THIS FIRST SUPPLEMENTAL INDENTURE, dated as of July 25, 1997, is
between JORDAN INDUSTRIES, INC., an Illinois corporation (the "Company"), and
FIRST TRUST NATIONAL ASSOCIATION, as trustee (herein called the "Trustee").
PRELIMINARY STATEMENT
The Company and the Trustee have entered into an Indenture, dated as
of April 2, 1997 (the "Indenture"), with respect to the Company's 11 3/4%
Senior Subordinated Discount Debentures due 2009. Capitalized terms used
herein, not otherwise defined herein, shall have the meanings given them in the
Indenture.
Section 9.02 of the Indenture provides that, under certain
circumstances, a supplemental indenture may be entered into by the Company and
the Trustee with the written consent of the Holders of at least a majority in
principal amount of the then outstanding Securities. In accordance with the
terms of Sections 9.02 and 9.06 of the Indenture, the Company has, by
resolution of the Board of Directors, authorized this First Supplemental
Indenture. The Trustee has determined that this First Supplemental Indenture
is in form satisfactory to it.
The Company has solicited consents to proposed amendments to the
Indenture, pursuant to the Consent Solicitation Statement, dated June 26, 1997
(as the same may be amended, supplemented or otherwise modified from time to
time, the "Consent Solicitation"). This First Supplemental Indenture evidences
the proposed amendments described in the Consent Solicitation.
All things necessary to make this First Supplemental Indenture a valid
agreement of the Company and the Trustee and a valid amendment of and
supplement to the Indenture have been done.
NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH:
For and in consideration of the premises, it is mutually covenanted
and agreed, for the equal and proportionate benefit of all Holders of the
Securities issued under the Indenture from and after the date of this First
Supplemental Indenture, as follows:
Section 1. Amendment to the Indenture.
(a) Section . DEFINITIONS. The following definitions are amended and
restated in their entirety, or added to Section 1.01 of the Indenture in their
alphabetically appropriate place, as applicable, to read as follows (deletions
are indicated by a line through the deleted text and new language is indicated
by a double underline):
"Asset Sale" means the sale, lease, conveyance or other disposition by
the Company or a Restricted Subsidiary of assets or property (other than (i)
the sale or disposition of any Restricted Investment, (ii) the sale or lease of
inventory, equipment, receivables or other assets in the ordinary course of
business, (iii) Receivables Financings, (iv) any sale or transfer of properties
or assets by the Company or a Restricted Subsidiary to the Company or any other
Restricted Subsidiary, (v) the sale, lease, conveyance or other disposition of
all or substantially all of the assets of the Company as permitted under
Article V, or (vi) Restricted Payments permitted by Section 4.05).
"Cash Flow" means, for any given period and Person, the sum of,
without duplication, Consolidated Net Income, plus
(i) the portion of Net Income attributable to the minority
interests in its Subsidiaries to the extent not included in
calculating Consolidated Net Income, plus
(ii) provision for taxes based on income or profits to the extent
such income or profits were included in computing Consolidated
Net Income, plus
(iii) Consolidated Interest Expense, to the extent deducted in
computing Consolidated Net Income, plus
(iv) the amortization of all intangible assets, to the extent such
amortization was deducted in computing Consolidated Net Income
(including, but not limited to, inventory write-ups, goodwill,
debt and financing costs and Incentive Arrangements), plus
(v) non-capitalized transaction costs incurred in connection with
financings, acquisitions or dispositions (including, but not
limited to, financing and refinancing fees, to the extent
deducted in computing Consolidated Net Income), plus
(vi) all depreciation and all other non-cash charges (including,
without limitation, those charges relating to purchase
accounting adjustments, to the extent deducted in computing
Consolidated Net Income), plus
(vii) interest income, to the extent such income was not included in
computing Consolidated Net Income, plus
(viii) all dividend payments on Preferred Stock (whether or not paid
in cash), to the extent deducted in computing Consolidated Net
Income, plus
(ix) any extraordinary or non-recurring charge or expense arising
out of the implementation of SFAS 106 or SFAS 109, to the
extent deducted in computing Consolidated Net Income;
provided, however, that if any such calculation includes any period during
which an acquisition or sale of a Person or the incurrence or repayment of
Indebtedness occurred, then such calculation for such period shall be made on
a Pro Forma Basis.
"Consolidated Interest Expense" means, for any given period and
Person, the aggregate of the interest expense in respect of all Indebtedness
of such Person and its Subsidiaries for such period, on a consolidated basis,
determined in accordance with GAAP (including amortization of original issue
discount on any such Indebtedness, all non-cash interest payments, the
interest portion of any deferred payment obligation and the interest component
of Capital Lease Obligations, but excluding amortization of deferred financing
fees if such amortization would otherwise be included in interest expense);
provided, however, that for the purpose of the Cash Flow Coverage Ratio in
Sections 4.07 and 5.01, Consolidated Interest Expense shall be calculated on a
Pro Forma Basis; provided further that any premiums, fees and expenses
(including the amortization thereof) payable in connection with the Plan and
the Offering and the application of the net proceeds therefrom or any other
refinancing of Indebtedness will be excluded.
"Consolidated Net Income" means, for any given period and Person, the
aggregate of the Net Income of such Person and its Subsidiaries for such
period, on a consolidated basis, determined in accordance with GAAP; provided,
however, that:
(i) the Net Income of any Person acquired in a pooling of interests
transaction for any period prior to the date of such
acquisition shall be excluded, and
(ii) Consolidated Net Income of any Person will not include, without
duplication, any deduction for:
2
(A) any increased amortization or depreciation resulting from
the write-up of assets pursuant to Accounting Principles
Board Opinion Nos. 16 and 17, as amended or supplemented
from time to time,
(B) the amortization of all intangible assets (including
amortization attributable to inventory write-ups,
goodwill, debt and financing costs, and Incentive
Arrangements),
(C) any non-capitalized transaction costs incurred in
connection with financings, acquisitions or divestitures
(including, but not limited to, financing and refinancing
fees),
(D) any extraordinary or nonrecurring charges relating to any
premium or penalty paid, write-off of deferred financing
costs or other financial recapitalization charges in
connection with redeeming or retiring any Indebtedness
prior to its stated maturity, and
(E) any non-recurring charge arising out of the restructuring
or consolidation of the operations of any Person(s) or
business either alone or together with the Company or any
Restricted Subsidiary, incurred within 18 months
following the acquisition of such Person(s) or business
by the Company or any Restricted Subsidiary;
provided, however, that for purposes of determining the Cash Flow Coverage
Ratio, Consolidated Net Income shall be calculated on a Pro Forma Basis.
"Consolidated Net Worth" with respect to any Person means, as of any
date, the consolidated equity of the common stockholders of such Person
(excluding the accumulated foreign currency translation adjustment), all
determined on a consolidated basis in accordance with GAAP, but without any
reduction in respect of the payment of dividends on any series of such
Person's Preferred Stock if such dividends are paid in additional shares of
Capital Stock (other than Disqualified Stock); provided, however, that
Consolidated Net Worth shall also include, without duplication:
(i) the amortization of all write-ups of inventory,
(ii) the amortization of all intangible assets (including
amortization of goodwill, debt and financing costs, and
Incentive Arrangements),
(iii) any non-capitalized transaction costs incurred in connection
with financings, acquisitions or divestitures (including, but
not limited to, financing and refinancing fees),
(iv) any increased amortization or depreciation resulting from the
write-up of assets pursuant to Accounting Principles Board
Opinion Nos. 16 and 17, as amended and supplemented from time
to time,
(v) any extraordinary or nonrecurring charges or expenses relating
to any premium or penalty paid, write-off of deferred financing
costs or other financial recapitalization charges incurred in
connection with redeeming or retiring any Indebtedness prior to
its stated maturity,
(vi) any non-recurring cash charge arising out of the restructuring
or consolidation of the operations of any Person(s) or business
either alone or together with the Company or any Restricted
Subsidiary, incurred within 18 months following the acquisition
of such Person(s) or business by the Company or any Restricted
Subsidiary, and
(vii) any extraordinary or non-recurring charge arising out of the
implementation of SFAS 106 or SFAS 109;
3
provided, however, that for purposes of determining Consolidated Net Worth in
Section 5.01, Consolidated Net Worth shall be calculated on a Pro Forma Basis.
"First Supplemental Indenture" means the First Supplemental
Indenture, dated as of the date first written above, between the Company and
the Trustee, to this Indenture.
"Net Proceeds" means. with respect to any Asset Sale, the aggregate
amount of cash proceeds (including an cash received by way of deferred payment
pursuant to a note receivable Issued in connection with such Asset Sale, other
than the portion of such deferred payment constituting interest, and including
any amounts received as disbursements or withdrawals from any escrow or
similar account established in connection with any such Asset Sale, but, in
either such case, only as and when so received) received by the Company or any
of its Restricted Subsidiaries in respect of such Asset Sale, net of:
(i) the cash expenses of such Asset Sale (including, without
limitation, the payment of principal of, and premium, if any,
and interest on, Indebtedness required to be paid as a result
of such Asset Sale (other than the Securities) and legal,
accounting, management, advisory and investment banking fees
and sales commissions),
(ii) taxes paid or payable as a result thereof,
(iii) any portion of cash proceeds that the Company determines in
good faith should be reserved for post-closing adjustments, it
being understood and agreed that on the day that all such
post-closing adjustments have been determined, the amount (if
any) by which the reserved amount in respect of such Asset Sale
exceeds the actual post-closing adjustments payable by the
Company or any of its Restricted Subsidiaries shall constitute
Net Proceeds on such date,
(iv) any relocation expenses and pension, severance and shutdown
costs incurred as a result thereof, and
(v) any deduction of appropriate amounts to be provided by the
Company or any of its Restricted Subsidiaries as a reserve in
accordance with GAAP against any liabilities associated with
the asset disposed of in such transaction and retained by the
Company or such Restricted Subsidiary after such sale or other
disposition thereof, including, without limitation, pension and
other post-employment benefit liabilities and liabilities
related to environmental matters or against any indemnification
obligations associated with such transaction.
"New Credit Agreement" means the credit agreement to be entered into
by the Company and/or certain of its Restricted Subsidiaries and certain
Subsidiaries and the lenders party thereto in their capacities as lenders
thereunder and The First National Bank of Boston, N.A., as agent, together
with all loan documents and instruments thereunder (including, without
limitation, any guarantee agreements and security documents), in each case as
such agreements may be amended (including any amendment and restatement
thereof), supplemented or otherwise modified from time to time, including any
agreement extending the maturity of, refinancing, replacing or otherwise
restructuring (including, without limitation, increasing the amount of
available borrowings thereunder, and all Obligations with respect thereto, in
each case, to the extent permitted by Section 4.07, or adding Subsidiaries of
the Company as additional borrowers or guarantors thereunder) all or any
portion of the Indebtedness under such agreement or any successor or
replacement agreement and whether by the same or any other agent, lender or
group of lenders.
"New Senior Notes" means the 103/8% Senior Notes due 2007 of the
Company.
"New Subsidiary Advisory Agreements" means the New Subsidiary
Advisory Agreements, between the Company and each of its Subsidiaries, as in
effect on the date of the First Supplemental Indenture.
4
"New Subsidiary Consulting Agreements" means the New Subsidiary
Consulting Agreements, between the Company and each of its Subsidiaries, as in
effect on the date of the First Supplemental Indenture.
"New TJC Management Consulting Agreement" means the New TJC
Management Consulting Agreement, between the Company and TJC Management
Corporation, as in effect on the date of the First Supplemental Indenture.
"Non-Restricted Subsidiary" means Motors and Gears Holdings, Inc. and
its Subsidiaries, Jordan Telecommunications Products, Inc. and its
Subsidiaries, JI Properties, Inc. and its Subsidiaries, and any other
Subsidiary of the Company other than a Restricted Subsidiary.
"Offering Circular" means the Offering Circular of the Company, dated
July 21, 1997, for the New Senior Notes.
"Other Permitted Indebtedness" means:
(i) Indebtedness of the Company and its Restricted Subsidiaries
existing as of the date of the First Supplemental Indenture
(including Old Notes, if any, the Securities and the New Senior
Notes);
(ii) Indebtedness of the Company and its Restricted Subsidiaries in
respect of bankers acceptances and letters of credit
(including, without limitation, letters of credit in respect of
workers' compensation claims) Issued in the ordinary course of
business, or other Indebtedness with respect to
reimbursement-type obligations regarding workers' compensation
claims;
(iii) Refinancing Indebtedness, provided that:
(A) the principal amount of such Refinancing Indebtedness
shall not exceed the outstanding principal amount of
Indebtedness (including unused commitments) so extended,
refinanced, renewed, replaced, substituted or refunded
plus any amounts incurred to pay premiums, fees and
expenses in connection therewith,
(B) Refinancing Indebtedness of Indebtedness other than
Senior Indebtedness shall have a Weighted Average Life to
Maturity equal to or greater than the Weighted Average
Life to Maturity of the Indebtedness being extended,
refinanced, renewed, replaced, substituted or refunded;
and
(C) in the case of Refinancing Indebtedness of Subordinated
Indebtedness, such Refinancing Indebtedness shall be
subordinated to the Securities at least to the same
extent as the Indebtedness being extended, refinanced,
renewed, replaced, substituted or refunded;
(iv) intercompany Indebtedness of and among the Company and its
Restricted Subsidiaries (excluding guarantees by Restricted
Subsidiaries of Indebtedness of the Company not Issued in
compliance with Section 4.17);
(v) Indebtedness of the Company and its Restricted Subsidiaries
Issued in connection with making permitted Restricted Payments
under Sections 4.05(b)(iv) or (b)(v) and guarantees by the
Company of (a) capital leases of the Company's Non-Restricted
Subsidiaries up to the aggregate amount permitted by clause
4.05(b)(xv) and (b) operating leases of or assumed by
Non-Restricted Subsidiaries and existing on the date of
original issuance of the New Senior Notes, including any
refinancing, substitution, extension or other modification
thereto, up to the aggregate amount permitted by Section
4.05(b)(xv);
5
(vi) Indebtedness of any Non-Restricted Subsidiary, provided that
such Indebtedness is nonrecourse to the Company and its
Restricted Subsidiaries and the Company and its Restricted
Subsidiaries have no Obligations with respect to such
Indebtedness;
(vii) Indebtedness of the Company and its Restricted Subsidiaries
under Hedging Obligations;
(viii) Indebtedness of the Company and its Restricted Subsidiaries
arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument
inadvertently (except in the case of daylight overdrafts, which
will not be, and will not be deemed to be, inadvertent) drawn
against insufficient funds in the ordinary course of business;
(ix) Indebtedness of any Person at the time it is acquired as a
Restricted Subsidiary, provided that such Indebtedness was not
Issued by such Person in connection with or in anticipation of
such acquisition and that such Indebtedness is nonrecourse to
the Company and any other Restricted Subsidiary and the Company
and such other Restricted Subsidiaries have no Obligations with
respect to such Indebtedness;
(x) guarantees by Restricted Subsidiaries of Indebtedness of any
Restricted Subsidiary if the Indebtedness so guaranteed is
permitted under this Indenture;
(xi) guarantees by a Restricted Subsidiary of Indebtedness of the
Company, if the Indebtedness so guaranteed is permitted under
this Indenture and the Securities are guaranteed by such
Restricted Subsidiary to the extent required by Section 4.17;
(xii) guarantees by the Company of Indebtedness of any Restricted
Subsidiary if the Indebtedness so guaranteed is permitted under
this Indenture;
(xiii) Indebtedness of the Company and its Restricted Subsidiaries
Issued in connection with performance, surety, statutory,
appeal or similar bonds in the ordinary course of business; and
(xiv) Indebtedness of the Company and its Restricted Subsidiaries
Issued in connection with agreements providing for
indemnification, purchase price adjustments and similar
obligations in connection with the sale or disposition of any
of their business, properties or assets.
"Permitted Liens" means: (a) with respect to the Company and its
Restricted Subsidiaries,
(1) Liens for taxes, assessments, governmental charges or claims
which are being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted and if
a reserve or other appropriate provision, if any, as shall be
required in conformity with GAAP shall have been made therefor;
(2) statutory Liens of landlords and carriers', warehousemen's,
mechanics', suppliers', materialmen's, repairmen's or other
like Liens arising in the ordinary course of business and with
respect to amounts not yet delinquent or being contested in
good faith by appropriate proceedings, if a reserve or other
appropriate provision, if any as shall be required in
conformity with GAAP shall have been made therefor;
(3) Liens incurred on deposits made in the ordinary course of
business in connection with workers' compensation, unemployment
insurance and other types of social security;
(4) Liens incurred on deposits made to secure the performance of
tenders, bids, leases, statutory obligations, surety and appeal
bonds, government contracts, performance and return of moneys,
6
bonds and other obligations of a like nature incurred in the
ordinary course of business (exclusive of obligations for
the payment of borrowed money);
(5) easements, rights-of-way, zoning or other restrictions, minor
defects or irregularities in title and other similar charges or
encumbrances not interfering in any material respect with the
business of the Company or any of its Restricted Subsidiaries
incurred in the ordinary course of business;
(6) Liens (including extensions, renewals and replacements thereof)
upon property acquired (the "Acquired Property") after the date
of the First Supplemental Indenture, provided that:
(A) any such Lien is created solely for the purpose of
securing Indebtedness representing, or Issued to finance,
refinance or refund, the cost (including the cost of
construction) of the Acquired Property,
(B) the principal amount of the Indebtedness secured by such
Lien does not exceed 100% of the cost of the Acquired
Property,
(C) such Lien does not extend to or cover any property other
than the Acquired Property and any improvements on such
Acquired Property, and
(D) the Issuance of the Indebtedness to purchase the Acquired
Property is permitted by Section 4.07;
(7) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection
with the importation of goods;
(8) judgment and attachment Liens not giving rise to an Event of
Default;
(9) leases or subleases granted to others not interfering in any
material respect with the business of the Company or any of its
Restricted Subsidiaries;
(10) Liens encumbering customary initial deposits and margin
deposits, and other Liens incurred in the ordinary course of
business and that are within the general parameters customary
in the industry, in each case securing Indebtedness under
Hedging Obligations;
(11) Liens encumbering deposits made to secure obligations arising
from statutory, regulatory, contractual or warranty
requirements of the Company or its Restricted Subsidiaries,
(12) Liens arising out of consignment or similar arrangements for
the sale of goods entered into by the Company or its Restricted
Subsidiaries in the ordinary course of business;
(13) any interest or title of a lessor in property subject to any
Capital Lease Obligation or operating lease;
(14) Liens arising from filing Uniform Commercial Code financing
statements regarding leases;
(15) Liens existing on the date of the First Supplemental Indenture
and any extensions, renewals or replacements thereof; and
(16) any (a) Lien granted to any trustee (including, but not limited
to, the Security Trustee) or similar institution under any
indenture for Senior Indebtedness, and (b) any Lien granted to
the Trustee under this Indenture and any substantially
equivalent Lien granted to any trustee or similar
7
institution under any indenture for Senior Subordinated
Indebtedness permitted by the terms of this Indenture;
(b) with respect to the Restricted Subsidiaries,
(1) Liens securing Restricted Subsidiaries' reimbursement
Obligations with respect to letters of credit that encumber
documents and other property relating to such letters of credit
and the products and proceeds thereof;
(2) Liens securing Indebtedness Issued by Restricted Subsidiaries
if such Indebtedness is permitted by (A) Section 4.07(a), (B)
Sections 4.07(b)(i), (b)(ii), (b)(iii) or (b)(iv), or (C)
clauses (i), (iii) (to the extent the Indebtedness subject to
such Refinancing Indebtedness was subject to Liens), (vii),
(ix) or (x) of the definition of Other Permitted Indebtedness;
(3) Liens securing intercompany Indebtedness Issued by any
Restricted Subsidiary to the Company or another Restricted
Subsidiary;
(4) additional Liens at any one time outstanding with respect to
assets of the Restricted Subsidiaries the aggregate fair market
value of which does not exceed $10,000,000 (the fair market
value of any such asset is to be determined on the date such
Lien is granted on such asset);
(5) Liens securing guarantees by Restricted Subsidiaries of
Indebtedness Issued by the Company if such guarantees are
permitted by clause (xi) (but only in respect of the property,
rights and assets of the Restricted Subsidiaries Issuing such
guarantees) of the definition of Other Permitted Indebtedness;
and
(c) with respect to the Company,
(1) Liens securing Indebtedness Issued by the Company under the
Credit Agreement or the New Credit Agreement if such
Indebtedness is permitted by Section 4.07 (including, but not
limited to, Indebtedness Issued by the Company under the Credit
Agreement or the New Credit Agreement pursuant to Section
4.07(b)(i) and/or (b)(iv));
(2) Liens securing Indebtedness of the Company if such Indebtedness
is permitted by clauses (i), (iii) (to the extent the
Indebtedness subject to such Refinancing Indebtedness was
subject to Liens) or (vii) of the definition of Other Permitted
Indebtedness; and
(3) Liens securing guarantees by the Company of Indebtedness Issued
by Restricted Subsidiaries if such Indebtedness is permitted by
Section 4.07 (including, but not limited to, Indebtedness
Issued by Restricted Subsidiaries under the Credit Agreement or
the New Credit Agreement pursuant to Section 4.07(b)(i) and/or
(b)(iv)) and if such guarantees are permitted by clause (xii)
(but only in respect of Indebtedness Issued by the Restricted
Subsidiaries under the Credit Agreement or the New Credit
Agreement pursuant to Section 4.07) of the definition of Other
Permitted Indebtedness;
provided, however, that, notwithstanding any of the foregoing, the Permitted
Liens referred to in clause (c) of this definition shall not include any Lien
on Capital Stock of Restricted Subsidiaries held by the Company (as
distinguished from Liens on Capital Stock of Restricted Subsidiaries held by
other Restricted Subsidiaries) other than Liens securing (A) Indebtedness of
the Company Issued under the Credit Agreement or the New Credit Agreement
pursuant to Section 4.07 and any permitted Refinancing Indebtedness of such
Indebtedness, and (B) guarantees by the Company of Indebtedness Issued by
Restricted Subsidiaries under the Credit Agreement or the New Credit Agreement
pursuant to Section 4.07 and any permitted Refinancing Indebtedness of such
Indebtedness.
8
"Plan" means the Company's Recapitalization and Repositioning Plan
referenced in the Offering Circular and all agreements, instruments and
transactions pursuant thereto.
"Pro Forma Basis" means, for purposes of determining Consolidated Net
Income, Cash Flow, and Consolidated Interest Expense in connection with the
Cash Flow Coverage Ratio (including in connection with Section 4.05, Section
4.16, Section 5.01, the incurrence of Indebtedness pursuant to Section 4.07(a)
and Consolidated Net Worth for purposes of Section 5.01), giving pro forma
effect to (x) any acquisition or sale of a Person, business or asset, related
incurrence, repayment or refinancing of Indebtedness or other related
transactions, including any related restructuring charges in respect of
restructurings, consolidations, compensation or headcount reductions or other
cost savings which would otherwise be accounted for as an adjustment permitted
by Regulation S-X under the Securities Act or on a pro forma basis under GAAP,
or (y) any incurrence, repayment or refinancing of any Indebtedness and the
application of the proceeds therefrom, in each case, as if such acquisition or
sale and related transactions, restructurings, consolidations, cost savings,
reductions, incurrence, repayment or refinancing were realized on the first
day of the relevant period permitted by Regulation S-X under the Securities
Act or on a pro forma basis under GAAP. Furthermore, in calculating the Cash
Flow Coverage Ratio, (1) interest on outstanding Indebtedness determined on a
fluctuating basis as of the determination date and which will continue to be
so determined thereafter shall be deemed to have accrued at a fixed rate per
annum equal to the rate of interest on such Indebtedness in effect on the
determination date; (2) if interest on any Indebtedness actually incurred on
the determination date may optionally be determined at an interest rate based
upon a factor of a prime or similar rate, a eurocurrency interbank offered
rate, or other rates, then the interest rate in effect on the determination
date will be deemed to have been in effect during the relevant period; and (3)
notwithstanding clause (1) above, interest on Indebtedness determined on a
fluctuating basis, to the extent such interest is covered by agreements
relating to interest rate swaps or similar interest rate protection Hedging
Obligations, shall be deemed to accrue at the rate per annum resulting after
giving effect to the operation of such agreements.
"Restricted Subsidiary" means: (i) any Subsidiary of the Company
existing on the date of the First Supplemental Indenture, other than a
Non-Restricted Subsidiary, and (ii) any other Subsidiary of the Company
formed, acquired or existing after the date of the First Supplemental
Indenture that is designated as a "Restricted Subsidiary" by the Company
pursuant to a resolution approved by a majority of the Board of Directors,
provided that any Restricted Subsidiary that is organized under the laws of a
foreign jurisdiction and whose stock or ownership interests are sold or
transferred to a Non-Restricted Subsidiary may, by resolution approved by a
majority of the Board of Directors, be thereafter designated and considered as
a Non-Restricted Subsidiary.
"Tax Sharing Agreement" means the Tax Sharing Agreement, between the
Company and each of its Subsidiaries, as in effect on the date of the First
Supplemental Indenture.
"Transition Agreement" means the Transition Agreement, between the
Company and Motors and Gears Holdings, Inc., and the Transition Agreement,
between the Company and Jordan Telecommunications Products, Inc., each as in
effect on the date of the First Supplemental Indenture.
(b) The following Sections of the Indenture are hereby amended and
restated in their entirety, or added to the Indenture in their numerically
predetermined place, to read as follows (deletions are indicated by a line
through the deleted text and new language is indicated by a double underline):
Section 4.05. LIMITATION ON RESTRICTED PAYMENTS.
(a) The Company will not, and will not permit any Restricted Subsidiary
to, directly or indirectly,
(i) declare or pay any dividend or make any distribution on account
of the Company's or such Restricted Subsidiary's Capital Stock
or other Equity Interests (other than dividends or
distributions payable in Equity Interests (other than
Disqualified Stock) of the Company or a
9
Restricted Subsidiary and other than dividends or
distributions payable by a Restricted Subsidiary to another
Restricted Subsidiary or to the Company),
(ii) purchase, redeem or otherwise acquire or retire for value any
Equity Interests of the Company or any of its Restricted
Subsidiaries (other than any such Equity Interest purchased
from the Company or any Restricted Subsidiary),
(iii) voluntarily prepay Indebtedness that is subordinated to the
Securities, whether any such Subordinated Indebtedness is
outstanding on, or issued after, the date of original issuance
of the Securities, except as specifically permitted by the
terms of this Indenture,
(iv) make any Restricted Investment (all such dividends,
distributions, purchases, redemptions or other acquisitions,
retirements, prepayments and Restricted Investments being
collectively referred to as "Restricted Payments"), if, at the
time of such Restricted Payment:
(1) a Default or Event of Default shall have occurred and be
continuing or shall occur as a consequence thereof; or
(2) immediately after such Restricted Payment and after
giving effect thereto on a Pro Forma Basis, the Company
shall not be able to Issue $1.00 of additional
Indebtedness pursuant to Section 4.07(a); or
(3) such Restricted Payment, together with the aggregate of
all other Restricted Payments made after the date of the
First Supplemental Indenture, exceeds the sum of, without
duplication:
(A) 50% of the aggregate Consolidated Net Income
(including, for this purpose, gains from Asset
Sales and, to the extent not already included in
the aggregate Consolidated Net Income, gains from
Restricted Investments) of the Company (or, in case
such aggregate is a loss, 100% of such loss) for
the period (taken as one accounting period) from
the beginning of the first fiscal quarter
commencing immediately after the date of the First
Supplemental Indenture and ending as of the
Company's most recently ended fiscal quarter at the
time of such Restricted Payment, plus
(B) 100% of the aggregate net cash proceeds and the
fair market value of any property or securities (as
determined by the Board of Directors in good faith)
received by the Company from the Issue or sale of
Equity Interests or warrants, options or rights to
acquire Equity Interests of the Company or any
Restricted Subsidiary subsequent to the date of the
First Supplemental Indenture (other than Equity
Interests Issued or sold to a Restricted Subsidiary
and other than Disqualified Stock), plus
(C) $5,000,000, plus
(D) the amount by which the principal amount of and any
accrued interest on:
1) any Senior Indebtedness or Senior
Subordinated Indebtedness of the Company, or
2) any Indebtedness of the Restricted
Subsidiaries,
10
(not held by the Company or any Restricted
Subsidiary) is reduced on the Company's
consolidated balance sheet upon the conversion or
exchange subsequent to the date of the First
Supplemental Indenture for Equity Interests (other
than Disqualified Stock) of the Company or any
Restricted Subsidiaries (less the amount of any
cash, or the fair market value of any other
property or securities (as determined by the Board
of Directors in good faith), distributed by the
Company or any Restricted Subsidiary (to Persons
other than the Company or any other Restricted
Subsidiary) upon such conversion or exchange, plus
(E) if any Non-Restricted Subsidiary is redesignated as
a Restricted Subsidiary, the fair market value (as
determined by the Board of Directors in good faith)
of such Non-Restricted Subsidiary as of the date it
is redesignated; provided, however, that for
purposes of this clause (E), the fair market value
of any redesignated Non-Restricted Subsidiary shall
be reduced by the amount that any such
redesignation replenishes or increases the amount
of Restricted Investments permitted to be made
pursuant to Section 4.05(b)(iii).
(b) Notwithstanding Section 4.05(a), the following Restricted Payments
may be made:
(i) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration such
payment would comply with the provisions hereof;
(ii) the retirement of any of the Company's Capital Stock or
Subordinated Indebtedness in exchange for, or out of the net
proceeds of the substantially concurrent sale (other than to a
Restricted Subsidiary) of, other Capital Stock (other than
Disqualified Stock) and neither such retirement nor the
proceeds of any such sale or exchange shall be included in any
computation made pursuant to Section 4.05(a);
(iii) making Restricted Investments at any time, and from time to
time, in an aggregate outstanding amount of $40,000,000 after
the date of the First Supplemental Indenture under this
Indenture (it being understood that if any Restricted
Investment acquired with a Restricted Payment after the date of
the First Supplemental Indenture pursuant to this clause (iii)
is sold, transferred or otherwise conveyed to any Person other
than the Company or a Restricted Subsidiary, the portion of the
net cash proceeds or fair market value of securities or
properties paid or transferred to the Company and its
Restricted Subsidiaries in connection with such sale, transfer
or conveyance that relates to the repayment or return of the
original cost of such a Restricted Investment will replenish or
increase the amount of Restricted Investments permitted to be
made pursuant to this Section 4.05(b)(iii), so that up to
$40,000,000 of Restricted Investments may be outstanding under
this Section 4.05(b)(iii) at any given time);
(iv) the repurchase or redemption of the Company's common stock upon
the death of Xxxxxx X. Xxxxx, pursuant to the terms of an
Employment Agreement, dated as of February 25, 1988, between
the Company and Xxxxxx X. Xxxxx, as amended or supplemented;
provided, however, that the funds necessary to satisfy the
Company's obligation to repurchase or redeem such Common Stock
shall be fully reimbursed by insurance;
(v) the repurchase or redemption of the Company's common stock
pursuant to the terms of the several Restricted Stock
Agreements, each dated as of February 25, 1988, between the
Company and each of Xxxxxx X. Xxxxx, Xxxxxxxx X. Xxxxxxx and
Xxxx X. Xxxxxx, the Restricted Stock Agreement, dated as of
December 31, 1992, between the Company and Xxxxxx Xxxxx, the
Restricted Stock Agreements, each dated as of January 1, 1992,
between the Company and each of Xxxxxxxx X.
11
Xxxxxxx, Xxxx Max and Xxxxxx Xxxxx, and the Restricted Stock
Agreement, dated as of May 16, 1997, between the Company and
Xxxxxx Xxxxx, in each case as amended or supplemented, up to
an aggregate amount not to exceed $7,500,000;
(vi) any loans, advances, distributions or payments from the Company
to its Restricted Subsidiaries, or any loans, advances,
distributions or payments by a Restricted Subsidiary to the
Company or to another Restricted Subsidiary, pursuant to
intercompany Indebtedness, intercompany management agreements,
intercompany tax sharing agreements, and other intercompany
agreements and obligations;
(vii) the payment of directors' fees in an annual aggregate amount
not to exceed $250,000;
(viii) to the extent constituting Restricted Payments, if no Default
or Event of Default shall have occurred and be continuing or
shall occur as a consequence thereof, the payment of
consulting, financial and investment banking fees (but not
limiting the payment of indemnities, expenses and other
amounts) under the New TJC Management Consulting Agreement,
provided that the obligation of the Company to pay such fees
under the New TJC Management Consulting Agreement shall be
subordinated expressly to the Company's Obligations on the
Securities;
(ix) the purchase, redemption, retirement or other acquisition of
(a) any Senior Indebtedness required by its terms to be
purchased, redeemed, retired or acquired with the net proceeds
from asset sales (as defined in the instrument evidencing such
Senior Indebtedness) or upon a change of control (as defined in
the instrument evidencing such Senior Indebtedness), and (b)
the Securities pursuant to Sections 4.13 and 4.14;
(x) the exchanging, refinancing or refunding of Subordinated
Indebtedness through the Issuance of Subordinated Indebtedness
so long as the Subordinated Indebtedness to be Issued is
Refinancing Indebtedness permitted under Section 4.07;
(xi) to the extent constituting Restricted Payments, any payments
made in connection with the Plan as disclosed in the Offering
Circular for the New Senior Notes;
(xii) Restricted Investments received as consideration for the sale,
transfer or disposition of any business, properties or assets
of the Company or any Restricted Subsidiary, provided, that the
Company complies with the Section 4.14;
(xiii) any Restricted Investment constituting securities or
instruments of a Person issued in exchange for trade or other
claims against such person in connection with a financial
reorganization or restructuring of such Person;
(xiv) any Restricted Investment constituting an equity investment in
a Receivables Subsidiary; provided that the aggregate amount of
such equity investments does not exceed $1,000,000; and
(xv) guarantees by the Company of (a) capital lease obligations of
Non-Restricted Subsidiaries in an aggregate principal or face
amount not exceeding the aggregate principal or face amount of
capital leases of the Non-Restricted Subsidiaries guaranteed by
the Company on the date of the First Supplemental Indenture and
(b) operating leases of or assumed by Non-Restricted
Subsidiaries and existing on the date of the First Supplemental
Indenture, including any refinancing, substitution, extension
or other modification thereto.
12
Section 4.07. LIMITATION ON INCURRENCE OF INDEBTEDNESS.
(a) The Company will not, and will not permit any Restricted Subsidiary to,
Issue any Indebtedness (other than the Indebtedness represented by the
Securities, the Old Notes and the New Senior Notes) unless: the Company's Cash
Flow Coverage Ratio for its four full fiscal quarters next preceding the date
such additional Indebtedness is Issued would have been at least:
(i) 1.7 to 1, if such date is between the date of original Issuance
of the Securities under this Indenture and June 30, 1999,
(ii) 1.85 to 1, from July 1, 1999 through June 30, 2001, or
(iii) 2.0 to 1, from July 1, 2001 and thereafter,
in each case determined on a Pro Forma Basis as if such
additional Indebtedness and any other Indebtedness issued
since the end of the applicable four quarter period had been
Issued at the beginning of such four-quarter period.
(b) Section 4.07(a) will not apply to the Issuance of:
(i) Indebtedness of the Company and/or its Restricted Subsidiaries
up to the greater of (A) $75.0 million in aggregate principal
amount pursuant to the Credit Agreement or the New Credit
Agreement, and (B) an aggregate principal amount up to the sum
of: (x) 85% of the book value of the Company and its Restricted
Subsidiaries' Receivables on a consolidated basis, and (y) 65%
of the book value of the Company and its Restricted
Subsidiaries' inventories on a consolidated basis;
(ii) Indebtedness of the Company and its Restricted Subsidiaries
pursuant to any Receivables Financing;
(iii) Indebtedness of the Company and its Restricted Subsidiaries in
connection with capital leases, sale and leaseback
transactions, purchase money obligations, capital expenditures
or similar financing transactions relating to:
(A) their properties, assets and rights as of the date of the
First Supplemental Indenture up to $20,000,000 in
aggregate principal amount, or
(B) their properties, assets and rights acquired after the
date of the First Supplemental Indenture, provided that
such Indebtedness under this Section 4.07(b)(iii)(B) does
not exceed 100% of the cost of such properties, assets
and rights:
(iv) additional Indebtedness of the Company and its Restricted
Subsidiaries in an aggregate principal amount up to $25,000,000
(all or any portion of which may be Issued as additional
Indebtedness under the Credit Agreement or the New Credit
Agreement); and
(v) Other Permitted Indebtedness.
Section 4.08. LIMITATION ON TRANSACTIONS WITH AFFILIATES.
(a) Neither the Company nor any of its Restricted Subsidiaries may make any
loan, advance, guarantee or capital contribution to, or for the benefit of, or
sell, lease, transfer or dispose of any properties or assets to, or for the
benefit of, or purchase or lease any property or assets from, or enter into or
amend any contract, agreement
13
or understanding with, or for the benefit of, an Affiliate (each such
transaction or series of related transactions that are part of a common plan
an "Affiliate Transaction"), except in good faith and on terms that are no
less favorable to the Company or the relevant Restricted Subsidiary than those
that would have been obtained in a comparable transaction on an arm's length
basis from an unrelated Person.
(b) Neither the Company nor any of its Restricted Subsidiaries may engage in
any Affiliate Transaction involving aggregate payments or other transfers by
the Company and its Restricted Subsidiaries in excess of $5,000,000 (including
cash and non-cash payments and benefits valued at their fair market value by
the Board of Directors in good faith) unless the Company delivers to the
Trustee (i) a resolution of the Board of Directors stating that the Board of
Directors (including a majority of the disinterested directors, if any) has,
in good faith, determined that such Affiliate Transaction complies with the
provisions of this Indenture, and (ii) an opinion as to the fairness of such
Affiliate Transaction to the Company or such Restricted Subsidiary and the
holders of the Securities from a financial point of view by an investment
banking firm of national prominence that is not an Affiliate.
(c) Notwithstanding Sections 4.08(a) and (b), this Section 4.08 will not apply
to:
(i) transactions between the Company and any Restricted Subsidiary
or between Restricted Subsidiaries,
(ii) any Restricted Payments permitted pursuant to Section 4.05,
(iii) payments of fees and other amounts due under any stock
appreciation right ("SAR") agreements, the New Subsidiary
Advisory Agreements, the New Subsidiary Consulting Agreements,
the Tax Sharing Agreement, the JI Properties Services
Agreement, the Transition Agreement and the New TJC Management
Consulting Agreement, provided, that any amendments,
supplements, modifications, substitutions, renewals or
replacements of the foregoing agreements are approved by a
majority of the Board of Directors (including a majority of the
disinterested directors, if any) as fair to the Company and the
holders of the Securities,
(iv) the payment of reasonable and customary directors' fees to
directors of the Company and its Restricted Subsidiaries,
(v) transactions in connection with a Receivables Financing, or
(vi) payments and transactions in connection with the Plan as
described in the Offering Circular.
Section 4.09. LIMITATION ON LIENS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien (other than Permitted Liens) upon any asset now owned or
hereafter acquired by them, or any income or profits therefrom or assign or
convey any right to receive income therefrom; provided, however, that in
addition to creating Permitted Liens on its properties or assets, the Company
and any of its Restricted Subsidiaries may create any Lien upon any of their
properties or assets (including, but not limited to, any Capital Stock of its
Subsidiaries) if the Securities are equally, and ratably secured.
14
Section 4.11. LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING
RESTRICTED SUBSIDIARIES.
(a) The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer
to exist or become effective, any encumbrance or restriction on the ability of
any Restricted Subsidiary to:
(i) pay dividends or make any other distributions on its Capital
Stock or any other interest or participation in, or measured
by, its profits, owned by the Company or any Restricted
Subsidiary, or pay any Indebtedness owed to, the Company or any
Restricted Subsidiary,
(ii) make loans or advances to the Company, or
(iii) transfer any of its properties or assets to the Company, except
for such encumbrances or restrictions existing under or by
reason of:
(A) applicable law,
(B) Indebtedness permitted;
1) under Section 4.07(a),
2) under Sections 4.07(b)(i), (b)(ii) and (b)(iv) and
clauses (i), (vi) and (ix) of the definition of
Other Permitted Indebtedness, or
3) Restricted Payments and agreements or instruments
evidencing Restricted Payments permitted under
Section 4.05,
(C) customary provisions restricting subletting or assignment
of any lease or license of the Company or any Restricted
Subsidiary,
(D) customary provisions of any franchise, distribution or
similar agreement,
(E) any instrument governing Indebtedness or any other
encumbrance or restriction of a Person acquired by the
Company or any Restricted Subsidiary at the time of such
acquisition, which encumbrance or restriction is not
applicable to any Person, or the properties or assets of
any Person, other than the Person, or the property or
assets of the Person, so acquired,
(F) Indebtedness or other agreements existing on the date of
the First Supplemental Indenture,
(G) any Refinancing Indebtedness of Indebtedness described in
Section 4.07(b)(i), (b)(ii), (b)(iii) and (b)(iv) and
clauses (i), (vi), and (ix) of the definition of Other
Permitted Indebtedness; provided that the encumbrances
and restrictions created in connection with such
Refinancing Indebtedness are no more restrictive in any
material respect with regard to the interests of the
Holders than the encumbrances and restrictions in the
refinanced Indebtedness,
15
(H) any restrictions, with respect to a Restricted
Subsidiary, imposed pursuant to an agreement that has
been entered into for the sale or disposition of the
stock, business, assets or properties of such Restricted
Subsidiary,
(I) the terms of any Indebtedness of the Company incurred in
connection with Section 4.07, provided that the terms of
such Indebtedness constitute no greater encumbrance or
restriction on the ability of any Restricted Subsidiary
to pay dividends or make distributions, make loans or
advances or transfer properties or assets than is
permitted by this Section 4.11, and
(J) the terms of purchase money obligations, but only to the
extent such purchase money obligations restrict or
prohibit the transfer of the property so acquired.
(b) Nothing contained in this Section 4.11 shall prevent the Company from
entering into any agreement or instrument providing for the incurrence of
Permitted Liens or restricting the sale or other disposition of property or
assets of the Company or any of its Restricted Subsidiaries that are subject
to Permitted Liens.
Section 5.01. MERGER OR CONSOLIDATION.
(a) The Company shall not consolidate or merge with or into, or sell, lease,
convey or otherwise dispose of all or substantially all of its assets to, any
Person (any such consolidation, merger or sale being a "Disposition") unless:
(i) the successor entity of such Disposition or the Person to which
such Disposition shall have been made is a corporation
organized or existing under the laws of the United States, any
state thereof or the District of Columbia;
(ii) the successor corporation of such Disposition or the
corporation to which such Disposition shall have been made
expressly assumes the Obligations of the Company, pursuant to a
supplemental indenture in a form reasonably satisfactory to the
Trustee, under the Securities and this Indenture;
(iii) immediately after such Disposition no Default or Event of
Default exists; and
(iv) the entity (the "Successor Corporation") formed by or surviving
any such Disposition or the corporation to which such
Disposition shall have been made;
(A) shall have Consolidated Net Worth (immediately after the
Disposition but prior to any purchase accounting
adjustments resulting from the Disposition) equal to or
greater than the Consolidated Net Worth of the Company
immediately preceding the Disposition,
(B) shall be permitted immediately after the Disposition by
the terms of Section 4.07(a) to Issue at least $1.00 of
additional Indebtedness determined on a Pro Forma Basis
pursuant to Section 4.07(a), and
(C) shall have a Cash Flow Coverage Ratio on a Pro Forma
Basis, for the four fiscal quarters immediately preceding
the applicable Disposition, equal to or greater than the
actual Cash Flow Coverage Ratio of the Company for such
four-quarter period.
Prior to the consummation of any proposed Disposition, the Company
shall deliver to the Trustee an Officers' Certificate to the foregoing effect
and an Opinion of Counsel stating that the proposed Disposition and such
supplemental indenture comply with this Indenture.
16
Section 2. Effectiveness; Termination
(a) This First Supplemental Indenture is entered into pursuant to and
consistent with Section 9.02 of the Indenture, and nothing herein shall
constitute an amendment, supplement or waiver requiring the approval of each
Holder pursuant to clauses (1) through (7) of the last paragraph of Section
9.02.
(b) This First Supplemental Indenture shall become effective and
binding on the Company, the Trustee and the Holders of the Securities upon the
execution and delivery by the parties to this First Supplemental Indenture;
provided, however, that the provisions of the Indenture referred to in Section
1 above (such provisions being referred to as the "Amended Provisions") will
remain in effect in the form they existed prior to the execution of this First
Supplemental Indenture, the deletions and amendments of the Amended Provisions
will not become operative, and the terms of the Indenture will not be amended,
modified or deleted, in each case until the date and time (the "Payment Date")
that the Company pays the Consent Payments to the Trustee. Upon the Payment
Date, the Amended Provisions will automatically be deleted or modified as
contemplated by Section 1 above.
Section 3. Reference to and Effect on the Indenture.
(a) On and after the Payment Date, each reference in the Indenture to
"the Indenture," "this Indenture," "hereunder," "hereof" or "herein" shall
mean and be a reference to the Indenture as supplemented by this First
Supplemental Indenture unless the context otherwise requires.
(b) Except as specifically amended above, the Indenture shall remain
in full force and effect and is hereby ratified and confirmed.
Section 4. Governing Law.
This First Supplemental Indenture shall be construed and enforced in
accordance with, and interpreted under, the internal laws of the State of New
York, without reference to the conflict of laws provisions thereof.
Section 5. Counterparts and Methods of Execution.
This First Supplemental Indenture may be executed in several
counterparts, all of which together shall constitute one agreement binding on
all parties, notwithstanding that all parties have not signed the same
counterpart.
Section 6. Titles.
Section titles are for descriptive purposes only and shall not
control or alter the meaning of this First Supplemental Indenture as set forth
in the text.
17
IN WITNESS WHEREOF, the Company and the Trustee have caused this
First Supplemental Indenture to be duly executed by their respective officers
thereunto duly authorized all as of the day and year first above written.
JORDAN INDUSTRIES, INC.
By:
--------------------------------
Its: Senior Vice President
FIRST TRUST NATIONAL ASSOCIATION,
as Trustee
By:
--------------------------------
Its:
-------------------------------
00
XXXXX XX XXX XXXX )
) ss.:
COUNTY OF NEW YORK )
On the ____ day of July, 1997, before me personally came to me known,
who, being by me duly sworn, did depose and say that he resides at New York,
New York; that he is a ________________ of FIRST TRUST NATIONAL ASSOCIATION,
one of the banking corporations described herein and that executed the above
instrument; and that he signed his name thereto by order of the Board of
Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
[NOTARIAL SEAL]
-----------------------------------
Notary Public
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the ______ day of July, 1997, before me personally came , to me
known, who, being by me duly sworn, did depose and say that he resides at New
York, New York; that he is a ________________ of JORDAN INDUSTRIES, INC., the
corporation described herein and that executed the above instrument; and that
he signed his name thereto by order of the Board of Directors of said
corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
[NOTARIAL SEAL]
-----------------------------------
Notary Public
