MODIFICATION AGREEMENT
THIS MODIFICATION AGREEMENT (this "Agreement") is made as of
February 18, 2004 by and among Jordan Industries, Inc. ("Jordan Industries")
and those certain holders of Jordan Industries' 11-3/4% Senior Subordinated
Discount Debentures due 2009 (the "Debentures") identified on Schedule A
attached hereto (the "Group Holders").
RECITALS
WHEREAS, the Debentures were issued pursuant to that certain
Indenture, dated as of April 2, 1997, between Jordan Industries and U.S. Bank
National Association (f.k.a. First Trust National Association), as Trustee, as
supplemented by the First Supplemental Indenture thereto dated as of July 25,
1997, the Second Supplemental Indenture thereto dated as of March 9, 1999, and
the Third Supplemental Indenture thereto dated as of February 18, 2004 (as
supplemented, the "Indenture");
WHEREAS, the Group Holders in the aggregate own Debentures with an
Accreted Value of $24,006,565.01 (the "Group Debentures");
WHEREAS, Jordan Industries is required to pay, and prior to the date
hereof has timely paid, cash interest to holders of the Debentures
semiannually on October 1 and April 1, beginning October 1, 2002 and
continuing until maturity of the Debentures on April 1, 2009;
WHEREAS, the Indenture provides that the failure to make an interest
payment on the Debentures within 30 days of its due date constitutes an Event
of Default;
WHEREAS, to avoid an Event of Default arising from Jordan Industries'
failure to make required interest payments due April 1, 2004 and thereafter,
the Group Holders and Jordan Industries entered into that certain Waiver
Agreement, dated as of January 31, 2004 (the "Waiver Agreement");
WHEREAS, pursuant to the Waiver Agreement, the Group Holders agreed
to waive their rights to take any actions in connection with an Event of
Default resulting from Jordan Industries' failure to make required interest
payments on the Group Debentures; and
WHEREAS, the Group Holders, in order to facilitate Jordan Industries'
refinancing plan, are willing to consent to certain modifications to the terms
of the Group Debentures as provided herein;
NOW, THEREFORE, in consideration of the foregoing and other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto hereby agree as follows:
Section 1. Definitions.
(a) For purposes of this Agreement, the following terms shall have
the meanings provided below.
"Accreted Value" means the aggregate amount payable with respect to
the Group Debentures prior to modification pursuant to the terms of this
Agreement, as shown on Schedule A attached hereto.
"Accrued OID" means, as of any date, interest accrued at the
Short-Term AFR on the unpaid accreted value of the Modified Debentures.
"Adjustment Date" means the date that is the three year anniversary
of the execution of this Agreement.
"Agreement" means this Modification Agreement as supplemented or
amended.
"Available Cash" means, with respect to any potential payment date,
an amount of cash on hand or available under any Credit Agreement of Jordan
Industries or its Restricted Subsidiaries (and available for distribution to
Jordan Industries pursuant to the terms of the New Senior Note Indenture) such
that after the payment of any principal or interest on the payment date, there
is at least $20 million of cash on hand or available under such Credit
Agreements and that this amount of cash on hand or available under any such
Credit Agreements has existed for all days since the last interest payment on
the New Senior Notes.
"Code" means the Internal Revenue Code of 1986, as amended.
"Conditional Interest" means, as of any date, the excess of (a)
interest that would have accrued on the Group Debentures if the Group Holders
had not entered into either this Agreement or the Waiver Agreement (and the
failure to make cash interest payments did not give rise to an Event of
Default), including the additional interest required to be paid under Section
4.01 of the Indenture (but only with respect to overdue installments of
interest), over (b) Accrued OID on the Modified Debentures.
"Debentures" means the 11-3/4% Senior Subordinated Discount
Debentures of Jordan Industries due 2009.
"Fixed Charge Coverage Ratio" has the meaning given to such term in
the New Senior Note Indenture.
"Group Debentures" means the Debentures held by the Group Holders
with an aggregate Accreted Value, prior to modification pursuant to the terms
hereof, in the amount shown on Schedule A attached hereto.
"Group Holders" means those holders of Group Debentures identified on
Schedule A attached hereto.
"Indenture" shall have the meaning given to such term in the Recitals
hereto.
"Jordan Industries" means Jordan Industries, Inc., an Illinois
corporation.
2
"Maturity Date" means the earlier to occur of (a) the date on which
all the outstanding principal and interest (or any other amounts owed) on the
Debentures held by persons other than the Group Holders have been paid in
full, (b) the date that is six months after the maturity of the Debentures and
(c) the date on which Jordan Industries, pursuant to or within the meaning of
any Bankruptcy Law: (i) commences a voluntary case, (ii) consents to the entry
of an order for relief against it in an involuntary case, (iii) consents to
the appointment of a Custodian of it or for all or substantially all of its
property, or (iv) makes a general assignment for the benefit of its creditors.
"Modified Debentures" means the Group Debentures as modified pursuant
to the terms of this Agreement.
"Modified Issue Price" means 30% of the Accreted Value of the Group
Debentures.
"New Senior Note Issuers" means JII Holdings, LLC and its wholly
owned subsidiary, JII Holdings Finance Corporation.
"New Senior Note Indenture" means the indentures pursuant to which
the New Senior Note Issuers co-issued 13% Senior Secured Notes due 2007, dated
as of February 18, 2004, among the New Senior Notes Issuers, Jordan
Industries, Inc., as guarantor, and U.S. Bank National Association, as
Trustee.
"New Senior Notes" means the 13% Senior Secured Notes due 2007 and
issued pursuant to the New Senior Note Indenture.
"Short-Term AFR" means (a) for the period from the date hereof until
the Adjustment Date, 1.61%, and (b) for the period from the Adjustment Date
until maturity, the minimum rate of interest necessary for a debt instrument
with a term to maturity of less than three years to have adequate stated
interest for purposes of Code section 1274(c)(2).
"Unconditional Redemption Price" means the Modified Issue Price plus
Accrued OID reduced by cash payments of Accrued OID received prior to the
Maturity Date.
"Waiver Agreement" means that certain Waiver Agreement dated as of
January 31, 2004 by and between the Group Holders and Jordan Industries.
(b) Capitalized terms used but not defined herein shall have the
meaning ascribed to such terms in the Waiver Agreement or, to the extent not
defined in the Waiver Agreement, in the Indenture or, to the extent defined in
the Indenture, in the New Senior Note Indenture.
Section 2. Principal Amount of the Group Debentures.
(a) The Accreted Value of the Group Debentures as of the date hereof
shall be reduced to the Modified Issue Price.
(b) On the Maturity Date, Jordan Industries shall pay the Group
Holders an amount equal to the Unconditional Redemption Price.
3
Section 3. Interest.
(a) Jordan Industries shall pay interest in an amount equal to the
unpaid balance of Accrued OID and Conditional Interest semi-annually, on each
April 1 and October 1; provided, however, that interest shall only be paid on
an interest payment date to the extent of Available Cash and only if the Fixed
Charge Coverage Ratio has been satisfied for the twelve month period preceding
such interest payment date.
(b) In the event interest is paid pursuant to Section 3(a), such
interest payment shall be credited first against the amount of Accrued OID and
second, to the extent of any excess, against Conditional Interest.
Section 4. Conditional Principal Payments.
On the Maturity Date, Jordan Industries shall pay the Group Holders
additional principal in an amount equal to the difference between the Accreted
Value of the Group Debentures prior to reduction pursuant to Section 2(a) of
this Agreement and the Modified Issue Price of the Group Debentures; provided,
however, that such additional principal amount shall only be paid to the
extent of Available Cash after the payment of any remaining Conditional
Interest.
Section 5. Redemptions.
Nothing in this Agreement shall reduce the amount payable to the
Group Holders upon the optional redemption or mandatory redemption of the
Group Debentures pursuant to Article 3 of the Indenture.
Section 6. Federal Income Tax Treatment.
For all federal, state and local income tax purposes, each of the
Group Holders and Jordan Industries agree to report the tax consequences of
the modifications of the Group Debentures pursuant to this Agreement and the
holding of the Modified Debentures in a manner consistent with the information
returns provided by Jordan Industries to the Group Holders.
Section 7. Other Agreements.
To the extent any other agreement, including the Indenture or the
Waiver Agreement, is inconsistent with the terms of this Agreement, the terms
of this Agreement shall prevail. Except as expressly provided herein, the
Group Holders do not consent to any modifications to the terms of the Group
Debentures or waive any rights held pursuant to any other agreement.
Section 8. Continuing Effectiveness.
The Indenture shall remain in full force and effect and is hereby
ratified, approved and confirmed in each and every respect.
4
Section 9. Severability.
Any provision of this Agreement which is prohibited or unforceable in
any jurisdiction shall, as to such provision and such jurisdiction, be
ineffective to the extent of such prohibition or unforceability without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
Section 10. Governing Law.
This Agreement 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 law provisions thereof.
Section 11. Counterparts and Methods of Execution.
This Agreement 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 12. Titles.
Section titles are for descriptive purposes only and shall not
control or alter the meaning of this Agreement as set forth in the text.
[SIGNATURE PAGES FOLLOW]
5
IN WITNESS WHEREOF, Jordan Industries and the undersigned have caused
this Agreement 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: /s/ Xxxxxx X. Xxxxx
----------------------------
Name: Xxxxxx X. Xxxxx
Title: President & Chief
Operating Officer
Xxxxxxx X. Xxxxxxxxx,
representing $15,792,704.75 in
Accreted Value of Debentures
By: /s/ Xxxxxxx X. Xxxxxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxxxxx
6
JORDAN INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxxxx
----------------------------
Name: Xxxxxx X. Xxxxx
Title: President & Chief
Operating Officer
Xxxxx X. Xxxxx,
representing $7,877,786.18 in
Accreted Value of Debentures
By: /s/ Xxxxx X. Xxxxx
----------------------------
Name: Xxxxx X. Xxxxx
7
JORDAN INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxxxx
----------------------------
Name: Xxxxxx X. Xxxxx
Title: President & Chief
Operating Officer
Xxxxxxxx X. Xxxxxxx,
representing $336,074.08 in
Accreted Value of Debentures
By: /s/ Xxxxxxxx X. Xxxxxxx
----------------------------
Name: Xxxxxxxx X. Xxxxxxx
8
FEBRUARY 18, 2004
SCHEDULE A
GROUP HOLDERS AND THEIR RESPECTIVE
HOLDINGS OF GROUP DEBENTURES
----------------------------
Principal Accreted
Amount Value
of Group Accrued but of Group
Debentures Unpaid Interest Debentures
Held by Such as of the Date Held by Such
Group Holder Name Group Holder Shown Above Group Holder
----------------- ------------ --------------- -------------
Xxxxxxx X. Xxxxxxxxx $15,116,302.00 $676,402.75 $15,792,704.75
Xxxxx X. Xxxxx $ 7,540,380.00 $337,406.18 $ 7,877,786.18
Xxxxxxxx X. Xxxxxxx $ 321,680.00 $ 14,394.08 $ 336,074.08
TOTAL $24,006,565.01
==============
ADDENDUM
THIS ADDENDUM TO THAT CERTAIN MODIFICATION AGREEMENT (this
"Addendum") is made as of April 1, 2004 by and among Jordan Industries, Inc.
("Jordan Industries") and those certain holders of Jordan Industries' 11-3/4%
Senior Subordinated Discount Debentures due 2009 (the "Debentures") identified
on Schedule A-1 attached hereto (the "Addendum Group Holders").
RECITALS
WHEREAS, Jordan Industries and the Addendum Group Holders, along with
certain other holders of Debentures, previously entered into that certain
Modification Agreement with respect to the Debentures dated as of February 18,
2004 (the "Modification Agreement");
WHEREAS, after the effective date of the Modification Agreement, the
Addendum Group Holders acquired Debentures with an aggregate Accreted Value of
$1,847,257.99 (the "Additional Group Debentures"); and
WHEREAS, the Addendum Group Holders, in order to facilitate Jordan
Industries' refinancing plan, are willing to consent to the modification to
the terms of the Additional Group Debentures provided in the Modification
Agreement;
NOW, THEREFORE, in consideration of the foregoing and other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto hereby agree as follows:
Section 1. Definitions.
Capitalized terms used but not defined herein shall have the meaning
given to such terms in the Modification Agreement.
Section 2. Modification of Additional Group Debentures.
(a) As of the date hereof, the Additional Group Debentures shall be
treated as Group Debentures for all purposes of the Modification Agreement,
including adjustments to the Accreted Value and interest and principal payable
with respect to such Additional Group Debentures.
(b) As of the date hereof, any reference to Group Debentures contained
in the Modification Agreement shall be deemed to include the Additional Group
Debentures.
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, Jordan Industries and the undersigned have caused
this Addendum 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: /s/ Xxxxxx X. Xxxxx
----------------------------
Name: Xxxxxx X. Xxxxx
Title: President & Chief
Operating Officer
Xxxxxxx X. Xxxxxxxxx,
representing $1,747,257.99 in
Accreted Value of Debentures
By: /s/ Xxxxxxx X. Xxxxxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxxxxx
APRIL 1, 2004
SCHEDULE A-1
ADDITIONAL GROUP DEBENTURES
---------------------------
Principal Accreted
Amount Value
of Group Accrued but of Group
Debentures Unpaid Interest Debentures
Held by Such as of the Date Held by Such
Group Holder Name Group Holder Shown Above Group Holder
----------------- ------------ --------------- -------------
Xxxxxxx X. Xxxxxxxxx $ 1,745,019.00 $102,238.99 $1,847,257.99
