THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
FIRST AMENDMENT
Dated as of August 12, 1999
amending the
Senior Note Purchase Agreement
Dated as of June 30, 1994
FIRST AMENDMENT dated as of August 12, 1999 (the "Amendment") to the
SENIOR NOTE PURCHASE AGREEMENT dated as of June 30, 1994 (the "Agreement") by
and among The York Group, Inc., a Pennsylvania corporation (the "Company") and
The Variable Annuity Life Insurance Company, a Texas corporation (the
"Purchaser", and together with its successors and assigns and any holder of
Notes (as such term is defined below), the "Holders").
R E C I T A L S
WHEREAS, the Company has requested that the Purchaser enter into an
amendment to the Agreement and the Purchaser is willing to enter into such an
amendment subject to the terms and conditions set forth below.
NOW THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. AMENDMENTS TO THE AGREEMENT. Effective as of the Effective Date
(as hereinafter defined), the Agreement is hereby amended as follows:
1.1 GLOBAL CHANGES.
Each reference in the Agreement and in the Notes to "7.87%" shall be
changed to "8.37%" (such change in the interest rate to be effective on August
12, 1999), and any reference in the Agreement and in the Notes to "Senior Note"
shall be changed to "Senior Secured Note". EXHIBIT A attached to the Agreement
is hereby deleted and EXHIBIT A to this Amendment is hereby inserted in lieu
thereof. The "Closing Date" under the Agreement shall be deemed to be the
Effective Date of this Amendment.
1.2 AMENDMENTS TO SECTION 1.
(a) The heading of Section 1 of the Agreement is hereby amended by
inserting the language below after the existing heading:
"; GUARANTEES; PLEDGE AND SECURITY AGREEMENTS.
1.1 THE NOTES."
(b) Section 1 of the Agreement is further amended hereby by
inserting the following language at the end thereof after Section 1.1:
"1.2 THE SUBSIDIARY GUARANTEES; THE PLEDGE AGREEMENTS; THE SECURITY
AGREEMENTS AND THE TRADEMARK AND PATENT SECURITY AGREEMENTS. The Notes will be
unconditionally guaranteed by each
of the Company's existing Subsidiaries pursuant to the subsidiary guarantees,
substantially in the form of EXHIBIT 4.1C of the Credit Agreement (individually
a "Subsidiary Guarantee" and collectively the "Subsidiary Guarantees", which
terms shall include after the Closing Date all additional Subsidiary Guarantees
from time to time executed and delivered pursuant to SECTION 6.10). The Notes
will also have the benefit of one or more (a) Pledge Agreements substantially in
the form of EXHIBIT 4.1B of the Credit Agreement (b) Security Agreements
substantially in the form of EXHIBIT 4.1A of the Credit Agreement and (c)
Trademark and Patent Security Agreements substantially in the form of EXHIBIT
4.1E of the Credit Agreement."
1.3 AMENDMENTS TO SECTION 3.
(a) Section 3 of the Agreement is hereby amended by deleting the
introductory paragraph and inserting in lieu thereof the following:
"This Agreement shall be amended as provided in the First Amendment on the
Effective Date when all conditions listed below have been met:"
(b) Section 3.7 of the Agreement is further amended by inserting the
words "the Amendment," after the word "Agreement" on the ninth line thereof.
(c) Section 3 of the Agreement is further amended by adding the
following provisions after Section 3.12:
"3.13 SECURITY AGREEMENTS; TRADEMARK AND PATENT SECURITY AGREEMENTS.
Security Agreements and Trademark and Patent Security Agreements shall have been
executed by the Company and each Guarantor pledging to the Collateral Agent for
the benefit of, among other persons, the Holders substantially all of the
personal property assets of the Company and the Guarantors, together with UCC-1
financing statements, patent and trademark filings and any other documents,
agreements or instruments necessary or desirable in the Holders' sole reasonable
discretion to create an Acceptable Security Interest in such collateral.
3.14 PLEDGE AGREEMENTS. Pledge Agreements shall have been executed by the
Company and the Guarantors pledging to the Collateral Agent for the benefit of,
among other persons, the Holders, (a) all of the capital stock of the
Subsidiaries of the Company that are not Foreign Subsidiaries and (b) 65% of the
capital stock of the Subsidiaries of the Company that are Foreign Subsidiaries,
in each case together with stock certificates, stock powers executed in blank,
UCC-1 financing statements and any other documents, agreements or instruments
necessary or desirable in the Holders' sole reasonable discretion to create an
Acceptable Security Interest in such pledged stock.
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3.15 GUARANTEES. The Holder shall have received a duly executed Subsidiary
Guarantee from each Guarantor."
1.4 AMENDMENTS TO SECTION 4.
(a) Section 4.1 of the Agreement is hereby amended by deleting it in
its entirety and inserting in lieu thereof the following:
"4.1 MANDATORY REPAYMENTS. The Notes shall be subject to mandatory
prepayment as follows: (a) on August 31, 1999 and on the last day of each month
thereafter to and including May 31, 2000 (so long as the Notes shall be
outstanding), the Company will prepay $297,619.05 of the aggregate principal
amount of the Notes, (b) on June 30, 2000 (so long as the Notes shall be
outstanding) the Company will prepay $595,238.10 of the aggregate principal
amount of the Notes and (c) on July 31, 2000 and on the last day of each month
thereafter to and including June 30, 2004 (so long as the Notes shall be
outstanding), the Company will prepay $297,619.05 of the aggregate principal
amount of the Notes or, if the unpaid balance thereof is less or more, then such
other amount as may be then currently outstanding. Each such prepayment under
SECTION 4.1 shall be at the principal amount so to be prepaid, together with
accrued interest thereon to the date of such prepayment, without premium or
prepayment charge."
(b) The heading of Section 4.2 of the Agreement is hereby deleted
and replaced with the following heading:
"OPTIONAL AND MANDATORY PREPAYMENT WITH PREMIUM. (a)"
(c) The following language shall be added as a new clause (b) after
the first sentence of Section 4.2:
"(b) The Notes shall, if a Triggering Event shall have occurred and be
continuing, be subject to mandatory prepayment with (i) the Net Cash Proceeds
from Assets as set forth in the proviso of SECTION 7.6(G) and (ii) the casualty
proceeds received pursuant to SECTION 6.11, in each case subject to the pro rata
treatment set forth in SECTIONS 2.3 and 2.6 of the Intercreditor Agreement (any
such proceeds to be applied in accordance with this sentence, the "Mandatory
Proceeds"), such prepayments being due and payable on the date the Net Cash
Proceeds from Assets are distributed by the Collateral Agent in accordance with
Section 2.3(a) of the Intercreditor Agreement (the "Triggering Prepayment
Date"). On the Triggering Prepayment Date the Company shall be deemed to have
delivered a notice of prepayment and shall prepay the outstanding Notes in an
amount equal to the Mandatory Proceeds, either in whole or in part, by payment
of the principal amount of the Notes, or portion thereof to be prepaid, and
accrued interest on the Notes to the Triggering Prepayment Date, together with a
premium equal to the Make-Whole Premium Amount (determined by the Holders) with
respect to such principal amount
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then to be prepaid, determined as of one (1) Business Day prior to the
Triggering Prepayment Date."
(c) The last three sentences of Section 4.2 shall become a new
clause (c) of Section 4.2.
1.5 AMENDMENTS TO SECTION 6.
(a) Section 6.1(c) of the Agreement is hereby amended by deleting
clause (ii) thereof from "(ii) specifying" on the thirteenth line through
"SECTIONS 6.8, 7.1, 7.2 and 7.4" on the seventeenth line thereof and inserting
in lieu thereof the following: "(ii) specifying the amount available at the end
of such accounting period for dividends in compliance with SECTION 7.4 and
showing in reasonable detail compliance during and at the end of such accounting
period with the restrictions contained in SECTIONS 6.8, 7.1, 7.2, 7.4, 7.6,
7.12, 7.13, 7.14, 7.15 and 7.16."
(b) Section 6.1(e) of the Agreement is hereby amended by inserting
on the third line thereof after the word "Lenders" the following language:
"or to the Agent (including, without limitation, under SECTION 6.7 of
the Credit Agreement)"
(c) Section 6.6 of the Agreement is hereby amended by inserting at
the end thereof the following sentences:
"None of the Special Purpose Subsidiaries will engage in any line of
business other than (i) with respect to T.Y.G. Company, the cash and investment
management business for the Company and its Subsidiaries, and (ii) with respect
to all other Special Purpose Subsidiaries, the business of acting as an
intellectual property holding company for the Company and its Subsidiaries.
Additionally, none of such Special Purpose Subsidiaries will incur any Debt
other than Debt related to tax liabilities. Finally, the Company shall not own,
create or acquire any other Subsidiaries for the purpose of performing the
actions described in clauses (i) and (ii) above, other than the Special Purpose
Subsidiaries."
(d) Section 6 is hereby amended by inserting after Section 6.9 of
the Agreement the following subsections:
"Section 6.10 NEW SUBSIDIARIES. The Company shall cause any direct or
indirect Subsidiary which is formed or acquired after the Closing Date to,
within five (5) days following the formation or acquisition of such Subsidiary,
execute and deliver to the Collateral Agent (with sufficient originals for each
Holder) all of the following documents: a Subsidiary Guarantee in the form of
EXHIBIT 4.1C of the Credit Agreement, a Security Agreement in the form of
EXHIBIT 4.1A of the Credit Agreement, a Pledge Agreement in the form of EXHIBIT
4.1B of the Credit
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Agreement (and such other Security Documents as any Holder may reasonably
request), and such evidence of corporate or other authority to enter into such
Subsidiary Guarantee, Security Agreement, Pledge Agreement and other Security
Documents as any Holder may reasonably request.
Section 6.11 INSURANCE.
(a) POLICIES AND CERTIFICATES. Each of the Company and its Subsidiaries
will maintain insurance with responsible and reputable insurance companies or
associations in such amounts and covering such risks as are usually carried by
companies engaged in similar businesses and owning similar assets and properties
in the same general areas in which the Company and its Subsidiaries operate. The
Company and each of its Subsidiaries will also insure employers' and public and
product liability risks with responsible insurance companies, all as reasonably
acceptable to the Holders. The Company will (i) on the Closing Date, (ii) on or
before January 31st of each calendar year commencing January 31, 2000 and (iii)
upon the request of the Holders, furnish a certificate from the Company's
insurance agent(s) setting forth the nature and extent of the insurance
maintained pursuant to this SECTION 6.11 and providing that such agent will
provide fifteen (15) days' advance written notice to the Holders prior to
cancellation of any such insurance. In addition, upon the request of the
Holders, the Company will deliver to the Holders copies of the underlying
policies (as they are available), and evidence that the premiums have been paid
before termination of any insurance policies representing such insurance. If
such insurance is not maintained in full force and effect, the Collateral Agent
at its option may procure such insurance at the Company's and its Subsidiaries'
expense. All policies representing property insurance shall name the Collateral
Agent as loss payee in a form reasonably satisfactory to the Collateral Agent.
All policies representing liability insurance shall name the Collateral Agent,
for the benefit of itself, the Agent, the Lenders and the Holders, as an
additional named insured party in a form reasonably satisfactory to the
Collateral Agent.
(b) NOTICE OF CASUALTY EVENTS, ETC. Promptly upon obtaining knowledge
thereof, the Company and its Subsidiaries shall notify the Collateral Agent and
each Holder of any material casualty to the Collateral, including all casualties
to the Collateral where the aggregate damage to the Collateral could reasonably
be expected to exceed $1,000,000. With respect to any potential claims under any
property insurance maintained by the Company and its Subsidiaries in excess of
such amount, after the occurrence and during the continuance of an Event of
Default, the Collateral Agent may, but shall not be required to, make proof of
loss under, settle and adjust any claims under, and receive the proceeds under
any such property insurance or direct the Debtor (as defined in each Security
Agreement) to take such actions at the direction of the Collateral Agent, and
the reasonable expenses incurred by the Collateral Agent in the adjustment and
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collection of such proceeds shall be paid by the Company and its Subsidiaries.
The Collateral Agent shall not be liable or responsible for failure to collect
or exercise diligence in the collection of any proceeds.
(c) PAYMENTS. With respect to any casualty to the Collateral, after the
occurrence and during the continuance of an Event of Default, all proceeds of
such casualty, including any property insurance proceeds, proceeds from actions,
and any other proceeds, whether or not above the amounts specified above, are
assigned to the Collateral Agent and shall be paid directly to the Collateral
Agent and applied in accordance with paragraph (d) below. In the event that any
such proceeds are paid to the Company or any of its Subsidiaries in violation of
the foregoing, the Company or such Subsidiary shall hold the proceeds in trust
for the Collateral Agent, segregate the proceeds from the other funds of the
Company or such Subsidiary, and promptly pay the proceeds to the Collateral
Agent with any necessary endorsement. Upon the request of the Collateral Agent,
after the occurrence and during the continuance of an Event of Default, each of
the Company and its Subsidiaries shall execute and deliver to the Collateral
Agent any additional assignments and other documents as may be necessary or
desirable to enable the Collateral Agent to directly collect the proceeds.
(d) APPLICATION OF PROCEEDS. With respect to the proceeds of any casualty
required to be paid to the Collateral Agent hereunder, after the occurrence and
during the continuance of an Event of Default, the Collateral Agent may, in its
sole discretion, either disburse the proceeds to the Company or any of its
Subsidiaries for the purpose of repairing, replacing, and restoring the damaged
collateral or retain the proceeds and apply such proceeds as provided for in
SECTIONS 2.3 and 2.6 of the Intercreditor Agreement and Section 4.2(b) hereof.
6.12 NEW NOTE. At any time after the Closing Date and simultaneously with
delivery by the Holders to their counsel (including, without limitation, Xxxxxxx
Xxxx & Xxxxxxxxx) of the initial 7.87% Senior Note or of an affidavit of loss or
destruction of such Note in accordance with SECTION 11.4 of this Agreement, the
Company shall deliver to the Holders' counsel (including, without limitation,
Xxxxxxx Xxxx & Xxxxxxxxx) a new Note substantially in the form of EXHIBIT A
attached hereto.
6.13 POST-CLOSING MATTERS. The Company agrees that it will, (a) within 60
days after the Closing Date, execute and deliver Mortgages, title commitments,
title policies, surveys environmental reports and audits, and such other
documents, agreements or instruments as the Collateral Agent may reasonably
request with respect to the real properties required to be pledged as Collateral
as security for the Obligations as determined by the Collateral Agent in its
sole reasonable discretion, (b) within 10 days of the Closing Date, deliver to
the Collateral Agent and the Holders (i) evidence satisfactory to
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the Collateral Agent indicating that there are no Liens on any of the properties
or assets of any of the Company or its Subsidiaries other than Permitted Liens,
or evidence that any such Liens (other than Permitted Liens) have been
terminated or will be terminated within 20 days of the Closing Date, (ii) the
stock certificates and stock powers required in connection with the pledge of
the shares of Colonial Guild, Ltd., Xxxxx Xxxxx, Inc., Cercueil Xxxxxxxx Inc.,
Puget Sound Casket Company, and Oregon Casket Company, Inc., and (iii) the
intercompany notes held by the Special Purpose Subsidiaries, and (c) within 45
days after the Closing Date, permit the Collateral Agent (or its
representatives) to complete a collateral audit of the Company's and its
Subsidiaries' properties, (d) within 30 days after the Closing Date, deliver to
or cause to be delivered to each Holder one or more subordination agreements
from each of the Special Purpose Subsidiaries (the "Subordination Agreements")
substantially identical to the subordination agreements delivered to the Agent
and the Lenders under the Credit Agreement (in the form attached as EXHIBIT 4.1D
of the Credit Agreement) on the Closing Date or to be delivered to the Agent and
the Lenders from time to time after the Closing Date and (e) within 15 days
after the Closing Date, the Company at its expense shall obtain for the Notes a
PPN issued by Standard & Poor's CUSIP Service Bureau (in cooperation with the
Securities Valuation Office of the National Association of Insurance
Commissioners).
6.14 BANK ACCOUNTS. Within sixty (60) days from the Closing Date, the
Company shall establish with the Agent, any Lender or any Affiliate thereof, a
concentration account (the "Concentration Account") into which all deposits and
receipts existing in the Company's and its Subsidiaries' respective bank
accounts shall be deposited on a daily basis. The Collateral Agent, for the
benefit of the Agent, the Lenders and the Holders shall have an Acceptable
Security Interest in the Concentration Account, and each of the Borrower and its
Subsidiaries shall cause each depository where such bank accounts are maintained
to execute and deliver a bank account agreement in form and substance
satisfactory to the Collateral Agent providing for, among other things, (a) the
grant of an Acceptable Security Interest in favor of the Collateral Agent in
each such bank account (and the amounts contained therein) and (b) a weekly wire
transfer or automated clearinghouse transfer to the Concentration Account of all
amounts contained in such bank accounts.
6.15 PAYMENT OF FEES. No later than Monday, August 23, 1999, the Company
shall pay (i) a closing fee of $89,285.71 to the Holders by wire transfer of
immediately available funds to: ABA#000000000, State Street Bank and Trust
Company, Xxxxxx, XX 00000 Re: The Variable Annuity Life Insurance Company,
AC-0125-821-9 (OBI=PPN#98663 @ AA8 and closing fee) Fund Number PA 54, with a
duplicate payment notice to: The Variable Annuity Life Insurance Company, c/o
American General Corporation, Attn: Investment Xxxxxxxx Xxxxxxxxxx, X00-00, X.X.
Xxx 0000, Xxxxxxx, Xxxxx 00000-0000, Overnight Mail Address: 0000 Xxxxx Xxxxxxx,
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X00-00, Xxxxxxx, Xxxxx 00000-0000, and (ii) without limiting the generality of
SECTION 13.1, the fees and disbursements of Xxxxxxx Xxxx & Xxxxxxxxx set forth
on a statement delivered on or prior to August 23, 1999, by wire transfer of
immediately available funds as set forth in such statement."
1.6 AMENDMENTS TO SECTION 7.
(a) Section 7.1 of the Agreement is hereby amended by deleting it
from the beginning until the words "in contemplation of such acquisition" and
inserting in lieu thereof the following:
"7.1 RESTRICTIONS ON THE INCURRENCE OF INDEBTEDNESS. The Company and its
Subsidiaries shall not contract, assume or suffer to exist any Debt (including,
without limitation, any Contingent Obligations), except:
(a) Debt under the Financing Documents;
(b) Debt existing on the Closing Date and described on ANNEX 7.1 hereto;
PROVIDED THAT, the aggregate principal amount of such Debt may not be increased;
(c) unsecured intercompany loans and advances from the Company to any of
its Subsidiaries (other than YCF) and unsecured intercompany loans and advances
from any of such Subsidiaries to the Company or any other Subsidiaries of the
Company (other than YCF), in each case which are subordinated to the obligations
of the Company and the Guarantors to Holders under this Agreement and any of the
Financing Documents (the "Obligations") in form and substance satisfactory to
the Holders;
(d) Debt under any Interest Rate Protection Agreements entered into to
protect the Company against fluctuations in interest rates and not for
speculative purposes;
(e) Debt under the Credit Agreement and any subsequent extensions,
renewals or refinancings thereof so long as such Debt is not increased in amount
(except as set forth in, and subject to the terms and conditions contained in,
the last sentence of SECTION 2.12 of the Intercreditor Agreement) the maturity
date is not made earlier in time, the interest rate per annum applicable thereto
is not increased, any amortization of principal thereunder is not shortened and
the payments thereunder are not increased and the other terms and conditions
thereof are no more restrictive than the terms and conditions of the Credit
Agreement;
(f) Debt subordinated to the Obligations hereunder on terms and conditions
reasonably satisfactory to the Holders; provided that (i) no principal payments
may be made thereon (other than with respect to existing subordinated Debt
listed on ANNEX 7.1 hereto) before June 30, 2004, (ii) such Debt contains
covenants no more restrictive than the covenants contained in this
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Agreement and standstill provisions and (iii) no payments may be made thereon if
a Default or an Event of Default shall have occurred and be continuing or would
occur as a result of any such payment; and
(g) Debt not otherwise permitted by this SECTION 7.1 not to exceed
$1,000,000 in the aggregate at any time outstanding."
(b) Section 7.2 of the Agreement is hereby amended by deleting it in
its entirety and inserting in lieu thereof the following:
"7.2 MINIMUM FIXED CHARGE COVERAGE RATIO. The Company will maintain a
Fixed Charge Coverage Ratio as of the end of each calendar month for the twelve
month period then ended of at least (i) for all calendar months ending on or
before December 31, 1999, 2.25 to 1.00, (ii) for all calendar months ending
after December 31, 1999 but on or before May 31, 2000, 2.35 to 1.00, and (iii)
for all calendar months ending thereafter, 2.50 to 1.00."
(c) Section 7.3(a) of the Agreement is hereby amended by deleting it
in its entirety and inserting in lieu thereof the following:
"7.3 LIENS. (a) The Company and its Subsidiaries shall not create, incur,
assume or suffer to exist any Lien of any kind on any of their properties or
assets of any kind except the following (collectively, the "Permitted Liens"):
(i) Liens securing the Obligations pursuant to the
Security Documents;
(ii) Liens securing the Obligations (as such term is defined in the
Credit Agreement) pursuant to the Security Documents;
(iii) Liens arising in the ordinary course of business by operation
of law in connection with workers' compensation, unemployment insurance, old age
benefits, social security obligations, taxes, assessments, statutory obligations
or other similar charges, good faith deposits, pledges or other Liens in
connection with (or to obtain letters of credit in connection with) bids,
performance bonds, contracts or leases to which the Company or its Subsidiaries
are a party or other deposits required to be made in the ordinary course of
business; provided that in each case the obligation secured is not for Debt and
is not overdue or, if overdue, is being contested in good faith by appropriate
proceedings and reserves in conformity with GAAP have been provided therefor;
(iv) mechanics', workmen, materialmen, landlords', carriers' or
other similar Liens arising in the ordinary course of business (or deposits to
obtain the release of such Liens)
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related to obligations not due or, if due, that are being contested in good
faith by appropriate proceedings and reserves in conformity with GAAP have been
provided therefor;
(v) inchoate Liens under ERISA and Liens for Taxes not yet due or
which are being contested in good faith by appropriate proceedings and reserves
in conformity with GAAP have been provided therefor;
(vi) Liens arising out of judgments or awards against the Company or
any of its Subsidiaries, or in connection with surety or appeal bonds or the
like in connection with bonding such judgments or awards, the time for appeal
from which or petition for rehearing of which shall not have expired or for
which the Company or such Subsidiary shall be prosecuting on appeal or
proceeding for review and for which it shall have obtained a stay of execution
or the like pending such appeal or proceeding for review; provided that the
aggregate amount of uninsured or underinsured liabilities (including interest,
costs, fees and penalties, if any) of the Company and its Subsidiaries secured
by such Liens shall not exceed $1,000,000 at any one time outstanding; and
provided further that there is adequate assurance, in the reasonable opinion of
the Holders, that the insurance proceeds, if any, attributable thereto shall be
paid promptly upon the expiration of such time period or resolution of such
proceeding if necessary to remove such Liens;
(vii) rights of a common owner of any interest in property held by a
Person and such common owner as tenants in common or through other common
ownership;
(viii) encumbrances (other than to secure the payment of Debt),
easements, restrictions, servitudes, permits, conditions, covenants, exceptions
or reservations in any property or rights-of-way of a Person for the purpose of
roads, pipelines, transmission lines, transportation lines, distribution lines,
removal of gas, oil, coal, metals, steam, minerals, timber or other natural
resources, and other like purposes, or for the joint or common use of real
property, rights-of-way, facilities or equipment, or defects, irregularity and
deficiencies in title of any property or rights-of-way;
(ix) financing statements filed by lessors of property (but only
with respect to the property so leased) and Liens under any conditional sale or
title retention agreements entered into in the ordinary course of business;
(x) rights of lessees of equipment owned by the Company
or any of its Subsidiaries;
(xi) Liens securing Capitalized Lease Obligations or purchase money
debt permitted by SECTION 7.1(G) on any assets acquired;
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(xii) any extension, renewal or replacement (or successive
extensions, renewals or replacements) in whole or in part of any Lien referred
to in the foregoing subsections (i) through (xi), PROVIDED THAT the principal
amount of Debt secured thereby (other than with respect to subsection (i) above)
does not exceed the initial principal amount secured, and such extension,
renewal or replacement is limited to the property already subject to the Lien so
extended, renewed or replaced; and
(xiii) the contractual unperfected right of offset contained in
SECTION 10.6 of the Credit Agreement as in effect on the Effective Date and the
related common law right of offset, in each instance, with respect to the funds
in the Company's general operating accounts at ABN AMRO Bank N.V. or at any
other Lender, if any, deposited in the ordinary course of business; PROVIDED,
HOWEVER, that any exercise of such rights of offset will be deemed an immediate
Event of Default under SECTION 9.1 hereof."
(d) Section 7.4 of the Agreement is hereby amended by deleting it in
its entirety and inserting in lieu thereof the following:
"7.4 RESTRICTIONS ON REDEMPTION; DIVIDENDS. (a) The Company shall not
redeem, purchase or otherwise acquire any shares of its capital stock or declare
or pay any dividends on its capital stock (other than dividends paid in kind) or
make any distribution or payment to shareholders, or set aside funds for any
such purpose, except that, so long as no Default or Event of Default shall have
occurred and be continuing or would occur as a result thereof, the Company may
pay cash dividends on its common stock in an annual amount not to exceed, on a
per share basis, the annual per share amount paid in fiscal year ended in 1998
(but in no event shall the aggregate amount of all dividends paid in any fiscal
year exceed the lesser of (i) $1,500,000 and (ii) an amount equal to 50% of the
Consolidated Net Income of the Company during the preceding fiscal year); and
(b) Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, create or otherwise permit to exist or become effective any
restriction on the ability of any Subsidiary of the Company to (i) pay dividends
or make any other distributions on its capital stock or any other interest or
participation in its profits owed by the Company or to pay any Debt owed to the
Company, or (ii) make loans or advances to the Company or any of its
Subsidiaries, except in either case for restrictions existing under or by reason
of applicable law, this Agreement and the other Financing Documents."
(e) Section 7.5 of the Agreement is hereby amended by deleting it in
its entirety and inserting in lieu thereof the following:
"7.5 RESTRICTIONS ON FUNDAMENTAL CHANGES. Neither the Company nor any of
its Subsidiaries shall be a party to any
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merger into or consolidation with, make an Acquisition or otherwise purchase or
acquire all or substantially all of the assets or stock of, any other Person, or
sell all or substantially all of its assets or stock, except:
(a) the Company may purchase or otherwise acquire all or substantially all
of the stock or assets of, or otherwise acquire by merger or consolidation, any
of its Subsidiaries, and any such Subsidiary may merge into, or consolidate
with, or purchase or otherwise acquire all or substantially all of the assets or
stock of or sell all or substantially all of its assets or stock to, any other
Subsidiary of the Company (other than YCF) or the Company, in each case so long
as the Company shall be the surviving entity to any such merger or consolidation
if the transaction is with the Company;
(b) subject to the requirements of SECTION 6.10, the Company or any of its
Subsidiaries may form new Subsidiaries; and
(c) the Company and its Subsidiaries may issue additional capital stock or
ownership interests so long as there is no scheduled mandatory redemption or
scheduled liquidating distribution of any such stock or interest before June 30,
2004."
(f) Section 7.6 of the Agreement is hereby amended by deleting it in
its entirety and inserting in lieu thereof the following:
"7.6 TRANSFER OF ASSETS. The Company and its Subsidiaries shall not permit
any transfer of any asset of the Company (including, without limitation, the
capital stock of or ownership interest in any of its Subsidiaries) or any of its
Subsidiaries except:
(a) Transfers of inventory (other than YMS Rooms) in the ordinary
course of business;
(b) the Transfer of assets that are obsolete, worn out or no longer useful
in the business of the Company and its Subsidiaries; PROVIDED THAT (i) the Net
Cash Proceeds from Assets received by the Company or any of its Subsidiaries
from any such Transfer are either (A) reinvested by the Company and its
Subsidiaries in replacement assets (with equal or greater value) within the
three-month period following such Transfer (or, if such replacement assets have
already been acquired prior to such Transfer with internal cash flow of the
Company and its Subsidiaries, applied as a reimbursement to the Company or such
Subsidiary for the purchase price of such asset) or (B) applied in accordance
with the proviso to clause (g) below, and (ii) within ten days of such Transfer,
the Company notifies the Agent of its intention to either reinvest such Net Cash
Proceeds from Assets in replacements assets or apply such Net Cash Proceeds from
Assets pursuant to subclause (B) above.
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(c) Transfers of any assets among the Company and any of its Subsidiaries
(other than Special Purpose Subsidiaries);
(d) Transfers permitted by SECTION 7.5;
(e) Transfers of YMS Rooms made in accordance with SECTION 7.11;
(f) Transfers of any non-core assets of the Company and its Subsidiaries;
PROVIDED THAT, (i) the fair market value of all such assets transferred during
any fiscal year may not exceed 15% of Tangible Net Worth as of the Company's
most recent fiscal year end and (ii) the Net Cash Proceeds from Assets received
from all such Transfers are applied in accordance with the proviso to clause (g)
below; and
(g) the sale of the Aiken, South Carolina plant; PROVIDED THAT, (i) 80%
(or 100% if a Triggering Event shall have occurred and be continuing) of the Net
Cash Proceeds from Assets received by the Company or any of its Subsidiaries
from Transfers contemplated by clauses (b) and (f) above and this clause (g) are
applied as a prepayment of the Notes in accordance with SECTION 4.2(B) hereof
and the Term Loans in accordance with SECTION 2.9(B) of the Credit Agreement, on
a pro rata basis in accordance with SECTIONS 2.3 and 2.6 of the Intercreditor
Agreement.
Upon the sale, disposition or other Transfer of any asset permitted in
accordance with this SECTION 7.6 and so long as no Default or Event of Default
shall have occurred and be continuing (or would be occasioned thereby), then the
Collateral Agent shall be permitted to, at the expense of the Company and
without the consent of any Holder, execute and deliver such releases or
terminations (or similar instruments) as may be reasonably necessary in order to
consummate such sale, disposition or Transfer."
(g) Section 7.7 of the Agreement is hereby amended by deleting it in
its entirety and inserting in lieu thereof the following:
"7.7 TRANSACTION WITH AFFILIATES. Except as otherwise specifically
permitted herein, the Company and its Subsidiaries shall not enter into or be a
party to any material transaction or arrangement or series of related
transactions or arrangements which in the aggregate would be material with any
Affiliate of such Person, including without limitation, the purchase from, sale
to or exchange of property with or the rendering of any service by or for, any
Affiliate, except pursuant to the reasonable requirements of such entity's
business and upon fair and reasonable terms no less favorable to such entity
than would be able to be obtained in a comparable arm's-length transaction with
a Person other than an Affiliate."
-13-
(h) Section 7 of the Agreement is further amended by inserting the
following language after Section 7.8:
"7.9 NEGATIVE PLEDGES. Neither the Company nor any of its Subsidiaries
shall enter into any agreement creating or assuming any Lien upon its
properties, revenues or assets, whether now owned or hereafter acquired other
than as permitted hereunder. Neither the Company nor any of its Subsidiaries
shall enter into any agreement other than this Agreement, the Financing
Documents, the Credit Agreement and the Credit Documents (as such term is
defined in the Credit Agreement) prohibiting the creation or assumption of any
Lien upon its properties, revenues or assets, whether now owned or hereafter
acquired, or prohibiting or restricting the ability of the Company or any of its
Subsidiaries to amend or otherwise modify this Agreement or any Financing
Document.
7.10 VENDOR LEASE PLAN AGREEMENT; CREDIT AGREEMENT. The Company shall not
amend or supplement or permit any Subsidiary to amend or supplement (or consent
to any amendment or supplement of) the Vendor Lease Plan Agreement. In addition,
the Company shall not amend or supplement or permit any Subsidiary to amend or
supplement (or consent to any amendment or supplement of) the Credit Agreement
to the extent that such amendment or supplement provides for the following or
which has any of the following effects:
(a) increases the overall principal amount of the Debt under the Credit
Agreement (except as set forth in, and subject to the terms and conditions
contained in, the last sentence of SECTION 2.12 of the Intercreditor Agreement)
or increases the amount of any single scheduled installment of principal or
interest;
(b) shortens or accelerates the date upon which any installment of
principal or interest becomes due or adds any additional mandatory redemption
provisions;
(c) shortens the final maturity date of such Debt or otherwise accelerates
the amortization schedule with respect thereto;
(d) increases the rate of interest accruing on such Debt;
(e) provides for the payment of additional fees or increases existing
fees; or
(f) adds restrictions which are more onerous or more restrictive than
those contained in this Agreement or which are otherwise materially adverse to
the Company or the Holders.
7.11 YMS ROOMS. Neither the Company nor any of its Subsidiaries will enter
into, install or otherwise maintain YMS Rooms with any customer other than (i)
YMS Rooms in existence and
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under lease with the Company or its Subsidiaries prior to the date hereof, which
leases are described on SCHEDULE 6.16, (ii) YMS Rooms for which the Company or
its Subsidiaries will be paid cash consideration in accordance with its normal
trade terms, (iii) YMS Rooms installed with a customer as part of the Company's
"millennium program", which program allows for installation of YMS Rooms with
certain large funeral homes in lieu of the Company giving higher cash rebates to
such customers; PROVIDED THAT, such YMS Rooms under this clause (iii) shall only
be permitted to the extent the Capital Expenditures associated with such YMS
Rooms are included in the most recently delivered Capital Expenditure budget
approved by the Holders prior to the Closing Date, (iv) YMS Rooms which the
Company or its Subsidiaries have subsequently sold to First Sierra pursuant to
the YMS leasing program evidenced by the Vendor Lease Plan Agreement, which
sales must be for cash consideration to be paid in accordance with its normal
trade terms and the terms of which must provide that neither the Company nor any
such Subsidiary shall have any further obligations with respect to such YMS
Rooms (other than obligations owing pursuant to the Vendor Lease Plan
Agreement), and (v) YMS Rooms which have been sold for cash pursuant to such
other leasing program approved in writing by the Majority Lenders (as such term
is defined in the Credit Agreement) or if the Credit Agreement has been
terminated, the Holders.
7.12 MAXIMUM CAPITAL EXPENDITURES. The Company will not make any Capital
Expenditures other than (a) maintenance Capital Expenditures during any fiscal
quarter required in connection with the ongoing operation of the Company's and
its Subsidiaries' businesses to the extent that such Capital Expenditures for
each such fiscal quarter does not exceed the sum of (i) the Capital Expenditures
projected amount for such fiscal quarter as set forth in the most recently
delivered Capital Expenditures projection furnished to the Holders plus (ii) the
amount of any maintenance Capital Expenditures projected to be made during the
immediately preceding fiscal quarter (without giving effect to any carry-forward
amounts from prior periods) that were not actually made, and (b) Capital
Expenditures related to YMS Rooms that comprise the "millennium program" to the
extent provided for in the budget for Capital Expenditures delivered prior to
the Closing Date.
7.13 MAXIMUM TOTAL DEBT TO EBITDA RATIO. The Company will maintain a Total
Debt to EBITDA Ratio as of the end of each calendar month for the twelve month
period then ended of not greater than (i) for the calendar month ending July 31,
1999, 3.25 to 1.00, (ii) for the calendar month ending August 31, 1999, 3.20 to
1.00, (iii) for the calendar month ending September 30, 1999, 3.15 to 1.00, and
(iv) for each calendar month ending thereafter, 3.00 to 1.00.
-15-
7.14 MAXIMUM TOTAL DEBT TO TOTAL CAPITAL RATIO. The Company will maintain
a Total Debt to Total Capital Ratio as of the end of each calendar month of not
greater than 55%.
7.15 MINIMUM EBITDA. The Company will maintain its EBITDA as of the end of
each fiscal quarter for the fiscal quarter then ended of at least (i) for the
calendar quarter ending September 30, 1999, $5,575,000, (ii) for the calendar
quarter ending December 31, 1999, $6,875,000, (iii) for the calendar quarter
ending March 31, 2000, $8,525,000, (iv) for the calendar quarter ending June 30,
2000, $6,975,000, (v) for the calendar quarter ending September 30, 2000,
$7,150,000, (vi) for the calendar quarter ending December 31, 2000, $8,575,000,
(vii) for the calendar quarter ending March 31, 2001, $9,000,000, and (viii) for
each calendar quarter ending thereafter, $7,375,000.
7.16 LOANS, ADVANCES, INVESTMENTS. The Company and its Subsidiaries shall
not purchase or acquire any stock, indebtedness, obligations or securities of,
or any other interest in, or make any capital contribution to, any Person (any
of the foregoing, an "Investment") or lend money or make advances to any Person
except:
(a) as permitted by SECTION 7.5(A) or (B) or SECTION 7.1(C);
(b) Investments outstanding as of the Closing Date and listed on ANNEX
7.16 hereto;
(c) loans to employees of the Company or any of its Subsidiaries for (i)
short-term loans in an aggregate amount of no greater than $250,000 at any one
time outstanding and in an amount no greater than $100,000 for any Person, and
(ii) moving and travel expenses and other similar expenses; in each case
incurred in the ordinary course of business;
(d) receivables owing to the Company or its Subsidiaries created or
acquired in the ordinary course of business and payable on customary trade terms
of the Company or such Subsidiary and in compliance with the arms-length
requirements of SECTION 7.7;
(e) other advances or loans to, or Investments in, any Person, PROVIDED
THAT the aggregate amount of such other loans and advances outstanding and
Investments shall not exceed $250,000 at any one time outstanding;
(f) Investments in Cash Equivalents; and
(g) lease receivables in connection with the YMS Rooms described on ANNEX
7.16 hereto, which lease receivables may not at any time exceed an amount equal
to (i) with respect to each existing YMS Room listed on such ANNEX 7.16, the
amount of the lease receivables for such YMS Room existing as of the Closing
-16-
Date (which maximum lease receivable amount for such YMS Room permitted
hereunder shall decrease in accordance with the amortization schedule or payment
schedule set forth in the lease for such YMS Room as in effect on the Closing
Date) and (ii) with respect to each YMS Room described on such ANNEX 7.16 as not
currently in existence but which is currently committed to be installed, the
amount of projected lease receivables for such committed YMS Room set forth on
ANNEX 7.16 hereto."
1.7 AMENDMENTS TO SECTION 8.
(a) Section 8.3 is hereby amended by (i) deleting the years "1990",
"1991", "1992" and "1993" on the third line thereof and inserting in lieu
thereof the years "1995," "1996," "1997" and "1998," respectively and (ii)
deleting the year "1994" on the sixth line thereof and inserting in lieu thereof
the year "1999".
(b) Section 8 of the Agreement is amended hereby by adding the
following subsections after Section 8.24:
"8.25 YEAR 2000 COMPLIANCE.
(a) The Company has (i) begun analyzing its business and operations and
each of its Subsidiaries and Affiliates' business and operations that could be
adversely affected by failure to become Year 2000 compliant (that is, the risk
that computer applications, imbedded microchips and other systems used by the
Company or any of its Subsidiaries or Affiliates will be able to perform
properly date sensitive functions prior to and after December 31, 1999), (ii)
developed a plan for becoming Year 2000 compliant in a timely manner, the
implementation of which is on schedule in all material respects and (iii) to
date, implemented that plan in accordance with that timetable. The Company
reasonably believes that it will become Year 2000 compliant for its operations
and those of its Subsidiaries and Affiliates on a timely basis except to the
extent that a failure to do so could not reasonably be expected to have a
material adverse effect upon the financial condition of the Company.
(b) The Company reasonably believes that any suppliers, vendors, and
customers that are material to its operations or the operations of its
Subsidiaries and Affiliates will be Year 2000 compliant for their own computer
applications except to the extent that a failure to do so could not reasonably
be expected to have a material adverse effect upon the financial condition of
the Company.
8.26 INSURANCE. The Company and its Subsidiaries carry insurance with
reputable insurers in respect of such of their respective assets and properties,
in such amounts and against such risks as is customarily maintained by other
Persons of similar size engaged in similar businesses or, self-insure to the
extent that is customary for Persons of similar size engaged in similar
businesses."
-17-
1.8 AMENDMENT TO SECTION 9.
(a) Clause (c) of Section 9.1 of the Agreement is hereby amended by
deleting it and inserting in lieu thereof the following:
"(c) Default shall occur in the observance or performance of any of the
covenants or conditions contained in SECTIONS 6.8, 6.11, 6.13, 6.14 and 6.15 or
Sections 7.1, 7.2, 7.3, 7.4(A), 7.5, 7.6, 7.7, 7.9 through 7.16, or the Company
shall fail to comply with the notice requirements of SECTION 6.1(G) hereof;"
(b) Clause (d) of Section 9.1 of the Agreement is hereby amended by
deleting it and inserting in lieu thereof the following:
"(d) [Intentionally Omitted];"
(c) Clause (i) of Section 9.1 of the Agreement is hereby amended by
inserting after the word "thereby" on the third, seventh and ninth lines thereof
the following language: "(including, without limitation, the Financing
Documents)".
(d) Section 9.1 of the Agreement is hereby amended by inserting after
clause (l) the following clauses:
"(m) the Collateral Agent and the Holders shall fail to have an Acceptable
Security Interest in the Collateral (other than Collateral deemed immaterial by
the Collateral Agent in its sole reasonable discretion) or (ii) any material
provision of any Financing Document shall for any reason cease to be valid and
binding on the Company or any Guarantor executing such Financing Document, or
any such Person shall so state in writing; or
(n) the Company, any Guarantor, any Person acting on behalf of the Company
or any Guarantor or any governmental, judicial or arbitral authority challenges
the validity of any Financing Document or the Company's or any Guarantor's
obligations thereunder, or any Financing Document ceases to be in full force and
effect in all material respects or ceases to give to the Holders the rights and
powers purported to be granted in their favor thereby in all material respects.
(o) any Person or two or more Persons acting in concert shall acquire
beneficial ownership (within the meaning of Rule 13d-3 of the Securities
Exchange Act of 1934), directly or indirectly, of securities of the Company (or
other securities convertible into such securities) representing fifty percent
(50%) or more of the combined voting power of all outstanding securities of the
Company entitled to vote in the election of directors."
-18-
(e) Section 9.5 of the Agreement is amended hereby by deleting "9.87%" in
the first sentence and substituting in lieu thereof "10.37%".
1.9 AMENDMENTS TO SECTION 12.
(a) Section 12.1 of the Agreement is hereby amended by inserting the
following definitions in their proper alphabetical order:
""Acceptable Security Interest" in any Property shall mean a Lien (a)
which exists in favor of the Collateral Agent for the benefit of, among other
persons, the Holders, (b) which is superior to all other Liens (except as
expressly permitted by this Agreement), (c) which secures the Obligations, and
(d) which is perfected and enforceable against all Persons in preference to any
rights of any Person therein (other than rights expressly permitted by this
Agreement and the Intercreditor Agreement).
"Acquisition" shall mean a direct or indirect purchase by the Company or
any of its Subsidiaries after the date hereof for cash, stock or other
securities or other property, whether in one or more related transactions, of
all or substantially all of the assets or voting securities or other equity
interests of a Person or a business unit, division or group of a Person.
"Agent" shall mean ABN AMRO Bank N.V. acting in its capacity as agent
for the Lenders, and any successor agent appointed pursuant to SECTION 9.7 of
the Credit Agreement.
"Authorized Officer" shall mean any officer or other employee of the
Company or the Guarantor, as applicable, authorized from time to time to execute
and deliver a Financing Document.
"Capital Expenditures" shall mean, for any period, the sum, without
duplication, of (i) all expenditures of the Company and its Subsidiaries for
fixed or capital assets made during such period which, in accordance with GAAP,
would be classified as capital expenditures, and (ii) all Capitalized Lease
Obligations incurred during such period.
"Capitalized Lease Obligations" shall mean, for any period, the amount of
the Company's and its Subsidiaries' liabilities under all leases (or similar
arrangements) of real or personal property (or any interest therein) which in
accordance with GAAP would be classified as capitalized leases on the balance
sheet of the Company and its Subsidiaries.
"Cash Equivalents" shall mean (i) securities issued or directly and fully
guaranteed or insured by the United States or any agency or instrumentality
thereof having maturities of not more than twelve (12) months from the date of
acquisition; (ii) U.S. Dollar denominated time deposits and certificates of
deposit
-19-
maturing within one (1) year from the date of acquisition thereof with any
Lender, or any other financial institution whose short-term senior unsecured
debt rating is at least A-2 from S&P or P-2 from Moody's; (iii) LIBOR
denominated time deposits and certificates of deposit maturing within six (6)
months from the date of acquisition thereof with any Lender, or any other
financial institution whose short-term senior unsecured debt rating is at least
A-1 from S&P or P-1 from Moody's; (iv) commercial paper or Eurocommercial paper
with a rating of at least A-1 from S&P or P-1 from Moody's, with maturities of
not more than twelve (12) months from the date of acquisition; (v) repurchase
obligations entered into with any Lender or any other financial institution
whose short-term senior unsecured debt rating is at least A-1 from S&P or P-1
from Moody's, which are secured by a fully perfected security interest in any
obligation of the type described in (i) above and has a market value at the time
such repurchase is entered into of not less than 100% of the repurchase
obligation of such Lender or such other Person thereunder; (vi) marketable
direct obligations issued by any state of the United States or any political
subdivision of any such state or any public instrumentality thereof maturing
within twelve (12) months from the date of acquisition thereof or providing for
the resetting of the interest rate applicable thereto not less often than
annually and, at the time of acquisition, having one of the two highest ratings
obtainable from either S&P or Moody's; and (vii) money market funds which have
at least $1,000,000,000 in assets and which invest primarily in securities of
the types described in clauses (i) through (vi) above.
"Collateral" shall mean all of the Property described under the
definitions of "Collateral", "Pledged Shares", "Pledged Securities", "Mortgaged
Property" or any other similar term contained in any of the Security Documents.
"Collateral Agent" shall mean ABN AMRO Bank N.V., in its capacity as
Collateral Agent under the terms of the Intercreditor Agreement, and any
successor Collateral Agent pursuant to Section 3.6 of the Intercreditor
Agreement.
"Consolidated Interest Expense" shall mean, for any period, the total
interest expense of the Company and its Subsidiaries on a consolidated basis for
such period in connection with Debt, determined in accordance with GAAP.
"Consolidated Interest Income" shall mean, for any period, the total
interest income of the Company and its Subsidiaries on a consolidated basis for
such period in connection with Debt, determined in accordance with GAAP.
"Consolidated Net Worth" shall mean, as of any date of determination, the
Company's consolidated stockholders' equity determined in accordance with GAAP.
-20-
"EBITDA" shall mean, as of any date of determination, the sum of (i)
Consolidated Net Income before (a) Consolidated Interest Expense, (b)
Consolidated Interest Income, (c) provisions for taxes based on income or
revenues, and (d) any extraordinary, unusual or nonrecurring gains or losses;
plus (ii) the amount of all depreciation, amortization expense and other
non-cash charges (excluding the effects of any accruals made in the ordinary
course of business) deducted in determining Consolidated Net Income, all
calculated on a consolidated basis for the Company and its Subsidiaries and as
determined in accordance with GAAP. Upon the consummation of any Acquisition,
EBITDA shall be adjusted to include the historical financial results of the
acquired business (on a historic twelve-month rolling pro forma basis).
"Financing Documents" shall mean this Agreement, the Notes, the Subsidiary
Guaranties, the Security Documents, the Subordination Agreements, the
Intercreditor Agreement and any other documents or instruments executed by the
Company or any of the Guarantors in connection with this Agreement, as the same
may be amended from time to time.
"First Sierra" shall mean First Sierra Financial, Inc.
"Foreign Subsidiary" shall mean any Subsidiary of the Company incorporated
in a jurisdiction other than in a state, province or territory of the United
States.
"Guarantor" shall mean each Subsidiary of the Company (other than YCF).
"Intercreditor Agreement" shall mean the Intercreditor Agreement dated as
of August 12, 1999 among the Company, the Guarantors, the Holders, the Lenders,
the Agent and the Collateral Agent, as the same may be amended from time to
time.
"Interest Rate Protection Agreement" shall mean any interest rate swap,
interest rate cap, interest rate collar, or other interest rate hedging
agreement or arrangement designed to protect against fluctuations in interest
rates.
"Lenders" shall mean the Agent and other lenders as defined in the
introductory paragraph of the Credit Agreement.
"Moody's" shall mean Xxxxx'x Investors Service, Inc. or any successor
thereto.
"Mortgage" shall mean a mortgage in form and substance satisfactory to the
Holders, executed by the Company or any of its Subsidiaries, and "Mortgages"
shall mean all such Mortgages collectively.
"Net Cash Proceeds from Assets" shall mean with respect to any asset sale
or transfer by the Company or any of its
-21-
Subsidiaries permitted by SECTION 7.6 (including, without limitation, any sale
or transfer resulting from a casualty event or condemnation), the net cash
proceeds received by the Company or such Subsidiary after giving effect to (x)
reasonable cash transaction costs and expenses attributable to such sale, (y)
cash taxes owing in connection with any taxable gain (measured on a consolidated
basis) attributable to such sale and purchase price adjustments reasonably
expected to be payable in connection therewith, and (z) the repayment of any
Debt owing by the Company or such Subsidiary to any Person (other than the
Company or any other Subsidiary of the Company) in respect of such asset.
"Pledge Agreement" shall mean each of the Pledge Agreements in
substantially the form of EXHIBIT 4.1B of the Credit Agreement and executed by
the Company or any Subsidiary of the Company to secure all or a portion of the
Obligations.
"Security Agreement" shall mean each of the Security Agreements in
substantially the form of EXHIBIT 4.1A of the Credit Agreement and executed by
the Company or any Subsidiary of the Company to secure all or a portion of the
Obligations.
"Security Documents" shall mean the Pledge Agreements, the Security
Agreements, the Mortgages and each other document, instrument or agreement
executed in connection therewith or otherwise executed in order to secure all or
a portion of the Obligations.
"S&P" shall mean Standard & Poor's Ratings Group or any successor thereto.
"Special Purpose Subsidiaries" shall mean Colonial Trade Company, Inc.,
Xxxxx Vault Trade Company, Inc., Xxxxx Trade Company, Inc., Xxxxx Xxxxx Trade
Company, Inc., T.Y.G. Company, Inc., T.Y.G. Trade II Company, Inc. and West
Point Trade Company, Inc.
"Tangible Net Worth" shall mean, as of the date of its determination, the
Consolidated Net Worth of the Company, excluding all of the Company's
consolidated intangible assets, as determined in accordance with GAAP
consistently applied.
"Taxes" shall mean all federal tax returns and all other material tax
returns required to be filed and all governmental taxes, rates, assessments,
fees, charges and levies.
"Term Loans" shall mean any advance by a Lender to the Company pursuant to
the Credit Agreement as part of a Term Borrowing and refers to a Base Rate Loan
or a Eurodollar Loan (as each such term is defined in the Credit Agreement).
"Total Capital" shall mean, as of any date of determination, the sum of
Total Debt plus Consolidated Net Worth as of such date.
-22-
"Total Debt" shall mean, as of any date of determination, the aggregate
amount of all Debt of the Company and its Subsidiaries outstanding on such date
determined on a consolidated basis in accordance with GAAP.
"Total Debt to EBITDA Ratio" shall mean, as of any date of determination,
the ratio of Total Debt to EBITDA, calculated using Total Debt at the date of
determination and EBITDA on a historic rolling twelve-months basis.
"Total Debt to Total Capital Ratio" shall mean, as of any date of
determination, the ratio of Total Debt to Total Capital.
"Trademark and Patent Security Agreement" shall mean each of the Trademark
and Patent Security Agreements in substantially the form of EXHIBIT 4.1E of the
Credit Agreement and executed by the Company or any Subsidiary of the Company to
secure all or a portion of the Obligations.
"Transfer" shall mean a sale, transfer, conveyance, assignment or other
disposition (or a series of related dispositions), including, without
limitation, any transfer pursuant to an option to purchase, any sale or
assignment (with or without recourse) of any accounts receivable and any sale
and leaseback of assets, of an asset, but excluding any involuntary transfer by
operation of law and any transfers of an asset pursuant to any casualty or theft
with respect to such asset.
"Triggering Event" shall have the meaning set forth in the
Intercreditor Agreement.
"Vendor Lease Plan Agreement" shall mean the Vendor Lease Plan Agreement
between the Company and First Sierra certified by an Authorized Officer of the
Company as being true and correct and attaching all amendments, modifications,
supplements and waivers to such agreement through the Closing Date.
"YCF" shall mean the York Children's Foundation, a non-profit
corporation.
"YMS Rooms" shall mean merchandising system rooms of the Company or any of
its Subsidiaries set up in the ordinary course of business at third party
facilities."
(b) Section 12.1 of the Agreement is further amended by (1) deleting
the figure "5 million" from the fourteenth line of the definition of "Debt"
therein and substituting in lieu thereof "2,500,000," and (2) deleting the
following language on the twentieth line of such definition: "or (ii) casket
repurchase obligations under any repurchase agreements in an amount not to
exceed $5,000,000 in the aggregate during the term of this Agreement".
-23-
(c) Section 12.1 of the Agreement is further amended by deleting the
definition of "Credit Agreement" and inserting in lieu thereof the following:
""Credit Agreement" shall mean the Credit Agreement, among the
Company, the Agent and the Lenders, whether or not such Credit Agreement is
amended, modified or terminated after the date hereof."
(d) Section 12.1 of the Agreement is further amended by inserting in
the definition of "Consolidated Earnings Before Interest, Leases and Taxes":
after the words "(C) Lease Expense" the words:
"minus (iii) any extraordinary, unusual or nonrecurring gains or
losses"
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to you as follows:
2.1 ORGANIZATION, AUTHORIZATION, ETC. Each of the Company, its
Subsidiaries and the Guarantors is a corporation or limited liability company
duly organized, validly existing and in good standing under the laws of their
respective states of organization or incorporation, and has all requisite power
and authority to execute, deliver and perform its obligations under this
Amendment, the Agreement and the Financing Documents.
The execution and delivery of this Amendment and the performance of this
Amendment, the Agreement and the Financing Documents have been duly authorized
by all necessary corporate or other and, if required, stockholder action on the
part of the Company, its Subsidiaries and the Guarantors. This Amendment, the
Agreement and the Financing Documents are legal, valid and binding obligations
of the Company, enforceable against the Company, its Subsidiaries and the
Guarantors in accordance with their respective terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization, fraudulent transfer,
moratorium or other similar laws relating to or affecting creditors' rights
generally and by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
2.2 COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC. The execution,
delivery and performance by the Company, its Subsidiaries and the Guarantors of
this Amendment, the Agreement and the Financing Documents do not and will not
(i) violate (A) any provision of any law, statute, rule or regulation, other
than any law, statute, rule or regulation, the violation of which will not
result in a material adverse effect on the financial condition of the Company,
or of the certificate of incorporation, certificate of formation, or other
constitutive documents or by-laws of the Company, any Subsidiary or any
Guarantor, (B) any order of any Governmental Authority or (C) any provision of
any
-24-
material indenture, agreement or other instrument to which the Company or any
Guarantor is a party or by which any of them or any of their property or assets
is or may be bound, (ii) be in conflict with, result in a breach of or
constitute (alone or with notice or lapse of time or both) a default under any
such indenture, agreement or other instrument or (iii) result in the creation or
imposition of any Lien (other than any Lien created under the Financing
Documents) upon or with respect to any property or assets now owned or hereafter
acquired by the Company, any Subsidiary or any Guarantor.
2.3 GOVERNMENTAL AUTHORIZATIONS, ETC. No approval, authorization or
consent of, or registration, filing or declaration with, any state, federal or
local governmental body is required in connection with the execution, delivery
or performance by the Company of this Amendment, except such as have been made
or obtained and are in full force and effect and other than filings, recordings
and approvals to record and/or perfect the Liens created by the Financing
Documents.
2.4 NO DEFAULT, ETC. Except as set forth in a letter from the
Holders to the Company dated June 28, 1999 (as amended on August 13, 1999), no
Event of Default or Default has occurred and is continuing, and neither the
Company, any Subsidiary or any Guarantor is in default (whether or not waived)
in the performance or observance of any of the terms, covenants or conditions
contained in any instrument evidencing any Indebtedness, and no event has
occurred and is continuing which, with notice or lapse of time or both, would
become such a default.
2.5 NO UNDISCLOSED FEES. The Company has not, directly or
indirectly, paid or caused to be paid any consideration (as supplemental or
additional interest, a fee or otherwise) to any Lender in order to induce such
Lender to enter into the Credit Agreement or to induce such Lender to take any
other action in connection with the transactions contemplated hereby, nor has
the Company agreed to make any such payment.
2.6 DELIVERY OF DOCUMENTS. The Company has provided to each Holder
true and complete copies of all documents executed by or provided by the Company
to the Collateral Agent, the Agent and the Lenders under the Credit Agreement.
2.7 NOTES NOT HELD BY COMPANY, ETC. Neither the Company nor any
Subsidiary or Affiliate of the Company directly or indirectly owns any of the
Notes.
2.8 OTHER REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company contained in SECTION 8 of the Agreement are true and
correct in all material respects on and as of the Effective Date. The schedules
to the Agreement with respect to the representations and warranties of
-25-
the Company set forth in SECTION 8 of the Credit Agreement are set forth in
EXHIBIT B hereto.
3. CONDITIONS TO EFFECTIVENESS OF THIS AMENDMENT.
This Amendment shall become effective only upon the satisfaction in
full (or waiver by the Holders) of the following conditions precedent (the first
date upon which each such condition shall have been so satisfied or waived being
herein referred to as the "Effective Date"):
(a) NO DEFAULTS. On the Effective Date (after giving effect to
this Amendment) no Default or Event of Default shall have occurred and be
continuing.
(b) AMENDMENT. Each of the Company and the Holders shall have
executed this Amendment, and counterparts thereof bearing the signatures of the
Company shall have been delivered to the Holders.
(c) CONDITIONS. All of the conditions of closing set forth in
Section 3 of the Agreement (except for SECTIONS 3.3 and 3.10 of the Agreement)
shall be satisfied as of August 12, 1999 as if the Closing Date was such date.
(d) REPRESENTATIONS AND WARRANTIES, ETC. The representations
and warranties of the Company contained in Section 8 of the Agreement shall be
true in all material respects on and as of the Effective Date as though such
representations and warranties had been made on and as of the Effective Date,
except to the extent such representations and warranties expressly relate to an
earlier date or that there are changes to the factual information contained in
such representations and warranties that do not reflect any violation of or
failure to comply with any provision of the Agreement, and the Holders have
received a certificate of a senior financial officer of the Company, dated the
Effective Date, to such effect.
(e) FINANCING DOCUMENTS. The Holder shall have received a copy
of the Financing Documents executed and delivered by the Company, the Guarantor,
the Collateral Agent, the Agent and the Lenders, as the case may be, with no
modifications thereof.
(f) OFFICER'S CERTIFICATE. The Collateral Agent shall have
received an officer's certificate of the Company certifying as to the
satisfaction of all conditions to closing, such certificate to be substantially
satisfactory in form and substance to all the Holders.
(g) VENDOR LEASE PLAN AGREEMENT The Holders shall have
received a certified copy of the Vendor Lease Plan Agreement certified by an
Authorized Officer of the Company as being true and correct and attaching all
amendments,
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modifications, supplements and waivers to such agreement through the Closing
Date.
4. AGREEMENT; TERMS. Except as otherwise provided hereby, the
Agreement shall continue in full force and effect in accordance with the
provisions thereof on the date hereof, and this Amendment shall not be deemed to
waive or amend any provision of the Agreement or the Intercreditor Agreement
except as expressly set forth herein. As used in the Agreement, the terms "this
Agreement", herein, hereinafter, hereunder, hereto and words of similar import
shall mean and refer to, from and after the Effective Date, unless the context
otherwise requires, the Agreement as amended by this Amendment. Capitalized
terms used and not defined herein shall have the meaning assigned to such terms
in the Agreement or the Intercreditor Agreement.
5. HEADINGS. Section headings in this Amendment are included herein
for convenience of reference only and shall not define, limit or otherwise
affect any of the terms or provisions hereof.
6. COUNTERPARTS. This Amendment may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument, and all signatures need not appear on any one
counterpart.
7. EXPENSES. Without limiting the generality of SECTION 13.1 of the
Agreement, the Company agrees to pay the reasonable fees and disbursements and
other charges of Xxxxxxx Xxxx & Xxxxxxxxx, the Holders' special counsel, for
their services rendered in connection with the transactions contemplated hereby
and with respect to this Amendment and any other document delivered pursuant to
this Amendment and reimburse the Holders for their out-of-pocket expenses in
connection with the foregoing; PROVIDED, HOWEVER, that the Company agrees to pay
the fees and disbursements of Xxxxxxx Xxxx & Xxxxxxxxx set forth on a statement
delivered to it on or prior to August 23, 1999, no later than Monday, August 23,
1999 by wire transfer as set forth in such statement.
8. CLOSING Fee. The Company agrees to pay a closing fee equal to
$89,285.71 to the Holders no later than Monday, August 23, 1999 by wire transfer
as set forth in Section 6.15 of the Agreement.
9. LAW GOVERNING: SUBMISSION TO JURISDICTION.
(a) THIS AMENDMENT, THE NOTES, AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH (i) THE LAWS OF THE STATE OF TEXAS WITHOUT REFERENCE TO THE
PRINCIPLES OF CONFLICTS
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OF LAWS THEREUNDER AND (ii) THE LAWS OF THE UNITED STATES OF AMERICA, AS
APPLICABLE.
(b) EACH OF THE COMPANY AND THE HOLDERS HEREBY IRREVOCABLY AND
UNCONDITIONALLY:
(i) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AMENDMENT, ANY NOTE AND ANY DOCUMENT TO WHICH IT IS
A PARTY, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT OF ANY
THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF
TEXAS, THE COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF
TEXAS, AND APPELLATE COURTS FROM ANY THEREOF;
(ii) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN
SUCH COURTS, AND WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE
VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR
PROCEEDING WAS BROUGHT IN ANY INCONVENIENT COURT AND AGREES NOT TO PLEAD OR
CLAIM THE SAME;
(iii) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR
PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED
MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM AND MAIL), POSTAGE PREPAID, TO IT AT ITS
ADDRESS SPECIFIED OR REFERENCED IN SECTION 13.2 OF THE AGREEMENT; AND
(iv) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT
SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT
TO XXX IN ANY OTHER JURISDICTION.
[REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed as of the date first above written.
THE YORK GROUP, INC.
By:________________________
Name:
Title:
THE VARIABLE ANNUITY LIFE
INSURANCE COMPANY
By:________________________
Name:
Title:
-29-
EXHIBIT "A"
THE YORK GROUP, INC.
8.37% SENIOR SECURED NOTE
DUE JUNE 30, 2004
Registered Note No. ____ Houston, Texas
$_______________ ______________
PPN ____________
THE YORK GROUP, INC., a Pennsylvania corporation (the "Company"), for
value received, hereby promises to pay to
_____________________________________________, or registered assigns, on the
30th day of June, 2004, the principal sum of _________________________ AND
00/100 DOLLARS ($_____________) (or so much thereof as shall not have been
prepaid) and to pay interest (computed on the basis of a 360-DAY year, with
interest payments calculated on the basis of twelve 30-day months) on the
principal amount from time to time remaining unpaid hereon at the rate of (i)
7.87% per annum from June 30, 1999 to and including August 11, 1999 and (ii)
8.37% per annum from and including August 12, 1999 until maturity, payable
commencing on August 31, 1999, and thereafter monthly on the last day of each
month and at maturity, and to pay interest on any overdue principal and (to the
extent legally permitted) on any overdue installment of interest or any overdue
premium, at a rate per annum equal to the Default Rate, after maturity, whether
by acceleration or otherwise, until paid. The principal hereof and interest to
accrue hereon and premium, if any, are payable in lawful money of the United
States of America in accordance with the Agreement (hereinafter defined).
This note (the "Senior Secured Note") is one of a duly authorized issue of
Senior Notes of the Company in the aggregate principal amount of $25,000,000
issued under and pursuant to the terms and provisions of a Senior Secured Note
Purchase Agreement dated as of June 30, 1994, as amended by the First Amendment,
dated as of August 12, 1999 (the "Agreement"), entered into by the Company with
the Purchasers named in Annex I to said Agreement, and this Senior Secured Note
and the Holder hereof are entitled equally and ratably with the Holders of all
other Senior Secured Notes outstanding from time to time under the Agreement to
all of the benefits provided for by said Agreement or referred to therein by any
thereof. This Senior Secured Note is also entitled to the benefits of Subsidiary
Guarantees heretofore and from time to time hereafter executed and delivered
pursuant to the Agreement. The provisions of the Agreement (including, without
limitation, Section 5.2 of the Agreement) are hereby
incorporated in this Senior Secured Note to the same extent as if set forth at
length herein. All capitalized terms not otherwise defined herein shall have the
respective meanings ascribed to them in the Agreement.
As provided in the Agreement, upon surrender of this Senior Secured Note
for registration or transfer, duly endorsed or accompanied by a written
instrument of transfer duly executed, by the registered holder hereof or his
attorney duly authorized in writing, a new Senior Secured Note for a like unpaid
principal amount will be issued to, and registered in the name of, the
transferee upon the payment of the taxes or other governmental charges, if any,
that may be imposed in connection therewith. The Company may treat the Person in
whose name this Senior Secured Note is registered as the owner hereof for the
purpose of receiving payment and for all other purposes, and the Company shall
not be affected by any notice to the contrary.
This Senior Secured Note and any other Senior Secured Note may, under
certain circumstances be declared due prior to its expressed maturity date, all
in the events, on the terms and in the manner as provided in the Agreement.
As provided in the Agreement, this Senior Secured Note is subject to
optional and mandatory prepayment in whole or in part, with premium, and the
Company agrees to make such prepayments of principal on the dates, in the
amounts and in the manner provided in the Agreement, to which reference is made
for the terms and conditions applicable to prepayment.
Should the indebtedness represented by this Senior Secured Note or any
part thereof be collected in any proceeding provided for in the Agreement or be
placed in the hands of attorneys for collection, the Company agrees to pay, in
addition to the principal, premium, if any, and interest due and payable hereon,
all costs of collecting this Senior Secured Note, including reasonable
attorneys' fees and expenses.
Notwithstanding any provision to the contrary in the Agreement or this
Senior Secured Note or in any document or documents otherwise relating thereto
or hereto, in no event shall the Agreement or this Senior Secured Note or such
documents require or permit the payment, charging, taking, reserving, or
receiving of any sums constituting interest under applicable laws which exceed
the maximum amount permitted by such laws. If any such excess interest is
contracted for, charged, taken, reserved, or received under the Agreement or
this Senior Secured Note or in any of the documents otherwise relating thereto
or hereto, or in any communication by the Holder hereof or any other Person to
the Company or any other party liable for payment of this Senior Secured Note,
or in the event all or part of the principal or interest hereof shall be prepaid
or accelerated, so that under any of such circumstances or under any other
circumstance whatsoever the amount of interest contracted for, charged, taken,
reserved, or received on the amount of principal actually outstanding from time
to time under the Agreement or this Senior Secured Note shall exceed the maximum
amount of interest permitted by applicable usury laws, then in any such event it
is agreed as follows: (i) the provisions of this paragraph shall govern and
control, (ii) any such excess shall be canceled automatically to the extent of
such excess, and shall not be collected or collectible, (iii) any such excess
which is or has been received shall be credited against the then unpaid
principal balance of this Senior Secured Note or refunded to the Company, at the
option of the Holder hereof, and (iv) the effective rate of interest shall be
automatically reduced to the maximum lawful rate allowed under applicable laws
as construed by courts having jurisdiction hereof or thereof. Without limiting
the foregoing, all calculations of the rate of interest contracted for, charged,
taken, reserved, or received in connection herewith which are made for the
purpose of determining whether such rate exceeds the maximum lawful rate shall
be made to the extent permitted by applicable laws by amortizing, prorating,
allocating and spreading during the period of the full term of this Senior
Secured Note, including all prior and subsequent renewals and extensions, all
interest at any time contracted for, charged, taken, reserved, or received. The
term "applicable usury laws" shall mean such laws of the State of Texas or the
laws of the United States, whichever laws allow the higher rate of interest, as
such laws now exist; provided, however, that if such laws shall hereafter allow
higher rates of interest, then the applicable usury laws shall be the laws
allowing the higher rates, to be effective as of the effective date of such
laws.
This Senior Secured Note is entitled to all of the benefits of the
Agreement.
THIS SENIOR SECURED NOTE IS GOVERNED BY AND IS TO BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND THE LAWS OF THE UNITED STATES
OF AMERICA.
THE YORK GROUP, INC.
By:_______________________________
Name:
Title:
EXHIBIT "B"
