
(8) liabilities created or arising as a result of Liens
described in clauses (a) through (d) of Section 5.12 to the extent
that such liabilities are classified upon a balance sheet of the
Obligors and their Subsidiaries as liabilities of any such Person;
PROVIDED that no such liability shall be created or arise in
connection with the borrowing of money or in connection with the
creation of Liens described in clauses (e) through (m) of Section
5.12;
(9) Indebtedness incurred by MMI in connection with the
Acquisitions permitted under Section 7.3(b) of the Revolving
Credit Agreement only to the extent that such Indebtedness is
unsecured financing by a seller of product lines to MMI and the
payment of principal amount of which is subordinated to the
payment of the Notes;
(10) Indebtedness of MPC under an unsecured term loan;
PROVIDED that the aggregate principal amount outstanding under
such loan does not exceed $1,850,000; PROVIDED FURTHER, that such
Indebtedness shall be repaid in full prior to June 18, 1998;
(11) Indebtedness of MMI and ▇▇▇▇▇▇ evidenced by the Bank
Guaranty, and Indebtedness of MMI or any Subsidiary, representing
overdrafts, or the guaranty thereof; PROVIDED THAT the aggregate
amount of all Indebtedness incurred pursuant to this Section
5.11(a)(11) together with all Indebtedness incurred under Section
5.11(a)(3) shall not exceed at any one time outstanding
$20,000,000; and
(12) Indebtedness of MMI and ▇▇▇▇▇▇ evidenced by the Bank
Guaranty, and Indebtedness of MMI or any Subsidiary, representing
foreign exchange contracts, products or derivatives, or the
guaranty thereof; PROVIDED that such contracts are entered into
for hedging and not speculative purposes; PROVIDED FURTHER that
the aggregate amount of all Indebtedness incurred pursuant to this
Section 5.11(a)(12) together with all Indebtedness incurred under
-8-
Section 5.11(a)(3) and Section 5.11(a)(11) shall not exceed at any
one time outstanding $23,000,000.
(b) Indebtedness within the limitations of Section
5.11(a) may be renewed, extended or refunded (without any increase
in principal amount remaining unpaid at the time of such renewal,
extension or refunding); PROVIDED that at the time of such
renewal, extension or refunding and after giving effect thereto,
no Default or Event of Default would exist.
(c) Any Person which becomes a Subsidiary after the date
hereof shall for all purposes of this Section 5.11 be deemed to
have created, assumed or incurred at the time it becomes a
Subsidiary all Indebtedness of such Person existing immediately
after it becomes a Subsidiary.
SECTION 5.12. LIMITATION ON LIENS. The Obligors will not,
and will not permit any of their respective Subsidiaries to,
create or incur, or suffer to be incurred or to exist, any Lien on
its or their property or assets, whether now owned or hereafter
acquired, or upon any income or profits therefrom, or transfer any
property for the purpose of subjecting the same to the payment of
obligations in priority to the payment of its or their general
creditors, or acquire or agree to acquire, or permit any of their
respective Subsidiaries to acquire, any property or assets upon
conditional sales agreements or other title retention devices,
except:
(a) Liens for property taxes and assessments or
governmental charges or levies and Liens securing claims or
demands of mechanics and materialmen, PROVIDED that payment
thereof is not at the time required by Section 5.3;
(b) Liens of or resulting from any judgment or award,
the time for the appeal or petition for rehearing of which shall
not have expired, or in respect of which the relevant Obligor or
relevant Subsidiary shall at any time in good faith be prosecuting
an appeal or proceeding for a review and in respect of which a
stay of execution pending such appeal or proceeding for review
shall have been secured, whether as a result of the same having
been bonded or otherwise and which do not exceed in the aggregate
$1,000,000;
(c) Liens incidental to the conduct of business or the
ownership of properties and assets (including Liens in connection
with worker's compensation, unemployment insurance and other like
laws, warehousemen's and attorneys' liens and statutory
-9-
landlords' liens) and Liens to secure the performance of bids, tenders
or trade contracts, or to secure statutory obligations, surety or
appeal bonds or other Liens of like general nature, in any such case
incurred in the ordinary course of business and not in connection with
the borrowing of money and which in each such case would not
materially and adversely affect the properties, business, prospects,
profits or condition (financial or otherwise) of the Obligors and
their respective Subsidiaries; PROVIDED in each case, the obligation
secured is not overdue or, if overdue, is being contested in good
faith by appropriate actions or proceedings;
(d) minor survey exceptions or minor encumbrances,
easements or reservations, or rights of others for rights-of-way,
utilities and other similar purposes, or zoning or other
restrictions as to the use of real properties, which are necessary
for the conduct of the activities of the Obligors and their
respective Subsidiaries and which customarily exists on properties
of corporations engaged in similar activities and similarly
situated or which do not in any event materially impair their use
in the operation of the business of the Obligors and their
respective Subsidiaries;
(e) Liens existing as of the Effective Date and
described on SCHEDULE II hereto;
(f) Liens securing obligations in respect of capital
leases on assets subject to such leases; PROVIDED that such
capital leases are otherwise permitted hereunder; PROVIDED FURTHER
that (1) the Lien shall attach solely to such assets, (2) such
Lien shall have been created or incurred substantially
concurrently with the entering into of such capital lease, (3) at
the time of lease, the aggregate amount of Indebtedness secured by
Liens on such assets shall not exceed an amount equal to the
lesser of the purchase price or fair market value of such assets
(as determined in good faith by the Board of Directors of MMI in
the event the fair market value of such assets equals or exceeds
$1,000,000 or a Responsible Officer of MMI in the event that the
fair market value of such real or personal property is less than
$1,000,000), and (4) at the time of the creation or incurrence of
the Indebtedness secured by such Lien and after giving effect
thereto and to the application of the proceeds thereof, no Default
or Event of Default would exist;
(g) Liens created or incurred after the Effective Date
given to secure the payment of the purchase price incurred in
connection with the acquisition or purchase of real or personal
property or the cost of construction or improvements to real or
personal property, in any such case, useful and intended to be
used
-10-
in carrying on the business of an Obligor or any of its respective
Subsidiaries, PROVIDED that (1) the Lien shall attach solely to the
real or personal property acquired, purchased, constructed or
improved, (2) such Lien shall have been created or incurred within 180
days after the date of acquisition or purchase or the date of
completion of construction or improvement of such real or personal
property, as the case may be, (3) at the time of the imposition of the
Lien, the aggregate amount remaining unpaid on all Indebtedness
secured by Liens on such real or personal property, as the case may be
(whether or not assumed by an Obligor or any of its respective
Subsidiaries) shall not exceed an amount equal to the lesser of the
total acquisition or purchase price or cost of construction or
improvement, as the case may be, or fair market value of such real or
personal property (as determined in good faith by the Board of
Directors of MMI in the event the fair market value of such real or
personal property equals or exceeds $1,000,000 or a Responsible
Officer of MMI in the event that the fair market value of such real or
personal property is less than $1,000,000), and (4) at the time of the
creation or incurrence of the Indebtedness secured by such Lien and
after giving effect thereto and to the application of the proceeds
thereof, no Default or Event of Default would exist;
(h) Liens affixed on real or personal property
(including without limitation outstanding shares of capital stock
and Indebtedness) of any entity at the time such entity becomes a
Subsidiary given to secure the payment of the purchase price
incurred in connection with the acquisition of such entity by an
Obligor or any of its respective Subsidiaries; PROVIDED that
(1) the Lien shall attach solely to such real or personal
property, (2) such Lien shall have been created or incurred
substantially concurrently with such acquisition or purchase,
(3) at the time of acquisition or purchase of such Subsidiary, the
aggregate amount of Indebtedness secured by Liens on such real or
personal property (whether or not assumed by such Obligor or such
Subsidiary) shall not exceed an amount equal to the lesser of the
purchase price or fair market value of such real property or such
personal property (as determined in good faith by the Board of
Directors of MMI in the event the fair market value of such real
or personal property equals or exceeds $1,000,000 or a Responsible
Officer of MMI in the event that the fair market value of such
real or personal property is less than $1,000,000), and (4) at the
time of the creation or incurrence of the Indebtedness secured by
such Lien and after giving effect thereto and to the application
of the proceeds thereof, no Default or Event of Default would
exist;
-11-
(i) (1) Liens affixed on real or personal property
existing at the time of acquisition thereof, whether or not the
Indebtedness secured thereby is assumed by an Obligor or any of
its respective Subsidiaries, or (2) Liens on the property or
outstanding shares of a corporation at the time such corporation
is merged into or consolidated with such Obligor or such
Subsidiary or at the time of a sale, lease or other disposition of
the properties or outstanding shares or Indebtedness of a
corporation or firm as an entirety to such Obligor or such
Subsidiary; PROVIDED that in each such case (i) the amount of
Indebtedness secured by such Liens shall not exceed an amount
equal to the lesser of the acquisition or purchase price or fair
market value of such real or personal property (as determined in
good faith by the Board of Directors of MMI in the event the fair
market value of such real or personal property equals or exceeds
$1,000,000 or a Responsible Officer of MMI in the event that the
fair market value of such real or personal property is less than
$1,000,000) and (ii) at the time of the creation or incurrence of
the Indebtedness secured by such Lien and after giving effect
thereto and to the application of the proceeds thereof, no Default
or Event of Default would exist;
(j) Liens created or incurred by MMI after the Effective
Date given to secure Indebtedness of MMI in addition to the Liens
permitted by the preceding clauses (a) through (i) hereof,
PROVIDED that all Indebtedness secured by such Liens shall have
been incurred within the applicable limitations provided in
Section 5.11(a)(6);
(k) any extension, renewal or refunding of any Lien
permitted by the preceding clauses (e) through (i) of this Section
5.12 in respect of the same property theretofore subject to such
Lien in connection with the extension, renewal or refunding of the
Indebtedness secured thereby; PROVIDED that (1) such extension,
renewal or refunding of Indebtedness shall be without increase in
the principal amount remaining unpaid as of the date of such
extension, renewal or refunding, (2) such Lien shall attach solely
to the same such property, (3) the principal amount remaining
unpaid as of the date of such extension, renewal or refunding of
Indebtedness is less than or equal or the fair market value of the
property (determined in good faith by the Board or Directors of
MMI) to which such Lien is attached, and (4) at the time of such
extension, renewal or refunding and after giving effect thereto,
no Default or Event of Default would exist;
(l) Liens securing Indebtedness of a Subsidiary of MMI
or ▇▇▇▇▇▇ to MMI; and
-12-
(m) Liens held by Bank of America in deposits and
accounts of MMI and ▇▇▇▇▇▇ pursuant to the Bank Guaranty.
SECTION 5.13. RESTRICTED PAYMENTS. (a) MMI will not except
as provided in this clause (a) and in clause (b) of this Section
5.13:
(1) Declare or pay any dividends, either in cash or
property, on any shares of its capital stock of any class (except
dividends or other distributions payable solely in shares of
common stock of MMI);
(2) Directly or indirectly, or through any Subsidiary or
through any Affiliate of MMI, purchase, redeem or retire any
shares of its capital stock of any class or any warrants, rights
or options to purchase or acquire any shares of its capital stock;
or
(3) Make any other payment or distribution, either
directly or indirectly or through any Subsidiary of MMI, in
respect of its capital stock;
(such declarations or payments of dividends, purchases,
redemptions or retirements of capital stock and warrants, rights
or options and all such other payments or distributions being
herein collectively called "RESTRICTED PAYMENTS"), if after giving
effect thereto the aggregate amount of Restricted Payments made
during the period from and after December 31, 1994 to and
including the date of the making of the Restricted Payment in
question would exceed the sum of (A) $500,000 PLUS (B) 25% of
Consolidated Net Income for such period, computed on a cumulative
basis for said entire period (or if such Consolidated Net Income
is a deficit figure, then MINUS 100% of such deficit) PLUS (C) an
amount equal to the aggregate net cash proceeds received by MMI
from the Parent Corporation as a contribution to equity evidenced
by Common Stock of MMI from the sale after the Closing Date of
shares of any class of the capital stock of the Parent Corporation
or from any Securities evidencing Indebtedness of the Parent
Corporation which are converted into shares of capital stock of
the Parent Corporation reduced by an amount equal to the amount
paid or advanced by the Parent Corporation after the Closing Date
to purchase, redeem or retire any shares of its capital stock of
any class or any warrants, rights or options to purchase or
acquire any shares of the capital stock of the Parent Corporation.
(b) The Obligors will not declare any dividend which
constitutes a Restricted Payment payable pursuant to clause (a) of
-13-
this Section 5.13 payable more than 60 days after the date of
declaration thereof.
(c) For the purposes of this Section 5.13, the amount of
any Restricted Payment declared, paid or distributed in property
pursuant to clause (a) of this Section 5.13 shall be deemed to be
the greater of the book value or fair market value (as determined
in good faith by the Board of Directors of MMI) of such property
at the time of the making of the Restricted Payment in question.
(d) MMI will not authorize or make a Restricted Payment
pursuant to clause (a) of this Section 5.13 if after giving effect
to the proposed Restricted Payment: (1) a Default or Event of
Default would exist or (2) Consolidated Funded Debt would exceed
50% of Consolidated Total Capitalization.
(e) Anything contained in this Section 5.13 to the
contrary notwithstanding, MMI may, in addition to the making of
any Restricted Payment pursuant to clause (a) of this Section
5.13, pay dividends to the Parent Corporation solely for the
purpose of discharging its obligation in respect of Corporate
Overhead Expenses in an amount not exceeding $800,000 in the 1994
Fiscal Year and increasing by $100,000 in each Fiscal Year
thereafter.
SECTION 5.14. INVESTMENTS. The Obligors will not, and will
not permit any of their respective Subsidiaries to, make any
Investments, other than:
(a) extensions of credit not described in Section
5.14(c) by the Obligors to any of their Subsidiaries and, to the
extent any Obligor actually pays or by reason of default of a
Subsidiary becomes obligated to pay thereunder, Indebtedness
described in Section 5.11(a)(12) which shall not in the aggregate
exceed at any one time outstanding, or by any of their
Subsidiaries to other Subsidiaries which shall not exceed, in each
case at any one time outstanding $1,000,000 for MMI's fiscal year
ending on or about December 31, 1998, $2,000,000 for MMI's fiscal
year ending on or about December 31, 1999, and $3,000,000 for
MMI's fiscal year ending on or about December 31, 2000 and each
fiscal year thereafter;
(b) Investments in property or assets to be used in the
ordinary course of the business of the Obligors and of their
respective Subsidiaries as described in Section 5.5 of this
Agreement;
-14-
(c) Investments of the Obligors existing as of the
Effective Date and described on SCHEDULE II hereto;
(d) receivables arising from the sale of goods and
services in the ordinary course of business of the Obligors and of
their respective Subsidiaries;
(e) Investments in commercial paper of corporations
organized under the laws of the United States or any state thereof
maturing in 270 days or less from the date of issuance which, at
the time of acquisition by the Obligors or any of their respective
Subsidiaries, is accorded a rating of "A-1" by Standard & Poor's
Ratings Group or "P-1" by ▇▇▇▇▇'▇ Investors Service, Inc.;
(f) Investments in direct obligations of the United
States of America or any agency or instrumentality of the United
States of America, the payment or guarantee of which constitutes a
full faith and credit obligation of the United States of America,
in either case, maturing within twelve months from the date of
acquisition thereof;
(g) Investments in certificates of deposit, demand
deposits and time deposits maturing within one year from the date
of issuance thereof, either (1) issued by a bank or trust company
organized under the laws of the United States or any State
thereof, having capital, surplus and undivided profits aggregating
at least $250,000,000, PROVIDED that at the time of acquisition
thereof by an Obligor or any of their respective Subsidiaries,
(1) the senior unsecured long-term debt of such bank or trust
company or of the holding company of such bank or trust company is
rated "A" or better by Standard & Poor's Ratings Group or "A2" or
better by ▇▇▇▇▇'▇ Investors Service, Inc. or (2) or such
certificate of deposit or time deposit is issued by any bank or
trust company organized under the laws of the United States or any
state thereof to the extent that such Investments are fully
insured by the Federal Depository Insurance Corporation;
(h) Investments in repurchase agreements with respect to
any Security described in clause (f) of this Section 5.14 entered
into with a depository institution or trust company acting as
principal described in clause (g) of this Section 5.14 if such
repurchase agreements are by their terms to be performed by the
repurchase obligor and such repurchase agreements are deposited
with a bank or trust company of the type described in clause (g)
of this Section 5.14;
-15-
(i) Investments in any money market fund which is
classified as a current asset in accordance with GAAP, the
aggregate asset value of which "marked to market" is at least
$100,000,000 and which is managed by a fund manager of recognized
national standing regulated under the Investment Company Act of
1940, as amended, and which invests substantially all of its
assets in obligations described in clauses (e) through (g) above
or clause (j) below;
(j) Investments in publicly traded "money market"
preferred stock, "Dutch Auction" preferred stock, "remarketed"
preferred stock and "variable rate" preferred stock which, at the
time of acquisition by an Obligor or any of its Subsidiaries, are
rated "A-" by Standard & Poor's Ratings Group or "a3" or better by
▇▇▇▇▇'▇ Investors Service, Inc.; and
(k) Investments of MMI not described in the foregoing
clauses (a) through (j), PROVIDED that the aggregate amount of all
such Investments shall not at any time exceed an amount equal to
(1) 10% of Consolidated Tangible Net Worth LESS (2) the aggregate
amount of extensions of credit outstanding pursuant to Section
5.14(a).
In valuing any Investments for the purpose of applying the
limitations set forth in this Section 5.14, such Investments shall
be taken at the original cost thereof, without allowance for any
subsequent write-offs or appreciation or depreciation therein, but
less any amount repaid or recovered on account of capital or
principal.
For purposes of this Section 5.14, at any time when a corporation
becomes a Subsidiary of an Obligor, all Investments of such
corporation at such time shall be deemed to have been made by such
corporation, as a Subsidiary, at such time.
SECTION 5.15. MERGERS, CONSOLIDATIONS AND SALES OF ASSETS.
(a) The Obligors will not, and will not permit any of their
respective Subsidiaries to, consolidate with or be a party to a
merger with any other Person, or sell, lease or otherwise dispose
of all or substantially all of its assets or recapitalize,
reorganize or engage in any other activity similar to any of the
foregoing, except that any Subsidiary of MMI may merge or
consolidate with or into MMI or any Wholly-owned Subsidiary of MMI
so long as in any merger or consolidation involving MMI or any
Wholly-owned Subsidiary, MMI or such Wholly-owned Subsidiary shall
be the surviving or continuing corporation.
-16-
(b) The Obligors will not, and will not permit any of
their respective Subsidiaries to, sell, lease, transfer, abandon
or otherwise dispose of assets (except assets sold in the ordinary
course of business for fair market value); PROVIDED that the
foregoing restrictions do not apply to:
(1) the sale, lease, transfer or other disposition of
assets of a Subsidiary of MMI to MMI or a Wholly-owned Subsidiary
of MMI; or
(2) the sale or transfer of assets of an Obligor or any
of its respective Subsidiaries whenever it is determined in the
good faith judgment of the Board of Directors of MMI in the event
the fair market value of such assets being disposed of equals or
exceeds $1,000,000 or a Responsible Officer of MMI in the event
that the fair market value of such assets being disposed of is
less than $1,000,000 that such assets are obsolete, worn-out or
without economic value to such Obligor or such Subsidiary; or
(3) the exchange in an arms-length transaction of
assets, PROVIDED that (i) the assets acquired by an Obligor or any
of its respective Subsidiaries in connection with such exchange
shall have a fair market value (as determined in good faith by the
Board of Directors of MMI in the event the fair market value of
such assets being disposed of equals or exceeds $1,000,000 or a
Responsible Officer of MMI in the event that the fair market value
of such assets being disposed of is less than $1,000,000) equal to
or greater than the fair market value of the assets disposed of by
such Obligor or such Subsidiary in connection with such exchange,
(ii) the assets acquired by such Obligor or such Subsidiary in
connection with such exchange shall be similar in nature to the
assets sold or otherwise disposed of in connection with such
exchange, and (iii) the assets so acquired are free and clear of
any Lien and are useful and are intended to be used in the
business of the Obligors and their respective Subsidiaries as
described in Section 5.5; or
(4) the sale of assets for cash or other property to a
Person or Persons other than an Affiliate if all of the following
conditions are met:
(i) such assets (valued at net book value) do not,
together with all other assets of the Obligors and their
respective Subsidiaries previously disposed of during the same
Fiscal Year (other than in the ordinary course of business),
exceed 5% of Consolidated Total Assets determined as of the end of
the immediately preceding fiscal quarter;
-17-
(ii) in the opinion of the Board of Directors of MMI in
the event the fair market value of such assets being disposed of
equals or exceeds $1,000,000 or a Responsible Officer of MMI in
the event that the fair market value of such assets being disposed
of is less than $1,000,000, the sale is for fair value and is in
the best interests of the Obligors; and
(iii) immediately after the consummation of the
transaction and after giving effect thereto, no Default or Event
of Default would exist.
Computations pursuant to this Section 5.15(b) shall include
dispositions made pursuant to Section 5.15(c) and computations
pursuant to Section 5.15(c) shall include dispositions made
pursuant to this Section 5.15(b).
(c) The Obligors will not, and will not permit any of
their respective Subsidiaries to, sell, pledge or otherwise
dispose of any shares of the stock (including as "stock" for the
purposes of this Section 5.15(c) any options or warrants to
purchase stock or other Securities exchangeable for or convertible
into stock) of a Subsidiary (said stock, options, warrants and
other Securities herein called "SUBSIDIARY STOCK") or any
Indebtedness of any Subsidiary, nor will any Subsidiary issue,
sell, pledge or otherwise dispose of any shares of its own
Subsidiary Stock, PROVIDED that the foregoing restrictions do not
apply to:
(1) the issue of directors' qualifying shares; or
(2) the issue of Subsidiary Stock to MMI; or
(3) the sale or other disposition at any one time to a
Person (other than directly or indirectly to an Affiliate) of the
entire Investment of the Obligors and their other Subsidiaries in
any Subsidiary if all of the following conditions are met:
(i) the assets (valued at net book value) of such
Subsidiary do not, together with all other assets of the Obligors
and their respective Subsidiaries previously disposed of during
the same Fiscal Year (other than in the ordinary course of
business), exceed 5% of Consolidated Total Assets determined as of
the end of the immediately preceding fiscal quarter;
(ii) in the opinion of the Board of Directors of MMI in
the event the fair market value of such assets being disposed of
equals or exceeds $1,000,000 or a Responsible Officer of MMI in
the
-18-
event that the fair market value of such assets being disposed
of is less than $1,000,000, the sale is for fair value and is in
the best interests of the Obligors;
(iii) immediately after the consummation of the
transaction and after giving effect thereto, such Subsidiary shall
have no Indebtedness of or continuing Investment in the capital
stock of the Obligors or of any Subsidiary and any such
Indebtedness or Investment shall have been discharged or acquired,
as the case may be, by an Obligor or any of its Subsidiaries; and
(iv) immediately after the consummation of the
transaction and after giving effect thereto, no Default or Event
of Default would exist.
Computations pursuant to this Section 5.15(c) shall include
dispositions made pursuant to Section 5.15(b) and computations
pursuant to Section 5.15B) shall include dispositions made
pursuant to this Section 5.15(c).
SECTION 5.16. REPURCHASE OF NOTES. Except as provided in
Section 2.2, Section 5.15(b) and Section 5.15(c), neither the
Obligors nor any their respective Subsidiaries or Affiliates,
directly or indirectly, may repurchase or make any offer to
repurchase any Notes.
SECTION 5.17. TRANSACTIONS WITH AFFILIATES. The Obligors
will not, and will not permit any of their respective Subsidiaries
to, enter into or be a party to any transaction or arrangement
with any Affiliate (including, without limitation, the purchase
from, sale to or exchange of property with, or the rendering of
any service by or for, any Affiliate), except in the ordinary
course of and pursuant to the reasonable requirements of such
Obligor's or such Subsidiary's business and upon fair and
reasonable terms no less favorable to such Obligor or such
Subsidiary than would obtain in a comparable arm's-length
transaction with a Person other than an Affiliate.
SECTION 5.18. TERMINATION OF PENSION PLANS. The Obligors
will not and will not permit any of their respective Subsidiaries
to withdraw from any Multiemployer Plan or permit any employee
benefit plan maintained by it to be terminated if such withdrawal
or termination could result in withdrawal liability (as described
in Part 1 of Subtitle E of Title IV of ERISA) in excess of
$500,000 in the aggregate or the imposition of a Lien on any
property of an Obligor or any of its Subsidiaries pursuant to
Section 4068 of ERISA.
-19-
SECTION 5.19. AMENDMENT OF CERTAIN DOCUMENTS; RESTRICTIONS
RELATING TO PREPAYMENT OF THE NOTES. (a) The Obligors will not
agree to any agreement (oral or written) (1) amending, modifying
or altering the terms, provisions or related definitions of
Article VII or VIII of the Revolving Credit Agreement in any
respect, whether temporary or permanent, or (2) terminating the
Revolving Credit Agreement or any of the Revolving Credit
Documents; PROVIDED that the foregoing Section 5.19(a) shall not
prohibit the Obligors from agreeing to or accepting a waiver by
Bank of America of the failure by the Obligors to comply with any
term or provision of the Revolving Credit Agreement.
(b) MMI will not agree to any amendment or other change
to the Certificate of Incorporation or By Laws of MMI or to the
terms and provisions of any agreement or other instrument
constituting or relating to the capital stock of MMI.
(c) The Obligors will not, directly or indirectly, enter
into any restriction or limitation on their ability to prepay the
Notes.
(d) The Obligors shall cause the Revolving Credit
Agreement to contain an express provision requiring that all
parties to the Revolving Credit Agreement, including each original
party and each Person which subsequently becomes a party thereto,
to be bound by the terms and provisions of the Intercreditor
Agreement.
SECTION 5.20. PROHIBITION OF CHANGE IN FISCAL YEAR. MMI
will not, and will not permit any of its Subsidiaries to, change
its Fiscal Year.
SECTION 5.21. OBLIGORS COMPLIANCE. The Obligors will at
all times take such action as may be necessary or proper to
comply, and to permit the Parent Corporation to comply with the
terms of the Warrant, the Security Documents to which it is a
party and the Intercreditor Agreement.
SECTION 5.22. GUARANTY BY SUBSIDIARIES; OWNERSHIP OF
SUBSIDIARY GUARANTORS; DELIVERY OF OTHER POST-CLOSING ITEMS.
(a) The Obligors will cause each of their respective
Subsidiaries which delivers a Guaranty to Bank of America (other
than the Bank Guaranty) to become a party to a guaranty (the
"SUBSIDIARY GUARANTY") in form and substance satisfactory to
holders of the Notes and their special counsel within ten Business
Days thereafter, unless the execution and delivery of such
-20-
Subsidiary Guaranty would result in an adverse tax effect on such
Subsidiary or the Obligors, and in connection therewith shall
deliver to the holders of the Notes the following items:
(i) an executed counterpart of the Subsidiary Guaranty
executed by such Subsidiary;
(ii) executed counterparts of the Intercreditor
Agreement;
(iii) a certificate of the President or a Vice President
of such Subsidiary to the effect that the representations and
warranties of such Subsidiary contained in the Subsidiary Guaranty
are true and correct on and as of the date of execution of the
Subsidiary Guaranty by such Subsidiary;
(iv) such documents and evidence with respect to such
Subsidiary as the holders of at least 51% in aggregate principal
amount of outstanding Notes shall have requested in order to
establish the existence and good standing of such Subsidiary and
the authorization of the transactions contemplated by the
Subsidiary Guaranty;
(v) an opinion of counsel to such Subsidiary in form and
substance satisfactory to the holders of at least 51% in aggregate
principal amount of outstanding Notes to the effect that (A) such
Subsidiary is a corporation validly existing and in good standing
under the laws of its jurisdiction of incorporation and has the
corporate power and the corporate authority to execute and deliver
the Subsidiary Guaranty, (B) the Subsidiary Guaranty has been duly
authorized by all necessary corporate action on the part of such
Subsidiary, has been duly executed and delivered by such
Subsidiary and constitutes the legal, valid and binding contract
of such Subsidiary 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 Subsidiary Guaranty by such Subsidiary, (D) the
execution, delivery and performance by such Subsidiary of the
Subsidiary Guaranty does 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 such Subsidiary pursuant to the provisions of the charter or
by-laws of such Subsidiary or any law, agreement, license or
instrument to which such Subsidiary is a party or by which such
Subsidiary may be bound, and (E) there is no litigation pending or
threatened
-21-
which could reasonably be expected to materially and adversely affect
the properties, business, prospects, profits or condition (financial
or otherwise) of such Subsidiary or the ability of such Subsidiary to
perform its obligations under the Subsidiary Guaranty.
(b) 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 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 ▇▇▇▇▇▇, 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 directors' qualifying
shares.
(c) 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
other than the restrictions contained in Article VII of the
Revolving Credit Agreement.
SECTION 5.23. REPORTS AND RIGHTS OF INSPECTION. Each
Obligor will keep, and will cause each of its Subsidiaries to
keep, proper books of record and account in which full and correct
entries will be made of all dealings or transactions of, or in
relation to, the business and affairs of such Obligor or such
Subsidiary, in accordance with GAAP consistently applied (except
for changes disclosed in the financial statements furnished to you
pursuant to this Section 5.23 and concurred in by the independent
public accountants referred to in Section 5.23(b)), and will
furnish to you so long as you are the holder of any Note and to
each other Institutional Holder of the then outstanding Notes (in
duplicate if so specified below or otherwise requested):
(a) QUARTERLY STATEMENTS. As soon as available and in
any event within 30 days after the end of each quarterly fiscal
period (except the last) of each fiscal year, copies of:
-22-
(1) consolidated and consolidating balance sheets of the
Parent Corporation and its consolidated Subsidiaries as of the
close of such quarterly fiscal period, setting forth in
comparative form the consolidated figures for the fiscal year then
most recently ended,
(2) consolidated and consolidating statements of
earnings of the Parent Corporation and its consolidated
Subsidiaries for such quarterly fiscal period and for the portion
of the fiscal year ending with such quarterly fiscal period, in
each case setting forth in comparative form the consolidated
figures for the corresponding periods of the preceding fiscal
year, and
(3) consolidated and consolidating statements of cash
flows of the Parent Corporation and its Subsidiaries for the
portion of the fiscal year ending with such quarterly fiscal
period, setting forth in comparative form the consolidated figures
for the corresponding period of the preceding fiscal year,
all in reasonable detail and certified as complete and correct by
an authorized financial officer of the Parent Corporation and of
MMI;
(b) ANNUAL STATEMENTS. As soon as available and in any
event within 90 days after the close of each fiscal year of the
Parent Corporation, copies of:
(1) consolidated and consolidating balance sheets of the
Parent Corporation and its consolidated Subsidiaries as of the
close of such fiscal year, and
(2) consolidated and consolidating statement of
earnings, shareholders' equity and cash flows of the Parent
Corporation and its consolidated Subsidiaries for such fiscal
year,
in each case setting forth in comparative form the consolidated
figures for the preceding fiscal year, all in reasonable detail
and accompanied by a report thereon of a firm of independent
public accountants of recognized national standing selected by the
Parent Corporation to the effect that the consolidated financial
statements present fairly, in all material respects, the
consolidated financial position of the Parent Corporation and its
consolidated Subsidiaries as of the end of the fiscal year being
reported on and the consolidated results of the operations and
cash flows for said year in conformity with GAAP and that the
examination of such accountants in connection with such financial
statements has been conducted in accordance with generally
accepted auditing standards
-23-
and included such tests of the accounting records and such other
auditing procedures as said accountants deemed necessary in the
circumstances;
(c) AUDIT REPORTS. Promptly upon receipt thereof, one
copy of each interim or special audit made by independent
accountants of the books of the Parent Corporation, an Obligor or
any of its respective Subsidiaries and any management letter
received from such accountants;
(d) SEC AND OTHER REPORTS. Promptly upon their becoming
available, one copy of each financial statement, report, notice or
proxy statement sent by the Parent Corporation, an Obligor or any
of its respective Subsidiaries to its creditors and stockholders
generally and of each regular or periodic report, and any
registration statement or prospectus filed by the Parent
Corporation, an Obligor or any of its respective Subsidiaries with
any securities exchange or the Securities and Exchange Commission
or any successor agency, and copies of any orders in any
proceedings to which the Parent Corporation, an Obligor or any of
its respective Subsidiaries is a party, issued by any governmental
agency, Federal or state, having jurisdiction over an Obligor or
any of its respective Subsidiaries;
(e) ERISA REPORTS. Promptly upon the occurrence
thereof, written notice of (1) a Reportable Event with respect to
any Plan; (2) the institution of any steps by the Parent
Corporation, an Obligor or any of its respective Subsidiaries, any
ERISA Affiliate, the PBGC or any other Person to terminate any
Plan; (3) the institution of any steps by the Parent Corporation,
an Obligor or any of its respective Subsidiaries or any ERISA
Affiliate to withdraw from any Plan; (4) a non-exempt "prohibited
transaction" within the meaning of Section 406 of ERISA in
connection with any Plan; (5) any material increase in the
contingent liability of the Parent Corporation, an Obligor or any
of its respective Subsidiaries with respect to any post-retirement
welfare liability; or (6) the taking of any action by, or the
threatening of the taking of any action by, the Internal Revenue
Service, the Department of Labor or the PBGC with respect to any
of the foregoing;
(f) OFFICER'S CERTIFICATES. Within the periods provided
in paragraphs (a) and (b) above, a certificate of the chief
financial officer of the Parent Corporation and of the Obligors
stating that such officers have reviewed the provisions of this
Agreement and setting forth: (1) the information and computations
(in sufficient
-24-
detail) required in order to establish whether the Obligors were in
compliance with the requirements of Sections 5.6 through 5.15 at the
end of the period covered by the financial statements then being
furnished, and (2) whether there existed as of the date of such
financial statements and whether, to the best of each of such
officers' knowledge, there exists on the date of the certificate or
existed at any time during the period covered by such financial
statements any Default or Event of Default and, if any such condition
or event exists on the date of the certificate, specifying the nature
and period of existence thereof and the action the Obligors are taking
and propose to take with respect thereto;
(g) ACCOUNTANT'S CERTIFICATES. Within the period
provided in paragraph (b) above, a certificate of the accountants
who render an opinion with respect to such financial statements,
stating that they have reviewed this Agreement and stating further
whether, in making their audit, such accountants have become aware
of any Default or Event of Default under any of the terms or
provisions of this Agreement insofar as any such terms or
provisions pertain to or involve accounting matters or
determinations, and if any such condition or event then exists,
specifying the nature and period of existence thereof;
(h) DEFAULT. Promptly upon the occurrence thereof, a
notice of any default under the Revolving Credit Agreement,
whether or not such default has been waived or cured;
(i) REQUESTED INFORMATION. With reasonable promptness,
such other data and information as you or any such Institutional
Holder may reasonably request.
Without limiting the foregoing, each of the Obligors will permit
you and will cause the Parent Corporation to permit you, so long
as you are the holder of any Note, and each Institutional Holder
of the then outstanding Notes (or such Persons as either you or
such Institutional Holder may designate), to visit and inspect,
under the Parent Corporation's or such Obligor's guidance, as the
case may be, any of the properties of the Parent Corporation or
such Obligor or any of its respective Subsidiaries, to examine all
of their books of account, records, reports and other papers, to
make copies and extracts therefrom and to discuss their respective
affairs, finances and accounts with their respective officers,
employees, and independent public accountants (and by this
provision each Obligor authorizes said accountants to discuss with
you the finances and affairs of such Obligor and its respective
Subsidiaries), all at such reasonable times and as often as may be
reasonably requested. Any
-25-
visitation shall be at the sole expense of you or such Institutional
Holder, unless a Default or Event of Default shall have occurred and
be continuing or the holder of any Note or of any other evidence of
Indebtedness of the Parent Corporation or either Obligor or any of its
respective Subsidiaries gives any written notice or takes any other
action with respect to a claimed default, in which case, any such
visitation or inspection shall be at the sole expense of the Obligors.
SECTION 5.24. NOTES TO RANK PARI PASSU. (a) The Obligors
will keep and maintain the obligations of the Obligors with
respect to the Notes and all other monetary obligations
outstanding at any time to the holders of the Notes under this
Agreement as direct obligations of the Obligors ranking PARI PASSU
as against the assets of the Obligors with all other present and
future unsecured Debt of the Obligors.
(b) In the event the Obligors enter into any agreement
with any holder of Indebtedness for borrowed money of the Obligors
which results in the imposition or inclusion of an additional or
different business or financial covenant than those contained in
this Agreement (an "ADDITIONAL COVENANT"), then the Obligor shall,
within 30 days following the date on which such agreement is
entered into, provide copies of such other provision contained in
any such agreement and, upon the request of the holders of the
majority of the Notes outstanding, enter into an amendment to this
Agreement whereby such Additional Covenant shall be incorporated
in Section 5 of this Agreement as a covenant applicable to the
Notes.
SECTION 5.25. YEAR 2000 COMPLIANCE. By December 31, 1998,
MMI shall, and shall cause each of its Subsidiaries to, commence
and pursue an inquiry of its material suppliers, vendors and
customers with respect to any defect in their computer software,
databases, hardware, controls and peripherals related to the
occurrence of the year 2000 or the use of any date after
December 31, 1999 in connection therewith, and MMI shall promptly
notify the holders of the Notes if, based on the foregoing
inquiry, it believes that a material adverse effect on the
operations, business, properties, condition (financial or
otherwise) or prospects of MMI and its Subsidiaries could result
from any such defects (taken as a whole).
SECTION 1.3. AMENDMENT TO SECTION 6 OF THE ORIGINAL NOTE AGREEMENT. Section 6
of the Original Note Agreement shall be, and is hereby, amended in its entirety
to read as follows:
-26-
Section 6. Events of Default and Remedies Therefor.
SECTION 6.1. EVENTS OF DEFAULT. Any one or more of the
following shall constitute an "EVENT OF DEFAULT" as such term is
used herein:
(a) Default shall occur in the payment of interest on
any Note when the same shall have become due and such default
shall continue for more than five Business Days; or
(b) Default shall occur in the making of any required
prepayment on any of the Notes as provided in Section 2.1; or
(c) Default shall occur in the making of any other
payment of the principal of any Note or premium, if any, thereon
at the expressed or any accelerated maturity date or at any date
fixed for prepayment; or
(d) Default shall occur in the observance or performance
of any covenant or agreement contained in Section 5.6 through 5.15
or Section 5.17; or
(e) Default shall occur in the observance or performance
of any other provision of this Agreement which is not remedied
within 30 days after the earlier of (1) the day on which a
Responsible Officer of either of the Obligors first obtains
knowledge of such default, or (2) the day on which written notice
thereof is given to the Obligors by the holder of any Note; or
(f) (i) Any "Event of Default" under the Revolving
Credit Agreement or (ii) default in the payment when due, whether
by acceleration or otherwise, or in the performance or observance
(subject to any applicable grace period) of any obligation or
agreement to or with Bank of America or any Affiliate, including
without limitation BA Leasing & Capital Corporation; or
(g) (i) An ERISA Event shall occur with respect to a
Plan or Multiemployer Plan which has resulted or could reasonably
be expected to result in liability of the Obligors or any ERISA
Affiliate under Title IV of ERISA to the Plan, Multiemployer Plan
or PBGC in an aggregate amount in excess of $1,000,000; (ii) the
aggregate amount of Unfunded Pension Liability among all Plans at
any time exceeds $5,000,000; or (iii) the Obligors or any ERISA
Affiliate shall fail to pay when due, after the expiration of any
applicable grace period, any installment payment with respect to
its withdrawal liability under Section 4201 of ERISA under a
-27-
Multiemployer Plan in an aggregate amount in excess of $1,000,000;
or
(h) There shall occur any material adverse change in the
financial condition or business prospects of either Obligor; or
(i) Default shall be made in the payment when due
(whether by lapse of time, by declaration, by call for redemption
or otherwise) of the principal of or interest on any Indebtedness
for borrowed money or Contingent Obligation (other than the Notes
and other than the Revolving Credit Agreement, provision for which
is made in clause (f) of this Section 6.1) of any Obligor or any
of their respective Subsidiaries aggregating in excess of $500,000
and such default shall continue beyond the period of grace, if
any, allowed with respect thereto; or
(j) Default or the happening of any event shall occur
under any indenture, agreement or other instrument relating to any
Indebtedness for borrowed money (other than the Notes and other
than the Revolving Credit Agreement, provision for which is made
in clause (f) of this Section 6.1) or relating to any Contingent
Obligation of any Obligor or any of their respective Subsidiaries
and such default shall continue beyond the period of grace, if
any, allowed with respect thereto; or
(k) Any representation or warranty made by either
Obligor herein, or made by either Obligor, the Parent Corporation
or any Subsidiary Guarantor in any statement, certificate or
agreement furnished by either Obligor, the Parent Corporation or
any Subsidiary Guarantor in connection with the consummation of
the issuance and delivery of the Notes or furnished by either
Obligor, the Parent Corporation or any Subsidiary Guarantor
pursuant hereto or pursuant to any of the Security Documents or
the Intercreditor Agreement, is untrue in any material respect as
of the date of the issuance or making thereof; or
(l) Final judgment or judgments for the payment of money
aggregating in excess of $1,000,000 (excluding for purposes of
such determination the amount of any insurance proceeds received
by, or paid on behalf of, either Obligor, the Parent Corporation
or any of their respective Subsidiaries in respect of such
judgment or judgments) is or are outstanding against either
Obligor, the Parent Corporation or any of their respective
Subsidiaries or against any property or assets of any thereof and
any one of such judgments has remained unpaid, unvacated,
-28-
unbonded or unstayed by appeal or otherwise for a period of 60 days
from the date of its entry; or
(m) Any Subsidiary Guaranty shall cease to be in full
force and effect for any reason whatsoever, including, without
limitation, a determination by any governmental body or court that
such agreement is invalid, void or unenforceable or any Subsidiary
which is a party thereto shall contest or deny in writing the
validity or enforceability of any of its obligations under the
Subsidiary Guaranty; or
(n) An event of default or event which with the lapse of
time or the giving of notice, or both, would constitute an event
of default under any Security Document shall have occurred and be
continuing; or
(o) (1) The Parent Corporation shall fail to observe or
perform any provision of the Support Agreement or (2) the Support
Agreement shall cease to be in full force and effect for any
reason whatsoever, including, without limitation, a determination
by any governmental body or any court that such agreement is
invalid, void or unenforceable or the Parent Corporation shall
contest or deny in writing the validity or enforceability of any
of its obligations under the Support Agreement; or
(p) A custodian, liquidator, trustee or receiver is
appointed for either Obligor, the Parent Corporation or any of
their respective Subsidiaries or for the major part of the
property of any thereof and is not discharged within 60 days after
such appointment; or
(q) Either Obligor, the Parent Corporation or any of
their respective Subsidiaries becomes insolvent or bankrupt, is
generally not paying its debts as they become due or makes an
assignment for the benefit of creditors, or either Obligor, the
Parent Corporation or any of their respective Subsidiaries applies
for or consents to the appointment of a custodian, liquidator,
trustee or receiver for either Obligor, the Parent Corporation or
any of their respective Subsidiaries or for the major part of the
property of any thereof; or
(r) Bankruptcy, reorganization, arrangement or
insolvency proceedings, or other proceedings for relief under any
bankruptcy or similar law or laws for the relief of debtors, are
instituted by or against either Obligor, the Parent Corporation or
any of their respective Subsidiaries and, if instituted against
the
-29-
Company, the Parent Corporation or any of their respective
Subsidiaries, are consented to or are not dismissed within 60 days
after such institution.
SECTION 6.2. NOTICE TO HOLDERS. When any Event of Default
described in the foregoing Section 6.1 has occurred, or if the
holder of any Note or of any other evidence of Indebtedness for
borrowed money of either Obligor or the Parent Corporation gives
any notice or takes any other action with respect to a claimed
default, each Obligor agrees to give notice within three Business
Days of such event to all holders of the Notes then outstanding.
SECTION 6.3. ACCELERATION OF MATURITIES. When any Event
of Default described in paragraph (a), (b) or (c) of Section 6.1
has happened and is continuing, any holder of any Note may, by
notice in writing sent to the Obligors in the manner provided in
Section 9.6, declare the entire principal and all interest accrued
on such Note to be, and such Note shall thereupon become forthwith
due and payable, without any presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived.
When any Event of Default described in paragraphs (a) through (o),
inclusive, of said Section 6.1 has happened and is continuing, the
holder or holders of 51% or more of the principal amount of the
Notes at the time outstanding may, by notice in writing to the
Obligors in the manner provided in Section 9.6, declare the entire
principal and all interest accrued on all Notes to be, and all
Notes shall thereupon become, forthwith due and payable, without
any presentment, demand, protest or other notice of any kind, all
of which are hereby expressly waived. When any Event of Default
described in paragraph (p), (q) or (r) of Section 6.1 has
occurred, then all outstanding Notes shall immediately become due
and payable without presentment, demand or notice of any kind.
Upon the Notes becoming due and payable as a result of any Event
of Default as aforesaid, the Obligors will forthwith pay to the
holders of the Notes the entire principal and interest accrued on
the Notes and, to the extent not prohibited by applicable law, an
amount as liquidated damages for the loss of the bargain evidenced
hereby (and not as a penalty) equal to the Make-Whole Amount,
determined as of the date on which the Notes shall so become due
and payable. No course of dealing on the part of the holder or
holders of any Notes nor any delay or failure on the part of any
holder of Notes to exercise any right shall operate as a waiver of
such right or otherwise prejudice such holder's rights, powers and
remedies. The Obligors further agree, to the extent permitted by
law, to pay to the holder or holders of the Notes all costs and
expenses incurred by them in the collection of any Notes upon any
default
-30-
hereunder or thereon, including reasonable compensation to such
holder's or holders' attorneys for all services rendered in connection
therewith.
SECTION 6.4. RESCISSION OF ACCELERATION. The provisions
of Section 6.3 are subject to the condition that if the principal
of and accrued interest on all or any outstanding Notes have been
declared immediately due and payable by reason of the occurrence
of any Event of Default described in paragraphs (a) through (o),
inclusive, of Section 6.1, the holders of 51% in aggregate
principal amount of the Notes then outstanding may, by written
instrument filed with the Obligors, rescind and annul such
declaration and the consequences thereof, PROVIDED that at the
time such declaration is annulled and rescinded:
(a) no judgment or decree has been entered for the
payment of any monies due pursuant to the Notes or this Agreement;
(b) all arrears of interest upon all the Notes and all
other sums payable under the Notes and under this Agreement
(except any principal, interest or premium on the Notes which has
become due and payable solely by reason of such declaration under
Section 6.3) shall have been duly paid; and
(c) each and every other Default and Event of Default
shall have been made good, cured or waived pursuant to Section
7.1;
and PROVIDED FURTHER, that no such rescission and annulment shall
extend to or affect any subsequent Default or Event of Default or
impair any right consequent thereto.
SECTION 1.4. AMENDMENT TO SECTION 8 OF THE ORIGINAL NOTE AGREEMENT.
(a) Section 8.1 of the Original Note Agreement shall be, and is hereby, further
amended by adding thereto the following definitions:
"ACQUISITION" shall have the meaning assigned thereto in the
Revolving Credit Agreement.
"BA LEASE" shall mean that certain Lease Agreement dated as of
December 30, 1997 between BA Leasing and Capital Corporation, as lessor,
and MMI, as lessee.
"BANK OF AMERICA" shall mean Bank of America National Trust and
Savings Association."
-31-
"BANK GUARANTY" shall mean the guaranty by MMI and ▇▇▇▇▇▇ of the
obligations of MMI and its Subsidiaries executed or to be executed under
the Revolving Credit Agreement.
"CONSOLIDATED FIXED CHARGE COVERAGE RATIO" shall mean the ratio of
(a) the sum of (1) Consolidated Net Income before payment of income
taxes, PLUS (2) depreciation, PLUS (3) amortization, PLUS (4) interest
expense and PLUS (5) lease expense over (b) the sum of (1) current
maturities of long-term debt, including current capital lease payments,
PLUS (2) interest expense, PLUS (3) lease expense, PLUS (4) shareholder
dividends or distributions paid.
"CONSOLIDATED INDEBTEDNESS" means and includes all (i) obligations
of the Obligors and their respective Subsidiaries, determined on a
consolidated basis, for borrowed money or which have been incurred in
connection with the acquisition of property other than current accounts
payable, (ii) obligations secured by any Lien or other charge upon
property owned by the Obligors and their respective Subsidiaries, even
though the Obligors have not assumed or become liable for the payment of
such obligations, (iii) noncontingent obligations created or arising
under any conditional sale or other title retention agreement with
respect to property acquired by the Obligors and their respective
Subsidiaries, notwithstanding the fact that the rights and remedies of
the seller, lender or lessor under such agreement in the event of default
are limited to repossession or sale of property, (iv) obligations (other
than obligations under any lease which is not a capitalized lease and
obligations in an amount equal to the demand component of any contract
providing for usual and customary utility services, including gas, water,
electricity and wastewater treatment services) to purchase any property
or to obtain the services of another person if the contract requires that
payment for such property or services be made regardless of whether such
property is delivered or such services are performed, except that no
obligation shall constitute Indebtedness solely because the contract
provides for liquidated damages or reimbursement of expenses following
cancellation, (v) capitalized rentals, (vi) obligations in respect of
letters of credit (a) but only to the extent that such letters of credit
do not support an obligation of the Obligors and their respective
Subsidiaries already included in Indebtedness, and (b) in respect of
standby letters of credit in excess of $1,000,000 of the stated amount,
and (vii) all guaranties by the Obligors and their respective
Subsidiaries of obligations of the type described in the foregoing
clauses (i) through (vi).
"CONSOLIDATED TANGIBLE NET WORTH" shall mean the excess of total
assets of MMI and its Subsidiaries, determined on a consolidated basis
eliminating intercompany items, over total liabilities and reserves of
MMI and its Subsidiaries, determined on a consolidated basis eliminating
intercompany items, total assets and total liabilities and reserves each
to be determined in accordance with GAAP excluding, however, from the
determination of total assets, all assets which would be classified as
intangible assets under GAAP including, without limitation, goodwill,
patents, trademarks, trade names, copyrights, franchises and deferred
charges (including, without limitation, unamortized debt discount and
expense, organization costs and deferred research and
-32-
development expenses) and excluding the write-up of assets above cost
and also excluding the effect of gains or losses of the type described
in clause (a) of the definition of the term "CONSOLIDATED NET INCOME".
"CONTINGENT OBLIGATION" means, as to any Person, any agreement,
undertaking or arrangement by which such Person assumes, guarantees,
endorses, contingently agrees to purchase or provide funds for the
payment of, or otherwise becomes or is contingently liable upon, the
obligation or liability or any other Person, or agrees to maintain the
net worth or working capital or financial condition of any other Person,
or otherwise assures any creditor of such other Person against loss.
"EBITDA" shall mean Consolidated Net Income PLUS, without
duplication and to the extent deducted in determining such Consolidated
Net Income, interest, depreciation and amortization expense PLUS income
taxes paid, all determined in accordance with a first-in, first-out basis
of accounting.
"EFFECTIVE DATE" shall have the meaning assigned thereto in
Section 5.1 of the Fifth Amendment.
ERISA AFFILIATE" shall mean any trade or business (whether or not
incorporated) under common control with any Obligor within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the
Code for purposes of provisions relating to Section 412 of the Code).
"ERISA EVENT" shall mean (a) a Reportable Event with respect to a
Plan; (b) a withdrawal by any Obligor or any ERISA Affiliate from a Plan
subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a
cessation of operations which is treated as such a withdrawal under
Section 4062(e) of ERISA; (c) a complete or partial withdrawal by any
Obligor or any ERISA Affiliate from a Multiemployer Plan or notification
that a Multiemployer Plan is in reorganization; (d) the filing of a
notice of intent to terminate, the treatment of a Plan amendment as a
termination under Section 4041 or 4041A of ERISA, or the commencement of
proceedings by the PBGC to terminate a Plan or Multiemployer Plan; (e) an
event or condition which might reasonably be expected to constitute
grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan or Multiemployer Plan;
or (f) the imposition of any liability under Title IV of ERISA, other
than PBGC premiums due but not delinquent under Section 4007 of ERISA,
upon any Obligor or any ERISA Affiliate.
"INTERCREDITOR AGREEMENT" shall mean an Intercreditor Agreement in
form and substance satisfactory to the holders of at least 51% in
aggregate principal amount of outstanding Notes and their special counsel
to be entered into by Bank of America, the Subsidiary Guarantors, from
time to time, the Obligors and the holders of the Notes.
-33-
"REVOLVING CREDIT AGREEMENT" shall mean that certain Multicurrency
Credit Agreement dated March 18, 1998 among Bank of America National
Trust and Savings Association, MMI and its Subsidiaries, as amended from
time to time in accordance with the terms of this Note Agreement.
"REVOLVING CREDIT DOCUMENTS" shall mean all documents and
certificates delivered in connection with the Revolving Credit Agreement.
"SUBSIDIARY GUARANTY" shall have the meaning assigned thereto in
Section 5.22.
"UNFUNDED PENSION LIABILITY" shall mean the excess of a Plan's
benefit liabilities under Section 4001(a)(16) of ERISA, over the current
value of that Plan's assets, determined in accordance with the
assumptions used for funding the Plan pursuant to Section 412 of the Code
for the applicable plan year.
(b) Section 8.1 of the Original Note Agreement shall be, and is hereby,
amended by deleting the definitions of "INDEBTEDNESS", "SECURITY DOCUMENTS" and
"SUBSIDIARY GUARANTOR" and replacing them with the following:
"INDEBTEDNESS" of any Person shall mean and include all
obligations (other than current accounts payable) of such Person which in
accordance with GAAP shall be classified upon a balance sheet of such
Person as liabilities of such Person, and in any event shall include all
(a) obligations of such Person for borrowed money or which have been
incurred in connection with the acquisition of property or assets,
(b) obligations secured by any Lien upon property or assets owned by such
Person, even though such Person has not assumed or become liable for the
payment of such obligations, (c) obligations created or arising under any
conditional sale or other title retention agreement with respect to
property acquired by such Person, notwithstanding the fact that the
rights and remedies of the seller, lender or lessor under such agreement
in the event of default are limited to repossession or sale of property,
(d) Capitalized Rentals, (e) obligations for foreign exchange contracts,
products or derivatives and (f) Guaranties of obligations of others of
the character referred to in this definition.
"SECURITY DOCUMENTS" shall include each and every Subsidiary
Guaranty delivered pursuant to Section 5.22.
"SUBSIDIARY GUARANTOR" shall mean each Subsidiary of any of the
Obligors which becomes a party to a Subsidiary Guaranty as provided in
Section 5.22.
SECTION 1.5. AMENDMENT TO SCHEDULE II OF THE ORIGINAL NOTE AGREEMENT.
(a) Part I, subparts 1, 3 and 4 and Part IX of Schedule II of the Original Note
Agreement shall be, and is hereby, amended in their entirety and replaced by
Exhibit C hereto.
(b) A new Schedule III is added to the Original Note Agreement in the
form of Exhibit D hereto.
-34-
SECTION 2. WAIVER, CONSENTS AND RELEASE
SECTION 2.1. WAIVERS AND CONSENTS. Upon and by virtue of this Fifth
Amendment becoming effective as herein contemplated, (i) the execution, delivery
and performance of the Revolving Credit Agreement in the form attached hereto as
Exhibit A and (ii) the termination of the Finance Company Loan Agreement are
hereby consented to and approved by the Noteholder. Any failure of the Obligors
to comply with the provisions of Section 5.19, which failure constitutes an
Event of Default under the Original Note Agreement, as a result of (i) the
execution, delivery or performance of such Revolving Credit Agreement and
(ii) the termination of the Finance Company Loan Agreement shall be deemed to
have been waived by the Noteholder.
SECTION 2.2. RELEASE. (a) Upon and by virtue of this Fifth Amendment
becoming effective as herein contemplated, the liens and security interests of
the Noteholder, the Security Trustee and the Collateral Agent in any and all of
the property of the Obligors shall be deemed to be released and terminated.
(b) Upon and by virtue of this Fifth Amendment becoming effective as
herein contemplated, the Guaranties of the obligations of the Obligors for the
benefit of the Noteholder by any and all Subsidiaries of an Obligor shall be
deemed to be released and terminated.
(c) In furtherance of the foregoing, the Noteholder hereby agrees upon
the effectiveness of this Fifth Amendment, to instruct the Security Trustee and
Collateral Agent to deliver to you appropriate evidence of such release and
termination, including, without limitation, termination statements under the
Uniform Commercial Code and mortgage releases as shall be necessary, or
otherwise reasonably requested by the Obligors, to terminate the Noteholder's
Liens and security interests.
SECTION 2.3. LIMITATION ON WAIVERS. The Obligors understand and agree that the
waivers contained in this Section 2 pertain only to the matters and to the
extent herein described and not to any other actions of the Obligors under, or
matters arising in connection with, the Original Note Agreement or to any rights
which you have arising by virtue of any such other actions or matters.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE OBLIGORS.
SECTION 3.1. REPRESENTATION. To induce the Noteholder to execute and deliver
this Fifth Amendment to Note Agreement, each of the Obligors represents and
warrants to Noteholder (which representations shall survive the execution and
delivery of this Fifth Amendment to Note Agreement) that:
(a) this Fifth Amendment to Note Agreement has been duly
authorized, executed and delivered by it and this Fifth Amendment to Note
Agreement 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
-35-
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 Fifth
Amendment to Note Agreement, constitutes the legal, valid and binding
obligations, contracts and agreements 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 Fifth Amendment to Note Agreement (i) has been duly authorized by
all requisite corporate action and, if required, shareholder action,
(ii) does 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, or
(3) any provision of any 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 (B) 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)(A)(3) of this
Section 3.1(c);
(d) as of the date hereof and after giving effect to this Fifth
Amendment to Note Agreement, no Default or Event of Default has occurred
which is continuing;
(e) the representations and warranties set forth in Exhibit B
to the First Amendment are true and correct on and as of the Effective
Date as if made on such date;
(f) since January 1, 1996 there has been no material adverse
change in the business, financial or other conditions of any Obligor; and
(g) MMI and its Subsidiaries have conducted a comprehensive
review and assessment of their computer applications with respect to any
defect in computer software, databases, hardware, controls and
peripherals related to the occurrence of the year 2000 or the use of any
date after December 31, 1999 in connection therewith. Based on the
foregoing review, assessment and inquiry, MMI reasonably believes that no
such defect will result in a Material Adverse Effect on the operations,
business, properties, condition (financial or otherwise) or prospects of
MMI and its Subsidiaries taken as a whole.
SECTION 4. CONDITIONS PRECEDENT.
The effectiveness and validity of this Fifth Amendment to the Note
Agreement is subject to the satisfaction of the following conditions precedent:
-36-
(a) The Noteholder of the shall have received the following,
all of which must be satisfactory in form and substance to such
Noteholder:
(i) this Fifth Amendment to Note Agreement, duly executed by
the Obligors;
(ii) an opinion of ▇'▇▇▇▇▇▇ & ▇▇▇▇▇▇, special counsel to the
Obligors, to the effect that: (A) this Fifth Amendment to Note Agreement
has 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
United States governmental body, Federal, state or local, is necessary in
connection with the execution, delivery and performance of this Fifth
Amendment to Note Agreement or any other agreements being delivered by
the Obligors in connection with 1998 Changes; (C) the execution, delivery
and performance by the Obligors of this Fifth Amendment to Note
Agreement, or any other agreement being delivered in connection with 1998
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 any of the
Obligors is a party or by which any of such Obligors may be bound; and
such opinion shall cover such other matters relating to this Fifth
Amendment to Note Agreement as the Noteholder may reasonably request.
(b) This Fifth Amendment to Note Agreement shall have been
executed and delivered by the Noteholder.
(c) The Noteholder shall have received evidence satisfactory in
form and substance to it and its special counsel that the Finance Company
Loan Agreement has been terminated and all security interests granted by
the Obligors in connection therewith have been released.
(d) The Parent Corporation shall have delivered its consent to
the 1998 Changes and reaffirmed its obligations under the Support
Agreement, by its execution and delivery of the Parent Support Letter in
the form of Exhibit B hereto.
(e) The Noteholder shall have received copies, certified as
being true, correct and complete, of the Revolving Credit Agreement and
evidence satisfactory in form and substance to it that the transactions
contemplated therein have been consummated.
-37-
(f) The Intercreditor Agreement, satisfactory in form and
substance to the Noteholder, shall have been executed and delivered by
Bank of America.
(g) The representations and warranties of the Obligors
contained in SECTION 3 of this Fifth Amendment to Note Agreement shall be
true and correct as of the Effective Date.
SECTION 5. MISCELLANEOUS.
SECTION 5.1. EFFECTIVE DATE; RATIFICATION. The amendments contemplated
by this Fifth Amendment to Note Agreement shall be effective as of the date (the
"EFFECTIVE DATE") upon which (a) all conditions set forth in SECTION 4 hereof
have been satisfied, (b) the Noteholder shall have received a copy of the
agreements entered into by the Obligors with the Finance Company Lenders with
respect to the 1998 Changes, and (c) the fees and expenses of ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇
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 5.2. SUCCESSORS AND ASSIGNS. This Fifth 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 5.3. COUNTERPARTS. This Fifth 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 5.4. 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 Fifth Amendment to Note Agreement.
SECTION 5.5. 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 Fifth Amendment to Note Agreement, but nevertheless all such references
shall be deemed to include this Fifth Amendment to Note Agreement unless the
context shall otherwise require.
SECTION 5.6. GOVERNING LAW. THIS FIFTH AMENDMENT TO NOTE AGREEMENT
SHALL BE DEEMED CONTRACTS AND INSTRUMENTS MADE UNDER THE LAWS OF THE STATE OF
ILLINOIS.
-38-
IN WITNESS WHEREOF, the parties hereto have executed this Fifth Amendment
to Note Agreement as of the day and year first above written.
MIDDLEBY MARSHALL INC.
By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------------
Its Executive Vice President
▇▇▇▇▇▇ ASSOCIATES, INC.
By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------------
Its Vice President
-39-
Accepted as of April 1, 1998.
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY, a Wisconsin
corporation
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Its Authorized Representative
-40-