SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
For quarter ended September 30, 1994 Commission File Number 33-24317
JORDAN INDUSTRIES, INC.
(Exact name of registrant as specified in charter)
Illinois 36-3598114
(State or other jurisdiction of (I.R.S. Employer
incorporated or organization) Identification No.)
ArborLake Centre, Suite 550 60015
1751 Lake Cook Road, (Zip Code)
Deerfield, Illinois
(Address of Principal Executive Offices)
Registrant's telephone number, including Area Code:
(708) 945-5591
Former name, former address and former fiscal year, if changed since last
report: Not applicable.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve (12) months (or for such shorter period that
the registrant was required to file such reports) and (2) has been subject to
such filing requirements for the past ninety (90) days.
Yes X No
The aggregate market value of voting stock held by non-affiliates of the
Registrant is non determinable as such shares were privately placed and there
is currently no public market for such shares.
The number of shares outstanding of Registrant's Common Stock as of
November 2, 1994: 93,501.0004
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FORM 10-Q QUARTERLY REPORT
JORDAN INDUSTRIES, INC.
INDEX
Part I. Page No.
Financial Information
Condensed Consolidated Balance Sheets
at September 30, 1994 and December 31, 1993 3
Condensed Consolidated Statements of Operations
for the Third Quarter and Nine Months Ended
September 30, 1994 and 1993 4
Condensed Consolidated Statements of Cash Flows
for the Nine Months Ended September 30, 1994
and 1993 5 - 6
Notes to Condensed Consolidated Financial
Statements 7
Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
Part II.
Other Information 14
Signatures 15
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JORDAN INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(ALL DOLLAR AMOUNTS IN THOUSANDS)
September 30, December 31,
1994 1993
ASSETS
Current Assets:
Cash and cash equivalents $ 26,223 $ 68,273
Accounts receivable - net 57,288 47,786
Inventories 78,348 61,186
Prepaid expenses and other current
assets 6,425 5,735
Total Current Assets 168,284 182,980
Property, plant and equipment - net 67,959 57,700
Notes receivable from affiliate 8,762 5,535
Goodwill - net 89,066 57,102
Other assets 35,103 35,192
Total Assets $369,174 $338,509
LIABILITIES AND NET CAPITAL DEFICIENCY
Current Liabilities:
Accounts payable $ 28,567 $ 31,806
Accrued liabilities 20,241 26,086
Advance deposits 2,282 1,696
Current portion of long-term debt 1,140 1,902
Total Current Liabilities 52,230 61,490
Long-term debt 379,422 356,981
Other non-current liabilities 1,972 3,649
Deferred income taxes 3,915 6,784
Minority interest and other 3,210 31
Redeemable preferred stock - 243
Net Capital Deficiency:
Common stock 1 1
Additional paid-in capital 2,972 2,972
Accumulated deficit (74,548) (93,642)
Total Net Capital Deficiency (71,575) (90,669)
Total Liabilities and Net
Capital Deficiency $369,174 $338,509
See accompanying notes to condensed consolidated financial statements.
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JORDAN INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(ALL DOLLAR AMOUNTS IN THOUSANDS)
NINE MONTHS ENDED
THIRD QUARTER September 30,
1994 1993 1994 1993
Net sales $109,103 $91,955 $292,790 $250,024
Cost of sales, excluding
depreciation 66,721 56,548 180,463 154,416
Selling, general and administra-
tive expenses 25,096 21,484 70,270 58,203
Depreciation 2,641 2,250 7,456 6,826
Amortization of goodwill and other
intangibles 1,941 2,220 5,961 6,654
Management fees and other 546 499 1,304 1,902
Operating income 12,158 8,954 27,336 22,023
Other (income) and expenses:
Interest expense 10,315 11,694 30,386 30,028
Interest income (86) (770) (587) (1,120)
Interest income from affiliates - (159) - (414)
Gain on sale of a partial interest
in a subsidiary (21,790) - (21,790) -
Total other (income) expenses (11,561) 10,765 8,009 28,494
Income (loss) before income taxes,
minority interest, and
extraordinary items 23,719 (1,811) 19,327 (6,471)
Provision (benefit) for income
taxes 348 300 (719) 716
Income (loss) before minority
interest and extraordinary items 23,371 (2,111) 20,046 (7,187)
Minority interest 276 7 1,130 31
Income (loss) before extraordinary
items 23,095 (2,118) 18,916 (7,218)
Extraordinary loss - 23,592 - 23,592
Net income (loss) $ 23,095 $(25,710) $ 18,916 $ (30,810)
See accompanying notes to condensed consolidated financial statements.
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JORDAN INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(ALL DOLLAR AMOUNTS IN THOUSANDS)
NINE MONTHS ENDED
September 30,
1994 1993
Cash flows from operating activities:
Net income (loss) $ 18,916 $(30,810)
Adjustments to reconcile net loss to net
cash (used in) provided by operating
activities:
Extraordinary loss - 23,592
Depreciation and amortization 14,365 14,689
Benefit from deferred income taxes (2,869) (600)
Minority interest 3,164 22
Non-cash interest 7,068 1,689
Changes in operating assets and
liabilities (net of acquisitions):
Increase in current assets (21,581) (11,228)
Increase (decrease) in current liabilities (10,330) 1,093
Increase in non-current assets (1,222) (1,177)
Net cash provided by (used in) in operating
activities 7,511 (2,730)
Cash flows from investing activities:
Capital expenditures (6,880) (6,296)
Notes receivable from affiliate (3,075) (2,400)
Acquisition of subsidiaries (35,872) -
Acquisitions of minority interests and
other (1,410) (2,531)
Net cash used in investing
activities (47,237) (11,227)
See accompanying notes to condensed consolidated financial statements.
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JORDAN INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(ALL DOLLAR AMOUNTS IN THOUSANDS)
NINE MONTHS ENDED
September 30,
1994 1993
Cash flows from financing activities:
Proceeds of debt issuance - 350,000
Purchase of Senior Subordinated Notes - (157,269)
Proceeds from Revolving Credit Facility 25,000 -
Payments of Revolving Credit Facility (25,000) (66,950)
Premium and consent fee on purchase
of Senior Subordinated Notes - (14,747)
Deferred financing costs (852) (13,153)
Issuance of (repayment of) other long
term debt (1,737) 1,148
Other 45 (309)
Net cash provided by (used in)
financing activities (2,544) 98,720
Effect of exchange rate changes on cash 220 (100)
Net increase (decrease) in cash and cash
equivalents (42,050) 84,663
Cash and cash equivalents at beginning of
the year 68,273 8,886
Cash and cash equivalents at end of period $ 26,223 $ 93,549
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest $ 29,670 $ 21,241
Income taxes, net $ 627 $ 939
Non cash investing activities:
Capital leases $ 7,107 $ 201
See accompanying notes to condensed consolidated financial statements.
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JORDAN INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(ALL DOLLAR AMOUNTS IN THOUSANDS)
A. ORGANIZATION
The unaudited condensed consolidated financial statements, which reflect all
adjustments that management believes necessary to present fairly the results
of interim operations, should be read in conjunction with the Notes to the
Consolidated Financial Statements (including the Summary of Significant
Accounting Policies) included in the Company's audited consolidated financial
statements for the year ended December 31, 1993, which are included in the
Company's Annual Report filed on Form 10-K for such year (the "1993 10-K").
Results of operations for the interim periods are not necessarily indicative
of annual results of operations.
B. INVENTORIES
Inventories are summarized as follows:
September 30, December 31,
1994 1993
Raw materials $14,911 $15,000
Work in process 7,287 5,868
Finished goods 56,150 40,318
$78,348 $61,186
C. NOTES RECEIVABLE FROM AFFILIATES
At September 30, 1994, the Company had notes receivable from Cape Craftsmen,
Inc., a company that is controlled by the partners, principals, employees and
affiliates of The Jordan Company, of $8,762.
D. ACCOUNTING FOR INCOME TAXES
Effective January 1, 1993, the Company adopted FAS No. 109, which requires
recognition of deferred tax assets and liabilities for the expected future tax
consequences of events that have been included in the financial statements or
tax returns. As permitted by FAS No. 109, prior year financial statements have
not been restated. Adoption of the new rules had no material effect on either
the Company's operating results or its financial position for the twelve months
ended December 31, 1993.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components
of the Company's deferred tax liabilities and assets as of September 30, 1994,
are as follows:
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JORDAN INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(ALL DOLLAR AMOUNTS IN THOUSANDS)
Deferred tax liabilities
Tax over book depreciation $ 8,915
Other 496
Total deferred tax liabilities $ 9,411
Deferred tax assets
NOL carryforwards $28,500
Other 2,779
Total deferred tax assets 31,279
Valuation allowance for deferred
tax assets (25,783)
Net deferred tax assets 5,496
Net deferred tax liabilities $ 3,915
E. ACQUISITION OF SUBSIDIARIES
On January 4, 1994, the Company, through its newly-formed wholly-owned
subsidiary, J2, Inc., bought substantially all of the net assets of Valmark
Industries, Inc. ("Valmark"), a manufacturer of membrane switches, graphic
panel overlays, labels, and bar codes.
The purchase price of $18,139, including costs incurred directly related to the
transaction, was allocated to working capital of $2,105, property, plant and
equipment of $1,358, non-compete agreements of $1,500, other assets of $58, and
the assumption of long-term capital lease obligation of $4 and resulted in an
excess purchase price over net identifiable assets of $13,122. The acquisition
was financed with the issuance of a $4,000 Subordinated Note to a former
shareholder, and cash.
On May 20, 1994, the Company, through its wholly-owned subsidiary, J2, Inc.,
bought all of the common stock of Pamco Printed Tape and Label Co., Inc.
("Pamco"), a manufacturer of printed labels.
The purchase price of $25,733, including costs incurred directly related to the
transaction, was allocated to working capital of $2,237, property, plant and
equipment of $2,690, non-compete agreements of $1,000, and the assumption of
a mortgage note of $731 and resulted in an excess purchase price over net
identifiable assets of $20,537. The acquisition was financed with the issuance
of a $4,000 Subordinated Note to a former shareholder, and cash.
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JORDAN INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(ALL DOLLAR AMOUNTS IN THOUSANDS)
F. REVOLVING CREDIT FACILITY
On June 29, 1994, the Company entered into a $50 million five year revolving
credit facility with the First National Bank of Boston ("FNBB"). The facility
will be used for working capital and acquisitions over the term of the loan.
There was no outstanding balance on the revolving credit facility at September
30, 1994.
G. WELCOME HOME PUBLIC OFFERING
On September 29, 1994, Welcome Home, Inc. ("Welcome Home"), sold 2.5 million
of the total 8.5 million shares outstanding, at an initial offering price of
$11.00 per share. As a result, Jordan Industries recorded a gain in the amount
of $21,790, reflecting the difference between the net proceeds received and
its proportionate share in its book basis of Welcome Home. The net proceeds
were used by Jordan Industries to repay certain bank indebtedness.
On October 13, 1994, Welcome Home, Inc., sold .4 million of the total 8.5
million shares outstanding, at a price of $11.00 per share. As a result,
Jordan Industries, Inc. will record a gain of approximately $3.6 million in
the fourth quarter. The net proceeds will be used to repay certain
bank indebtedness.
H. EXTRAORDINARY ITEM
In the third quarter of 1993, the Company incurred an extraordinary loss of
$23.6 million related to the July 23, 1993 debt offering. The extraordinary
loss was comprised of the premium paid to redeem the bonds, $14.8 million, the
write-off of deferred financing fees, $7.2 million, and the write-off of the
debt discount, $1.6 million.
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JORDAN INDUSTRIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(ALL DOLLAR AMOUNTS IN THOUSANDS)
The following discussion should be read in conjunction with Management's
Discussion and Analysis of Financial Condition and Results of Operations
contained in the 1993 10-K and the financial statements and the related notes
thereto which are included elsewhere in this quarterly report.
Results of Operations
Summarized below are the net sales, operating income and operation margins (as
defined) for each of the Company's business segments for the third quarter and
nine months ended September 30, 1994 and 1993. This discussion reviews the
foregoing segment data and certain of the consolidated financial data for the
Company.
NINE MONTHS ENDED
THIRD QUARTER SEPTEMBER 30,
1994 1993 1994 1993
Net Sales:
Consumer Products $ 52,904 $46,195 $142,519 $120,458
Industrial Products and Equipment 32,433 30,016 90,570 84,624
Specialty Advertising & Calendars 23,766 15,744 59,702 44,942
Total $109,103 $91,955 $292,791 $250,024
Operating Income (a):
Consumer Products $ 6,219 $ 5,528 $ 14,073 $ 11,520
Industrial Products and Equipment 7,403 5,692 18,466 15,619
Specialty Advertising & Calendars 1,820 (132) 3,310 1,255
Total $ 15,442 $11,088 $ 35,849 $ 28,394
Operating Margins (b):
Consumer Products 11.8% 12.0% 9.9% 9.6%
Industrial Products and Equipment 22.8% 19.0% 20.4% 18.5%
Specialty Advertising & Calendars 7.7% (.8)% 5.5% 2.8%
Consolidated 14.2% 12.1% 12.2% 11.4%
(a) Before corporate overhead of $3,284 and $2,134 for the third quarter
ended September 30, 1994 and 1993, respectively and $8,512 and $6,371 for
the nine months ended September 30, 1994 and 1993, respectively.
(b) Operating margin is operating income divided by net sales.
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CONSUMER PRODUCTS. As of September 30, 1994, the Consumer Products segment
consists of DACCO, Sate-Lite, Riverside, and Welcome Home.
Net sales during the third quarter and first nine months of 1994 increased $6.7
million or 14.5% and $22.1 million or 18.3%, respectively, over the same
periods in 1993. The third quarter sales increase was due to increased sales
of rebuilt converters and other parts at DACCO, $1.0 million, self help books,
music, audio tapes, and bibles at Riverside, $1.3 million, and 7.7% same store
sales growth and twenty-three additional stores at Welcome Home, $4.4 million.
The year-to-date increase was due to increased sales of rebuilt converters and
other parts at DACCO, $4.0 million, plastic wheels and warning triangles at
Sate-Lite, $.5 million, self help books, music, audio tapes, gifts, and bibles
at Riverside, $5.6 million, and 11.1% same store sales growth and twenty-three
additional stores at Welcome Home, $12.0 million.
Operating income increased $.7 million or 12.5% and $2.6 million or 22.2% in
the third quarter and first nine months of 1994, respectively, compared to the
same period in 1993. The third quarter increase was due to increases at DACCO,
$.2 million, Riverside, $.2 million, and Welcome Home, $.4 million, offset by
a decrease at Sate-Lite of $.1 million. The year-to-date increase was due to
increases at DACCO, $1.4 million, Riverside, $.9 million, and Welcome Home, $.4
million, offset by a decrease at Sate-Lite of $.1 million. These increases
were due to increased sales.
The third quarter operating margin decreased from 12.0% in 1993 to 11.8% and
the nine month year-to-date margin increased from 9.6% in 1993 to 9.9%.
INDUSTRIAL PRODUCTS AND EQUIPMENT. As of September 30, 1994, the Industrial
Products and Equipment segment consists of Parsons, Dura-Line, Imperial, Scott,
Gear, Hudson, AIM and Cambridge.
Net sales during the third quarter and first nine months increased $2.4 million
or 8.1% and $5.9 million or 7.0%, respectively, over the comparable periods in
1993. The third quarter sales increase was due to increased sales of Innerduct
at Dura-Line, $1.2 million, motors at Imperial, $.7 million, precision gears
at Gear, $.3 million, locks at Hudson, $.3 million, and electronic connectors
at AIM and Cambridge, $.4 million and $.1 million, respectively. This was
offset by a decrease in sales from fabrication and hot forming at Parsons, $.6
million. The year-to-date increase was due to an increase in Innerduct and
pipe sales at Dura-Line, $3.7 million, motors at Imperial, $1.7 million,
precision gears at Gear, $1.1 million, locks at Hudson, $.4 million, and
electronic connectors at AIM and Cambridge, $1.2 million and $.6 million,
respectively. This was offset by an overall decrease in sales at Parsons, $2.8
million.
Operating income increased $1.7 million or 30.1% and $2.8 million or 18.2% in
the third quarter and first nine months of 1994, respectively, compared to the
same periods in 1993. The third quarter increase was due to increases at
Hudson, $.5 million, Dura-Line, $.4 million, AIM $.3 million, Imperial, $.3
million, and Scott, $.2 million. The year-to-date increase was due to
increases at Hudson, $1.2 million, AIM, $.6 million, Scott, $.6 million, Gear,
$.5 million, and Cambridge, $.5 million, offset by a decrease at Parsons, $.6
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PAGE 12
million. These increases were due to increased sales and production
efficiencies.
The third quarter operating margin increased from 19.0% in 1993 to 22.8% and
the nine month year-to-date margin increased from 18.5% in 1993 to 20.4%.
These increases were due to higher sales and lower operating expenses.
SPECIALTY ADVERTISING AND CALENDARS. As of September 30, 1994, the Specialty
Advertising and Calendars segment consists of JII/SPAI ("SPAI"), Beemak,
Valmark and Pamco.
Net sales during the third quarter and first nine months of 1994 increased $8.0
million or 51.0% and $14.8 million or 32.8%, respectively, compared to the same
periods in 1993. The third quarter and nine month sales increases are both
attributable to the acquisitions of Valmark and Pamco during 1994. Without the
Valmark and Pamco acquisitions, net sales for the third quarter increased $.4
million or 2.8% and net sales for the nine months decreased $.8 million or 1.8%
compared to the same periods in 1993. The third quarter increase was due to
increased sales of ad-specialties at SPAI, $.5 million and increased
fabrication sales at Beemak, $.1 million, offset by a decrease in calendar
sales at SPAI, $.2 million. The nine month decrease was due to lower ad-
specialty sales at SPAI, $.8 million. Valmark and Pamco contributed $10.2
million and $5.3 million, respectively, to net sales during the first nine
months of 1994.
Operating income increased $2.0 million from ($.1) million to $1.9 million
and $2.1 million or 163.7% in the third quarter and first nine months of
1994, respectively compared to the same periods in 1993. The increases were
due to the acquisitions of Valmark and Pamco which favorably affected
operating income by $1.4 million in the third quarter and $1.7 million in
the nine month period. Without these acquisitions, operating income would
have increased $.6 million in the third quarter, and $.4 million for the
nine month period, as compared to 1993.
The third quarter operating margin increased from (.8)% in 1993 to 7.7% and the
nine month year-to-date operating margin increased from 2.8% in 1993 to 5.5%.
This is due to the inclusion of Valmark and Pamco in 1994.
CONSOLIDATED RESULTS: (See Condensed Consolidated Statements of Operations.)
Operating income for the first nine months increased $5.3 million or 24.1%
compared to 1993 due to the increase in sales and lower amortization expense.
Interest expense for the first nine months of 1993 increased from $30.0 million
to $30.4 million due to interest expense incurred by Valmark and Pamco of $.3
million. Nine month interest income decreased from $1.5 million to $.6 million
due to lower cash balances. As a result of higher operating income, and a
gain of $21.8 million on the sale of 2.5 million shares of Welcome Home common
stock, the Company recorded net income before extraordinary items of $18.9
million in the first nine months of 1994 as compared to a net loss before
extraordinary items of $7.2 million in 1993. The Company incurred an
extraordinary loss of $23.6 million in 1993, related to the third quarter debt
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offering. The extraordinary loss was comprised of the premium paid to redeem
the bonds, $14.8 million, the write-off of deferred financing fees, $7.2
million, and the write-off of the debt discount, $1.6 million.
LIQUIDITY AND CAPITAL RESOURCES. The Company had $116.1 million of working
capital at September 30, 1994, compared to $121.5 million at the end of 1993.
The decrease in working capital was due to lower cash balances and higher
advanced deposits offset by higher accounts receivables, higher inventories,
higher prepaid expenses and other current assets, lower accounts payable, lower
accrued expenses, and lower current portion of long-term debt.
The Company's net cash provided by (used in) operating activities for the nine
months ended September 30, 1994 increased $10.2 million versus the same period
in 1993. This increase was due to net income of $18.9 million, versus a net
loss of $30.8 million in the prior period, higher minority interest, $3.1
million, higher non-cash interest, $5.4 million, offset by the extraordinary
loss in the prior period, $23.6 million, lower depreciation and amortization,
$.3 million, higher benefit from deferred income taxes, $2.3 million, higher
increase in current assets, $10.4 million, and a decrease in current
liabilities, $11.4 million.
The net cash used in investing activities for the nine months ended September
30, 1994, increased $36.0 million versus the same period in 1993. This
increase was due to higher capital expenditures, $.6 million, higher advances
to affiliates, $.6 million, and the acquisition of Valmark and Pamco, $35.9
million, offset by a decrease in acquisitions of minority interest and other,
$1.1 million.
The net cash provided by (used in) financing activities for the nine months
ended September 30, 1994 decreased $101.3 million versus the same period in
1993. This decrease was due to the net effect of the debt offering in the
period, $97.9 million, and $1.7 million of debt payments compared to an
increase of notes payable of $1.1 million in 1993.
The Company is, and expects to continue to be, in compliance with the
provisions of the Indentures.
None of the subsidiaries require significant amounts of capital spending to
sustain their current operations or to achieve projected growth.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
None
(a) Reports on Form 8-K
None
(b) Exhibits
10.1 Revolving Credit Agreement dated as of September 29,
1994, between Jordan Industries, Inc. and Welcome
Home, Inc.
10.2 Termination Agreement dated as of September 29, 1994,
between Jordan Industries, Inc. and Welcome Home, Inc.
with respect to the Tax Sharing Agreement, Management
Consulting Agreement, and other allocations of
of overhead charges.
27. EDGAR Financial Data Schedule
28.1 Press release dated May 5, 1994, announcing the filing
for an Initial Public Offering by Welcome Home, Inc.,
a subsidiary of Jordan Industries, Inc.
28.2 Press release dated May 5, 1994, announcing the filing
for an Initial Public Offering by Welcome Home, Inc.
28.3 Press release dated June 30, 1994, announcing the
postponement of the Initial Public Offering by Welcome
Home, Inc.
28.4 Press release dated September 23, 1994, announcing the
pricing of the Initial Public Offering by Welcome
Home, Inc., a subsidiary of Jordan Industries, Inc.
28.5 Press release dated September 23, 1994, announcing the
pricing of the Initial Public Offering by Welcome
Home, Inc.
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PAGE 15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
JORDAN INDUSTRIES, INC.
November 2, 1994 By: /s/ Thomas C. Spielberger
Thomas C. Spielberger
Controller and Principal
Accounting Officer
REVOLVING CREDIT AGREEMENT
REVOLVING CREDIT AGREEMENT, dated as of September 29, 1994, between
WELCOME HOME, INC., a Delaware corporation (the "Borrower") and JORDAN
INDUSTRIES, INC., an Illinois corporation (the "Lender").
ARTICLE I
THE LOANS
SECTION 1.1. The Commitments.
(a) The Lender agrees, on the terms and subject to the conditions
hereinafter set forth, to make loans (the "Loans") to the Borrower from
time to time during the period from the date hereof to the earlier of
September 29, 1997, the date notice is given by the Lender to the
Borrower pursuant to Section 6.1, and the date a Commitment Termination
Notice is given by the Borrower to the Lender pursuant to Section 1.4
(such date being the "Termination Date").
(b) The aggregate amount of all Loans outstanding from time to
time may not exceed $15 million (the "Commitment Amount"). Each Loan
must be in an amount not less than $100,000 and an integral multiple of
$100,000. Subject to the terms hereof, the Borrower may from time to
time borrow, prepay and reborrow amounts pursuant hereto.
SECTION 1.2. Making the Loans. Each Loan shall be made on at least one
(1) Business Days' (as defined below) written notice from the Borrower to the
Lender (a "Borrowing Notice"), which notice shall be in the form attached
hereto as Exhibit A, specifying
(a) the proposed date (which must be a Business Day) and amount
of such Loan;
(b) the interest rate option applicable thereto; and
(c) with respect to LIBO Rate Loans (as defined below), the
initial Interest Period for such Loan.
Not later than 11:00 A.M. (New York City time) on the date of such Loan and
upon fulfillment of the conditions set forth in Sections 3.1 and 3.2, that the
Lender will make the proceeds of such Loan available, in immediately available
funds, to the Borrower's account at Wachovia Bank & Trust, Winston-Salem, North
Carolina, ABA #053100494, credit to Welcome Home, Inc., Account #8611052630.
The term "Business Day" means, in respect of Prime Rate Loans, a day of
the year on which banks are not required or authorized to close in New York
City and Boston, Massachusetts, and in respect of LIBO Rate Loans a day of the
year on which dealings are carried on in the London interbank market and banks
are open for business in London and not required or authorized to close in New
York City.
SECTION 1.3. Interest, Etc. Interest will accrue on the unpaid
principal amount of each Loan from the date such Loan is made until such
principal amount is paid in full. Payments of accrued interest and the
determinations of applicable interest rates and Interest Periods relative
thereto will be made as set forth below:
(a) Prime Rate. The Borrower may from time to time elect,
pursuant to Section 1.2, to pay interest on any Loan at a rate per annum
equal to the sum of 0.5% per annum plus the Prime Rate. Interest on each
Loan bearing interest at the Prime Rate (a "Prime Rate Loan") will be
payable on the last Business Day of each March, June, September and
December and on the Termination Date.
The "Prime Rate" means a per annum rate of interest equal to the
rate of interest most recently announced by The First National Bank of
Boston in Boston, Massachusetts as the Lender's prime rate.
The Prime Rate is not necessarily intended to be the lowest rate of
interest determined by the Lender in connection with extensions of
credit. Changes in the rate of interest on the Loans will take effect
simultaneously with each change in the Prime Rate. The Lender will give
prompt notice to the Borrower of changes in the Prime Rate.
(b) LIBO Rate. The Borrower may from time to time, but in no
event sooner than ninety (90) days from the date hereof, elect to pay
interest on any Loan at a rate per annum equal to the sum of 2.0% per
annum plus the LIBO Rate for an Interest Period for such Loan by notice,
pursuant to Section 1.2 (for the initial Interest Period for each Loan)
and clause (d) of this Section (for each subsequent Interest Period for
each Loan), specifying such interest rate and the first day and duration
of such Interest Period. If the Borrower makes such election for any
Loan for any such Interest Period, the Borrower will pay interest on such
Loan during such Interest Period on the last day of such Interest Period
and also, in the case of any Loan having an Interest Period greater than
three calendar months, on the last Business Day of every third calendar
month during such Interest Period, at the LIBO Rate for such Interest
Period for such Loan.
The "LIBO Rate" means for any Interest Period for any Loan chosen
by the Borrower to bear interest at the LIBO Rate (a "LIBO Rate Loan"),
an interest rate per annum equal at all times during such Interest Period
to the rate which appears on the Reuters Screen LIBO Page as of 11:00
a.m., London time, one (1) Business Day before the first day of such
Interest Period for a period equal to such Interest Period. If more than
one such offered rate appears on the Reuters Screen LIBO Page, the
offered rate used to determine the Interest Rate shall be the
arithmetical average (rounded upward, if necessary, to the nearest
one-hundredth of one percent (1/100%)) of such offered rates.
If, for any reason, the LIBO Rate cannot be determined by reference
to the Reuters Screen LIBO Page on the day one (1) Business Day before
the first day of such Interest Period the Lender shall notify the
Borrower forthwith and shall determined the LIBO Rate on such date, in
accordance with the immediately preceding paragraph, mutatis mutandis,
using offered rates advised to The First National Bank of Boston.
(c) Interest Periods. Interest on each LIBO Rate Loan made
hereunder shall be determined for, and payable at the termination of, a
specified period (an "Interest Period") chosen by the Borrower in
accordance with clause (b) or (c) of this Section. The first day of any
Interest Period for any LIBO Rate Loan will be, in the case of the
initial Interest Period for any such Loan, the date such Loan is made,
and for each subsequent Interest Period for any such Loan, the last day
of the then current Interest Period for such Loan. The duration of each
Interest Period shall be in the case of a LIBO Rate Loan one, two, three,
or six months, in each case as the Borrower may select upon notice
received by the Lender not later than 11:00 A.M. (New York City time) on
the first Business Day prior to the first day of such Interest Period;
provided, however, that the duration of any Interest Period which begins
prior to and would otherwise end after the Termination Date shall end on
such Termination Date.
(d) Default Rate. On any overdue principal amount of any Loan,
the Borrower will pay interest, payable on demand, at a fluctuating
interest rate per annum (the "Default Rate") equal to 2% per annum over
the Prime Rate in effect from time to time (but not less than the Prime
Rate in effect at the time of the applicable default).
(e) Conversion/Continuation Procedures. At the Borrower's
election pursuant to notice received by the Lender not later than 11:00
A.M. (New York City time) on not less than one (1) nor more than five (5)
Business Days' notice, which notice shall be in the form attached hereto
as Exhibit B:
(i) all, or any portion in a minimum amount of $100,000
and an integral multiple of $100,000, of any Prime Rate Loan may be
converted from a Prime Rate Loan into a LIBO Rate Loan;
(ii) on the expiration of the Interest Period applicable
to any LIBO Rate Loan, all, or any portion in a minimum amount of
$100,000 and an integral multiple of $100,000, of the outstanding
principal amount of such LIBO Rate Loan may be continued as a LIBO
Rate Loan or be converted into a Prime Rate Loan;
provided, however, that:
(iii) no portion of the outstanding principal amount of any
Loan may be continued as, or be converted into, LIBO Rate Loans
when any Event of Default, or any event that would constitute an
Event of Default but for the requirement that notice be given or
time elapse or both, has occurred and is continuing.
The Borrower will, in each notice to the Lender electing that all, or any
portion, of the principal amount of any LIBO Rate Loans be continued as,
or any Loans be converted into, LIBO Rate Loans, select the duration of
the Interest Period commencing upon such continuation or conversion. In
the absence of delivery of a notice referred to in the preceding sentence
with respect to any LIBO Rate Loan before the expiration of the then
applicable Interest Period for such LIBO Rate Loan, the Borrower will be
deemed to have elected to convert such LIBO Rate Loan into a Prime Rate
Loan at the expiration of such Interest Period.
SECTION 1.4. Reduction/Termination of the Commitment Amount.
(a) The Borrower may, upon at least two (2) Business Days' notice
to the Lender, terminate or reduce the unused portion of the Commitment
Amount, provided that each partial reduction must be in a minimum amount
of $100,000 and an integral multiple of $100,000.
(b) The Borrower may, upon at least two (2) Business Days' notice
(a "Commitment Termination Notice") to the Lender, terminate the
Commitment Amount, provided that Borrower has prepaid in full all Loans,
including accrued interest to the date of such prepayment on the
principal amount of all outstanding loans, in accordance with Section
2.2.
ARTICLE II
TERMS OF PAYMENT
SECTION 2.1. Repayment. On the Termination Date, the then outstanding
aggregate principal amount of all Loans will be due and payable in full.
SECTION 2.2. Prepayments.
(a) The Borrower may, upon at least one (1) Business Days' notice
to the Lender
(i) in the case of any Prime Rate Loan, prepay the
outstanding amount of such Loan, in whole or in part, on any
Business Day; and
(ii) in the case of any LIBO Rate Loan, prepay the
outstanding amount of such Loan, in whole or in part on, but only
on, the last day of any applicable Interest Period for such Loan,
in each case with accrued interest to the date of such prepayment on the
principal amount prepaid; provided, however, that each partial prepayment
shall be in a principal amount not less than $100,000 and in integral
multiples of $100,000.
(b) If it shall become unlawful for the Lender to fund or continue
to fund or maintain any LIBO Rate Loans, or to perform the Lender's
obligations hereunder, upon demand by the Lender the Borrower shall
prepay in full all such Loans bearing interest at such rate with accrued
interest thereon, and upon such demand or such notice of prepayment the
Lender's obligation to make such Loans bearing interest at such rate
shall terminate. In addition, at any time the aggregate outstanding
principal amount of all Loans exceeds the Commitment Amount, the Borrower
will immediately make a prepayment in an amount at least equal to such
excess.
(c) Any and all prepayments made by Borrower pursuant to this
Section 2.2, or otherwise, shall not be subject to any prepayment premium
or penalty.
SECTION 2.3. Increased Costs, Funding Losses, Capital Adequacy,Etc.
(a) In the event that as a result of either (i) the introduction
of or any change in, or in the interpretation of, any law or regulation,
or (ii) the compliance by the Lender with any request from any central
bank or other governmental authority, if applicable, there is any
increase in the Lender's cost of agreeing to make, fund or maintain
Loans, then the Borrower, will, from time to time, promptly upon the
Lender's written request to the Borrower, pay to the Lender additional
amounts sufficient to indemnify the Lender against such increased cost.
(b) In the event that the Lender incurs any loss or expense
(including any loss or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by the Lender to make,
continue or maintain any portion of the principal amount of any Loan as,
or to convert any portion of the principal amount of any Loan into, a
LIBO Rate Loan) a result of
(i) the repayment or prepayment (whether pursuant to
Section 2.2 or for any other reason) of the principal amount of any
LIBO Rate Loan on a date other than the last day of the Interest
Period applicable thereto;
(ii) any conversion of all or any portion of the outstanding
principal amount of any LIBO Rate Loans into Prime Rate Loans
pursuant to clause (e) of Section 1.3 prior to the expiration of
the Interest Period then applicable thereto;
(iii) any Loans not being made as a LIBO Rate Loan in
accordance with the Borrowing Notice therefor; or
(iv) any Loans not being continued as, or converted into,
LIBO Rate Loans in accordance with the request given therefor
pursuant to clause (e) of Section 1.3; then the Borrower will, from
time to time, promptly upon the Lender's written request to the
Borrower, pay to the Lender additional amounts sufficient to
reimburse the Lender for such loss or expenses.
(c) If either the introduction, effectiveness, interpretation, or
phase-in of, or compliance by the Lender with, any applicable law or
regulation, directive, guideline, decision or request (whether or not
having the force of law) of any court, central bank, regulator or other
governmental authority affects or would affect the amount of capital
required or expected to be maintained by the Lender, and the Lender
determines (in its sole and absolute discretion) that the rate of return
on the Lender's capital as a consequence of the Lender's commitment
hereunder or the Loans made hereunder is reduced to a level below that
which the Lender could have achieved but for the occurrence of any such
circumstance, then the Borrower will, from time to time, promptly upon
the Lender's written request to the Borrower, pay to the Lender
additional amounts sufficient to compensate the Lender for such reduction
in the Lender's rate of return.
(d) A statement by the Lender as to any such amount (including
calculations thereof in reasonable detail) will, in the absence of
manifest error, be conclusive and binding on the Borrower. In
determining such amount, the Lender may use any method of averaging and
attribution that the Lender (in its sole and absolute discretion) deems
applicable.
SECTION 2.4. Payments and Computations.
(a) The Borrower shall make each payment hereunder not later than
1:00 p.m. (New York City time) on the day when due in lawful money of the
United States (in freely transferable United States dollars) to the
Lender at Northern Trust, Chicago, Illinois, ABA #071000152, credit to
Jordan Industries, Inc., Account #30175175, in same day funds.
(b) All computations of interest based on the Prime Rate will be
made by the Lender on the basis of a year of 360 days for the actual
number of days (including the first day but excluding the last day)
occurring in the period for which such interest or commitment fee is
payable. All computations of interest based on the LIBO Rate will be
made by the Lender on the basis of a year of 360 days for the actual
number of days (including the first day but excluding the last day)
occurring in the period for which such interest is payable. Each
computation by the Lender of interest or fees hereunder will be
conclusive and binding for all purposes, absent manifest error.
(c) Whenever any payment to be made hereunder or under the Note or
any other instrument delivered hereunder shall be stated to be due, or
whenever the last day of any Interest Period would otherwise occur, on a
day other than a Business Day, such payment shall be made, and the last
day of such Interest Period shall occur, on the next succeeding Business
Day, and such extension of time will, in such case, be included in the
computation of payment of interest or commitment fee, as the case may be;
provided, however, in the case of a LIBO Rate Loan, if such extension
would cause such payment to be made or the last day of such Interest
Period to occur in a new calendar month, such payment will be made, and
the last day of such Interest Period will occur, on the next preceding
Business Day.
SECTION 2.5. Evidence of Debt. The Lender's Loans under its commitment
hereunder shall be evidenced by the Borrower promissory note (the "Note"), in
substantially the form of Exhibit C, delivered to the Lender pursuant to clause
(a) of Section 3.1, payable to the order of the Lender in a maximum principal
amount equal to the original Commitment Amount. The Borrower hereby
irrevocably authorizes the Lender to make (or cause to be made) appropriate
notations on the grid attached to the Note (or on a continuation of such grid
attached to the Note and made a part thereof), which notations, if made, will
evidence the date of, the outstanding principal of, and the interest rate
(including any conversions thereof) applicable to, all Loans evidenced thereby.
Failure to record any notation on such grid (or on such continuation), or any
error with respect thereto, will not, however, limit or otherwise affect the
Borrower's obligations hereunder or under the Note to make payments of
principal of or interest on the Loans when due. The Lender will also maintain
an account or accounts evidencing the Borrower's indebtedness to the Lender
resulting from each Loan made from time to time and the amounts of principal,
interest and fees payable and paid from time to time hereunder. In any legal
action or proceeding in respect of this Agreement, the entries made in such
account or accounts will be conclusive evidence of the existence and amounts of
the Borrower's obligations to the Lender therein recorded.
ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.1. Condition Precedent to Initial Loan. The Lender's
obligation to make the initial Loan hereunder is subject to the condition
precedent that the Lender receives, prior to or concurrently with the making of
such Loan, the following documents and instruments, each dated the date of such
Loan, in form and substance satisfactory to the Lender:
(a) The Note.
(b) An officer's certificate, dated the date of such initial Loan,
certifying as to
(i) resolutions of the Board of Directors then in full
force and effect authorizing the execution, delivery and
performance of this Agreement, the Note and the other documents and
instruments to be executed hereunder, and
(ii) the incumbency and true signatures of the officers
duly authorized to sign this Agreement, the Note and the other
documents and instruments to be delivered hereunder.
(c) Certified copies of all necessary governmental authorizations
and approvals, if any, with respect to this Agreement, the Note and each
other document or instrument to be delivered hereunder or in connection
herewith.
SECTION 3.2. Conditions Precedent to All Loans. The Lender's obligation
to make each Loan (including the initial Loan) shall be subject to the further
conditions precedent that on the date of such Loan:
(a) The following statements shall be true, and each of the giving
of the applicable Borrowing Notice for such Loan and the acceptance by
the Borrower of the proceeds of such Loan shall constitute a
representation and warranty by the Borrower that on the date of such Loan
such statements are true:
(i) the representations and warranties contained in
Section 4.1 are true and correct on and as of the date of such Loan
as though made on and as of such date; and
(ii) no event has occurred and is continuing, or would
result from such Loan, which constitutes an Event of Default or
would constitute an Event of Default but for the requirement that
notice be given or time elapse or both.
(b) The Lender will have received such other approvals, opinions
or documents as the Lender may reasonably request, and all such
approvals, opinions and documents shall be in form and substance
satisfactory to the Lender.
SECTION 3.3. Conditions Precedent to Certain Loans. The Lender's
obligation to make each Loan (including the initial Loan) shall, at the option
of the Lender upon ten (10) Business Days' notice to the Borrower, be subject
to the further condition precedent that the Lender receive, prior to or
concurrently with the making of such Loan, the following documents and
instruments each dated the date of such Loan, in form and substance
satisfactory to the Lender:
(a) A Security Agreement, dated the date of such Loan, duly
executed by the Borrower in favor of the Lender, a copy of which is
attached as Exhibit D (the "Security Agreement", together with this
Agreement, the Note, and each other document and instrument to be
executed hereunder and thereunder, hereinafter referred to collectively
as the "Loan Documents" and individually a "Loan Document"), together
with:
(i) acknowledgment copies of proper financing statements
(Form UCC-1) duly filed under the Uniform Commercial Code of all
jurisdictions as may be necessary or, in the Lender's opinion,
desirable to perfect the security interests created by the Security
Agreement.
(ii) certified copies of requests for information or
copies (Form UCC-11), or equivalent reports, listing the financing
statements referred to in clause (i) above and all other effective
financing statements which name the Borrower (under the Borrower's
present name and any previous name) as debtor and which are filed
in the jurisdictions referred to in said clause (i), together with
copies of such other financing statements (none of which shall
cover the collateral purported to be covered by the Security
Agreement),
(iii) evidence of the completion of all recordings and
filings as may be necessary or, in the Lender's opinion, desirable
to perfect the security interests and liens created by the Security
Agreement,
(iv) evidence of the insurance required by the terms of
the Security Agreement,
(v) evidence that all other actions necessary or, in the
Lender's opinion, desirable to perfect and protect the security
interests created by the Security Agreement have been taken.
(b) A certificate, dated the date of such Loan, of one of the
Borrower's duly authorized officers, certifying as to
(i) resolutions of the Borrower's Board of Directors then
in full force and effect authorizing the execution, delivery and
performance of each Loan Document to which the Borrower is a party,
and
(ii) the incumbency and true signatures of the officers
duly authorized to sign each Loan Document to which the Borrower is
a party.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1. Representations and Warranties. The Borrower represents
and warrants as follows:
(a) The Borrower is a corporation duly organized, validly existing
and in good standing under the laws of Delaware, and is duly qualified to
do business and is in good standing as a foreign corporation in each
jurisdiction where the nature of its business requires such
qualification.
(b) The Borrower's execution, delivery and performance of this
Agreement, the Note and each other document or instrument delivered in
connection herewith are within its corporate powers, have been duly
authorized by all necessary corporate action, and do not contravene
(i) its charter or by-laws;
(ii) any law, rule or regulation applicable to the
Borrower (including, without limitation, Regulation G, T, U or X of
the Board of Governors of the Federal Reserve System); or
(iii) any contractual restriction binding on or affecting
the Borrower or the Borrower's properties.
(c) No authorization, approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body is
required for the Borrower's due execution, delivery and performance of
this Agreement or the Note.
(d) This Agreement is, and the Note when delivered hereunder will
constitute, the Borrower's legal, valid and binding obligations
enforceable against the Borrower in accordance with their respective
terms.
(e) The Borrower's balance sheet as at December 31, 1993, and its
related statement of income and retained earnings and changes in
financial position for the fiscal year then ended, copies of which have
been furnished to the Lender, fairly present the Borrower's financial
condition as at such date and the results of the Borrower's operations
for the period ended on such date, all in accordance with generally
accepted accounting principles consistently applied.
(f) Since December 31, 1993, there has been no material adverse
change in the Borrower's financial condition, operations or prospects as
presented in the financial statements described in clause (e) of this
Section.
(g) There is no pending or threatened action or proceeding
affecting the Borrower or any of its subsidiaries before any court,
governmental agency or arbitrator, which would, if adversely determined,
have a materially adverse effect upon the financial condition or
operations of the Borrower or any of its subsidiaries.
(h) The Borrower is not engaged in the business of extending
credit for the purpose of purchasing or carrying margin stock (within
meaning of Regulation U issued by the Board of Governors of the Federal
Reserve System), and no proceeds of any Loan will be used to purchase or
carry any margin stock or to extend credit to others for the purpose of
purchasing or carrying any margin stock.
(i) The Borrower is not an "investment company", or a company
"controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended; nor is it a "holding
company", a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company" or of a "subsidiary company" of a
"holding company", within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
ARTICLE V
COVENANTS
SECTION 5.1. Affirmative Covenants. So long as any Loan remains unpaid
or the Lender has any commitment hereunder to make Loans to the Borrower, the
Borrower will, unless the Lender otherwise consents in writing:
(a) Maintain Property. Maintain and preserve, and cause each of
its subsidiaries to maintain and preserve, all of its properties which
are used or useful in the conduct of its business in good working order
and condition, ordinary wear and tear excepted.
(b) Maintenance of Insurance. Maintain, and cause each of its
subsidiaries to maintain, insurance with responsible and reputable
insurance companies or associations in such amounts and covering such
risks as is usually carried by companies engaged in similar businesses
and owning similar properties, in the same general areas in which the
Borrower or such subsidiary operates.
(c) Books and Records. Keep, and cause each of its subsidiaries
to keep, books and records reflecting all of its business affairs and
transactions in a manner which permits the preparation of financial
statements in accordance with generally accepted accounting principles.
(d) Compliance with Laws, Etc. Comply, and cause each of its
subsidiaries to comply, in all material respects with all applicable
laws, rules, regulations and orders, such compliance to include paying
before the same become delinquent, all taxes, assessments and
governmental charges imposed upon either of the Borrower or upon any of
the Borrower's respective subsidiaries' properties, except to the extent
contested in good faith and by appropriate proceedings promptly
instituted and diligently pursued.
(e) Net Worth. Maintain an excess of consolidated total assets
over consolidated total liabilities of not less than $10 million.
(f) Reporting Requirements. Furnish to the Lender:
(i) as soon as available and in any event within 45 days
after the end of each of the Borrower's first three quarters of
each of the Borrower's fiscal years, consolidated balance sheets of
the Borrower and its subsidiaries as of the end of such quarter and
consolidated statements of income and retained earnings and of cash
flows of the Borrower and its subsidiaries for the period
commencing at the end of the previous fiscal year and ending with
the end of such quarter, certified by the Borrower's chief
financial officer as having been prepared in accordance with
generally accepted accounting principles consistent with those
applied in the preparation of the financial statements referred to
in clause (e) of Section 4.1;
(ii) as soon as available and in any event within 120 days
after the end of each of the Borrower's fiscal years, consolidated
financial statements of the Borrower and its subsidiaries for such
year certified in a manner acceptable to the Lender by Ernst &
Young or other independent public accountants acceptable to the
Lender;
(iii) as soon as possible and in any event within five (5)
Business Days after the occurrence of each Event of Default and
each event which, with the giving of notice or lapse of time, or
both, would constitute an Event of Default, continuing on the date
of such statement, a statement of the Borrower's chief financial
officer setting forth details of such Event of Default or event and
the action which the Borrower has taken and proposes to take with
respect thereto;
(iv) promptly after the sending or filing thereof, copies
of all reports which the Borrower sends to any of its security
holders, and copies of all reports and registration statements
which the Borrower or any of its subsidiaries files with the
Securities and Exchange Commission or any national securities
exchange;
(v) promptly after the filing or receiving thereof,
copies of all reports and notices which the Borrower or any of its
subsidiaries files under the Employees Retirement Income Security
Act of 1974, as amended, with the Internal Revenue Service or the
Pension Benefit Guaranty Corporation or the U.S. Department of
Labor or which the Borrower or any of its subsidiaries receives
from such Corporation or any other government agency;
(vi) as soon as available and in any event within 45 days
after the end of each of the Borrower's fiscal quarters, a
certificate executed by the Borrower's chief financial officer,
showing (in reasonable detail and with appropriate calculations and
computations in all respects satisfactory to the Lender) compliance
with the financial covenants set forth in clauses (e) and (f) of
this Section; and
(vii) such other information respecting the condition or
operations, financial or otherwise, of the Borrower or any of its
subsidiaries as the Lender may from time to time reasonably
request.
(g) Security Agreement. Execute and deliver, upon the request of
Lender made upon ten (10) Business Days' notice to the Borrower, a
Security Agreement, each Loan Document and each instrument contemplated
by Section 3.3 herein.
SECTION 5.2. Negative Covenants. So long as any Loan remains unpaid or
the Lender has any commitment hereunder to make Loans to the Borrower, the
Borrower will not, without the Lender's written consent:
(a) Debt. Create or suffer to exist, or permit any of the
Borrower's subsidiaries to create or suffer to exist, any Debt other than
(A) Debt which is subordinated and junior in right of payment to Debt and
all other obligations and liabilities of Borrower to Lender in respect of
Loans under this Agreement and all Loan Documents and (B) Debt
outstanding on the date hereof, (C) obligations as lessee under leases
for stores which shall have been or should be, in accordance with
generally accepted accounting principles, consistently applied, recorded
as capital leases, (D) the Intercompany Redemption Note issued by
Borrower to Lender on September 22, 1994, in the aggregate principal
amount of $25,575,000 (the "Intercompany Redemption Note"), (E) the
Over-allotment Intercompany Redemption Note issued by Borrower to Lender
no later than October 24, 1994, in the aggregate principal amount no
greater than $4,125,000 (the "Over-allotment Redemption Note"), (F) the
Intercompany Note issued by Borrower to Lender on April 15, 1994, in the
aggregate principal amount of $15,000,000 (the "Intercompany Note"), and
(G) Debt, other than Debt described in clauses (A) through (F), in an
aggregate amount not exceeding $5 million. The term "Debt" means (i)
indebtedness for borrowed money, (ii) obligations evidenced by bonds,
debentures, notes or other similar instruments, (iii) obligations to pay
the deferred purchase price of property or services, (iv) obligations as
lessee under leases which shall have been or should be, in accordance
with generally accepted accounting principles, consistently applied,
recorded as capital leases other than store leases described in clause
(C) above, (v) obligations under direct or indirect guaranties in respect
of, and obligations (contingent or otherwise) to purchase or otherwise
acquire, or otherwise to assure a creditor against loss in respect of,
indebtedness or obligations of others of the kinds referred to in clauses
(i) through (iv) above, and (vi) liabilities in respect of unfunded
vested benefits under plans covered by Title IV of the Employee
Retirement Income Security Act of 1974, as amended, and any successor
statute of similar import, together with the regulations thereunder, in
each case as in effect from time to time.
(b) Liens, Etc. Create or suffer to exist, or permit any of the
Borrower's subsidiaries to create or suffer to exist, any lien, security
interest or other charge or encumbrance, or any other type of
preferential arrangement, upon or with respect to any of the Borrower's
or its properties, whether now owned or hereafter acquired, or assign, or
permit any of its subsidiaries to assign, any right to receive income, in
each case to secure or provide for the payment of any Debt of any person,
other than
(i) purchase money liens or purchase money security
interests upon or in any property acquired or held by the Borrower
or any of its subsidiaries in the ordinary course of business to
secure the purchase price of such property or to secure
indebtedness incurred solely for the purpose of financing the
acquisition of such property; or
(ii) liens or security interests existing on such property
at the time of its acquisition (other than any such lien or
security interest created in contemplation of such acquisition);
(iii) liens imposed pursuant to Debt outstanding as of the
date hereof;
(iv) liens in respect of store leases of Borrowers; or
(v) liens imposed pursuant to this Agreement or any Loan
Document.
(c) Dividends, Etc. Declare or make any dividend payment or other
distribution of assets, properties, cash, rights, obligations or
securities on account of any shares of any of its classes of capital
stock, or purchase, redeem or otherwise acquire for value (or permit any
of its subsidiaries to do so) any shares of any of its classes of capital
stock or any warrants, rights or options to acquire any such shares, now
or hereafter outstanding, except that the Borrower may
(i) declare and make any dividend payment or other
distribution payable solely in the Borrower's common stock,
(ii) purchase, redeem or otherwise acquire shares of the
Borrower's common stock or warrants, rights or options to acquire
any such shares with the proceeds received from the substantially
concurrent issue of new shares of the Borrower's common stock,
(iii) redeem shares of the Borrower's common stock in
respect of the Intercompany Redemption Note and the Over-allotment
Redemption Note, and
(iv) declare or pay cash dividends to the Borrower's
stockholders and purchase, redeem or otherwise acquire shares of
the Borrower's capital stock or warrants, rights or options to
acquire any such shares for cash solely out of 5% of the Borrower's
net income and its subsidiaries arising after September 30, 1994
and computed on a cumulative consolidated basis, and
(v) purchase, redeem or otherwise acquire rights or options
to acquire shares of the Borrower's common stock issued pursuant to
the Borrower's Stock Option/SAR Plan or any similar plan;
provided, however, that, immediately after giving effect to any proposed
action described above, no Event of Default or event which, with the
giving of notice or lapse of time, or both, would constitute an Event of
Default would exist.
(d) Mergers, Etc. Merge or consolidate with or into, or convey,
transfer, lease or otherwise dispose of (whether in one transaction or in
a series of transactions) all or substantially all of the Borrower's
assets (whether now owned or hereafter acquired) to, or acquire all or
substantially all of the assets or capital stock of, any person or
entity, or permit any of its subsidiaries to do so, except that (i) any
of its subsidiaries may merge or consolidate with or into, or transfer
assets to, or acquire assets of, any of its other subsidiaries; and (ii)
any of its subsidiaries may merge into or transfer assets to the Borrower
and the Borrower may merge or consolidate with or into, and any of its
subsidiaries may merge or consolidate with or into, any other person or
entity; provided, however, in each case that, immediately after giving
effect to such proposed transaction, no Event of Default or event which,
with the giving of notice or lapse of time, or both, would constitute an
Event of Default would exist and in the case of any such merger to which
the Borrower is a party, the Borrower is the surviving corporation.
(e) Negative Pledges, Restrictive Agreements, etc. The Borrower
will not, and will not permit any of its subsidiaries to, enter into any
agreement (excluding this Agreement and any other Loan Document)
prohibiting:
(a) the creation or assumption of any lien upon its
properties, revenues or assets, whether now owned or hereafter
acquired, or the ability of the Borrower to amend or otherwise
modify this Agreement or any other Loan Document; or
(b) the ability of any subsidiary of Borrower payments,
directly or indirectly, to the Borrower by way of dividends,
advances, repayments of loans or advances, reimbursements of
management and other intercompany charges, expenses and accruals
other returns on investments, or any other agreement or arrangement
which restricts the ability of any such subsidiary to make any
payment, directly or indirectly, to the Borrower.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.1. Events of Default. If any of the following events ("Events
of Default") occurs and is continuing:
(a) the Borrower fails to pay hereunder when due (i) any
installment of principal of, or (ii) interest on any Loan when due, which
failure to pay interest continues for five (5) Business Days;
(b) any representation or warranty made by the Borrower in or in
connection with any Loan Document shall prove to have been incorrect in
any material respect when made;
(c) the Borrower fails to perform or observe any covenant or
agreement contained in Section 5.2 or clauses (e) of Section 5.1;
(d) the Borrower fails to perform or observe any other term,
covenant or agreement contained in any Loan Document on its part to be
performed or observed and any such failure remains unremedied for 30 days
after written notice thereof is given to the Borrower by the Lender;
(e) the Borrower or any of its subsidiaries shall fail to pay any
Debt (excluding Debt evidenced by the Note), or any interest or premium
thereon, when due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) in a principal or notional amount of
at least $1,000,000 and such failure shall continue after the applicable
grace period, if any, specified in the agreement or instrument relating
to such Debt; or any other default under any agreement or instrument
relating to any such Debt, or any other event, shall occur and shall
continue after the applicable grace period, if any, specified in such
agreement or instrument, if the effect of such default or event is to
accelerate the maturity of such Debt; or any such Debt shall be declared
to be due and payable, or required to be prepaid (other than by a
regularly scheduled required prepayment), prior to the stated maturity
thereof;
(f) the Borrower or any of its subsidiaries shall generally not
pay its debts as such debts become due; provided, that such non-payment
of debts has a material adverse effect on the affairs and conduct of
Borrower's business, either singly or in the aggregate, or shall admit in
writing the Borrower's or such subsidiary's inability to pay its debts
generally, or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against the
Borrower or any of its subsidiaries seeking to adjudicate the Borrower or
any of its subsidiaries a bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief,
or composition of the Borrower's or such subsidiary's debts under any law
relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment
of a receiver, trustee, or other similar official for the Borrower or for
any substantial part of the Borrower's property and the same shall remain
unstayed or undismissed for 60 days; or the Borrower or any of its
subsidiaries shall take any corporate action to authorize any of the
actions set forth above in this clause (f);
(g) a final judgment or order for the payment of money in excess
of $1,000,000 shall be rendered against the Borrower or any of its
subsidiaries and such either (i) enforcement proceedings shall have been
commenced by any creditor upon such judgment or order, or (ii) judgment
or order shall continue unsatisfied and unstayed for a period of ten (10)
days, or
(h) the Security Agreement after delivery thereof under Section
3.3 shall for any reason, except to the extent permitted by the terms
thereof, cease to create a valid and perfected first priority security
interest in any of the collateral purported to be covered thereby, or
(i) Borrower fails to execute and deliver the documents required
to be delivered pursuant to Section 3.3 or 5.1(g);
then, and in any such event, the Lender may, by notice to the Borrower,
(j) declare its commitment under Section 1.1 to make Loans to be
terminated, whereupon the same will forthwith terminate; and
(i) declare the Loans and all indebtedness evidenced by
the Note, all interest thereon and all other amounts payable under
this Agreement (or any other document or instrument delivered in
connection herewith) to be forthwith due and payable, whereupon
(ii) the Termination Date will be deemed to have occurred;
and
(iii) the Loans and all indebtedness evidenced by the Note,
all such interest and all such amounts will become and be forthwith
due and payable, all without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly
waived by the Borrower.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. Assignment. Lender may assign all of its rights and
obligations under this Agreement and all Loan Documents to any subsidiary or
affiliate of Lender at any time upon three (3) days notice to Borrower.
SECTION 7.2. Amendments, Etc. No amendment to or waiver of any
provision of this Agreement, the Note or any other document or instrument
delivered in connection herewith, nor consent to any departure by the Borrower
therefrom, will in any event be effective unless the same is in writing and
signed by the Lender and then such amendment, waiver or consent will be
effective only in the specific instance and for the specific purpose for which
given.
SECTION 7.3. Notices, Etc. All notices and other communications
provided for hereunder must be in writing (including telecopy communication)
and mailed or telecopied or delivered, if to the Borrower, at its address at
309-D Raleigh Street, Wilmington, North Carolina 24812, Telecopy:
910-791-4945, Attention: Edward Kleiger; and if to the Lender, at its address
at Arbor Lake Centre, Suite 550, 1751 Lake Cook Road, Deerfield, Illinois
60015, Telecopy: 708-945-9645, Attention: Thomas C. Spielberger; with a copy
to Jonathan F. Boucher, The Jordan Company, 9 West 57th Street, New York, New
York 10019, or, at such other address as designated by the Borrower or the
Lender in a written notice to the other. All such notices and communications
will, when mailed or telecopied, be effective when deposited in the mails or
receipt of telecopy transmission is confirmed, respectively, addressed as
aforesaid, except that notices to the Lender will not be effective until
received by the Lender.
SECTION 7.4. No Waiver; Remedies. No failure on the Lender's part to
exercise, and no delay on its part in exercising, any right hereunder or under
the Note will operate as a waiver thereof; nor will any single or partial
exercise of any right hereunder or under the Note or any other document or
instrument delivered in connection herewith preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
SECTION 7.5. Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles consistently applied, except as otherwise stated herein.
SECTION 7.6. Costs and Expenses. The Borrower agrees to pay on demand
all costs and expenses, including reasonable legal fees and expenses, in
connection with the negotiation, execution, delivery, administration and
enforcement of this Agreement, the Note and any other document or instrument
delivered hereunder.
SECTION 7.7. Right of Set-off. Upon the occurrence and during the
continuance of any Event of Default, or any event that would constitute an
Event of Default under clause (f) of Section 6.1 but for the requirement that
notice be given or time elapse or both, the Lender is hereby authorized at any
time and from time to time, without notice to the Borrower (any such notice
being expressly waived by the Borrower), to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by the Lender to or for the
Borrower's credit or account against any and all of the Borrower's obligations
now or hereafter existing under this Agreement, the Note or any other document
or instrument delivered in connection herewith, irrespective of whether or not
the Lender has made any demand under this Agreement, the Note or any other
document or instrument delivered in connection herewith, and although such
obligations may be unmatured. The Lender's rights under this Section are in
addition to other rights and remedies (including other rights of set-off) which
the Lender may have.
SECTION 7.8. Binding Effect; Counterparts. This Agreement, the Note and
each other document or instrument delivered in connection herewith shall be
binding upon and inure to the benefit of the Borrower and the Lender and the
Borrower's and the Lender's respective successors and assigns, except that the
Borrower will not have the right to assign its rights hereunder or any interest
herein. The Lender may assign to any other financial institution all or any
part of, or any interest in (including participation interests), its rights and
benefits hereunder, and under the Note and each other document or instrument
delivered in connection herewith, and to the extent of such assignment such
assignee will have the same rights and benefits against the Borrower as it
would have had if it were the Lender hereunder. This Agreement may be executed
by the Borrower and the Lender in counterparts, each of which will be deemed to
be an original and all of which will constitute but one and the same agreement.
SECTION 7.9. Governing Law. THIS AGREEMENT, THE NOTE AND EACH OTHER
DOCUMENT OR INSTRUMENT DELIVERED IN CONNECTION HEREWITH SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 7.10. Waiver of Jury Trial. THE BORROWER AND THE LENDER HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THE BORROWER OR THE
LENDER MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON,
OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER
DOCUMENT RELATED HERETO (INCLUDING THE NOTE), OR ANY COURSE OF CONDUCT, COURSE
OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE BORROWER OR
THE LENDER. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDER'S ENTERING
INTO THIS AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
WELCOME HOME, INC.
By: ________________________
Name: Edward Kleiger
Title: President and
Chief Operating
Oficer
JORDAN INDUSTRIES, INC.
By: _________________________
Name: Jonathan F. Boucher
Title: Vice President
EXHIBIT A
BORROWING REQUEST
Jordan Industries, Inc.
Arbor Lake Centre, Suite 300
1751 Lake Cook
Deerfield, Illinois 60015
Attention: Thomas C. Spielberger
WELCOME HOME, INC.
------------------
Gentlemen and Ladies:
This Borrowing Request is delivered to you pursuant to Section 1.2 of the
Credit Agreement, dated as of June ___, 1994 (together with all amendments,
supplements, restatements and other modifications if any, from time to time
made thereto, the "Credit Agreement"), among Welcome Home, Inc., a Delaware
corporation (the "Borrower") and Jordan Industries, Inc., an Illinois
corporation (the "Lender"). Unless otherwise defined herein or the context
otherwise requires, terms used herein have the meanings provided in the Credit
Agreement.
The Borrower hereby requests that a Loan be made in the aggregate
principal amount of $______________ on ___________ ___, 19___ as a LIBO Rate
Loan having an Interest Period of [[one] [two] [three] [six] month(s)] [Prime
Rate Loan].
The Borrower hereby acknowledges that, pursuant to Section 3.2 of the
Credit Agreement, each of the delivery of this Borrowing Request and the
acceptance by the Borrower of the proceeds of the Loans requested hereby
constitute a representation and warranty by the Borrower that, on the date of
such Loans, and before and after giving effect thereto and to the application
of the proceeds therefrom, all statements set forth in Section 3.2 of the
Credit Agreement are true and correct in all material respects.
The Borrower agrees that if prior to the time of the Borrowing requested
hereby any matter certified to herein by it will not be true and correct at
such time as if then made, it will immediately so notify the Lender. Except to
the extent, if any, that prior to the time of the Borrowing requested hereby
the Lender shall receive written notice to the contrary from the Borrower, each
matter certified to herein shall be deemed once again to be certified as true
and correct at the date of such Borrowing as if then made.
Please wire transfer the proceeds of the Borrowing to the accounts of the
following persons at the financial institutions indicated respectively:
Amount to be Person to be Paid Name, Address, etc.
Transferred Name Account No. of Transferee Lender
- - ------------- ------------- ------------ --------------------
$____________ _____________ ____________ ____________________
____________________
Attention:__________
$____________ _____________ ____________ ____________________
____________________
Attention: _________
Balance of The Borrower ____________ ____________________
such proceeds ____________________
Attention: _________
The Borrower has caused this Borrowing Request to be executed and
delivered, and the certification and warranties contained herein to be made, by
its duly Authorized Officer this ___ day of ________ ___ , 19___.
WELCOME HOME, INC.
By:_________________________________
Name:
Title:
EXHIBIT B
CONTINUATION/CONVERSION NOTICE
Jordan Industries, Inc.
Arbor Lake Centre, Suite 3000
1751 Lake Cook Road
Deerfield, Illinois 60015
Attention: Thomas C. Spielberger
WELCOME HOME, INC.
Gentlemen and Ladies:
This Continuation/Conversion Notice is delivered to you pursuant to
Section 1.3(e) of the Credit Agreement, dated as of June ___, 1994 (together
with all amendments, supplements, restatements and other modifications if any,
from time to time made thereto, the "Credit Agreement"), among Welcome Home,
Inc., a Delaware corporation (the "Borrower") and Jordan Industries, Inc., an
Illinois corporation (the "Lender"). Unless otherwise defined herein or the
context otherwise requires, terms used herein have the meanings provided in the
Credit Agreement.
The Borrower hereby requests that on _________ ___, 19___,
(1) $___________ of the presently outstanding principal amount
of the Loans originally made on __________ ___, 19 ___,
(2) and all presently being maintained as [Prime Rate Loans]
[LIBO Rate Loans],
(3) be [converted into] [continued as],
(4) [LIBO Rate Loans having an Interest Period of [one] [two]
[three] [six] month(s)] [Prime Rate Loans].
The Borrower hereby:
(a) certifies and warrants that no Event of Default, or any
event that would constitute an Event of Default but for the requirement
that notice be given or time elapse or both, has occurred and is
continuing; and
(b) agrees that if prior to the time of such continuation or
conversion any matter certified to herein by it will not be true and
correct at such time as if then made, it will immediately so notify the
Lender.
Except to the extent, if any, that prior to the time of the continuation or
conversion requested hereby the Lender shall receive written notice to the
contrary from the Borrower, each matter certified to herein shall be deemed to
be certified at the date of such continuation or conversion as if then made.
The Borrower agrees to remit to the Lender, on the date of such conversion, an
interest payment in the amount of $__________ [if a Prime Rate Loan is being
converted into a LIBO Rate Loan on a date other than an interest payment date
on such Prime Rate Loan].
The Borrower has caused this Continuation/Conversion Notice to be
executed and delivered, and the certification and warranties contained herein
to be made, by its Authorized Officer this ____ day of ____________, 19___.
WELCOME HOME, INC.
By: _______________________________
Name:
Title:
EXHIBIT C
REVOLVING NOTE
$15,000,000 September 29, 1994
FOR VALUE RECEIVED, the undersigned, WELCOME HOME, INC., a Delaware
corporation (the "Borrower"), unconditionally promises to pay to the order of
JORDAN INDUSTRIES, INC. (the "Lender") on September 29, 1997, the principal sum
of fifteen million dollars ($15,000,000) or, if less, the aggregate unpaid
principal amount of all Revolving Loans made by the Lender pursuant to that
certain Revolving Credit Agreement, dated as of September 29, 1994 (together
with all amendments, supplements, restatements and other modifications, if any,
from time to time thereafter made thereto, the "Credit Agreement"), between the
Borrower and Lender.
The Borrower also promises to pay interest on the unpaid principal amount
hereof from time to time outstanding from the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity, until paid, at the
rates per annum and on the dates specified in the Credit Agreement.
Payments of both principal and interest are to be made without set-off or
counterclaim in lawful money of the United States of America in same day or
immediately available funds to the account designated by the Agent pursuant to
the Credit Agreement.
This Note is one of the Notes referred to in, and evidences Loans
advanced under the Credit Agreement, to which reference is made for a
description of the security for this Note and for a statement of the terms and
conditions on which the Borrower is permitted and required to make prepayments
and repayments of principal on the Loans evidenced by this Note, and on which
such Loans may be declared to be or shall automatically become immediately due
and payable. Unless otherwise defined, terms used herein have the meanings
provided in the Credit Agreement.
The Borrower hereby irrevocably authorizes each Lender to make (or cause
to be made) appropriate notations on the grid attached to such Lender's Note
(or on any continuation of such grid), which notations, if made, shall
evidence, inter alia, the date of, the outstanding principal of, and the
interest rate and Interest Period applicable to, the Loans evidenced hereby.
Such notations shall be rebuttable presumptive evidence of the information so
set forth; provided, however, that the failure of any Lender to make any such
notations shall not limit or otherwise affect any obligations of the Borrower.
All parties hereto, whether as makers, endorsers, or otherwise, severally
waive presentment for payment, demand, protest and notice of dishonor.
THIS NOTE HAS BEEN DELIVERED IN NEW YORK CITY, NEW YORK AND SHALL BE
DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE
STATE OF NEW YORK.
WELCOME HOME, INC.
By_____________________________
Name: Jonathan F. Boucher
Title: Vice President
<TABLE>
<CAPTION>
REVOLVING LOANS AND PRINCIPAL PAYMENTS
Amount of Revolving Amount of Principal Unpaid Principal
Loan Made Repaid Balance
------------------- ------------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Base LIBO Interest Base LIBO Base LIBO Notation
Date Rate Rate Period Rate Rate Rate Rate Total Made By
(If App-
licable)
</TABLE>
EXHIBIT D
SECURITY AGREEMENT
SECURITY AGREEMENT dated _______________, 199__, made by WELCOME HOME,
INC., a Delaware corporation with an office at ________________________ (the
"Grantor"), to Jordan Industries, Inc., an Illinois corporation (the "Lender").
WHEREAS, the Grantor has executed and delivered to the Lender a
Promissory Note dated ___________, 19__ (the "Note"). The Lender has required
that the Grantor grant the security interest contemplated by this Agreement as
a condition to making the loan (the "Loan") to the Grantor pursuant to the
Note. Terms defined in the Note are used herein with the same meanings.
NOW, THEREFORE, in consideration of the premises and in order to induce
the Lender to make the Loan under the Note, the Grantor hereby agrees as
follows:
SECTION 8. Grant of Security. The Grantor hereby assigns and pledges to
the Lender, and hereby grants to the Lender a security interest in, all of the
Grantor's right, title and interest in and to the following, whether now owned
or hereafter acquired (the "Collateral"):
(a) All equipment in all of its forms, wherever located, now or
hereafter existing (including, but not limited to, all machinery,
equipment, furnishings, movable trade fixtures and vehicles), and all
parts thereof and all accessions thereto (any and all such equipment,
parts and accessions being the "Equipment");
(b) All inventory in all of its forms, wherever located, now or
hereafter existing (including, but not limited to, (i) all raw materials
and work in process therefor, finished goods thereof, and materials used
or consumed in the manufacture or production thereof, (ii) goods in which
the Grantor has an interest in mass or a joint or other interest or right
of any kind (including, without limitation, goods in which the Grantor
has an interest or right as consignee), and (iii) goods which are
returned to or repossessed by the Grantor), and all accessions thereto
and products thereof and documents therefor (any and all such inventory,
accessions, products and documents being the "Inventory");
(c) All accounts, contract rights, chattel paper, instruments,
general intangibles and other obligations of any kind, now or hereafter
existing, whether or not arising out of or in connection with the sale or
lease of goods or the rendering of services, and all rights now or
hereafter existing in and to all security agreements, leases, and other
contracts securing or otherwise relating to any such accounts, contract
rights, chattel paper, instruments, general intangibles or obligations
(any and all such accounts, contract rights, chattel paper, instruments,
general intangibles and obligations being the "Receivables", and any and
all such leases, security agreements and other contracts being the
"Related Contracts"; and
(d) All proceeds of any and all of the foregoing Collateral
(including, without limitation, proceeds which constitute property of the
types described in clauses (a), (b) and (c) of this Section 1) and, to
the extent not otherwise included, all payments under insurance (whether
or not the Lender is the loss payee thereof), or any indemnity, warranty
or guaranty, payable by reason of loss or damage to or otherwise with
respect to any of the foregoing Collateral.
SECTION 9. Security for Obligations. This Agreement secures the payment
of all obligations of the Grantor to the Lender now or hereafter existing under
the Credit Agreement, Note, and each other Loan Document, whether for
principal, interest, indemnities, expenses or otherwise, and all obligations of
the Grantor now or hereafter existing under this Agreement (all such
obligations being the "Obligations").
SECTION 10. Grantor Remains Liable. Anything herein to the contrary
notwithstanding, (a) the Grantor shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein to
perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (b) the exercise by the Lender of any of
the rights hereunder shall not release the Grantor from any of its duties or
obligations under the contracts and agreements included in the Collateral, and
(c) the Lender shall not have any obligation or liability under the contracts
and agreements included in the Collateral by reason of this Agreement, nor
shall the Lender be obligated to perform any of the obligations or duties of
the Grantor thereunder or to take any action to collect or enforce any claim
for payment assigned hereunder.
SECTION 11. Representations and Warranties. The Grantor represents and
warrants as follows:
(a) All of the Equipment and Inventory are located at the places
specified in the Schedule hereto. The chief place of business and chief
executive office of the Grantor and the office where the Grantor keeps
its records concerning the Receivables, and all originals of all chattel
paper which evidence Receivables, are located at the address first
specified above for the Grantor. None of the Receivables is evidenced by
a promissory note.
(b) The Grantor owns the Collateral free and clear of any lien,
security interest, charge or encumbrance except for the security interest
created by this Agreement. No effective financing statement or other
instrument similar in effect covering all or any part of the Collateral
is on file in any recording office, except such as may have been filed in
favor of the Lender relating to this Agreement. The Grantor has the
following trade names: Welcome Home and Home Again.
(c) The Grantor has exclusive possession and control of the
Equipment and Inventory.
(d) This Agreement creates a valid and perfected first priority
security interest in the Collateral, securing the payment of the
Obligations, and all filings and other actions necessary or desirable to
perfect and protect such security interest have been duly taken.
(e) No authorization, approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body is
required either (i) for the grant by the Grantor of the security interest
granted hereby or for the execution, delivery or performance of this
Agreement by the Grantor or (ii) for the perfection of or the exercise by
the Lender of its rights and remedies hereunder.
SECTION 12. Further Assurances. (a) The Grantor agrees that from time
to time, at the expense of the Grantor, the Grantor will promptly execute and
deliver all further instruments and documents, and take all further action,
that may be necessary or desirable, or that the Lender might request, in order
to perfect and protect any security interest granted or purported to be granted
hereby or to enable the Lender to exercise and enforce its rights and remedies
hereunder with respect to any Collateral. Without limiting the generality of
the foregoing, the Grantor will: (i) mark conspicuously each document included
in the Inventory and each chattel paper included in the Receivables and each
Related Contract and, at the request of the Lender, each of its records
pertaining to the Collateral with a legend, in form and substance satisfactory
to the Lender, indicating that such document, chattel paper, Related Contract
or Collateral is subject to the security interest granted hereby; (ii) if any
Receivable shall be evidenced by a promissory note or other instrument or
chattel paper, deliver and pledge to the Lender hereunder such note, instrument
or chattel paper duly endorsed and accompanied by duly executed instruments of
transfer or assignment, all in form and substance satisfactory to the Lender;
and (iii) execute such financing or continuation statements, or amendments
thereto, and such other instruments or notices, as may be necessary or
desirable, or as the Lender may request, in order to perfect and preserve the
security interests granted or purported to be granted hereby.
(b) The Grantor hereby authorizes the Lender to file one or more
financing or continuation statements, and amendments thereto, relative to
all or any part of the Collateral without the signature of the Grantor
where permitted by law. A carbon, photographic or other reproduction of
this Agreement or any financing statement covering the Collateral or any
part thereof shall be sufficient as a financing statement where permitted
by law.
(c) The Grantor will furnish to the Lender from time to time
statements and schedules further identifying and describing the
Collateral and such other reports in connection with the Collateral as
the Lender may reasonable request, all in reasonable detail.
SECTION 13. As to Equipment and Inventory. The Grantor shall:
(a) Keep the Equipment and Inventory (other than Inventory sold in
the ordinary course of business) at the places therefor specified in
Section 4(a) or, upon 30 days' prior written notice to the Lender, at
such other places in jurisdictions where all action required by Section 5
shall have been taken with respect to the Equipment and Inventory.
(b) Cause the Equipment to be maintained and preserved in the same
condition, repair and working order as when new, ordinary wear and tear
excepted, and in accordance with any manufacturer's manual, and shall
forthwith, or in the case of any loss or damage to any of the Equipment
as quickly as practicable after the occurrence thereof, make or cause to
be made all repairs, replacements, and other improvements in connection
therewith which are necessary or desirable to such end. The Grantor
shall promptly furnish to the Lender a statement respecting any loss or
damage to any of the Equipment.
(c) Pay promptly when due all property and other taxes,
assessments and governmental charges or levies imposed upon, and all
claims (including claims for labor, materials and supplies) against, the
Equipment and Inventory, except to the extent the validity thereof is
being contested in good faith.
SECTION 14. Insurance. (a) The Grantor shall, at its own expense,
maintain insurance with respect to the Equipment and Inventory in such amounts,
against such risks, in such form and with such insurers, as shall be
satisfactory to the Lender from time to time. Each policy for (i) liability
insurance shall provide for all losses to be paid on behalf of the Lender and
the Grantor as their respective interests may appear and (ii) property damage
insurance shall provide for all losses (except for losses of less than
$____________ per occurrence) to be paid directly to the Lender. Each such
policy shall in addition (i) name the Grantor and the Lender as insured parties
thereunder (without any representation or warranty by or obligation upon the
Lender) as their interests may appear, (ii) contain the agreement by the
insurer that any loss thereunder shall be payable to the Lender notwithstanding
any action, inaction or breach of representation or warranty by the Grantor,
(ii) provide that there shall be no recourse against the Lender for payment of
premiums or other amounts with respect thereto and (iv) provide that at least
ten days' prior written notice of cancellation or of lapse shall be given to
the Lender by the insurer. The Grantor shall, if so requested by the Lender,
deliver to the Lender original or duplicate policies of such insurance and, as
often as the Lender may reasonably request, a report of a reputable insurance
broker with respect to such insurance. Further, the Grantor shall, at the
request of the Lender, duly execute and deliver instruments of assignment of
such insurance policies to comply with the requirements of Section 5 and cause
the respective insurers to acknowledge notice of such assignment.
(b) Reimbursement under any liability insurance maintained by the
Grantor pursuant to this Section 7 may be paid directly to the person who
shall have incurred liability covered by such insurance. In case of any
loss involving damage to Equipment or Inventory when subsection (c) of
this Section 7 is not applicable, the Grantor shall make or cause to be
made the necessary repairs to or replacements of such Equipment or
Inventory, and any proceeds of insurance maintained by the Grantor
pursuant to this Section 7 shall be paid to the Grantor as reimbursement
for the costs of such repairs or replacements.
(c) Upon (i) the occurrence and during the continuance of any
Event of Default, or (ii) the actual or constructive total loss (in
excess of $_________________ per occurrence) of any Equipment or
Inventory, all insurance payments in respect of such Equipment or
Inventory shall be paid to and applied by the Lender as specified in
Section 13(b).
SECTION 15. As to Receivables. (a) The Grantor shall keep its chief
place of business and chief executive office and the office where it keeps its
records concerning the Receivables [, and all originals of all chattel paper
which evidence Receivables,] at the location therefor specified in Section 4(a)
or, upon 30 days' prior written notice to the Lender, at such other locations
in a jurisdiction where all action required by Section 5 shall have been taken
with respect to the Receivables. The Grantor will hold and preserve such
records and chattel paper and will permit representatives of the Lender at any
time during normal business hours to inspect and make abstracts from such
records and chattel paper.
(b) Except as otherwise provided in this subsection (b), the
Grantor shall continue to collect, at its own expense, all amounts due or
to become due the Grantor under the Receivables. In connection with such
collections, the Grantor may take (and, at the Lender's direction, shall
take) such action as the Grantor or the Lender may deem necessary or
advisable to enforce collection of the Receivables; provided, however,
that the Lender shall have the right at any time, in the event that the
Lender in good faith believes that the prospect of payment of the
Obligations in the normal course, or the performance of collection of the
Receivables, is impaired and upon written notice to the Grantor of its
intention to do so, to notify the account debtors or obligors under any
Receivables of the assignment of such Receivables to the Lender and to
direct such account debtors or obligors to make payment of all amounts
due or to become due to the Grantor thereunder directly to the Lender
and, upon such notification and at the expense of the Grantor, to enforce
collection of any such Receivables, and to adjust, settle or compromise
the amount or payment thereof, in the same manner and to the same extent
as the Grantor might have done. After receipt by the Grantor of the
notice from the Lender referred to in the proviso to the preceding
sentence, (i) all amounts and proceeds (including instruments) received
by the Grantor in respect of the Receivables shall be received in trust
for the benefit of the Lender hereunder, shall be segregated from other
funds of the Grantor and shall be forthwith paid over to the Lender in
the same form as so received (with any necessary indorsement) to be held
as cash collateral and either (A) released to the Grantor so long as no
Event of Default shall have occurred and be continuing or (B) if any
Event of Default shall have occurred and be continuing, applied as
provided by Section 13(b), and (ii) the Grantor shall not adjust, settle
or compromise the amount or payment of any Receivable, or release wholly
or partly any account debtor or obligor thereof, or allow any credit or
discount thereon.
SECTION 16. Transfers and Other Liens. The Grantor shall not:
(a) Sell, assign (by operation of law or otherwise) or otherwise
dispose of any of the Collateral, except Inventory in the ordinary course
of business.
(b) Create or suffer to exist any lien, security interest or other
charge or encumbrance upon or with respect to any of the Collateral to
secure Debt of any person or entity, except for the security interest
created by this Agreement.
SECTION 17. Lender Appointed Attorney-in-Fact. The Grantor hereby
irrevocably appoints the Lender the Grantor's attorney-in-fact, with full
authority in the place and stead of the Grantor and in the name of the Grantor,
the Lender or otherwise, from time to time in the Lender's discretion, to take
any action and to execute any instrument which the Lender may deem necessary or
advisable to accomplish the purposes of this Agreement (subject to the rights
of the Grantor under Section 8), including, without limitation:
(i) to obtain and adjust insurance required to be paid to the
Lender pursuant to Section 7;
(ii) to ask, demand, collect, sue for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Collateral;
(iii) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with clause (i)
or (ii) above; and
(iv) to file any claims or take any action or institute any
proceedings which the Lender may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of
the Lender with respect to any of the Collateral.
SECTION 18. Lender May Perform. If the Grantor fails to perform any
agreement contained herein, the Lender may itself perform, or cause performance
of, such agreement, and the expenses of the Lender incurred in connection
therewith shall be payable by the Grantor under Section 14(b).
SECTION 19. The Lender's Duties. The powers conferred on the Lender
hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the safe
custody of any Collateral in its possession and the accounting for moneys
actually received by it hereunder, the Lender shall have no duty as to any
Collateral or as to the taking of any necessary steps to preserve rights
against prior parties or any other rights pertaining to any Collateral.
SECTION 20. Remedies. If any Event of Default shall have occurred and
be continuing:
(a) The Lender may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party on
default under the Uniform Commercial Code (the "Code") (whether or not
the Code applies to the affected Collateral) and also may (i) require the
Grantor to, and the Grantor hereby agrees that it will at its expense and
upon request of the Lender forthwith, assemble all or part of the
Collateral as directed by the Lender and make it available to the Lender
at a place to be designated by the Lender which is reasonably convenient
to both parties and (ii) without notice except as specified below, sell
the Collateral or any part thereof in one or more parcels at public or
private sale, at any of the Lender's offices or elsewhere, for cash, on
credit or for future delivery, and upon such other terms as the Lender
may deem commercially reasonable. The Grantor agrees that, to the extent
notice of sale shall be required by law, at least ten days' notice to the
Grantor of the time and place of any public sale or the time after which
any private sale is to be made shall constitute reasonable notification.
The Lender shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. The Lender may adjourn
any public or private sale from time to time by announcement at the time
and place fixed therefore, and such sale may, without further notice, be
made at the time and place to which it was so adjourned.
(b) All cash proceeds received by the Lender in respect of any
sale of, collection from, or other realization upon all or any part of
the Collateral may, in the discretion of the Lender, be held by the
Lender as collateral for, and/or then or at any time thereafter applied
(after payment of any amounts payable to the Lender pursuant to Section
14) in whole or in part by the Lender against, all or any part of the
Obligations in such order as the Lender shall elect. Any surplus of such
cash or cash proceeds held by the Lender and remaining after payment in
full of all the Obligations shall be paid over to the Grantor or to
whomsoever may be lawfully entitled to receive such surplus.
SECTION 21. Indemnity and Expenses. (a) The Grantor agrees to
indemnify the Lender from and against any and all claims, losses and
liabilities growing out of or resulting from this Agreement (including, without
limitation, enforcement of this Agreement), except claims, losses or
liabilities resulting from the Lender's gross negligence or willful misconduct.
(b) The Grantor will upon demand pay to the Lender the amount of
any and all reasonable expenses, including the reasonable fees and
disbursements of its counsel and of any experts and agents, which the
Lender may incur in connection with (i) the administration of this
Agreement, (ii) the custody, preservation, use or operation of, or the
sale of, collection from, or other realization upon, any of the
Collateral, (iii) the exercise or enforcement of any of the rights of the
Lender hereunder or (iv) the failure by the Grantor to perform or observe
any of the provisions hereof.
SECTION 22. Addresses for Notices. All notices and other communications
provided for hereunder shall be in writing (including telegraphic
communication) and, if to the Grantor, mailed or telecopied or delivered to it,
addressed to it at 309-D Raleigh Street, Wilmington, North Carolina 24812,
telecopy no. 910-791-4945, Attention of Edward Kleiger, if to the Lender,
mailed or delivered to it, addressed to it at the address of the Lender
specified in the Note, or as to either party at such other address as shall be
designated by such party in a written notice to each other party complying as
to delivery with the terms of this Section.
SECTION 23. Continuing Security Interest; Transfer of Note. This
Agreement shall create a continuing security interest in the Collateral and
shall (i) remain in full force and effect until payment in full of the
Obligations, (ii) be binding upon the Grantor, its successors and assigns and
(iii) inure to the benefit of the Lender and its successors, transferees and
assigns. Without limiting the generality of the foregoing clause (iii), the
Lender may assign or otherwise transfer the Note held by it to any other person
or entity, and such other person or entity shall thereupon become vested with
all the benefits in respect thereof granted to the Lender herein or otherwise.
Upon the payment in full of the Obligations, the security interest granted
hereby shall terminate and all rights to the Collateral shall revert to the
Grantor. Upon any such termination, the Lender will, at the Grantor's expense,
execute and deliver to the Grantor such documents as the Grantor shall
reasonably request to evidence such termination.
SECTION 24. Governing Law; Terms. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York, except to
the extent that the validity or perfection of the security interest hereunder,
or remedies hereunder, in respect of any particular Collateral are governed by
the laws of a jurisdiction other than the State of New York. Unless otherwise
defined herein or in the Credit Agreement, terms used in Article 9 of the
Uniform Commercial Code in the State of New York are used herein as therein
defined.
IN WITNESS WHEREOF, the Grantor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
WELCOME HOME, INC.
By ____________________________
Title:
Schedule
to
Security Agreement
Location of Equipment:
Location of Inventory:
TERMINATION AGREEMENT
THIS AGREEMENT, dated as of September 29, 1994, by and
between Welcome Home, Inc., a Delaware corporation ("Welcome Home") and Jordan
Industries, Inc., an Illinois corporation ("Jordan Industries").
W I T N E S S E T H:
WHEREAS, Welcome Home and Jordan Industries desire to
terminate their Tax Sharing Agreement, dated July 1, 1991 (as amended through
the date hereof, the "Tax Sharing Agreement"); and
WHEREAS, Welcome Home and Jordan Industries desire to
terminate their Management Consulting Agreement, dated March 23, 1991 (as
amended through the date hereof, the "Consulting Agreement"); and
WHEREAS, Welcome Home and Jordan Industries desire to
terminate all existing arrangements, practices and procedures whereby Jordan
Industries periodically has allocated certain charges and expenses, including
insurance, legal, accounting and other overhead charges to the Company (as
amended through the date hereof, the "Overhead Charges")
WHEREAS, the termination of each of the Tax Sharing
Agreement, Consulting Agreement and Overhead Charges are contingent upon the
consummation of an initial public offering (the "Initial Public Offering") of
shares of Welcome Home's common stock, par value $.01 per share to the public
pursuant to its Form S-1 Registration Statement (File No. 33-78650);
NOW, THEREFORE, it is agreed as follows:
1. Termination of Tax Sharing Agreement. Effective
upon the completion of the Initial Public Offering, the Tax Sharing Agreement
shall be terminated and shall have no further force or effect.
2. Termination of Consulting Agreement.
(a) Effective upon the completion of the
Initial Public Offering, the Consulting Agreement shall be terminated and shall
have no further force or effect.
(b) In connection with the termination of
the Consulting Agreement, Welcome Home shall pay to Jordan Industries all
accrued and unpaid fees under the Consulting Agreement from September 30, 1993
through termination (the amount of which accrued fees, as of September 28,
1994, would have been in the aggregate amount set forth in Exhibit A hereto) at
any time, and from time to time, prior to December 31, 1994, provided, that any
amounts unpaid on and after December 31, 1994 will be payable upon demand,
together with interest accrued on any unpaid amounts accruing at a rate of 1%
for each 30 day period such amounts remain unpaid.
(c) Jordan Industries shall have no
liability to Welcome Home on account of any advice which it rendered to Welcome
Home, whether under the Consulting Agreement or otherwise; provided that Jordan
Industries believed in good faith that such advice was useful or beneficial to
Welcome Home at the time it was rendered, including any advice rendered under
the Consulting Agreement. Jordan Industries will not be liable to Welcome Home
as a result of or in connection with services or other activities performed on
behalf of Welcome Home, whether under the Consulting Agreement or otherwise,
except with regard to Jordan Industries' gross negligence or willful
misconduct.
(d) Welcome Home will, to the fullest
extent permitted by applicable law, indemnify and hold harmless Jordan
Industries, and Jordan Industries' affiliates and associates, and each of their
owners, partners, officers, employees and agents, from and against any loss,
liability, damage, claim or expenses (including the fees and expenses of
counsel) arising as a result or in connection with Jordan Industries' services
or other activities on behalf of Welcome Home and its subsidiary, including any
services or activities rendered under the Consulting Agreement.
(e) After the date of this Agreement, any
advice or services provided by Jordan Industries to Welcome Home will be
subject to agreements and fees, if any, determined on an arms' length basis and
approved by a majority of Welcome Home's independent directors.
3. Termination of Overhead Charges.
(a) Effective upon the completion of the
Initial Public Offering, the Overhead Charges shall be terminated and no longer
charged and have no further force and effect.
(b) Welcome Home shall pay to Jordan
Industries all accrued and unpaid Overhead Charges through termination (the
amount of which accrued charges, as of September 28, 1994, would have been in
the aggregate amount set forth in Exhibit A hereto at any time, and from time,
to time prior to December 31, 1994, provided, that any amounts unpaid on and
after December 31, 1994 will be payable upon demand, together with interest
accrued on any unpaid amounts accruing at a rate of 1% for each 30 day period
such amounts remain unpaid.
4. Miscellaneous.
(a) This Agreement sets forth the entire
understanding of the parties hereto. This Agreement or any provision hereof
may not be modified, waived, terminated or amended except expressly by an
instrument in writing signed by both Jordan Industries and Welcome Home.
(b) This Agreement may not be assigned by
either party without the consent of the other party but shall be binding upon
and inure to the benefit of the parties and their respective successors and
assigns upon such permitted assignment.
(c) In the event that any provision of
this Agreement shall be held to be void or unenforceable, in whole or in part,
the remaining provisions of the Agreement and the remaining portion of any
provision held void or unenforceable in part shall continue in full force and
effect.
(d) Except as otherwise specifically
provided herein, notice given hereunder shall be deemed sufficient if delivered
personally or sent by registered or certified mail to the address of the party
for whom intended at the principal executive offices of such party, or at such
other address as such party may hereafter specify by written notice to the
other party.
(e) No waiver by either party of any
breach of any provision of this Agreement shall be deemed a continuing waiver
or a waiver of any preceding or succeeding breach of such provision or of any
other provision herein contained.
(f) Jordan Industries and its personnel
shall, for purposes of this Agreement, be independent contractors with respect
to Welcome Home.
(g) This Agreement shall be binding upon
each party's successors and assigns.
(h) This Agreement shall be governed by
the internal laws (and not the law of conflicts) of the State of Illinois.
IN WITNESS WHEREOF, the parties hereto have duly
executed this Agreement as of the date first above written.
WELCOME HOME, INC.
By: _____________________________
Name: Edward Kleiger
Title: President and Chief
Operating Officr
JORDAN INDUSTRIES, INC.
By: ______________________________
Name: Jonathan F. Boucher
Title: Vice President
EXHIBIT A
1. Consulting Agreement: Accruals from 9/30/93 to 9/28/94: $1,838,406.00
2. Overhead Charges: Accruals to 9/28/94: $51,000
Jordan Industries, Inc.
Announces Filing by Its
Subsidiary, Welcome Home,
Inc., for an Initial Public
Offering
----------------------------
May 5, 1994. (Deerfield, Illinois). Jordan
Industries, Inc. announced today that its subsidiary, Welcome Home, Inc., filed
a registration statement relating to a proposed initial public offering by
Welcome Home of 3.0 million shares of Welcome Home Common Stock (and an
additional 450,000 shares issuable upon exercise of an over-allotment option
granted by Welcome Home to its underwriters) through Welcome Home's managing
underwriters, Donaldson, Lufkin & Jenrette Securities Corporation and Alex.
Brown & Sons Incorporated. In the Registration Statement, Welcome Home
estimated that the initial public offering price per share will be between $14
and $16.
Welcome Home is a leading specialty retailer of
decorative home furnishings and accessories in North America, with 158 stores
located primarily in outlet/off-price malls in 38 states and 1 Canadian
province. Welcome Home stores offer a broad product line consisting of 12
basic groups, including textiles, afghans, framed art, home fragrances,
stationery, brass and silver pieces, picture frames, doilies, crystal, chimes
and bird feeders, wood and seasonal products. In fiscal 1993, Welcome Home had
net sales of $61.6 million and net income of $5.2 million.
Welcome Home expects that the initial public offering
will be completed in June, 1994. The net proceeds to Welcome Home from the
sale of the 3.0 million shares of Welcome Home Common Stock in connection with
the initial public offering, assuming an initial public offering price of $15
per share (the midpoint of the estimated price range for the initial public
offering), are estimated to be approximately $41.3 million after deducting
estimated underwriting discounts and offering expenses payable by Welcome Home
(or approximately $47.6 million, assuming the underwriters' over-allotment
option is exercised in full). The net proceeds from the initial public
offering (other than from the underwriters' over-allotment option) will be used
by Welcome Home to pay transaction expenses and to repay certain intercompany
indebtedness owed by Welcome Home to Jordan Industries. Any net proceeds from
the exercise of the underwriters' over-allotment option will be retained by
Welcome Home and will be used by Welcome Home for working capital and general
corporate purposes. Jordan Industries expects to apply the net proceeds
received from Welcome Home either to reinvest in its existing or similar
businesses or to repay senior indebtedness.
Upon completion of Welcome Home's initial public
offering, Jordan Industries would own approximately 57.2% (or 54.3%, if the
underwriters' over-allotment option is exercised in full) of the outstanding
shares of Welcome Home Common Stock. There can be no assurances, however, that
Welcome Home's initial public offering will be completed, or will be completed
in accordance with the timing, pricing and other terms described above.
A registration statement relating to the Common Stock
of Welcome Home has been filed with the Securities and Exchange Commission but
has not yet become effective. These securities may not be sold nor may offers
to buy be accepted prior to the time the registration statement becomes
effective. This release shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
Welcome Home, Inc.
Announces Filing for
Initial Public
Offering.
------------------------
May 5, 1994. (Wilmington, North Carolina). Welcome
Home, Inc. announced today that it filed a registration statement relating to a
proposed initial public offering by Welcome Home of 3.0 million shares of
Welcome Home Common Stock (and an additional 450,000 shares issuable upon
exercise of an over-allotment option granted by Welcome Home to its
underwriters through Welcome Home's managing underwriters, Donaldson, Lufkin &
Jenrette Securities Corporation and Alex. Brown & Sons Incorporated. In the
Registration Statement, Welcome Home estimated that the initial public offering
price per share will be between $14 and $16.
Welcome Home is a leading specialty retailer of
decorative home furnishings and accessories in North America, with 158 stores
located primarily in outlet/off-price malls in 38 states and 1 Canadian
province. Welcome Home stores offer a broad product line consisting of 12
basic groups, including textiles, afghans, framed art, home fragrances,
stationery, brass and silver pieces, picture frames, doilies, crystal, chimes
and bird feeders, wood and seasonal products. In fiscal 1993, Welcome Home had
net sales of $61.6 million and net income of $5.2 million.
Welcome Home expects that the initial public offering
will be completed in June, 1994. The net proceeds to Welcome Home from the
sale of the 3.0 million shares of Welcome Home Common Stock in connection with
the initial public offering, assuming an initial public offering price of $15
per share (the midpoint of the estimated price range for the initial public
offering), are estimated to be approximately $41.3 million after deducting
estimated underwriting discounts and offering expenses payable by Welcome Home
(or approximately $47.6 million, assuming the underwriters' over-allotment
option is exercised in full). The net proceeds from the initial public
offering (other than from the underwriters' over-allotment option) will be used
by Welcome Home to pay transaction expenses and to repay certain intercompany
indebtedness owed by Welcome Home to Jordan Industries. Any net proceeds from
the exercise of the underwriters' over-allotment option will be retained by
Welcome Home and will be used by Welcome Home for working capital and general
corporate purposes.
A registration statement relating to the Common Stock
of Welcome Home has been filed with the Securities and Exchange Commission but
has not yet become effective. These securities may not be sold nor may offers
to buy be accepted prior to the time the registration statement becomes
effective. This release shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
Welcome Home, Inc.
Announces Postponement of its
Initial Public
Offering.
------------------------------
June 30, 1994. (Wilmington, North Carolina). Welcome
Home, Inc. today announced that in view of current market conditions and at the
advice of its investment bankers, Donaldson, Lufkin & Jenrette Securities
Corporation and Alex. Brown & Sons Incorporated, it has postponed its
previously announced initial public offering of 3,000,000 primary shares of its
Common Stock. The Company believes that the postponement of its initial public
offering will not have any adverse effect on its business, since the funds from
the offering were to be used by Welcome Home to pay intercompany indebtedness
owed by Welcome Home to its parent, Jordan Industries, Inc., which
indebtedness, by its terms, is not required to be repaid at this time.
Welcome Home is a leading specialty retailer of
decorative home furnishings and accessories in North America, with 159 stores
located primarily in outlet/off-price malls in 38 states and 1 Canadian
province. Welcome Home stores offer a broad product line consisting of 12
basic groups, including textiles, afghans, framed art, home fragrances,
stationery, brass and silver pieces, picture frames, doilies, crystal, chimes
and bird feeders, wood and seasonal products.
FOR IMMEDIATE RELEASE Contact: Thomas H. Quinn
Jordan Industries, Inc.
(708) 945-5522
Jordan Industries, Inc.
Announces Pricing of the
Initial Public Offering
Of Its Subsidiary, Welcome
Home, Inc.
----------------------------
September 23, 1994. (Deerfield, Illinois). Jordan
Industries, Inc. announced today that its subsidiary, Welcome Home, Inc.,
priced an initial public offering of 2,500,000 primary shares of Common Stock.
Welcome Home has granted the underwriters a 30-day option to purchase up to an
aggregate of 375,000 additional shares of Welcome Home Common Stock to cover
over-allotments.
The Common Stock was priced at $11.00 a share for sale
by an underwriting group led by Mabon Securities Corp. and is quoted on the
Nasdaq National Market under the symbol "WELC."
Funds from the initial public offering will be used by
Welcome Home to pay transaction expenses and to repay certain intercompany
indebtedness owed by Welcome Home to Jordan Industries.
Jordan Industries expects to apply the net proceeds
received from Welcome Home either to reinvest in its existing or similar
businesses or to repay senior indebtedness.
Welcome Home is a leading specialty retailer of
decorative home furnishings and accessories in North America, with 170 stores
located primarily in outlet/off-price malls in 38 states and 1 Canadian
province. Welcome Home stores offer a broad product line consisting of 12
basic groups, including textiles, afghans, framed art, home fragrance,
stationery, brass and silver pieces, picture frames, doilies, crystal, chimes
and bird feeders, wood and seasonal products. From 1989 to 1993, the Company
has expanded from 45 to 158 stores and its net sales have increased from $13.5
million to $61.6 million, a compound annual sales growth rate of 46.2%. For
the six month period ended June 30, 1994 as compared to 1993, net sales
increased from $18.4 million to $26.0 million, a growth rate of 41.6%, which
included a 13.9% increase in sales for comparable stores.
Copies of the prospectus relating to the initial
public offering of the Common Stock of Welcome Home may be obtained from Mabon
Securities Corp., 1 Liberty Plaza, 165 Broadway, New York, New York 10006.
FOR IMMEDIATE RELEASE Contact: Edward Kleiger
Welcome Home, Inc.
(910) 791-4312
Welcome Home, Inc.
Announces Pricing of its
Initial Public
Offering.
---------------------------
September 23, 1994. (Wilmington, North Carolina).
Welcome Home, Inc. today priced an initial public offering of 2,500,000 primary
shares of its Common Stock. Welcome Home has granted the underwriters a 30-day
option to purchase up to an aggregate of 375,000 additional shares of Welcome
Home Common Stock to cover over-allotments.
The Common Stock was priced at $11.00 a share for sale
by an underwriting group led by Mabon Securities Corp. and is quoted on the
Nasdaq National Market under the symbol "WELC."
Funds from the initial public offering will be used by
Welcome Home to pay transaction expenses and to repay certain intercompany
indebtedness owed by Welcome Home to its parent, Jordan Industries, Inc.
Welcome Home is a leading specialty retailer of
decorative home furnishings and accessories in North America, with 170 stores
located primarily in outlet/off-price malls in 38 states and 1 Canadian
province. Welcome Home stores offer a broad product line consisting of 12
basic groups, including textiles, afghans, framed art, home fragrance,
stationery, brass and silver pieces, picture frames, doilies, crystal, chimes
and bird feeders, wood and seasonal products. From 1989 to 1993, the Company
has expanded from 45 to 158 stores and its net sales have increased from $13.5
million to $61.6 million, a compound annual sales growth rate of 46.2%. For
the six month period ended June 30, 1994 as compared to 1993, net sales
increased from $18.4 million to $26.0 million, a growth rate of 41.6%, which
included a 13.9% increase in sales for comparable stores.
Copies of the prospectus relating to the initial
public offering of the Common Stock of Welcome Home may be obtained from Mabon
Securities Corp., 1 Liberty Plaza, 165 Broadway, New York, New York 10006.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Condensed Consolidated Balance Sheet and the Condensed Consolidated Statement of
Operations, and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> QTR-3
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> SEP-30-1994
<CASH> 26,223
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<PP&E> 127,316
<DEPRECIATION> 59,357
<TOTAL-ASSETS> 369,174
<CURRENT-LIABILITIES> 52,230
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<COMMON> 1
0
0
<OTHER-SE> (71,575)
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<SALES> 292,790
<TOTAL-REVENUES> 292,790
<CGS> 180,463
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<OTHER-EXPENSES> 0
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<INTEREST-EXPENSE> 30,386
<INCOME-PRETAX> 19,327
<INCOME-TAX> (719)
<INCOME-CONTINUING> 20,046
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,916
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
