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SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 12, 1996
WELCOME HOME, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-24912 56-1379322
(State or other Jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation Identification No.)
309-D Raleigh Street 28412
Wilmington, North Carolina (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including are code: (910) 791-4312
Not Applicable
(Former name or former address, if changed since last report)
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INFORMATION TO BE INCLUDED IN REPORT
Item 1. Changes in Control of Registrant.
Not Applicable.
Item 2. Acquisition or Disposition of Assets.
Not Applicable.
Item 3. Bankruptcy or Receivership.
Not Applicable.
Item 4. Changes in Registrant's Certifying Accountant.
Not Applicable.
Item 5. Other Events.
On November 12, 1996, Welcome Home, Inc. (the "Company") entered
into an exchange agreement (the "Exchange Agreement") with Jordan
Industries, Inc. ("Jordan Industries"), the Company's majority
shareholder, whereby Jordan Industries agreed to exchange $4,450,604
of indebtedness and interest accrued under the Company's credit
facility with Jordan Industries for 4,451 shares of a newly designated
class of preferred stock of the Company (the "Series A Preferred
Stock"). On November 12, 1996, the Company filed a certificate of
designation (the "Certificate of Designation") with the Secretary of
State of Delaware setting forth the rights and preferences of the
Series A Preferred Stock.
The Company requested that Jordan Industries enter into the Exchange
Agreement as the Company was notified by the Nasdaq National Market that it
fell below the exchange's minimum net tangible assets test for continued
listing.
Consistent with Company policy, the Exchange Agreement and the
Certificate of Designation were each (i) approved by a majority of the
members of the Company's Board of Directors and by a majority of the
disinterested members of the Company's Board of Directors and (ii) deemed
to be on terms no less favorable to the Company than could be obtained from
unaffiliated third parties.
Included as exhibits hereto are the Exchange Agreement and the
Certificate of Designation and, as such, the foregoing description is
qualified in its entirety by reference to and incorporation of the
terms and provisions contained in those exhibits.
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Item 6. Resignations of Registrant's Directors.
Not Applicable.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
Exhibit
Number Description
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3.1 Certificate of Designation of Series and Determination of
Rights and Preferences of Series A Preferred Stock of
Welcome Home, Inc. (the "Company")
10.1 Exchange Agreement, dated November 12, 1996, by and between
the Company and Jordan Industries, Inc.
Item 8. Change in Fiscal Year.
Not Applicable.
Item 9. Sales of Equity Securities Pursuant to Regulation S.
Not Applicable.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly authorized.
WELCOME HOME, INC.
Date: November 18, 1996 By: /s/ Mark S. Dudeck
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Name: Mark S. Dudeck
Title: Chief Financial Officer
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EXHIBIT 3.1
CERTIFICATE OF DESIGNATION OF SERIES
AND DETERMINATION OF RIGHTS AND PREFERENCES
OF
SERIES A PREFERRED STOCK
OF
WELCOME HOME, INC.
(Pursuant to Section 151 of the
General Corporation Law of Delaware)
WELCOME HOME, INC., a Delaware corporation (the "Corporation"),
does hereby certify as follows:
WHEREAS, Article FOURTH of the Corporation's Certificate of
Incorporation, as amended and in effect as of the date hereof
(the "Certificate of Incorporation"), authorizes the Corporation
to issue up to 13,000,000 shares of common stock, par value $.01
per share (the "Common Stock"), and 1,000,000 shares of preferred
stock, par value $.01 per share (the "Preferred Stock");
WHEREAS, the Board of Directors of the Corporation (the
"Board of Directors") is authorized, subject to limitations
prescribed by law and by the provisions of Article FOURTH of the
Certificate of Incorporation, to establish the number of shares
to be included in any series of Preferred Stock and to fix the
designation, rights, preferences and limitations of the shares of
such series;
WHEREAS, no shares of Preferred Stock have previously been
designated prior to the date hereof; and
WHEREAS, pursuant to Section 141(f) of the General
Corporation Law of the State of Delaware, the Board of Directors
duly adopted by unanimous written consent resolutions
establishing the number of shares to be included in a new series
of Preferred Stock and the designations, rights, preferences and
limitations of the shares of such new series.
NOW, THEREFORE, BE IT RESOLVED that pursuant to Article
FOURTH of the Certificate of Incorporation, there is hereby
established a new series of shares of Preferred Stock of the
Corporation, to have the designation, rights, preferences and
limitations set forth in a supplement to Article FOURTH as
follows:
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Rights, Preferences and Limitations of the
Series A Preferred Stock.
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A. Designation.
The shares of such series shall be designated and
referred to hereinafter as the "Series A Preferred Stock." The
number of shares of Preferred Stock to be designated Series A
Preferred Stock shall be 12,250.
B. Dividends.
Subject to the foregoing and Paragraph (F) below, the
holders of the Series A Preferred Stock shall be entitled to
receive, and the Board of Directors shall declare and pay, annual
dividends of 10% of the Liquidation Value (as defined below) of
the Series A Preferred Stock, payable in quarterly dividends
equal to 2.5% of such Liquidation Value on each of September 30,
December 31, March 31 and June 30 of each year (the "Dividend
Payment Date"), commencing on December 31, 1996. Such dividends
shall be payable, on each Dividend Payment Date, in additional
shares of Series A Preferred Stock ("PIK Dividends"), or, in the
discretion of the Board of Directors, in cash and such dividends
shall be cumulative and shall accrue whether or not declared,
earned or payable from and after the date of issue of the
Series A Preferred Stock. The shares of Series A Preferred Stock
distributed as a PIK Dividend shall be deemed to be issued and
outstanding from and after such Dividend Payment Date, and the
amount of shares issued as a PIK Dividend shall have an aggregate
Liquidation Value, at the Dividend Payment Date equal to the
value of the dividend accrued and payable. The initial
"Liquidation Value" of each share of Series A Preferred Stock
will be $1,000 per share, and thereafter, there will be added to
the Liquidation Value of each share of Series A Preferred Stock,
as of any Dividend Payment Date, the amount of any dividends
payable on such share on that Dividend Payment Date but not paid
on that Dividend Payment Date, whether or not such dividends are
declared, earned or payable.
C. Liquidation
Upon any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, the holders of all
shares of Series A Preferred Stock shall be entitled, before any
distribution or payment is made upon any shares of any other
class of stock of the Corporation, to be paid an amount equal to
the sum of the Liquidation Value per share (subject to adjustment
after certain partial redemptions as provided in Paragraph (F))
plus any accrued and unpaid dividends thereon (such sum being
herein called the "Series A Preferred Stock Liquidation
Payment"), and the holders of Series A Preferred Stock shall not
be entitled to any further distribution or payment. If upon such
liquidation, dissolution or winding-up of the Corporation,
whether voluntary or involuntary, the assets of the Corporation
to be distributed among the holders of the capital stock of the
Corporation shall be insufficient to permit payment to the
holders of Series A Preferred Stock of the amount distributable
as aforesaid, then the entire assets of the Corporation to be
distributed to the holders of the capital stock of the
Corporation shall be distributed ratably among the holders of the
Series A Preferred Stock in proportion to the Series A Preferred
Stock Liquidation Payment due under this Paragraph (C) to each
such holder. Upon any such liquidation, dissolution or
winding-up of the Corporation, but only after each holder of the
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Series A Preferred Stock shall have been paid in full the
Series A Preferred Stock Liquidation Payment to which such holder
is entitled, the remaining assets of the Corporation shall be
distributed to the holders of other shares of capital stock of
the Corporation. Written notice of such liquidation, dissolution
or winding-up, stating a payment date, the amount of the Series A
Preferred Stock Liquidation Payment and the place where the
amounts distributed shall be payable, shall be given by mail,
postage prepaid, not less than ten (10) days prior to the payment
date stated therein, to the holders of record of the Series A
Preferred Stock, such notice to be addressed to each stockholder
at his or its post office address as shown by the records of the
Corporation.
Unless waived by the holders of Series A Preferred
Stock, a liquidation, dissolution or winding-up of the
Corporation for purposes hereof shall include (i) any
consolidation or merger of the Corporation with or into any other
company or (ii) a sale or other disposition of all or
substantially all of the Corporation's assets to another company.
D. Voting Rights.
The holders of Series A Preferred Stock shall not,
except as required by law or as set forth herein, have any right
or power to vote on any question or in any proceeding or to be
represented at, or to receive notice of, any meeting of
stockholders; provided, however, that the affirmative vote of
holders of not less than fifty-one percent (51%) of Series A
Preferred Stock then outstanding shall be required to (i) alter,
change, or amend the preferences or rights of the Series A
Preferred Stock; (ii) merge with or acquire another entity or
sell substantially all of the assets of the Corporation; (iii)
create, authorize or issue any class or series of stock ranking
either as to payment of dividends or distribution of assets prior
to or on parity with the Series A Preferred Stock; (iv) amend,
alter or repeal any of the provisions of the Certificate of
Incorporation or the Corporation's Bylaws in any manner adverse
to the holders of shares of Series A Preferred Stock; or (v)
engage in any business other than the business proposed to be
engaged in by the Corporation at the time of the initial sale of
the Series A Preferred Stock. On any matters on which the
holders of the Series A Preferred Stock shall be entitled to
vote, each holder of Series A Preferred Stock shall be entitled
to the number of votes equal to the number of whole shares of
Common Stock into which his or its shares of Series A Preferred
Stock are redeemable (as adjusted from time to time pursuant to
Paragraph (F) hereof) on the record date for such vote.
E. Ranking.
With regard to rights to receive dividends and
distributions upon liquidation of the Corporation, the Series A
Preferred Stock shall rank senior to all other capital stock of
the Corporation whether previously issued or authorized and
issued hereafter. In furtherance and without limiting the
foregoing, as long as any shares of the Series A Preferred Stock
are outstanding, the Corporation shall not declare or pay any
dividend or distribution (whether in cash, property or securities
other than shares of stock of the Corporation that rank junior to
the Series A Preferred Stock in respect of dividends and upon
liquidation and that are not exchangeable or convertible into
debt securities or equity securities that rank senior to or on a
parity with the Series A Preferred Stock in respect of dividends
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or upon liquidation) on, or authorize or make any redemption,
repurchase, retirement or acquisition of, any shares of stock of
the Corporation that rank junior to the Series A Preferred Stock
in respect of dividends or upon liquidation.
F. Redemption.
1. Mandatory Redemption. On November 12, 2006, the
Corporation shall redeem all outstanding shares of Series A
Preferred Stock by issuing or paying to the holder of each
outstanding share of Series A Preferred Stock with respect to
each such share either, in the sole discretion of the
Corporation, (x) that number of shares of Common Stock equal to
the sum (the "Mandatory Call Price") of $1,000 plus an amount
equal to all accumulated and unpaid dividends per share divided
by the Fair Market Value (as defined below), (y) cash in the
amount of the Fair Market Value (as defined below) as of November
12, 2006, of the number of shares of Common Stock determined
pursuant to clause (x) hereof, or (z) debt in like kind and tenor
to the various debt instruments as of November 12, 1996 the
Corporation has entered into with the holders of Series A
Preferred Stock in the amount of the Fair Market Value (as
defined below), of the number of shares of Common Stock
determined pursuant to clause (x) hereof.
2. Optional Redemption. The Corporation may, at its
discretion and upon the prior written consent of the holders of
shares of Series A Preferred Stock so affected, redeem a portion
of the outstanding shares of Series A Preferred Stock by issuing
or paying to the holder of each outstanding share of Series A
Preferred Stock, (x) that number of shares of Common Stock equal
to the sum (the "Optional Call Price") of $1,000 plus an amount
equal to all accumulated and unpaid dividends per share
(including a pro rata quarterly dividend from the last Dividend
Payment Date to the date of the optional redemption) divided by
the Fair Market Value (as defined below), (y) cash in the amount
of the Fair Market Value (as defined below) as of the date of the
optional redemption, of the number of shares of Common Stock
determined pursuant to clause (x) hereof, or (z) debt in like
kind and tenor to the various debt instruments the Corporation
has entered into with the holders of Series A Preferred Stock in
the amount of the Fair Market Value (as defined below) as of the
date of the optional redemption, of the number of shares of
Common Stock determined pursuant to clause (x) hereof.
3. Fair Market Value. For purposes of this
Certificate of Designation, "Fair Market Value" shall mean the
average of the daily closing prices for the ten (10) consecutive
business days for which such closing prices are available ending
immediately prior to the date in question (as adjusted for any
stock splits, stock dividends, combinations or recapitalization).
The closing price for each day shall be the last reported bid
price on such day on the principal national securities exchange
on which the Common Stock is listed or admitted to trading, or if
not listed or admitted to trading on any national securities
exchange, the last reported bid price as reported by the National
Association of Securities Dealers Automated Quotation System,
Inc., all as adjusted for stock splits, stock dividends,
combinations or similar recapitalization that took effect during
such ten (10) business day period; provided, however, that if the
Common Stock is not traded in such manner that the above
quotations are available for the period required hereunder, the
"Fair Market Value" shall be deemed to be the fair value of the
Common Stock as determined by a "big six" accounting firm
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selected by the mutual agreement of the Corporation and the
majority of the holders of shares of Series A Preferred Stock.
4. Notice and Effect of Redemption. At least twenty
(20) days and not more than sixty (60) days prior to the date
fixed for a redemption of the Series A Preferred Stock, written
notice (the "Redemption Notice") shall be mailed, postage
prepaid, to each holder of record of the Series A Preferred Stock
at his post office address last shown on the records of the
Corporation. The Redemption Notice shall state: (i) the manner
in which the outstanding shares of Series A Preferred are to be
redeemed; (ii) the number of outstanding shares of Series A
Preferred Stock to be redeemed; (iii) the number of shares of
Series A Preferred Stock held by the holder that the Corporation
intends to redeem; (iv) the date of redemption and the Mandatory
Call Price or the Optional Call Price, as the case may be; and
(v) the manner in which the holder is to surrender his shares of
Series A Preferred Stock to be redeemed.
If (and only if) the Corporation shall have paid in
full, or made a provision for payment in full, on the date of
redemption, the Mandatory Call Price or the Optional Call Price,
as applicable, for the number of shares to be redeemed, dividends
on the Series A Preferred Stock shall then cease to accumulate on
such date of redemption and the holders of such shares so
redeemed shall cease to have any further rights with respect
thereto, other than (i) the right to receive the Mandatory Call
Price or the Optional Call Price, as applicable, or (ii) to
receive certificates for the number of shares of Common Stock
into which such Series A Preferred Stock have been redeemed for.
Within ten (10) business days after the date of redemption and
the surrender of the certificate or certificates representing
shares of Series A Preferred Stock, the Corporation shall issue
and deliver to such holder, or on his or its written order to his
or its permitted transferees, a certificate or certificates for
the number of whole shares of Common Stock issuable upon such
conversion in accordance with the provisions hereof, together
with cash in lieu of any fractional shares equal to the product
of the fractional number of shares multiplied by the Fair Market
Value.
Any shares of Series A Preferred Stock acquired by the
Corporation, whether by purchase, redemption or otherwise, shall
assume the status of authorized but unissued shares of Preferred
Stock.
5. Effect of Applicable Law. (a) If applicable
laws, credit facilities or other agreements and/or arrangements
that the Corporation has entered into would prohibit either the
cash payment in full or the issuance of a debt instrument on the
date of redemption of the Mandatory Call Price or the Optional
Call Price, as applicable, for the shares of Series A Preferred
Stock required to be redeemed hereunder, (i) the Corporation
shall nevertheless, to the extent legally permissible, pay and/or
issue debt to the holders of such shares on the date of
redemption the highest permissible amount per share up to an
amount equal to the applicable Liquidation Payment less $0.01,
(ii) the Corporation shall purchase and redeem in cash and/or
debt the maximum amount of Series A Preferred Stock on the
soonest next date or dates on which dividends can be paid until
the full number of shares of Series A Preferred Stock is
redeemed, and (iii) the obligation of the Corporation to pay
dividends hereunder shall continue until all outstanding shares
of Series A Preferred Stock are redeemed.
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(b) If applicable rules or regulations of the
principal national securities exchange on which the Common Stock
is listed or if not listed or admitted to trading on any national
securities exchange, the National Association of Securities
Dealers Automated Quotation System, Inc., would prohibit the
payment in full on the date of redemption of the Mandatory Call
Price or the Optional Call Price in shares of Common Stock, then
the Corporation shall nevertheless, to the extent legally
permissible, issue (in one or more series of transactions) to the
holders of such shares the maximum number of shares of Common
Stock with the balance to be paid in accordance with clause (a)
of this Section 5 of Paragraph (F).
In no event shall the Corporation purchase or redeem any other
share of capital stock of the Corporation unless the Corporation
shall have paid to the last holder of Series A Preferred Stock,
all accrued and unpaid dividends on all shares of Series A
Preferred Stock held by such holder at any time.
6. Reservation of Shares. The Corporation shall at
all times when the Series A Preferred Stock shall be outstanding,
reserve and keep available out of its authorized but unissued
capital stock, for the purpose of effecting the conversion of the
Series A Preferred Stock, such number of its duly authorized but
unissued shares of Common Stock as shall from time to time be
sufficient to effect the conversion of all outstanding shares of
Series A Preferred Stock. Before taking any action which would
cause Common Stock, upon the conversion of Series A Preferred
Stock, to be issued below the then par value of the shares of
Common Stock, the Corporation will take any corporate action that
may, in the opinion of its counsel, be necessary in order that
the Corporation may validly and legally issue fully paid and non-
assessable shares of Common Stock to the holders of Series A
Preferred Stock.
G. Adjustments to Series A Preferred Stock.
1. Adjustment for Certain Dividends and
Distributions. If, at any time or from time to time, the
number of shares of Common Stock outstanding is increased (i) by
a stock dividend payable in shares of Common Stock or in any
other security exchangeable for or convertible into Common Stock
or (ii) by a subdivision or split-up of shares of Common Stock,
then, following the record date fixed for the determination of
holders of Common Stock entitled to receive such stock dividend,
subdivision or split-up, provision shall be made so that the
holders of Series A Preferred Stock shall receive on the date of
redemption, in addition to the number of shares of Common Stock
receivable thereupon (if the Corporation elects to redeem the
Series A Preferred Stock in shares of Common Stock in lieu of
cash), the amount of securities of the Corporation that they
would have received if (x) their Series A Preferred Stock had
been redeemed into Common Stock on the date of such event and (y)
they had thereafter retained such securities and all rights and
distributions relating to them.
2. Adjustment for Capital Reorganization,
Reclassification, Exchange, or Substitution. If Common Stock is
changed into the same or a different number of shares of any
class or classes of stock, whether by capital reorganization,
reclassification, or otherwise, then and in each such event, the
holders of Series A Preferred Stock shall have the right
thereafter to convert his or its shares of Common Stock received
upon redemption of the Series A Preferred Stock into the kind and
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amount of shares of stock and other securities and property
receivable upon such reorganization, reclassification, or other
change, by holders of the number of shares of Common Stock which
were convertible immediately prior to such reorganization,
reclassification, or change.
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IN WITNESS WHEREOF, the Corporation has caused this
Certificate to be executed by its Chief Operating Officer and
attested to by its Secretary this 12th day of November, 1996.
WELCOME HOME, INC.
By: /s/ Thomas H. Hicks
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Name: Thomas H. Hicks
Title: Chief Operating Officer
ATTEST:
/s/ James B. Carlson
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Name: James B. Carlson
Title: Secretary
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EXHIBIT 10.1
EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT (this "Agreement") is dated as of November
12, 1996, 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 are parties to an Amended
and Restated Credit Agreement, dated as of May 30, 1995, and as amended by
amendment no. 1 thereto, dated as of May 15, 1996 (the "Credit Agreement");
WHEREAS, as of the date hereof, the aggregate amount of all loans
outstanding under the Credit Agreement and interest accrued thereunder is
$4,450,604, which is represented by an account of Welcome Home entitled
"Advances-Jordan" (Account No. 2210-05) (the "Jordan Account");
WHEREAS, Jordan Industries has agreed to exchange (the "Exchange")
the indebtedness owed to it under the Jordan Account for a newly designated
class of capital stock of Welcome Home (the "Series A Preferred Stock"),
which shall have such rights, preferences and powers as set forth in that
certain Certificate of Designation, attached hereto as Exhibit A (the
"Certificate of Designation");
WHEREAS, Jordan Industries and Welcome Home acknowledge and agree
that after the Exchange, the Credit Agreement (and the liens secured
thereunder) shall not terminate and will remain in place for future loans
or other advances from Jordan Industries to Welcome Home;
WHEREAS, the Board of Directors of Welcome Home has been made fully
aware of the interests of certain members of its Board of Directors in
Jordan Industries;
WHEREAS, the Board of Directors of Welcome Home has reviewed in
detail and discussed the terms and provisions of this Agreement and the
Certificate of Designation; and
WHEREAS, on the basis of its review of this Agreement, the Board of
Directors of Welcome Home deems it advisable and in the best interests of
Welcome Home and necessary to the conduct, promotion, and attainment of the
business objectives of Welcome Home that this Agreement be entered into.
NOW, THEREFORE, for good and valuable consideration, the receipt,
adequacy and sufficiency of which are hereby acknowledged, Welcome Home and
Jordan Industries hereby agree as follows:
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ARTICLE I
ISSUANCE AND EXCHANGE
1.1 Issuance and Exchange. Subject to the terms and conditions set
forth in this Agreement, at the closing Welcome Home hereby agrees to issue
to Jordan Industries 4,451 shares of Series A Preferred Stock ) in exchange
for the indebtedness owed to Jordan Industries under the Jordan Account.
1.2 Closing. The transactions described in Section 1.1 shall be
consummated at a closing to be held at the offices of Mayer, Brown & Platt,
1675 Broadway, New York, New York 10019 at 5 PM on November 12, 1996, or at
such other time and such other date or place as Welcome Home and Jordan
Industries may mutually agree.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF WELCOME HOME
In order to induce Jordan Industries to enter into the transactions
referred to in Article I, Welcome Home makes the following representations
and warranties:
2.1 Organization and Standing. Welcome Home is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware and has full corporate power and authority to conduct its
business as presently conducted and as proposed to be conducted by it and
to enter into and perform this Agreement and to carry out the transactions
contemplated hereunder. Welcome Home is duly qualified to do business as a
foreign corporation and is in good standing in every jurisdiction in which
the failure so to qualify would have a material adverse effect on the
operations or financial condition of Welcome Home.
2.2 Issuance of Securities. The shares of Series A Preferred Stock
to be issued under this Agreement will be duly and validly issued, fully
paid and non-assessable and free from any lien, charge or encumbrance
(except those that may be placed thereon by Jordan Industries).
2.3 Authority for Agreement. The execution, delivery and
performance by Welcome Home of this Agreement and the Certificate of
Designation, and the consummation by Welcome Home of the transactions
contemplated hereby, have been duly authorized by all necessary corporate
action.
2.4 Binding Agreement. This Agreement has been duly executed and
delivered by Welcome Home and constitutes the valid and binding obligation
of Welcome Home enforceable against Welcome Home in accordance with its
terms, subject to applicable bankruptcy, insolvency, moratorium,
reorganization or similar laws from time to time in effect which affect
creditors' rights generally, and by legal and equitable limitations on the
availability of specific remedies.
2.5 Certificate of Designation. The Certificate of Designation has
been filed, or will be filed immediately after the execution of this
Agreement, with and recorded by the Secretary of State of the State of
Delaware.
2.6 Solicitation Expenses. Welcome Home has not paid or given
directly or indirectly to any person any commission or other remuneration
for soliciting the Exchange.
ARTICLE III
JORDAN INDUSTRIES REPRESENTATIONS
Jordan Industries hereby represents and warrants to Welcome Home as
follows:
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3.1 Authority for Agreement. The execution, delivery and
performance by Jordan Industries of this Agreement, and the consummation by
Jordan Industries of the transactions contemplated hereby, have been duly
authorized by all necessary corporate action.
3.2 Binding Agreement. This Agreement has been duly executed and
delivered by Jordan Industries and constitutes the valid and binding
obligation of Jordan Industries enforceable against Jordan Industries in
accordance with its terms, subject to applicable bankruptcy, insolvency,
moratorium, reorganization or similar laws from time to time in effect
which affect creditors' rights generally, and by legal and equitable
limitations on the availability of specific remedies.
3.3 Securities Act Matters.
(a) Jordan Industries acknowledges that the Series A Preferred
Stock has not been registered under the Securities Act of 1933, as
amended (the "Securities Act"), on the ground that the Exchange is
exempt from the registration requirements of the Securities Act.
(b) Jordan Industries represents that the Series A Preferred
Stock has been acquired solely by and for the account of Jordan
Industries for investment purposes only, and is not being acquired
for subdivision, fractionalization, resale or distribution. Jordan
Industries has no contract, undertaking, agreement or arrangement
with any other person to sell, transfer or pledge the Series A
Preferred Stock (or any part thereof) which Jordan Industries has
acquired hereunder. Jordan Industries has no present plans or
intentions to enter into any such contract, undertaking, agreement or
arrangement.
(c) Jordan Industries has not paid or given directly or
indirectly to any person any commission or other remuneration for
soliciting the Exchange.
(d) Jordan Industries acknowledges that the Series A Preferred
Stock may not be sold, transferred or otherwise conveyed except
pursuant to registration or qualification under the Securities Act or
an exemption therefrom.
(e) Jordan Industries acknowledges that it knows and
understands that an investment in the Series A Preferred Stock is a
speculative investment which involves a high risk of loss.
(f) Jordan Industries represents that is an "accredited
investor" (as defined and used in Rule 501 promulgated under the
Securities Act).
(g) Welcome Home has afforded Jordan Industries and its
advisors the opportunity to discuss an investment in the Series A
Preferred Stock and to ask questions of representatives of Welcome
Home concerning its businesses and an investment in the Series A
Preferred Stock, and such representatives have provided answers to
all such questions. Jordan Industries acknowledges that there have
been no general or public solicitations or advertisements or other
broadly disseminated disclosures (including, without limitation, any
advertisement, article, notice or other communication published in
any newspaper, magazine or similar media or broadcast over television
or radio, or any seminar or meeting whose attendees have been invited
by any general solicitation or advertising) by or on behalf of
Welcome Home regarding an investment in the Series A Preferred Stock.
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(h) Jordan Industries acknowledges that each certificate for
Series A Preferred Stock will be imprinted with a legend in
substantially the following form:
"THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND MAY NOT BE SOLD
OR TRANSFERRED OR OFFERED FOR SALE OR TRANSFER UNLESS A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND OTHER APPLICABLE SECURITIES
LAWS WITH RESPECT TO SUCH SECURITIES IS THEN IN EFFECT, OR IN THE
OPINION OF COUNSEL, SUCH REGISTRATION UNDER THE SECURITIES ACT AND
OTHER APPLICABLE SECURITIES LAWS IS NOT REQUIRED."
Jordan Industries acknowledges that the effect of this legend, among other
things, is or may be to limit or destroy the value of the certificate for
purposes of sale or for use as loan collateral. Jordan Industries consents
that "stop transfer" instructions may be noted against the Series A
Preferred Stock.
ARTICLE IV
REGISTRATION RIGHTS
4.1 Certain Definitions. As used in this Article IV, the following
terms shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission,
or any other federal agency at the time administering the Securities
Act.
"Common Stock" shall mean the Common Stock, $.01 par value per
share, of Welcome Home, as constituted as of the date of this
Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Redemption Date" shall mean the date or dates that Welcome Home
may redeem the Series A Preferred Stock in accordance with the
Certificate of Designation.
"Registrable Stock" shall mean all shares of Common Stock, if
any, issued upon the redemption of the Series A Preferred Stock on
the Redemption Date. As to any particular share of Registrable
Stock, such securities shall cease to be Registrable Stock when they
have been distributed to the public pursuant to an offering
registered under the Securities Act or sold to the public through a
broker, dealer or market maker in compliance with Rule 144 under the
Securities Act (or any similar rule then in force).
4.2 Demand Registration. (a) At any time beginning after the
Redemption Date, Jordan Industries shall be entitled to request on one or
more occasions that the Company use its best efforts to register under the
Securities Act all or a portion of the Registrable Stock; provided, that
such request includes not less than 25% of the total shares of the
Registrable Stock. Notwithstanding anything to the contrary contained
herein, no request may be made under this Section 4.2 within 120 days after
the effective date of a registration statement filed by Welcome Home
covering a firm commitment underwritten public offering in which Jordan
Industries participated or elected not to participate pursuant to Section
4.3 hereof.
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(b) Welcome Home shall be entitled to include in the
registration referred to in Section 4.2(a), for sale in accordance with the
method of disposition specified therein, shares of Common Stock to be sold
by Welcome Home for its own account or for sale by others. Notwithstanding
the foregoing, if a demand registration pursuant to Section 4.2(a) is a
firm commitment underwritten public offering of Common Stock and the
managing underwriters advise Welcome Home that in their opinion the number
of shares of Common Stock to be underwritten exceeds the number which can
be sold in an orderly manner in such offering within a price range
acceptable to Jordan Industries, then the shares of Common Stock being
registered on behalf of Welcome Home and/or others shall be excluded from
such registration to the extent required by such limitation.
(c) Except for registration statements on Form S-4, S-8 or any
successor thereto, the Company will not file with the Commission any other
registration statement with respect to its Common Stock, whether for its
own account or that of other stockholders, from the date of receipt of a
notice pursuant to Section 4(a) until the completion of the period of
distribution of the registration contemplated thereby.
4.3 Incidental Registration. If the Company at any time after the
Redemption Date proposes to register any of its securities under the
Securities Act for sale to the public, whether for its own account or for
the account of other security holders or both (except with respect to
registration statements on Forms S-4, S-8, a transaction described under
Rule 145 of the Securities Act, or another form not available for
registering the Registrable Stock for sale to the public), each such time
it will give a written notice to Jordan Industries setting forth (i) the
date that Welcome Home intends to register shares of Common Stock under the
Securities Act, (ii) the names of any proposed managing or lead
underwriters and (iii) the intended plan of distribution. Upon the written
request of Jordan Industries, received by Welcome Home within 30 days after
the giving of the notice by Welcome Home to register any shares of its
Common Stock (which request shall state the intended method of disposition
of a specified number of shares of Common Stock), Welcome Home will use its
best efforts to cause such Registrable Stock as to which registration has
been requested to be included in the registration statement proposed to be
filed by Welcome Home. In the event that any registration pursuant to this
Section 4.3 shall be, in whole or in part, a firm commitment underwritten
public offering of Common Stock and the managing underwriters advise
Welcome Home that in their opinion the number of shares of Common Stock to
be underwritten exceeds the number which can be sold in an orderly manner
in such offering within a price range acceptable to Jordan Industries, then
the number of shares of Common Stock to be included in such an underwriting
shall be reduced pro rata between Welcome Home and Jordan Industries based
upon the number of shares of Common Stock requested to be included in such
registration statement; provided, however, that the number of shares of
Registrable Stock shall be limited only after the exclusion of any shares
to be included in such underwriting for the account of any person other
than Welcome Home or Jordan Industries.
4.4 Registration Procedures. If and whenever Welcome Home is
required by the provisions of Article IV to use its best efforts to effect
the registration of any shares of Registrable Stock under the Securities
Act, Welcome Home will, as expeditiously as possible:
(a) prepare and file with the Commission a registration
statement with respect to such securities which shall permit the
disposition of the Registrable Stock in accordance with the intended
method or methods thereof and use its best efforts to cause such
registration statement to become and remain effective for a period of
(i) one hundred twenty (120) days or (ii) until the completion of the
period of the distribution contemplated in the registration
statement, whichever first occurs;
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(b) use reasonable efforts to furnish to Jordan Industries,
copies of the registration statement before its filing with the
Commission, and to reasonably respond to comments received from such
persons;
(c) advise Jordan Industries and each underwriter (if any)
under such registration statement (i) when the prospectus or any
prospectus supplement or post-effective amendment has been filed and
when the same has become effective, (ii) whether the Commission has
issued any stop order suspending the effectiveness of a registration
statement of Welcome Home, and (iii) whether any state securities
commission has suspended the qualification of the Registrable Stock
for sale in any jurisdiction;
(d) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for the period specified therein, and comply with
the provisions of the Securities Act with respect to the disposition
of all Registrable Stock covered by such registration statement for
such period;
(e) furnish to Jordan Industries and to each underwriter (if
any) such number of copies of the registration statement and the
prospectus included therein (including each preliminary prospectus)
and such other documents as those persons reasonably may request in
order to facilitate the public sale or other disposition of the
Registrable Stock covered by such registration statement;
(f) use its best efforts to register or qualify the Registrable
Stock covered by such registration statement under the securities or
"blue sky" laws of such jurisdictions as Jordan Industries or, in the
case of an underwritten public offering, the managing underwriter
reasonably shall request; provided, however, that Welcome Home shall
not for any such purpose be required to qualify generally to transact
business as a foreign corporation in any jurisdiction where it is not
so qualified or to consent to general service of process in any such
jurisdiction;
(g) use its best efforts to list the securities covered by such
registration statement with any securities exchange or automated
quotation system on which the Common Stock of Welcome Home is then
listed;
(h) immediately notify Jordan Industries and each underwriter
(if any) under such registration statement, at any time when a
prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event of which Welcome Home
has knowledge as a result of which the prospectus contained in such
registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing;
(i) if the offering is underwritten and at the request of
Jordan Industries, use its best efforts to furnish on the date that
the Registrable Stock is delivered to the underwriters (if any) for
sale pursuant to such registration: (i) an opinion dated such date of
counsel representing Welcome Home for the purposes of such
registration, addressed to the underwriters and to Jordan Industries,
stating that such registration statement has become effective under
the Securities Act and that (A) to the best knowledge of such
counsel, no stop order suspending the effectiveness thereof has been
issued and no proceedings for that purpose have been instituted or
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are pending or contemplated under the Securities Act, (B) the
registration statement, the related prospectus and each amendment or
supplement thereof comply as to form in all material respects with
the requirements of the Securities Act (except that such counsel need
not express any opinion as to financial statements or other financial
data contained therein) and (C) to such other effects as reasonably
may be requested by counsel for the underwriters or by Jordan
Industries or its counsel and (ii) a letter dated such date from the
independent public accountants retained by Welcome Home, addressed to
the underwriters and to Jordan Industries, stating that they are
independent public accountants within the meaning of the Securities
Act and that, in the opinion of such accountants, the financial
statements of Welcome Home included in the registration statement or
the prospectus, or any amendment or supplement thereof, comply as to
form in all material respects with the applicable accounting
requirements of the Securities Act, and such letter shall
additionally cover such other financial matters (including
information as to the period ending no more than five business days
prior to the date of such letter) with respect to such registration
as such underwriters reasonably may request; and
(j) subject to execution of confidentiality agreements that are
reasonably satisfactory to Welcome Home, make available upon
reasonable notice and at reasonable times for inspection by Jordan
Industries, any underwriter participating in any distribution
pursuant to such registration statement, and any attorney, accountant
or other agent retained by Jordan Industries or the underwriter, all
financial and other records, pertinent corporate documents and
properties of Welcome Home, and cause Welcome Home's officers,
directors and employees to supply all information requested by any
such seller, underwriter, attorney, accountant or agent in connection
with such registration statement reasonably necessary, in the opinion
of counsel for such person, to conduct a reasonable investigation in
accordance with Section 11 of the Securities Act.
In connection with each registration hereunder, Jordan Industries
will furnish to Welcome Home in writing such information with respect to
themselves and the proposed distribution by them as reasonably shall be
necessary in order to assure compliance with the Federal and applicable
state securities laws. Welcome Home may exclude Jordan Industries if it
fails to provide such information in an accurate and timely manner.
4.5 Expenses. All expenses incurred by Welcome Home in complying
with this Article IV, including, without limitation, all registration,
listing and filing fees, printing expenses, fees and disbursements of
counsel and independent public accountants for Welcome Home, fees and
expenses (including counsel fees) incurred in connection with complying
with state securities or "blue sky" laws, fees of the National Association
of Securities Dealers, Inc., transfer taxes, fees of transfer agents and
registrars, costs of insurance and reasonable fees and disbursements of
counsel for Jordan Industries, shall be paid by Welcome Home. All
underwriting discounts and selling commissions applicable to the sale of
Registrable Stock shall be paid by Jordan Industries (except to the extent
the Registrable Stock is sold by a party other than Jordan Industries).
4.6 Indemnification and Contribution. (a) In the event of a
registration of any Registrable Stock under the Securities Act pursuant to
this Article IV, Welcome Home will indemnify and hold harmless Jordan
Industries, each underwriter (if any) of such Registrable Stock thereunder
and each other person, if any, who controls Jordan Industries or such
underwriter within the meaning of the Securities Act, against any losses,
claims, damages or liabilities, joint or several, to which Jordan
Industries, such underwriter or controlling person may become subject under
the Securities Act or otherwise, insofar as such losses, claims, damages or
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liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact
contained in any registration statement under which such Registrable Stock
was registered under the Securities Act pursuant to this Article IV, any
preliminary prospectus or final prospectus contained therein, or any
amendment or supplement thereof, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading, and will reimburse Jordan Industries, each such underwriter and
each such controlling person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that Welcome
Home will not be liable in any such case if and to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission so
made in conformity with information furnished in writing by Jordan
Industries, any such underwriter or any such controlling person in writing
specifically for use in such registration statement or prospectus.
(b) In the event of a registration of any of the Registrable
Stock under the Securities Act pursuant to this Article IV, Jordan
Industries will indemnify and hold harmless Welcome Home, each person, if
any, who controls Welcome Home within the meaning of the Securities Act,
each officer of Welcome Home who signs the registration statement, each
director of Welcome Home, each underwriter and each person who controls any
underwriter within the meaning of the Securities Act, against all losses,
claims, damages or liabilities, joint or several, to which Welcome Home or
such officer, director, underwriter or controlling person may become
subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the registration statement under which such
Registrable Stock was registered under the Securities Act pursuant to this
Article IV, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof, or arise out of or are
based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse Welcome Home and each such
officer, director, underwriter and controlling person for any legal or
other expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability or action; provided,
however, that Jordan Industries will not be liable hereunder in any such
case if and only to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in reliance upon and
in conformity with information furnished by Welcome Home, any such
underwriter or any such controlling person in writing specifically for use
in such registration statement or prospectus; provided, further, that the
liability of Jordan Industries shall be limited to the proportion of any
such loss, claim, damage, liability or expense which is equal to the
proportion that the public offering price of the shares sold by Jordan
Industries under such registration statement bears to the total public
offering price of all securities sold thereunder, but not in any event to
exceed the net proceeds received by Jordan Industries from the sale of the
Registrable Stock covered by such registration statement (as further
reduced by any damages or other amounts such seller was otherwise required
to pay by reason of such omission or alleged omission or such untrue or
alleged untrue statement).
(c) Promptly after receipt by an indemnified party hereunder of
notice of the commencement of any action, such indemnified party shall, if
a claim in respect thereof is to be made against the indemnifying party
hereunder, notify the indemnifying party in writing thereof, but the
omission so to notify the indemnifying party shall not relieve it from any
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liability which it may have to such indemnified party other than under this
Section 4.6 and shall only relieve it from any liability which it may have
to such indemnified party under this Section 4.6 if and to the extent the
indemnifying party is prejudiced by such omission. In case any such action
shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate in and, to the extent it shall wish, to
assume and undertake the defense thereof with counsel reasonably
satisfactory to such indemnified party, and, after notice from the
indemnifying party to such indemnified party of its election so to assume
and undertake the defense thereof, the indemnifying party shall not be
liable to such indemnified party under this Section 4.6 for any legal
expenses subsequently incurred by such indemnified party in connection with
the defense thereof other than reasonable costs of investigation and of
liaison with counsel so selected; provided, however, that, if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably
concluded that there may be reasonable defenses available to it which are
different from or additional to those available to the indemnifying party
or if the interests of the indemnified party reasonably may be deemed to
conflict with the interests of the indemnifying party, the indemnified
party shall have the right to select a separate counsel reasonably
acceptable to the indemnifying party and to assume such legal defenses and
otherwise to participate in the defense of such action, with the reasonable
expenses and fees of such separate counsel and other expenses related to
such participation to be reimbursed by the indemnifying party as incurred.
No indemnifying party, in defense of any such action, shall, except with
the consent of each indemnified party, consent to the entry of any judgment
or enter into any settlement which does not include as an unconditional
term thereof the giving, by the claimant or plaintiff, to such indemnified
party of a release from all liability in respect to such action.
4.7 Changes in Common Stock. If, and as often as, there is any
change in the Registrable Stock by way of a stock split, stock dividend,
combination or reclassification, or through a merger, consolidation,
reorganization or recapitalization, or by any other means, appropriate
adjustment shall be made in the provisions hereof so that the rights and
privileges granted hereby shall continue with respect to the Registrable
Stock as so changed.
4.8 Public Information. With a view to making available the
benefits of certain rules and regulations of the Securities Act which may
at any time permit the sale of the Registrable Stock to the public without
registration, Welcome Home agrees to:
(a) make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act;
(b) use its best efforts to file with the Commission in a
timely manner all reports and other documents required of Welcome
Home under the Securities Act and the Exchange Act; and
(c) furnish to Jordan Industries upon request a written
statement by Welcome Home as to its compliance with the reporting
requirements of Rule 144, the Securities Act, and the Exchange Act, a
copy of the most recent annual or quarterly report of Welcome Home,
and such other reports and documents filed by Welcome Home or notices
received by Welcome Home as Jordan Industries may reasonably request
in availing itself of any rule or regulation of the Securities Act
allowing Jordan Industries to sell its shares of Registrable Stock
without registration.
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ARTICLE V
MISCELLANEOUS
5.1 Effect on Credit Agreement and Other Indebtedness.
Notwithstanding the consummation of this Agreement and the transactions
contemplated herein (including, without limitation, the Exchange), (i) the
security interest in the Collateral (as defined in the Credit Agreement)
granted to Jordan Industries shall not be terminated or amended and the
terms and provisions of the Credit Agreement shall remain in full force and
effect, except that the aggregate amount of all Loans (as defined in the
Credit Agreement) outstanding as of the date hereof shall be reduced to
zero and (ii) the terms, provisions, and amounts of all other indebtedness
owed to Jordan Industries by Welcome Home (i.e. indebtedness other than the
indebtedness represented by the Jordan Account) shall not be amended,
modified or otherwise affected in any form or manner and shall remain in
full force and effect in accordance with their respective terms.
5.2 Parties in Interest. Except as otherwise set forth herein, all
covenants, agreements, representations, warranties, undertakings and
registration rights contained in this Agreement shall be binding on and
shall inure to the benefit of the respective successors and assigns of the
parties hereto (including subsequent holders of any shares of Series A
Preferred Stock transferred by Jordan Industries).
5.3 Severability. If any provision or provisions of this Agreement
shall be held to be invalid, illegal or unenforceable for any reason
whatsoever the validity, legality and enforceability of the remaining
provisions of this Agreement (including without limitation, all portions of
any paragraphs of this Agreement containing any such provision held to be
invalid, illegal or unenforceable, that are not themselves invalid, illegal
or unenforceable) shall not in any way be affected or impaired thereby.
5.4 Amendments and Waivers. This Agreement may be amended or
modified in whole or in part, only by an instrument in writing signed by
all parties hereto. This Agreement sets forth the entire understanding of
the parties, and supersedes all prior agreements, arrangements and
communications, whether oral or written, with respect to the subject matter
hereof. Any waiver by any of the parties hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver
of any subsequent breach of the same or any other provision hereof.
5.5 Notices. All notices under this Agreement shall be in writing
and shall be deemed to have been delivered, given and received, (i) if
personally sent or sent by telegram, when received at the address for the
applicable person set forth below, (ii) on the date of acknowledgement or
receipt if sent by telex, facsimile or other wire transmission, (iii) if
sent by an express courier service, on the first business day following the
date on which the notice is deposited with such courier service for next
business day delivery or (iv) three days after being deposited in the U.S.
mail, certified or registered mail, postage prepaid, addressed as follows:
To Welcome Home:
309-D Raleigh Street
Wilmington, North Carolina 28412
Attn: President
To Jordan Industries:
Arbor Lake Centre
1751 Lake Cook Road
Suite 550
Deerfield, Illinois
Attn: President
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5.6 Effect of Headings. The article and section headings herein are
for convenience only and shall not affect the construction hereof.
5.7 Governing Law. This Agreement shall be deemed a contract made
under the laws of New York and together with the rights and obligations of
the parties hereunder, shall be construed under and governed by the laws of
New York, without giving effect to any principles of conflicts of law that
would result in the application of the laws of any other jurisdiction.
5.8 Further Assurances. Each party, at the request of the other,
shall promptly execute and deliver or cause to be executed and delivered to
such other party any and all other documents, in addition to those
otherwise required by this Agreement, in form and substance reasonably
satisfactory to such other party, as such other party may reasonably
request from time to time in order to carry out or evidence the
transactions contemplated by this Agreement.
5.9 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall constitute an original but all of which
shall constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers on the date first above
written.
WELCOME HOME, INC.
By: /s/ Thomas H. Hicks
----------------------------
Name: Tom Hicks
Title: Chief Operating Officer
JORDAN INDUSTRIES, INC.
By: /s/ Jonathan F. Boucher
-----------------------------
Name: Jonathan F. Boucher
Title: Vice President
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