EXHIBIT-10.6
SECOND AMENDMENT
TO
CREDIT AGREEMENT
THE YORK GROUP, INC.,
as the Borrower,
and
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
as the Lender
Effective as of January 31, 1997
SECOND AMENDMENT TO CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT (this "SECOND AMENDMENT")
executed effective as of the 31st of January, 1997 (the "EFFECTIVE DATE"), is
among THE YORK GROUP, INC., a corporation duly organized and validly existing
under the laws of the State of Delaware (the "BORROWER"), and TEXAS COMMERCE
BANK NATIONAL ASSOCIATION (the "LENDER").
R E C I T A L S
WHEREAS, the Borrower (formerly a corporation organized under the laws
of the Commonwealth of Pennsylvania) and the Lender are parties to that certain
Credit Agreement dated as of June 30, 1994, as amended by that certain First
Amendment to Credit Agreement dated as of December 31, 1995 (as the same may
further be amended, restated, modified or otherwise supplemented from time to
time and in effect, the "CREDIT AGREEMENT"), pursuant to which the Lender has
made certain credit available to the Borrower; and
WHEREAS, the Borrower has requested, and the Lender has agreed, to amend
certain provisions of the Credit Agreement and to extend the maturity of the
credit facility evidenced by the Credit Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and to induce the Lender to enter
into this Second Amendment, the parties hereto agree as follows:
1. DEFINED TERMS. All capitalized terms which are defined in the Credit
Agreement, but which are not defined in this Second Amendment, shall have the
same meanings as defined in the Credit Agreement. Unless otherwise indicated,
all section references in this Second Amendment refer to the Credit Agreement.
2. AMENDMENTS TO CREDIT AGREEMENT.
2.1 AMENDMENTS TO SECTION 1.02.
(a) The definition of "GUARANTOR" is hereby amended in its entirety
to read as follows:
"GUARANTOR" shall mean any Subsidiary of the Borrower which now
or hereafter executes and delivers a Guaranty Agreement or Joinder
Agreement pursuant to the Section 9.18 hereof.
1
(b) The definition of "JOINDER AGREEMENT" is hereby inserted after the
definition "INTEREST REDETERMINATION DATE" and before the definition of "LC
COMMITMENT", which definition reads in its entirety as follows:
"JOINDER AGREEMENT" has the meaning assigned to such term in the
Guaranty Agreement dated as of January 31, 1997 from York Agency, Inc.,
et al in favor of the Lender.
(c) The definition "MAXIMUM CREDIT AMOUNT" is hereby deleted and the
following definition is inserted in lieu thereof, which definition reads in its
entirety as follows:
"MAXIMUM CREDIT AMOUNT" at any time shall equal $6,000,000 as the
same may be reduced pursuant to Section 2.03(b)."
(d) The definition of "NET WORTH" is hereby inserted after the
definition of "NOTE" and before the definition of "PBGC", which definition reads
in its entirety as follows:
"NET WORTH" shall mean, as at any date, the sum of the following
for the Borrower and its Consolidated Subsidiaries determined (without
duplication) in accordance with GAAP:
(a) the amount of share capital liability of the Borrower, PLUS
(b) the amount of surplus and retained earnings (or, in the case
of a surplus or retained earnings deficit, MINUS the amount of such
deficit), MINUS
(c) the sum of the following: cost of treasury shares and any
writeup in the book value of assets resulting from a revaluation thereof
or resulting from any changes in GAAP subsequent to December 31, 1993."
(e) The definition "REVOLVING CREDIT TERMINATION DATE" is hereby deleted
and the following definition is inserted in lieu thereof, which definition reads
in its entirety as follows:
"REVOLVING CREDIT TERMINATION DATE" shall mean, unless the
Commitment is sooner terminated pursuant to Sections 2.03(b) or 10.02
hereof, January 31, 1998."
(f) The definitions of "SECOND AMENDMENT" and "SECOND AMENDMENT
EFFECTIVE DATE" are hereby inserted after the definition of "SEC" and before the
definition of "SUBORDINATED DEBT", which definitions read in their entirety as
follows:
"SECOND AMENDMENT" shall mean that certain Second Amendment to
Credit Agreement dated as of January 31, 1997 between the Borrower and
the Lender."
2
"SECOND AMENDMENT EFFECTIVE DATE" shall mean the "Effective Date"
as such term is defined in the Second Amendment."
(g) The definition of "TANGIBLE NET WORTH" is hereby deleted in its
entirety.
2.2 LIMITATION ON LEASES. Section 9.07 of the Credit Agreement is hereby
amended by replacing the amount "$1,500,000" in the fifth line thereof with the
amount "$3,000,000".
2.3 CAPITAL EXPENDITURES. Section 9.12 is hereby amended by deleting the
number "$8,000,000" as it appears in the third line, and inserting, in lieu
thereof, the number "$13,000,000".
2.4 TANGIBLE NET WORTH. Section 9.13 is hereby deleted in its entirety
and the following new Section 9.13 is inserted in lieu thereof, which reads in
its entirety as follows:
"Section 9.13 NET WORTH. The Borrower will not permit its Net
Worth to be less than the sum of (i) $48,000,000, and (ii) 100% of the
net cash proceeds of any offering of equity securities made subsequent
to December 31, 1996."
2.5 SUBSIDIARIES AND PARTNERSHIPS. Section 9.18 of the Credit Agreement
is hereby amended in its entirety to read as follows:
"Section 9.18 SUBSIDIARIES AND PARTNERSHIPS. Neither the Borrower
nor any Subsidiary shall create, acquire or permit to exist any new
Subsidiary if a Default has occurred and is continuing or would result
therefrom. Within 30 days after the creation or acquisition of any
Subsidiary permitted by the preceding sentence, , unless such Subsidiary
is in compliance with Section 9.21, the Borrower shall (i) cause such
Subsidiary to execute and deliver to the Lender a Joinder Agreement
making such Subsidiary an additional Guarantor and (ii) deliver to the
Lender an opinion of counsel addressed to the Lender in form, scope and
substance satisfactory to the Lender regarding such Joinder Agreement."
2.6 ASSETS OF SUBSIDIARIES. Section 9.21 is hereby deleted in its
entirety and the following new Section 9.21 is inserted in lieu thereof, which
reads in its entirety as follows:
"Section 9.21 ASSETS OF SUBSIDIARIES. The Borrower will not
permit any Subsidiary which has not executed and delivered a Guaranty
Agreement to own any tangible assets, other than (i) cash or cash
equivalents in an aggregate amount (taking into account all of the
non-guaranteeing Subsidiaries of the Borrower) not to exceed $2,500,000
(ii) promissory notes payable to such Subsidiary by the Borrower and
receivables relating thereto, provided that such promissory notes are
subordinated to payment of the Indebtedness on terms and conditions
satisfactory to the Lender, and (iii) other Property incidental to the
ordinary business of the non-guaranteeing Subsidiaries having a value no
greater than $10,000. To the extent any non-guaranteeing Subsidiary
shall own any tangible asset other than as
3
provided in the preceding sentence, such asset shall be conveyed to the
Borrower, either in the form of a dividend, loan or in such other manner
as may be approved by the Lender and as may conform to the terms and
provisions of this Agreement."
3. CONDITIONS. The enforceability of this Second Amendment against the
Lender is subject to the receipt by the Lender of the documents specified in
Section 3.1 and the satisfaction of the other conditions provided in Sections
3.1 through 3.4, each of which shall be satisfactory to the Lender in form and
substance.
3.1 LOAN DOCUMENTS. The Lender shall have received multiple
counterparts, as requested, of
(i) this Second Amendment, executed and delivered by a duly authorized
officer of the Borrower;
(ii) the Guaranty Agreement, executed and delivered by a duly authorized
officer of York Agency, Inc., The Doody Group, Inc., York Acquisition Corp.,
York Acquisition Corp. II, and The York Children's Foundation; and
(iii) Subordination Agreements, executed and delivered by a duly
authorized officer of each of T.Y.G. Company, Inc. and T.Y.G. Trade Company,
Inc.
3.2 REPRESENTATIONS AND WARRANTIES. Except as affected by the
transactions contemplated in this Second Amendment, each of the representations
and warranties made by the Borrower in or pursuant to the Credit Agreement and
each Loan Document to which the Borrower is a party shall be true and correct in
all material respects as of the Effective Date, as if made on and as of such
date.
3.3 NO DEFAULT. No Default or Event of Default shall have occurred and
be continuing as of the Effective Date.
3.4 NO CHANGE. No event shall have occurred since December 31, 1993,
which could have a Material Adverse Effect.
4. WAIVERS.
4.1 LIMITATIONS ON WAIVERS. The waivers set forth in Section 4.2 of this
Second Amendment shall not be deemed to be a waiver by the Lender of any other
covenant, condition or obligation on the part of the Borrower under the Credit
Agreement or any other Loan Document, except as set forth in Section 4.2 of this
Second Amendment. In addition, such waivers shall in no respect evidence any
commitment by the Lender to grant any future consents or waivers of any
covenant, condition or obligation on the part of the Borrower under the Credit
Agreement or any other Loan Document. Any further waivers or consents must be
specifically agreed to in writing in accordance with Section 11.04 of the Credit
Agreement.
4
4.2 SUBORDINATED INTERCOMPANY DEBT. The Borrower has informed the Lender
that it has (i) capitalized one of its Affiliates, T.Y.G. Company, Inc., a
Delaware corporation ("TYG COMPANY") and acquired from T.Y.G. Trade Company,
Inc., a Delaware corporation ("TYG TRADE"), the right to use certain trade names
(TYG Company and TYG Trade collectively, the "SUBORDINATED CREDITORS"), and (ii)
received loans from the Subordinated Creditors, as evidenced by promissory notes
in the aggregate original principal amount of $57,980,000 (the "SUBORDINATED
INTERCOMPANY DEBT"); and that by such transactions, it may have violated the
terms of Sections 9.01 and 9.21 of the Credit Agreement. The Lender hereby
waives any such Default or Event of Default resulting from such transactions,
including the borrowings of the Subordinated Intercompany Debt from the
Subordinated Creditors; provided that the Subordinated Creditors execute and
deliver to the Lender, on or before April 7, 1997, a subordination agreement or
agreements, in form and substance satisfactory to the Lender, pursuant to which
the Subordinated Intercompany Debt is subordinated to the obligations of the
Borrower to the Lender under the Credit Agreement and the other Loan Documents
to which the Borrower is a party. If such subordination agreement (or
agreements) has not been executed and delivered to the Lender on or before April
7, 1997, then such failure shall constitute an Event of Default under the Credit
Agreement.
5. REPRESENTATIONS AND WARRANTIES. The Borrower hereby affirms that as
of the date of execution and delivery of this Second Amendment, all of the
representations and warranties contained in the Credit Agreement, as amended
hereby, and the other Loan Documents to which the Borrower is a party are true
and correct in all material respects as though made on and as of the Effective
Date and after giving effect to this Second Amendment and to the transactions
contemplated hereby; and that no Defaults exist under the Credit Agreement or
will exist under the Credit Agreement after giving effect to the aforesaid
transactions.
6. MISCELLANEOUS.
6.1 CONFIRMATION. The provisions of the Credit Agreement (as amended by
this Second Amendment) and the other Loan Documents to which the Borrower is a
party shall remain in full force and effect in accordance with its terms
following the effectiveness of this Second Amendment.
6.2 COUNTERPARTS. This Second Amendment may be executed by one or more
of the parties hereto in any number of separate counterparts, and all of such
counterparts taken together shall be deemed to constitute one and the same
instrument.
6.3 NO ORAL AGREEMENT. THIS WRITTEN SECOND AMENDMENT REPRESENTS THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
6.4 GOVERNING LAW. THIS SECOND AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.
5
IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment
to be duly executed effective as of the date written above.
BORROWER:
THE YORK GROUP, INC.
By:
Name: David F. Beck
Title: Vice President
LENDER:
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
By:
Name:
Title:
S-1
GUARANTY AGREEMENT
BY
YORK AGENCY, INC.,
THE DOODY GROUP, INC.,
BRENNER CASKET COMPANY, INC.
YORK ACQUISITION CORP. II,
THE YORK CHILDREN'S FOUNDATION
IN FAVOR OF
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
JANUARY 31, 1997
TABLE OF CONTENTS
PAGE
GUARANTY
ARTICLE 1
GENERAL TERMS
Section 1.1 TERMS DEFINED ABOVE........................................1
Section 1.2 CERTAIN DEFINITIONS........................................1
Section 1.3 CREDIT AGREEMENT DEFINITIONS...............................3
ARTICLE 2
THE GUARANTY
Section 2.1 LIABILITIES GUARANTEED.....................................3
Section 2.2 NATURE OF GUARANTY.........................................3
Section 2.3 LENDER'S RIGHTS............................................4
Section 2.4 GUARANTOR'S WAIVERS........................................4
Section 2.5 MATURITY OF LIABILITIES; PAYMENT...........................5
Section 2.6 LENDER'S EXPENSES..........................................5
Section 2.7 LIABILITY..................................................5
Section 2.8 EVENTS AND CIRCUMSTANCES NOT REDUCING OR
DISCHARGING GUARANTOR'S OBLIGATIONS........................5
Section 2.9 RIGHT OF SUBROGATION AND CONTRIBUTION......................8
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Section 3.1 BY GUARANTOR...............................................8
Section 3.2 NO REPRESENTATION BY LENDERS...............................9
-i-
ARTICLE 4
SUBORDINATION OF INDEBTEDNESS
Section 4.1 SUBORDINATION OF ALL GUARANTOR CLAIMS......................9
Section 4.2 CLAIMS IN BANKRUPTCY......................................10
Section 4.3 PAYMENTS HELD IN TRUST....................................10
Section 4.4 LIENS SUBORDINATE.........................................10
Section 4.5 NOTATION OF RECORDS.......................................10
ARTICLE 5
MISCELLANEOUS
Section 5.1 SUCCESSORS AND ASSIGNS....................................11
Section 5.2 NOTICES...................................................11
Section 5.3 BUSINESS AND FINANCIAL INFORMATION........................11
Section 5.4 CONSTRUCTION..............................................11
Section 5.5 INVALIDITY................................................11
Section 5.7 ENTIRE AGREEMENT..........................................11
Exhibit A - Form of Joinder Agreement
-ii-
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT, dated as of January 31, 1997, by YORK AGENCY,
INC., a Delaware corporation, THE DOODY GROUP, INC., a Delaware corporation,
BRENNER CASKET COMPANY, INC., a Delaware corporation, YORK ACQUISITION CORP. II,
a Delaware corporation, and THE YORK CHILDREN'S FOUNDATION, a Texas corporation
(collectively with any Person which may become a party hereto, the "GUARANTORS"
and each, individually, a "GUARANTOR"), is in favor of TEXAS COMMERCE BANK
NATIONAL ASSOCIATION ("LENDER").
W I T N E S S E T H:
WHEREAS, The York Group, Inc., a Delaware Corporation ("BORROWER") and the
Lender are parties to that certain Credit Agreement dated as of June 30, 1994,
as amended by that certain First Amendment to Credit Agreement dated as of
December 31, 1995 and Second Amendment to Credit Agreement ("SECOND AMENDMENT")
dated as of even date herewith (as the same may be further amended, restated,
modified or otherwise supplemented from time to time and in effect, the "CREDIT
AGREEMENT"); and
WHEREAS, one of the terms and conditions stated in the Second Amendment
for the effectiveness thereof and making of Loans under the Credit Agreement is
the execution and delivery to the Lender of this Guaranty Agreement;
NOW, THEREFORE, (i) in order to comply with the terms and conditions of
the Second Amendment and the Credit Agreement, (ii) to induce the Lender, at any
time or from time to time, to loan monies, with or without security to or for
the account of Borrower in accordance with the terms of the Credit Agreement,
(iii) at the special insistence and request of the Lenders, and (iv) for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Guarantor hereby agrees as follows:
ARTICLE 1
GENERAL TERMS
Section 1.1 TERMS DEFINED ABOVE. As used in this Guaranty Agreement, the
terms "BORROWER", "GUARANTOR", "CREDIT AGREEMENT", "LENDERS" and "SECOND
AMENDMENT" shall have the meanings indicated above.
Section 1.2 CERTAIN DEFINITIONS. As used in this Guaranty Agreement, the
following terms shall have the following meanings, unless the context otherwise
requires:
"CONTRIBUTION OBLIGATION" shall mean an amount equal, at any time and from
time to time and for each respective Guarantor, to the product of (i) its
Contribution Percentage times (ii) the sum of all payments made previous
to or at the time of
-1-
calculation by all Guarantors in respect of the Liabilities, as a
Guarantor (less the amount of any such payments previously returned to any
Guarantor by operation of law or otherwise, but not including payments
received by any Guarantor by way of its rights of subrogation and
contribution under Section 2.9), provided, however, such Contribution
Obligation for any Guarantor shall in no event exceed such Guarantor's
Maximum Guaranteed Amount.
"CONTRIBUTION PERCENTAGE" shall mean for any Guarantor for any applicable
date as of which such percentage is being determined, an amount equal to
the quotient of (i) the Net Worth of such Guarantor as of such date,
divided by (ii) the sum of the Net Worth of all the Guarantors as of such
date.
"GUARANTOR CLAIMS" shall have the meaning indicated in Section 4.1 hereof.
"GUARANTY AGREEMENT" shall mean this Guaranty Agreement, as the same may
from time to time be amended or supplemented.
"JOINDER AGREEMENT" means each Joinder Agreement, substantially in the
form of EXHIBIT A attached hereto, from time to time executed and
delivered to Lender by a Subsidiary of the Borrower pursuant to the terms
of the Credit Agreement, for the purpose, among others, of becoming an
additional Guarantor hereunder.
"LIABILITIES" shall mean (a) any and all indebtedness, obligations and
liabilities of the Borrower pursuant to the Credit Agreement, including
without limitation, the unpaid principal of and interest on the Notes,
including without limitation, interest accruing subsequent to the filing
of a petition or other action concerning bankruptcy or other similar
proceeding; (b) any additional loans made by the Lenders to the Borrower;
(c) any and all other indebtedness, obligations and liabilities of any
kind of the Borrower to the Lenders, now or hereafter existing, arising
directly between the Borrower and the Lenders or acquired outright, as a
participation, conditionally or as collateral security from another by the
Lenders, absolute or contingent, joint and/or several, secured or
unsecured, due or not due, arising by operation of law or otherwise, or
direct or indirect, including indebtedness, obligations and liabilities to
the Lenders of the Borrower as a member of any partnership, syndicate,
association or other group, and whether incurred by the Borrower as
principal, surety, endorser, guarantor, accommodation party or otherwise
and (d) all renewals, rearrangements, increases, extensions for any
period, amendments or supplement in whole or in part of the Notes or any
documents evidencing the above.
"MAXIMUM GUARANTEED AMOUNT" shall mean, for any Guarantor, the greater of
(i) the "reasonably equivalent value" or "fair consideration" (or
equivalent concept) received by such Guarantor in exchange for the
obligation incurred hereunder,
-2-
within the meaning of any applicable state or federal fraudulent
conveyance or transfer laws; or (ii) the lesser of (A) the maximum amount
that will not render such Guarantor insolvent, or (B) the maximum amount
that will not leave such Guarantor with any property deemed an
unreasonably small capital. Clauses (A) and (B) are and shall be
determined pursuant to and as of the appropriate date mandated by such
applicable state or federal fraudulent conveyance or transfer laws and to
the extent allowed by law take into account the rights to contribution and
subrogation under Section 2.9 so as to provide for the largest Maximum
Guaranteed Amount possible.
"NET PAYMENTS" shall mean an amount equal, at any time and from time to
time and for each respective Guarantor, to the difference of (i) the sum
of all payments made previous to or at the time of calculation by such
Guarantor in respect to the Liabilities, as a Guarantor, and in respect of
its obligations contained in this Guaranty Agreement, less (ii) the sum of
all such payments previously returned to such Guarantor by operation of
law or otherwise and including payments received by such Guarantor by way
of its rights of subrogation and contribution under Section 2.9.
"NET WORTH" shall mean for any Guarantor, calculated on and as of any
applicable date on which such amount is being determined, the difference
between (i) the sum of all such Guarantor's property, at a fair valuation
and as of such date, minus (ii) the sum of all such Guarantor's debts, at
a fair valuation and as of such date, excluding the Liabilities.
Section 1.3 CREDIT AGREEMENT DEFINITIONS. Unless otherwise defined herein,
all terms beginning with a capital letter which are defined in the Credit
Agreement shall have the same meanings herein as therein.
ARTICLE 2
THE GUARANTY
Section 2.1 LIABILITIES GUARANTEED. Each Guarantor hereby irrevocably and
unconditionally guarantees the prompt payment of the Liabilities when due,
whether at maturity or otherwise, provided, however, that, notwithstanding
anything herein or in any other Loan Document to the contrary, the maximum
liability of each Guarantor hereunder shall in no event exceed its Maximum
Guaranteed Amount.
Section 2.2 NATURE OF GUARANTY. This Guaranty Agreement is an absolute,
irrevocable, completed and continuing guaranty of payment and not a guaranty of
collection, and no notice of the Liabilities or any extension of credit already
or hereafter contracted by or extended to Borrower need be given to Guarantors.
This Guaranty Agreement may not be revoked by
-3-
Guarantors and shall continue to be effective with respect to debt under the
Liabilities arising or created after any attempted revocation by Guarantors and
shall remain in full force and effect until the Liabilities are paid in full and
the Commitment is terminated, notwithstanding that from time to time prior
thereto no Liabilities may be outstanding. Borrower and the Lender may modify,
alter, rearrange, extend for any period and/or renew from time to time, the
Liabilities, and the Lender may waive any Default or Events of Default without
notice to the Guarantors and in such event Guarantors will remain fully bound
hereunder on the Liabilities. This Guaranty Agreement shall continue to be
effective or be reinstated, as the case may be, if at any time any payment of
the Liabilities is rescinded or must otherwise be returned by the Lender upon
the insolvency, bankruptcy or reorganization of Borrower or otherwise, all as
though such payment had not been made. This Guaranty Agreement may be enforced
by the Lender and any subsequent holder of any of the Liabilities and shall not
be discharged by the assignment or negotiation of all or part of the
Liabilities. Each Guarantor hereby expressly waives present ment, demand, notice
of non-payment, protest and notice of protest and dishonor, notice of Default or
Event of Default, notice of intent to accelerate the maturity and notice of
acceleration of the maturity and any other notice in connection with the
Liabilities, and also notice of acceptance of this Guaranty Agreement,
acceptance on the part of the Lender being conclusively presumed by the Lender's
request for this Guaranty Agreement and delivery of the same to the Lender.
Section 2.3 LENDER'S RIGHTS. Each Guarantor authorizes the Lender, without
notice or demand and without affecting its liability hereunder, to take and hold
security for the payment of this Guaranty Agreement and/or the Liabilities, and
exchange, enforce, waive and release any such security; and to apply such
security and direct the order or manner of sale thereof as the Lender in its
discretion may determine; and to obtain a guaranty of the Liabilities from any
one or more Persons and at any time or times to enforce, waive, rearrange,
modify, limit or release any of such other Persons from their obligations under
such guaranties.
Section 2.4 GUARANTOR'S WAIVERS.
(a) GENERAL. Each Guarantor waives any right to require the Lender
to (i) proceed against Borrower or any other person liable on the
Liabilities, (ii) enforce any of its rights against any other guarantor of
the Liabilities (iii) proceed or enforce any of its rights against or
exhaust any security given to secure the Liabilities (iv) have Borrower
joined with Guarantors in any suit arising out of this Guaranty Agreement
and/or the Liabilities, or (v) pursue any other remedy in the Lender's
powers whatsoever. The Lender shall not be required to mitigate damages or
take any action to reduce, collect or enforce the Liabilities. Each
Guarantor waives any defense arising by reason of any disability, lack of
corporate authority or power, or other defense of Borrower or any other
guarantor of the Liabilities, and shall remain liable hereon regardless of
whether Borrower or any other guarantor be found not liable thereon for
any reason. Whether and when to exercise any of the remedies of the Lender
under any of the Loan Documents shall be in the sole and absolute
discretion of the Lender, and no delay by the Lender in
-4-
enforcing any remedy, including delay in conducting a foreclosure sale,
shall be a defense to such Guarantor's liability under this Guaranty
Agreement. To the extent allowed by applicable law, each Guarantor hereby
waives any good faith duty on the part of the Lender in exercising any
remedies provided in the Loan Documents.
(b) SUBROGATION. Until the Liabilities have been paid in full, each
Guarantor waives all rights of subrogation or reimbursement against the
Borrower, whether arising by contract or operation of law (including,
without limitation, any such right arising under any federal or state
bankruptcy or insolvency laws) and waives any right to enforce any remedy
which the Lender now has or may hereafter have against the Borrower, and
waives any benefit or any right to participate in any security now or
hereafter held by the Lender.
Section 2.5 MATURITY OF LIABILITIES; PAYMENT. Guarantors agree that if the
maturity of any of the Liabilities is accelerated by bankruptcy or otherwise,
such maturity shall also be deemed accelerated for the purpose of this Guaranty
Agreement without demand or notice to Guarantors. Guarantors will, forthwith
upon notice from the Lender, pay to the Lender the amount due and unpaid by
Borrower and guaranteed hereby. The failure of the Lender to give this notice
shall not in any way release Guarantors hereunder.
Section 2.6 LENDER'S EXPENSES. If Guarantors fails to pay the Liabilities
after notice from the Lender of Borrower's failure to pay any Liabilities at
maturity, and if the Lender obtains the services of an attorney for collection
of amounts owing by Guarantors hereunder, or obtaining advice of counsel in
respect of any of its rights under this Guaranty Agreement, or if suit is filed
to enforce this Guaranty Agreement, or if proceedings are had in any bankruptcy,
probate, receivership or other judicial proceedings for the establishment or
collection of any amount owing by Guarantors hereunder, or if any amount owing
by Guarantors hereunder is collected through such proceedings, Guarantors agree
to pay to the Lender the Lender's reasonable attorneys' fees.
Section 2.7 LIABILITY. It is expressly agreed that the liability of the
Guarantors for the payment of the Liabilities guaranteed hereby shall be primary
and not secondary.
Section 2.8 EVENTS AND CIRCUMSTANCES NOT REDUCING OR DISCHARGING
GUARANTOR'S OBLIGATIONS. Each Guarantor hereby consents and agrees to each of
the following to the fullest extent permitted by law, and agrees that its
obligations under this Guaranty Agreement shall not be released, diminished,
impaired, reduced or adversely affected by any of the following, and waives any
rights (including without limitation rights to notice) which such Guarantor
might otherwise have as a result of or in connection with any of the following:
(a) MODIFICATIONS, ETC. Any renewal, extension, modification,
increase, decrease, alteration or rearrangement of all or any part of the
Liabilities, or of the Notes, or the Credit Agreement or any instrument
executed in connection
-5-
therewith, or any contract or understanding between Borrower and the
Lender or any other Person, pertaining to the Liabilities;
(b) ADJUSTMENT, ETC. Any adjustment, indulgence, forbearance or
compromise that might be granted or given by the Lender to Borrower or any
Guarantor or any Person liable on the Liabilities;
(c) CONDITION OF BORROWER OR GUARANTOR. The insolvency, bankruptcy
arrangement, adjustment, composition, liquidation, disability,
dissolution, death or lack of power of Borrower, any Guarantor or any
other Person at any time liable for the payment of all or part of the
Liabilities; or any dissolution of Borrower or any Guarantor, or any sale,
lease or transfer of any or all of the assets of Borrower or any
Guarantor, or any changes in the shareholders, partners, or members of
Borrower or any Guarantor; or any reorganization of Borrower or any
Guarantor;
(d) INVALIDITY OF LIABILITIES. The invalidity, illegality or
unenforceability of all or any part of the Liabilities, or any document or
agreement executed in connection with the Liabilities, for any reason
whatsoever, including without limitation the fact that the Liabilities, or
any part thereof, exceed the amount permitted by law, the act of creating
the Liabilities or any part thereof is ULTRA VIRES, the officers or
representatives executing the documents or otherwise creating the
Liabilities acted in excess of their authority, the Liabilities violate
applicable usury laws, the Borrower has valid defenses, claims or offsets
(whether at law, in equity or by agreement) which render the Liabilities
wholly or partially uncollectible from Borrower, the creation, performance
or repayment of the Liabilities (or the execution, delivery and
performance of any document or instrument representing part of the
Liabilities or executed in connection with the Liabilities, or given to
secure the repayment of the Liabilities) is illegal, uncollectible,
legally impossible or unenforceable, or the Credit Agreement or other
documents or instruments pertaining to the Liabilities have been forged or
otherwise are irregular or not genuine or authentic;
(e) RELEASE OF OBLIGORS. Any full or partial release of the
liability of Borrower on the Liabilities or any part thereof, of any
co-guarantors, or any other Person now or hereafter liable, whether
directly or indirectly, jointly, severally, or jointly and severally, to
pay, perform, guarantee or assure the payment of the Liabilities or any
part thereof, it being recognized, acknowledged and agreed by each
Guarantor that it may be required to pay the Liabilities in full without
assistance or support of any other Person, and Guarantor has not been
induced to enter into this Guaranty Agreement on the basis of a
contemplation, belief, understanding or agreement that other parties other
than the Borrower will be
-6-
liable to perform the Liabilities, or the Lender will look to other
parties to perform the Liabilities.
(f) OTHER SECURITY. The taking or accepting of any other security,
collateral or guaranty, or other assurance of payment, for all or any part
of the Liabilities;
(g) RELEASE OF COLLATERAL, ETC. Any release, surrender, exchange,
subordination, deterioration, waste, loss or impairment (including without
limitation negligent, willful, unreasonable or unjustifiable impairment)
of any collateral, property or security, at any time existing in
connection with, or assuring or securing payment of, all or any part of
the Liabilities;
(h) CARE AND DILIGENCE. The failure of the Lender or any other
Person to exercise diligence or reasonable care in the preservation,
protection, enforcement, sale or other handling or treatment of all or any
part of such collateral, property or security;
(i) STATUS OF LIENS. The fact that any collateral, security,
security interest or lien contemplated or intended to be given, created or
granted as security for the repayment of the Liabilities shall not be
properly perfected or created, or shall prove to be unenforceable or
subordinate to any other security interest or lien, it being recognized
and agreed by each Guarantor that it is not entering into this Guaranty
Agreement in reliance on, or in contemplation of the benefits of, the
validity, enforceability, collectibility or value of any of the collateral
for the Liabilities;
(j) PAYMENTS RESCINDED. Any payment by Borrower to the Lender is
held to constitute a preference under the bankruptcy laws, or for any
reason the Lender is required to refund such payment or pay such amount to
Borrower or someone else; or
(k) OTHER ACTIONS TAKEN OR OMITTED. Any other action taken or
omitted to be taken with respect to the Credit Agreement, the Liabilities,
or the security and collateral therefor, whether or not such action or
omission prejudices such Guarantor or increases the likelihood that such
Guarantor will be required to pay the Liabilities pursuant to the terms
hereof; it being the unambiguous and unequivocal intention of each
Guarantor that it shall be obligated to pay the Liabilities when due,
notwithstanding any occurrence, circumstance, event, action, or omission
whatsoever, whether contemplated or uncontemplated, and whether or not
otherwise or particularly described herein, except for the full and final
payment and satisfaction of the Liabilities.
-7-
Section 2.9 RIGHT OF SUBROGATION AND CONTRIBUTION. If any Guarantor makes
a payment in respect of the Liabilities, it shall be subrogated to the rights of
the Lender against the Borrower with respect to such payment and shall have the
rights of contribution against the other Guarantors as set forth in this Section
2.9; provided that such Guarantor shall not enforce its rights to any payment by
way of subrogation or by exercising its rights of contribution or reimbursement
or the right to participate in any security now or hereafter held by or for the
benefit of the Lender until the Liabilities have been paid in full. Each
Guarantor agrees that after all the Liabilities have been paid in full that if
its then current Net Payments are less than the amount of its then current
Contribution Obligation, such Guarantor shall pay to the other Guarantors an
amount (together with any payments required of the other Guarantors by this
Section 2.9) such that the Net Payments made by all Guarantors in respect of the
Liabilities shall be shared among all of the Guarantors in proportion to their
respective Contribution Percentages.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Section 3.1 BY GUARANTOR. In order to induce the Lender to accept this
Guaranty Agreement, each Guarantor represents and warrants to the Lender (which
representations and warranties will survive the creation of the Liabilities and
any extension of credit thereunder) that:
(a) BENEFIT TO GUARANTOR. Such Guarantor's guaranty pursuant to this
Guaranty Agreement reasonably may be expected to benefit, directly or
indirectly, such Guarantor.
(b) EXISTENCE. Such Guarantor is a corporation or partnership duly
organized, legally existing and in good standing under the laws of the
state of its incorporation or creation and is duly qualified to conduct
business in all jurisdictions wherein the property owned or the business
transacted by it makes such qualification necessary.
(c) POWER AND AUTHORIZATION. Such Guarantor is duly authorized and
empowered to execute, deliver and perform this Guaranty Agreement and all
action on such Guarantor's part requisite for the due execution, delivery
and performance of this Guaranty Agreement has been duly and effectively
taken.
(d) BINDING OBLIGATIONS. This Guaranty Agreement constitutes valid
and binding obligations of such Guarantor, enforceable in accordance with
its terms (except that enforcement may be subject to any applicable
bankruptcy, insolvency or similar laws generally affecting the enforcement
of creditors' rights).
-8-
(e) NO LEGAL BAR OR RESULTANT LIEN. This Guaranty Agreement will not
violate any provisions of such Guarantor's articles or certificate of
incorporation, bylaws, partnership agreement, member agreement or any
other contract, agreement, law, regulation, order, injunction, judgment,
decree or writ to which such Guarantor is subject, or result in the
creation or imposition of any Lien upon any Properties of such Guarantor.
(f) NO CONSENT. Such Guarantor's execution, delivery and performance
of this Guaranty Agreement does not require the consent or approval of any
other Person, including without limitation any regulatory authority or
governmental body of the United States or any state thereof or any
political subdivision of the United States or any state thereof.
(g) SOLVENCY. Each The Guarantor hereby represents that (i) it is
not insolvent as of the date hereof and will not be rendered insolvent as
a result of this Guaranty Agreement, (ii) it is not engaged in business or
a transaction, or about to engage in a business or a transaction, for
which any property or assets remaining with such Guarantor is unreasonably
small capital, and (iii) it does not intend to incur, or believe it will
incur, debts that will be beyond its ability to pay as such debts mature.
Section 3.2 NO REPRESENTATION BY LENDERS. Neither the Lender nor any other
Person has made any representation, warranty or statement to any Guarantor in
order to induce such Guarantor to execute this Guaranty Agreement.
ARTICLE 4
SUBORDINATION OF INDEBTEDNESS
Section 4.1 SUBORDINATION OF ALL GUARANTOR CLAIMS. As used herein, the
term "GUARANTOR CLAIMS" shall mean all debts and liabilities of Borrower to
Guarantors, whether such debts and liabilities now exist or are hereafter
incurred or arise, or whether the obligation of Borrower thereon be direct,
contingent, primary, secondary, several, joint and several, or otherwise, and
irrespective of whether such debts or liabilities be evidenced by note,
contract, open account, or otherwise, and irrespective of the person or persons
in whose favor such debts or liabilities may, at their inception, have been, or
may hereafter be created, or the manner in which they have been or may hereafter
be acquired by any Guarantor. The Guarantor Claims shall include without
limitation all rights and claims of any Guarantor against Borrower arising as a
result of subrogation or otherwise as a result of Guarantor's payment of all or
a portion of the Liabilities. Until the Liabilities shall be paid and satisfied
in full and Guarantors shall have performed all of their obligations hereunder,
Guarantors shall not receive or collect, directly or indirectly, from Borrower
or any other party any amount upon the Guarantor Claims.
-9-
Section 4.2 CLAIMS IN BANKRUPTCY. In the event of receivership,
bankruptcy, reorganization, arrangement, debtor's relief, or other insolvency
proceedings involving Borrower as debtor, the Lender shall have the right to
prove their claim in any proceeding, so as to establish its rights hereunder and
receive directly from the receiver, trustee or other court custodian, dividends
and payments which would otherwise be payable upon Guarantor Claims. Guarantors
hereby assign such dividends and payments to the Lender. Should the Lender
receive, for application upon the Liabilities, any such dividend or payment
which is otherwise payable to any Guarantor, and which, as between Borrower and
such Guarantor, shall constitute a credit upon the Guarantor Claims, then upon
payment in full of the Liabilities, such Guarantor shall become subrogated to
the rights of the Lender to the extent that such payments to the Lender on the
Guarantor Claims have contributed toward the liquidation of the Liabilities, and
such subrogation shall be with respect to that proportion of the Liabilities
which would have been unpaid if the Lender had not received dividends or
payments upon the Guarantor Claims.
Section 4.3 PAYMENTS HELD IN TRUST. In the event that notwithstanding
Sections 4.1 and 4.2 above, any Guarantor should receive any funds, payments,
claims or distributions which is prohibited by such Sections, such Guarantor
agrees to hold in trust for the Lender an amount equal to the amount of all
funds, payments, claims or distributions so received, and agrees that it shall
have absolutely no dominion over the amount of such funds, payments, claims or
distributions except to pay them promptly to the Lender, and such Guarantor
covenants promptly to pay the same to the Lender.
Section 4.4 LIENS SUBORDINATE. Guarantors agree that any liens, security
interests, judgment liens, charges or other encumbrances upon Borrower's assets
securing payment of the Guarantor Claims shall be and remain inferior and
subordinate to any liens, security interests, judgment liens, charges or other
encumbrances upon Borrower's assets securing payment of the Liabilities,
regardless of whether such encumbrances in favor of Guarantors, the Lender or
the Lender presently exist or are hereafter created or attach. Without the prior
written consent of the Lender, no Guarantor shall (a) exercise or enforce any
creditor's right it may have against the Borrower, or (b) foreclose, repossess,
sequester or otherwise take steps or institute any action or proceeding
(judicial or otherwise, including without limitation the commencement of or
joinder in any liquidation, bankruptcy, rearrangement, debtor's relief or
insolvency proceeding) to enforce any lien, mortgages, deeds of trust, security
interest, collateral rights, judgments or other encumbrances on assets of
Borrower held by such Guarantor.
Section 4.5 NOTATION OF RECORDS. All promissory notes, accounts receivable
ledgers or other evidence of the Guarantor Claims accepted by or held by any
Guarantor shall contain a specific written notice thereon that the indebtedness
evidenced thereby is subordinated under the terms of this Guaranty Agreement.
-10-
ARTICLE 5
MISCELLANEOUS
Section 5.1 SUCCESSORS AND ASSIGNS. This Guaranty Agreement is and shall
be in every particular available to the successors and assigns of the Lender and
is and shall always be fully binding upon the legal representatives, heirs,
successors and assigns of Guarantors, notwithstanding that some or all of the
monies, the repayment of which this Guaranty Agreement applies, may be actually
advanced after any bankruptcy, receivership, reorganization, death, disability
or other event affecting Guarantors.
Section 5.2 NOTICES. Any notice or demand to Guarantors under or in
connection with this Guaranty Agreement may be given and shall conclusively be
deemed and considered to have been given and received in accordance with Section
11.02 of the Credit Agreement, addressed to Guarantors at the address on the
signature page hereof or at such other address provided to the Lender in
writing.
Section 5.3 BUSINESS AND FINANCIAL INFORMATION. The Guarantors will
promptly furnish to the Lender from time to time upon request such information
regarding the business and affairs and financial condition of the Guarantor as
the Lender may reasonably request.
Section 5.4 CONSTRUCTION. This Guaranty Agreement is a contract made under
and shall be construed in accordance with and governed by the laws of the State
of Texas.
Section 5.5 INVALIDITY. In the event that any one or more of the
provisions contained in this Guaranty Agreement shall, for any reason, be held
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Guaranty
Agreement.
Section 5.6 JOINDER. It is contemplated by each Guarantor that additional
Subsidiaries of Borrower may from time to time become a Guarantor hereunder (as
required by the terms of the Credit Agreement) by their execution and delivery
to Lender of a Joinder Agreement. Each Guarantor agrees, consents and
acknowledges that upon the execution and delivery to Lender by any such
Subsidiary of a Joinder Agreement, such Subsidiary shall become a Guarantor
hereunder for all purposes, jointly and severally liable hereunder as if such
Subsidiary had originally been a party hereto, without notice to any Guarantor
or any other Person. Delivery of a Joinder Agreement to any Guarantor or any
other Person is not required for the Subsidiary of the Borrower executing and
delivering such Joinder Agreement to become a Guarantor hereunder.
Section 5.7 ENTIRE AGREEMENT. THIS WRITTEN GUARANTY AGREEMENT EMBODIES THE
ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN THE LENDER AND THE GUARANTORS AND
SUPERSEDES ALL
-11-
OTHER AGREEMENTS AND UNDERSTANDINGS BETWEEN SUCH PARTIES RELATING TO THE SUBJECT
MATTER HEREOF AND THEREOF. THIS WRITTEN GUARANTY AGREEMENT REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
[SIGNATURE PAGE FOLLOWS]
-12-
WITNESS THE EXECUTION HEREOF, as of the date first written above.
YORK AGENCY, INC.,
THE DOODY GROUP, INC.,
BRENNER CASKET COMPANY, INC.,
YORK ACQUISITION CORP. II,
THE YORK CHILDREN'S FOUNDATION
By:
Name: David F. Beck
Title: Vice President
Address: 9430 Old Katy Road
Houston, Texas 77055
Telecopier: (713) 984-5517
Telephone: (713) 984-5510
Attention: David F. Beck
S-1
EXHIBIT A
FORM OF
JOINDER AGREEMENT
This JOINDER AGREEMENT (this "JOINDER AGREEMENT") is dated effective as of
__________, 199_, and is executed and delivered by __________________ ("JOINING
GUARANTOR"), a _________ corporation, to TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, a national banking association, ("LENDER").
RECITALS
1. The York Group, Inc., a Delaware Corporation (the "BORROWER") and
Lender are parties to that certain Credit Agreement dated as of June 30, 1994,
as amended by that certain First Amendment to Credit Agreement dated as of
December 31, 1995 and Second Amendment to Credit Agreement dated as of January
31, 1997 (as the same may be further amended, restated, modified or otherwise
supplemented from time to time and in effect, the "CREDIT AGREEMENT"); and
2. Pursuant to the terms of the Credit Agreement, and as a condition
(among others) for making the Loans thereunder and issuing the Letters of Credit
pursuant thereto, Subsidiaries of the Borrower executed and delivered to Lender
a Guaranty Agreement dated as of January 31, 1997, pursuant to which, among
other things, each of such Subsidiaries jointly and severally unconditionally
guaranteed the payment and performance of all of the Liabilities. The Guaranty
Agreement as heretofore or hereafter amended, modified, supplemented, joined in
and restated from time to time, is herein called the "GUARANTY." All Persons
from time to time a party to the Guaranty (whether originally or by joinder) are
herein collectively called the "GUARANTORS" and are each a "GUARANTOR" herein.
3. Joining Guarantor is now required, among other things and subject to
certain terms and conditions, to join in the execution and delivery to Lender of
the Guaranty by its execution and delivery of this Joinder Agreement and
otherwise by such action as Lender may reasonably require.
In order to comply with such requirement, Joining Guarantor executes and
delivers this Joinder Agreement.
Now, in consideration of the credit and financial accommodations extended
and to be extended to Borrower pursuant to the Credit Agreement and the other
Loan Documents or otherwise, which Joining Guarantor hereby agrees have and
shall continue to benefit Joining Guarantor and its shareholders, directly or
indirectly, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Joining Guarantor hereby agrees,
assumes, ratifies, joins and acknowledges as follows:
A-1
AGREEMENTS
1. ASSUMPTION. Joining Guarantor hereby unconditionally, jointly and
severally, assumes liability for all covenants, warranties, representations,
indemnifications, obligations and liabilities of Guarantors now existing or
which may hereafter arise under the Guaranty and shall be liable therefor as
though Joining Guarantor had originally been a party to the Guaranty. Without
limitation of the foregoing, Joining Guarantor, as a primary obligor and not as
a surety, unconditionally, jointly and severally, guarantees unto Lender (i) the
payment of the Liabilities when due (whether at the stated maturity, by
acceleration or otherwise) in accordance with the terms of the Loan Documents,
and (ii) that Borrower will perform and observe each agreement, covenant, term
and condition in the Loan Documents to be performed or observed by Borrower and,
upon Borrower's failure to do so, will promptly perform and observe, or will
cause to be promptly performed and observed, each such agreement, covenant, term
or condition.
2. TERMS RATIFIED. Joining Guarantor hereby expressly ratifies all
guarantees, terms, covenants, representations, indemnifications, warranties,
agreements, provisions, WAIVERS, RELEASES, restrictions, duties and
responsibilities of the Guarantors under the Guaranty and all other Loan
Documents and agrees that they shall apply to Joining Guarantor as if Joining
Guarantor had executed the Guaranty as an original party thereto, and that any
reference to "Guarantors" or a "Guarantor" contained in the Guaranty, the Credit
Agreement or any other Loan Documents shall include, without limitation, Joining
Guarantor.
3. REPRESENTATIONS. Joining Guarantor (a) confirms that it has received a
copy of the Loan Documents, together with such other documents and information
as it has deemed appropriate to make its own credit analysis and decision to
enter into this Joinder Agreement; (b) agrees that it will, independently and
without reliance upon Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Loan Documents, and (c) represents that
the value of the consideration received and to be received by Joining Guarantor
is reasonably worth at least as much as the liability and obligation of such
Joining Guarantor hereunder, and that such liability and obligation may
reasonably be expected to benefit Joining Guarantor directly or indirectly. The
Board of Directors of Joining Guarantor has duly adopted resolutions certifying
that the execution, delivery and performance of this Joinder Agreement (and the
effect thereof) will benefit Joining Guarantor.
4. NO IMPAIRMENT. Nothing herein shall in any manner impair or extinguish
the Guaranty, any of the other Loan Documents or any lien or security interest
now or hereafter securing the payment of any of the Indebtedness arising
pursuant to the Loan Documents.
5. CONDITIONS. This Joinder Agreement shall not become effective until
Joining Guarantor shall have delivered to Lender each of the following:
(a) a certificate of the Secretary or any Assistant Secretary of
Joining Guarantor (or other officer or director of Joining Guarantor which
is duly authorized to keep the minute book or similar record of Joining
Guarantor), in form and substance satisfactory to Lender, dated as of the
date hereof, as to (i) the resolutions of the Board of Directors (or
similar governing body) of Joining Guarantor authorizing the execution,
delivery and performance
A-2
of this Joinder Agreement and of all instruments contemplated herein to be
executed and delivered by Joining Guarantor in connection herewith (a copy
of such resolutions to be incorporated into or attached as an exhibit to
such certificate), such certificate to state that said copy is a true and
correct copy of such resolutions and that such resolutions were duly
adopted and have not been amended, superseded, revoked or modified in any
respect and remain in full force and effect as of the date of such
certificate; (ii) the election, incumbency and signatures of the officer
or officers (or other official) of Joining Guarantor executing and
delivering this Joinder Agreement and each other instrument or document
furnished in connection herewith; (iii) Joining Guarantor's certificate or
articles of incorporation and bylaws (a copy of such documents to be
attached to the certificate), and (iv) such other documents and
information as Lender shall reasonably request; and
(b) a legal opinion from the legal counsel for Joining Guarantor in
form and substance satisfactory to Lender.
6. GOVERNING LAW. This Joinder Agreement shall be governed by and
construed in accordance with the laws of the State of Texas and the United
States of America. Joining Guarantor hereby irrevocably agrees that any legal
proceeding against Lender arising out of or in connection with this Joinder
Agreement, the Guaranty or the other Loan Documents shall be brought in the
district courts of Harris County, Texas, or in the United States District Court
for the Southern District of Texas, Houston Division.
7. SURVIVAL: PARTIES BOUND. All representations, warranties, covenants and
agreements made by or on behalf of Joining Guarantor in connection herewith
shall survive the execution and delivery of this Joinder Agreement and the other
Loan Documents, shall not be affected by any investigation made by any Person,
and shall bind Joining Guarantor and its successors, trustees, receivers and
assigns and inure to the benefit of the successors and assigns of Lender. The
term of this Joinder Agreement shall be until the termination of the Guaranty as
to all parties thereto.
8 CAPTIONS. The headings and captions appearing in this Joinder Agreement
have been included solely for convenience and shall not be considered in
construing this Joinder Agreement.
9. DEFINITIONS. Terms used herein and not defined herein, but which are
defined in the Credit Agreement or the Guaranty, shall have the meanings herein
assigned to them in the Credit Agreement or the Guaranty, respectively.
10. PARTIES BOUND. This Joinder Agreement shall bind and benefit the
parties hereto and the respective successors and assigns, except that Joining
Guarantor and Borrower may not assign their rights or obligations hereunder
without the prior written consent of Lender.
11. AMENDMENTS. ETC. No amendment or waiver of any provision of this
Joinder Agreement or any other Loan Document, nor any consent to any departure
by Joining Guarantor therefrom, shall in any event be effective unless the same
shall be agreed or consented to by Lender and Joining Guarantor, and each such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given, unless otherwise specifically provided in the
Credit Agreement.
A-3
12. DTPA WAIVER.
WAIVER OF CONSUMER RIGHTS
JOINING GUARANTOR HEREBY WAIVES ALL RIGHTS, REMEDIES, CLAIMS, DEMANDS AND
CAUSES OF ACTION UNDER, BASED UPON OR RELATED TO THE TEXAS DECEPTIVE TRADE
PRACTICES CONSUMER PROTECTION ACT AS DESCRIBED IN SECTIONS 17.41 ET SEQ. OF THE
TEXAS BUSINESS AND COMMERCE CODE (A LAW THAT GIVES CONSUMERS SPECIAL RIGHTS AND
PROTECTIONS), OTHER THAN SECTION 17.555, AS THE SAME PERTAINS OR MAY PERTAIN TO
THIS JOINDER AGREEMENT, THE CREDIT AGREEMENT, THE GUARANTY, ANY OF THE OTHER
LOAN DOCUMENTS, OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN OR THEREIN. IN
FURTHERANCE OF SAID WAIVER, JOINING GUARANTOR HEREBY REPRESENTS AND WARRANTS TO
LENDER THAT (A) JOINING GUARANTOR HAS KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND
BUSINESS MATTERS THAT ENABLE IT TO EVALUATE THE MERITS AND RISKS OF SUCH
TRANSACTIONS, (B) JOINING GUARANTOR IS REPRESENTED BY LEGAL COUNSEL OF ITS OWN
SELECTION IN CONNECTION WITH THE NEGOTIATIONS, EXECUTION AND DELIVERY OF THIS
JOINDER AGREEMENT AND THE OTHER LOAN DOCUMENTS; (C) JOINING GUARANTOR HAS A
CHOICE OTHER THAN TO ENTER INTO SAID WAIVER IN THAT THE BORROWER CAN OBTAIN THE
LOANS FROM ANOTHER INSTITUTION; (D) JOINING GUARANTOR DOES NOT CONSIDER ITSELF
TO BE IN A SIGNIFICANTLY DISPARATE BARGAINING POSITION RELATIVE TO LENDER WITH
RESPECT TO THIS JOINDER AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND (E) JOINING
GUARANTOR VOLUNTARILY CONSENTS TO THIS WAIVER.
13. WAIVER OF CLAIMS. Joining Guarantor hereby waives and releases Lender
from any and all claims or causes of action which Joining Guarantor may own,
hold or claim in respect of any of them as of the date hereof.
A-4
IN WITNESS WHEREOF, Joining Guarantor has executed this Agreement as of
the date set forth above.
______________________________________
a ________________________ corporation
By:
Name:
Title:
ATTEST:
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
By:
Name:
Title:
A-5
SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT is made as of January 31, 1997 between T.Y.G.
TRADE COMPANY, INC., a Delaware corporation (the "SUBORDINATED CREDITOR"), and
TEXAS COMMERCE BANK NATIONAL ASSOCIATION (the "LENDER").
RECITALS
A. THE YORK GROUP, INC., a corporation duly organized and validly existing
under the laws of the Commonwealth of Pennsylvania (the "BORROWER"), and the
Lender are parties to that certain Credit Agreement dated as of June 30, 1994,
as amended by that certain First Amendment to Credit Agreement dated as of
December 31, 1995, and as amended by that certain Second Amendment to Credit
Agreement (the "SECOND AMENDMENT") dated as of January 31, 1997 (as the same may
further be amended, restated, modified or otherwise supplemented from time to
time and in effect, the "CREDIT AGREEMENT"), pursuant to which the Lender has
made certain credit available to the Borrower.
B. Pursuant to the terms of the Second Amendment, the Borrower has agreed
to cause Subordinated Creditor to execute and deliver this Subordination
Agreement, and Subordinated Creditor has agreed to enter into this Subordination
Agreement.
C. Therefore, (i) in order to comply with the terms and conditions of the
Credit Agreement, (ii) to induce the Lender at any time or from time to time to
loan monies to or for the account of the Borrower in accordance with the terms
of the Credit Agreement, (iii) at the special insistence and request of the
Lender, and (iv) for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Subordinated Creditor hereby
agrees as follows:
ARTICLE I
DEFINITIONS
Section 1.01TERMS DEFINED ABOVE AND IN CREDIT AGREEMENT. As used in this
Subordination Agreement, the terms defined above shall have the meanings
respectively assigned to them. Unless otherwise defined herein, all terms
beginning with a capital letter which are defined in the Credit Agreement shall
have the meanings herein as assigned therein, unless the context hereof requires
otherwise.
Section 1.02CERTAIN DEFINITIONS. As used in this Subordination Agreement
the following terms shall have the following meanings, unless the context
otherwise requires:
"SUBORDINATED DEBT" shall mean any and all indebtedness, liabilities and
obligations of the Borrower, whether owed individually or jointly, to the
Subordinated Creditor, absolute or contingent, direct or indirect, joint,
several or independent, now outstanding or owing or which may hereafter be
existing or incurred, arising by operation of law or otherwise, due or to become
due, or held or to be held by the Subordinated Creditor, whether created
directly or acquired by assignment, as a participation, conditionally, as
collateral security from another or otherwise,
1
including indebtedness, obligations and liabilities of the Borrower to the
Subordinated Creditor as member of any partnership, syndicate, association or
other group, and whether incurred by the Borrower as principal, surety,
endorser, guarantor, accommodation party or otherwise, including, without
limiting the generality of the foregoing, all indebtedness, liabilities and
obligations of the Borrower to the Subordinated Creditor arising out of that
certain promissory note in the principal amount of $20,000,000, dated January
13, 1994 (modified as of October 7, 1995), executed by the Borrower and payable
to the order of the Subordinated Creditor ("NOTE").
"SUPERIOR INDEBTEDNESS" shall mean any and all indebtedness, liabilities
and obligations of the Borrower, whether owed individually or jointly, to the
Lender absolute or contingent, direct or indirect, joint, several or
independent, now outstanding or owing or which may hereafter be existing or
incurred, arising by operation of law or otherwise, due or to become due, or
held or to be held by the Lender whether created directly or acquired by
assignment, as a participation, conditionally, as collateral security from
another or otherwise, including indebtedness, obligations and liabilities of the
Borrower to the Lender as a member of any partnership, syndicate, association or
other group, and whether incurred by the Borrower as principal, surety,
endorser, guarantor, accommodation party or otherwise.
ARTICLE II
SUBORDINATION
Section 2.01 AGREEMENT TO SUBORDINATE. The payment of any and all
Subordinated Debt is expressly subordinated to the extent and in the manner set
forth in Sections 2.02 through 2.06 hereof to Superior Indebtedness.
Section 2.02 PAYMENT SUBORDINATION UPON DEFAULT. If for any reason any of
the Superior Indebtedness is not paid when due or is not paid on or before the
maturity thereof, or if there shall occur and be continuing any event which with
the giving of notice or lapse of time or both would constitute a Default or
Event of Default under the Credit Agreement or any Loan Document, then, unless
and until such Default or Event of Default shall have been cured to the
satisfaction of the Lender, in its sole discretion, or unless and until the
Superior Indebtedness shall be paid in full, the Subordinated creditor will not
ask for, sue for, take, demand, receive or accept from the Borrower, by set-off
or in any other manner, any payment or distribution on account of the
Subordinated Debt nor present any instrument evidencing the Subordinated Debt
for payment (other than such presentment as may be necessary to prevent
discharge of other liable parties on such instrument); provided that, so long as
no Default or Event of Default has occurred and is continuing or so long as such
payment would not result in a Default or Event of Default, the Borrower may (i)
pay interest on the Note on the dates specified therein.
Section 2.03 NO PAYMENTS WHICH CAUSE DEFAULTS. The Subordinated Creditor
will not ask for, demand, sue for, take, receive or accept from the Borrower by
set-off or in any other manner, any payment or distribution on account of the
Subordinated Debt, if the making of such payment would constitute, or would
result in the occurrence of, a Default or Event of Default under the Credit
Agreement or any Loan Document.
Section 2.04 PAYMENTS RECEIVED IN VIOLATION OF SUBORDINATION AGREEMENT. In
the event the Subordinated Creditor shall receive any payment or distribution on
account of the Subordinated
2
Debt which Subordinated Creditor is not entitled to receive under the provisions
of the foregoing Section 2.02 or Section 2.03, Subordinated Creditor will hold
any amount so received in trust for the Lender and will forthwith turn over such
payment to the Lender in the form received by Subordinated Creditor (together
with any necessary endorsement) to be applied on the Superior Indebtedness.
Section 2.05 LIENS SUBORDINATE. The Subordinated Creditor agrees that any
Liens, upon the Borrower's assets securing payment of the Subordinated Debt
shall be and remain inferior and subordinate to any Liens securing payment of
the Superior Indebtedness regardless of whether such encumbrances in favor of
Subordinated creditor or the Lender presently exist or are hereafter created or
attach. Without the prior written consent of the Lender, the Subordinated
Creditor shall not foreclose, repossess, sequester or otherwise take steps or
institute any action or proceeding (judicial or otherwise, including without
limitation the commencement of or joinder in any liquidation, bankruptcy,
rearrangement, debtor's relief or insolvency proceeding) to enforce any Lien,
collateral right, judgment or other encumbrance on the Borrower's assets held by
the Subordinated Creditor.
Section 2.06 AGREEMENT NOT TO PURSUE ACTIONS.
(a) The Subordinated Creditor will not commence any action or proceeding
against the Borrower to recover all or any part of the Subordinated Debt or join
with any other creditor, unless the Lender shall also join, in bringing any
proceedings against the Borrower under any bankruptcy, reorganization,
readjustment of debt, arrangement of debt, receivership, liquidation or
insolvency law or statute of the Federal or any state government unless and
until all Superior Indebtedness shall have been paid in full.
(b) In the event of any receivership, insolvency, bankruptcy, assignment
for the benefit of creditors, reorganization or arrangement with creditors,
adjustment of debt, whether or not pursuant to the Federal Bankruptcy Code, the
sale of all or substantially all of the assets, dissolution, liquidation, or any
other marshaling of the assets and liabilities of the Borrower, the Subordinated
Creditor will at the Lender's request file any claim, proof of claim, proof of
interest or other instrument of similar character necessary to enforce the
obligations of the Borrower in respect of the Subordinated Debt and will hold in
trust for the Lender and pay over to the Lender, in the form received (together
with any necessary endorsement), to be applied on the Superior Indebtedness, any
and all monies, dividends, distributions or other assets received in any such
proceedings on account of the Subordinated Debt unless and until the Superior
Indebtedness shall be paid in full. In the event that the Subordinated Creditor
shall fail to take any such action requested by the Lender, the Lender, may, as
attorney-in-fact for the Subordinated Creditor take such action on behalf of the
Subordinated Creditor, and the Subordinated Creditor hereby appoints the Lender
as attorney-in-fact for the Subordinated Creditor to demand, sue for, collect
and receive any and all such monies, dividends, distributions or other assets
and give acquittance therefor, and to file any claim, proof of claim, proof of
interest or other instrument of similar character and to take such other
proceedings in the Lender's own name or in the name of the Subordinated Creditor
as the Lender may deem necessary or advisable for the enforcement of this
Subordination Agreement; and the Subordinated Creditor will execute and deliver
to the Lender such other and further powers of attorney or other instruments as
the Lender may request in order to accomplish the foregoing.
3
Section 2.07 RIGHTS OF LENDER. The Lender may, at any time, and from time
to time, without the consent of or notice to the Subordinated Creditor, without
incurring responsibility to the Subordinated Creditor, without impairing or
releasing any of the Lender's rights or any of the obligations of the
Subordinated Creditor under this Subordination Agreement:
(a) Change the amount, manner, place or terms of payment, or change or
extend for any period the time of payment of, or renew or otherwise alter the
Superior Indebtedness or any instrument or agreement now or hereafter executed
evidencing, in connection with, as security for or providing for the issuance of
any of the Superior Indebtedness in any manner, or enter into or amend in any
manner any other agreement relating to the Superior Indebtedness (including
provisions restricting or further restricting payments of the Subordinated
Debt);
(b) Sell, exchange, release or otherwise deal with all or any part of the
Property, if any, by whomsoever at any time pledged or mortgaged to secure the
Superior Indebtedness;
(c) Release any Person liable in any manner for payment or collection of
the Superior Indebtedness;
(d) Exercise or refrain from exercising any rights against the Borrower or
others, including the Subordinated Creditor; and
(e) Apply any sums received by the Lender, paid by any Person and however
realized, to payment of the Superior Indebtedness in such a manner as the
Lender, in its sole discretion, may deem appropriate.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 3.01 REPRESENTATIONS OF SUBORDINATED CREDITOR. The Subordinated
Creditor represents and warrants that: (a) neither the execution nor delivery of
this Subordination Agree ment nor fulfillment of or compliance with the terms
and provisions hereof will conflict with, or result in a breach of the terms,
conditions or provisions of, or constitute a default under, any agreement or
instrument to which it is now subject; (b) it has all requisite authority to
execute, deliver and perform its obligations under this Subordination Agreement;
and (c) the outstanding principal amount of the Subordinated Debt, as of the
date hereof, is $20,000,000.
Section 3.02 COVENANTS. The Subordinated Creditor covenants that so long
as any of the Superior Indebtedness remains outstanding and until the
termination of the Commitment, the Subordinated Creditor shall: (a) cause all
Subordinated Debt to be evidenced by a note, debenture or other instrument
evidencing the Subordinated Debt; (b) at the Lender's request promptly surrender
or cause to be surrendered any such note, debenture, or instrument evidencing
the Subordinated Debt so that a statement or legend may be entered thereon to
the effect that such note, debenture, or other instrument is subordinated to the
Superior Indebtedness in favor of the Lender in the manner and to the extent set
forth in this Subordination Agreement; (c) mark the books of Subordinated
Creditor to show that the Subordinated Debt is subordinated to the Superior
Indebtedness in the manner and to the extent set forth in this Subordination
Agreement; (d) execute any and all other instruments necessary as required by
the Lender to subordinate the Subordinated
4
Debt to the Superior Indebtedness as herein provided; (e) not assign or transfer
to others any claim the Subordinated Creditor has or may have against the
Borrower as long as any of the Superior Indebtedness remains outstanding, unless
such assignment or transfer is expressly made subject to this Subordination
Agreement; (f) not ask for, sue for, take, demand, receive or accept any
principal or interest on any of the Subordinated Debt, except as set forth in
Section 2.02 hereof; (g) not amend, supplement or otherwise modify the terms of
the Subordinated Debt without the express written consent of the Lender, which
consent will not be unreasonably withheld, other than to decrease the rate of
interest therefor, decrease the amount of any installment or to extend the
maturity dates therefor; (h) not ask for, take, demand, receive or accept any
Property as collateral security for the Subordinated Debt; and (i) promptly upon
either receipt or delivery, forward to the Lender a true and complete copy of
any material notices or communications either received or delivered with respect
to the Subordinated Debt.
ARTICLE IV
MISCELLANEOUS
Section 4.01 ASSIGNMENT BY LENDER. This Subordination Agreement may be
assigned by the Lender in connection with any assignment or transfer of the
Superior Indebtedness.
Section 4.02 NOTICES. Any notice required or permitted to be given under
or in connection with this Subordination Agreement shall be given as specified
in the Credit Agreement.
Section 4.03 AMENDMENTS AND WAIVERS. The Lender's acceptance of partial or
delinquent payments or any forbearance, failure or delay by the Lender in
exercising any right, power or remedy hereunder shall not be deemed a waiver of
any obligation of the Borrower or the Subordinated Creditor, or of any right,
power or remedy of the Lender; and no partial exercise of any right, power or
remedy shall preclude any other or further exercise thereof. The Lender may
remedy any Event of Default hereunder or in connection with the Superior
Indebtedness without waiving the Event of Default so remedied. The Subordinated
Creditor hereby agrees that if the Lender agrees to a waiver of any provision
hereunder, or an exchange of or release of the Collateral, or the addition or
release of any Person, any such action shall not constitute a waiver of any of
the Lender's other rights or of the Subordinated Creditor's obligations
hereunder. This Subordination Agreement may be amended only by an instrument in
writing executed jointly by Subordinated Creditor and the Lender and may be
supplemented only by documents delivered or to be delivered in accordance with
the express terms hereof.
Section 4.04 GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
TRIAL.
(a) THIS SUBORDINATION AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS SUBORDINATION
AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF TEXAS OR OF THE UNITED
STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF TEXAS, AND, BY EXECUTION AND
DELIVERY OF THIS SUBORDINATION AGREEMENT, THE SUBORDINATED CREDITOR HEREBY
ACCEPTS AND (TO THE EXTENT PERMITTED BY LAW) IN RESPECT OF THE PROPERTY OF THE
5
SUBORDINATED CREDITOR, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE
AFORESAID COURTS. THE SUBORDINATED CREDITOR HEREBY IRREVOCABLY WAIVES ANY
OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH MAY NOW OR HEREAFTER BE
HAD TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE
JURISDICTIONS. THIS SUBMISSION TO JURISDICTION IS NONEXCLUSIVE AND DOES NOT
PRECLUDE THE LENDER FROM OBTAINING JURISDICTION OVER THE SUBORDINATED CREDITOR
IN ANY COURT OTHERWISE HAVING JURISDICTION. THE SUBORDINATED CREDITOR AND THE
LENDER HEREBY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS SUBORDINATION AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
(c) Nothing herein shall affect the right of the Lender or any holder of a
Note to serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against the Subordinated creditor in any other
jurisdiction.
Section 4.05 ENTIRE AGREEMENT. THIS WRITTEN SUBORDINATION AGREEMENT
EMBODIES THE ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN THE LENDER AND THE
SUBORDINATED CREDITOR AND SUPERSEDES ALL OTHER AGREEMENTS AND UNDERSTANDINGS
BETWEEN SUCH PARTIES RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF. THIS
WRITTEN SUBORDINATION AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
[SIGNATURES BEGIN NEXT PAGE]
6
WITNESS THE EXECUTION HEREOF, as of the date first above written.
SUBORDINATED CREDITOR:
T.Y.G. TRADE COMPANY, INC.
By:
Name:
Title:
Address
SENIOR LENDER:
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
By:
Name:
Title:
Address:
712 Main Street, 5-TCBE-78
Houston, Texas 77002
Attention: Senior Vice President, Houston
Corporate Banking
Telephone: (713) 216-5341
Facsimile: (713) 216-6004
S-1
SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT is made as of January 31, 1997 between T.Y.G.
COMPANY, INC., a Delaware corporation (the "SUBORDINATED CREDITOR"), and TEXAS
COMMERCE BANK NATIONAL ASSOCIATION (the "LENDER").
RECITALS
A. THE YORK GROUP, INC., a corporation duly organized and validly existing
under the laws of the Commonwealth of Pennsylvania (the "BORROWER"), and the
Lender are parties to that certain Credit Agreement dated as of June 30, 1994,
as amended by that certain First Amendment to Credit Agreement dated as of
December 31, 1995, and as amended by that certain Second Amendment to Credit
Agreement (the "SECOND AMENDMENT") dated as of January 31, 1997 (as the same may
further be amended, restated, modified or otherwise supplemented from time to
time and in effect, the "CREDIT AGREEMENT"), pursuant to which the Lender has
made certain credit available to the Borrower.
B. Pursuant to the terms of the Second Amendment, the Borrower has agreed
to cause Subordinated Creditor to execute and deliver this Subordination
Agreement, and Subordinated Creditor has agreed to enter into this Subordination
Agreement.
C. Therefore, (i) in order to comply with the terms and conditions of the
Credit Agreement, (ii) to induce the Lender at any time or from time to time to
loan monies to or for the account of the Borrower in accordance with the terms
of the Credit Agreement, (iii) at the special insistence and request of the
Lender, and (iv) for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Subordinated Creditor hereby
agrees as follows:
ARTICLE I
DEFINITIONS
Section 1.01 TERMS DEFINED ABOVE AND IN CREDIT AGREEMENT. As used in this
Subordination Agreement, the terms defined above shall have the meanings
respectively assigned to them. Unless otherwise defined herein, all terms
beginning with a capital letter which are defined in the Credit Agreement shall
have the meanings herein as assigned therein, unless the context hereof requires
otherwise.
Section 1.02 CERTAIN DEFINITIONS. As used in this Subordination Agreement
the following terms shall have the following meanings, unless the context
otherwise requires:
"SUBORDINATED DEBT" shall mean any and all indebtedness, liabilities and
obligations of the Borrower, whether owed individually or jointly, to the
Subordinated Creditor, absolute or contingent, direct or indirect, joint,
several or independent, now outstanding or owing or which may hereafter be
existing or incurred, arising by operation of law or otherwise, due or to become
due, or held or to be held by the Subordinated Creditor, whether created
directly or acquired by assignment, as a participation, conditionally, as
collateral security from another or otherwise,
1
including indebtedness, obligations and liabilities of the Borrower to the
Subordinated Creditor as member of any partnership, syndicate, association or
other group, and whether incurred by the Borrower as principal, surety,
endorser, guarantor, accommodation party or otherwise, including, without
limiting the generality of the foregoing, all indebtedness, liabilities and
obligations of the Borrower to the Subordinated Creditor arising out of the
following described promissory notes (i) that certain promissory note in the
principal amount of $6,980,000, dated December 23, 1992, executed by the
Borrower and payable to the order of the Subordinated Creditor and (ii) that
certain promissory note in the principal amount of $31,000,000, dated January
13, 1994 (modified as of July 9, 1996), executed by the Borrower and payable to
the order of the Subordinated Creditor ("NOTES").
"SUPERIOR INDEBTEDNESS" shall mean any and all indebtedness, liabilities
and obligations of the Borrower, whether owed individually or jointly, to the
Lender absolute or contingent, direct or indirect, joint, several or
independent, now outstanding or owing or which may hereafter be existing or
incurred, arising by operation of law or otherwise, due or to become due, or
held or to be held by the Lender whether created directly or acquired by
assignment, as a participation, conditionally, as collateral security from
another or otherwise, including indebtedness, obligations and liabilities of the
Borrower to the Lender as a member of any partnership, syndicate, association or
other group, and whether incurred by the Borrower as principal, surety,
endorser, guarantor, accommodation party or otherwise.
ARTICLE II
SUBORDINATION
Section 2.01 AGREEMENT TO SUBORDINATE. The payment of any and all
Subordinated Debt is expressly subordinated to the extent and in the manner set
forth in Sections 2.02 through 2.06 hereof to Superior Indebtedness.
Section 2.02 PAYMENT SUBORDINATION UPON DEFAULT. If for any reason any of
the Superior Indebtedness is not paid when due or is not paid on or before the
maturity thereof, or if there shall occur and be continuing any event which with
the giving of notice or lapse of time or both would constitute a Default or
Event of Default under the Credit Agreement or any Loan Document, then, unless
and until such Default or Event of Default shall have been cured to the
satisfaction of the Lender, in its sole discretion, or unless and until the
Superior Indebtedness shall be paid in full, the Subordinated creditor will not
ask for, sue for, take, demand, receive or accept from the Bor rower, by set-off
or in any other manner, any payment or distribution on account of the
Subordinated Debt nor present any instrument evidencing the Subordinated Debt
for payment (other than such presentment as may be necessary to prevent
discharge of other liable parties on such instrument); provided that, so long as
no Default or Event of Default has occurred and is continuing or so long as such
payment would not result in a Default or Event of Default, the Borrower may (i)
pay interest on the Notes on the dates specified therein and (ii) repay the
outstanding principal amount of the Subordinated Debt so long the aggregate
amount of all such repayments do not result in the aggregate principal amount of
the Subordinated Debt being less than $35,480,000.
Section 2.03 NO PAYMENTS WHICH CAUSE DEFAULTS. The Subordinated Creditor
will not ask for, demand, sue for, take, receive or accept from the Borrower by
set-off or in any other
2
manner, any payment or distribution on account of the Subordinated Debt, if the
making of such payment would constitute, or would result in the occurrence of, a
Default or Event of Default under the Credit Agreement or any Loan Document.
Section 2.04 PAYMENTS RECEIVED IN VIOLATION OF SUBORDINATION AGREEMENT. In
the event the Subordinated Creditor shall receive any payment or distribution on
account of the Subordinated Debt which Subordinated Creditor is not entitled to
receive under the provisions of the foregoing Section 2.02 or Section 2.03,
Subordinated Creditor will hold any amount so received in trust for the Lender
and will forthwith turn over such payment to the Lender in the form received by
Subordinated Creditor (together with any necessary endorsement) to be applied on
the Superior Indebtedness.
Section 2.05 LIENS SUBORDINATE. The Subordinated Creditor agrees that any
Liens, upon the Borrower's assets securing payment of the Subordinated Debt
shall be and remain inferior and subordinate to any Liens securing payment of
the Superior Indebtedness regardless of whether such encumbrances in favor of
Subordinated creditor or the Lender presently exist or are hereafter created or
attach. Without the prior written consent of the Lender, the Subordinated
Creditor shall not foreclose, repossess, sequester or otherwise take steps or
institute any action or proceeding (judicial or otherwise, including without
limitation the commencement of or joinder in any liquidation, bankruptcy,
rearrangement, debtor's relief or insolvency proceeding) to enforce any Lien,
collateral right, judgment or other encumbrance on the Borrower's assets held by
the Subordinated Creditor.
Section 2.06 AGREEMENT NOT TO PURSUE ACTIONS.
(a) The Subordinated Creditor will not commence any action or proceeding
against the Borrower to recover all or any part of the Subordinated Debt or join
with any other creditor, unless the Lender shall also join, in bringing any
proceedings against the Borrower under any bankruptcy, reorganization,
readjustment of debt, arrangement of debt, receivership, liquidation or
insolvency law or statute of the Federal or any state government unless and
until all Superior Indebtedness shall have been paid in full.
(b) In the event of any receivership, insolvency, bankruptcy, assignment
for the benefit of creditors, reorganization or arrangement with creditors,
adjustment of debt, whether or not pursuant to the Federal Bankruptcy Code, the
sale of all or substantially all of the assets, dissolution, liquidation, or any
other marshaling of the assets and liabilities of the Borrower, the Subordinated
Creditor will at the Lender's request file any claim, proof of claim, proof of
interest or other instrument of similar character necessary to enforce the
obligations of the Borrower in respect of the Subordinated Debt and will hold in
trust for the Lender and pay over to the Lender, in the form received (together
with any necessary endorsement), to be applied on the Superior Indebtedness, any
and all monies, dividends, distributions or other assets received in any such
proceedings on account of the Subordinated Debt unless and until the Superior
Indebtedness shall be paid in full. In the event that the Subordinated Creditor
shall fail to take any such action requested by the Lender, the Lender, may, as
attorney-in-fact for the Subordinated Creditor take such action on behalf of the
Subordinated Creditor, and the Subordinated Creditor hereby appoints the Lender
as attorney-in-fact for the Subordinated Creditor to demand, sue for, collect
and receive any and all such monies, dividends, distributions or other assets
and give acquittance
3
therefor, and to file any claim, proof of claim, proof of interest or other
instrument of similar character and to take such other proceedings in the
Lender's own name or in the name of the Subordinated Creditor as the Lender may
deem necessary or advisable for the enforcement of this Subordination Agreement;
and the Subordinated Creditor will execute and deliver to the Lender such other
and further powers of attorney or other instruments as the Lender may request in
order to accomplish the foregoing.
Section 2.07 RIGHTS OF LENDER. The Lender may, at any time, and from time
to time, without the consent of or notice to the Subordinated Creditor, without
incurring responsibility to the Subordinated Creditor, without impairing or
releasing any of the Lender's rights or any of the obligations of the
Subordinated Creditor under this Subordination Agreement:
(a) Change the amount, manner, place or terms of payment, or change or
extend for any period the time of payment of, or renew or otherwise alter the
Superior Indebtedness or any instrument or agreement now or hereafter executed
evidencing, in connection with, as security for or providing for the issuance of
any of the Superior Indebtedness in any manner, or enter into or amend in any
manner any other agreement relating to the Superior Indebtedness (including
provisions restricting or further restricting payments of the Subordinated
Debt);
(b) Sell, exchange, release or otherwise deal with all or any part of the
Property, if any, by whomsoever at any time pledged or mortgaged to secure the
Superior Indebtedness;
(c) Release any Person liable in any manner for payment or collection of
the Superior Indebtedness;
(d) Exercise or refrain from exercising any rights against the Borrower or
others, including the Subordinated Creditor; and
(e) Apply any sums received by the Lender, paid by any Person and however
realized, to payment of the Superior Indebtedness in such a manner as the
Lender, in its sole discretion, may deem appropriate.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 3.01 REPRESENTATIONS OF SUBORDINATED CREDITOR. The Subordinated
Creditor represents and warrants that: (a) neither the execution nor delivery of
this Subordination Agree ment nor fulfillment of or compliance with the terms
and provisions hereof will conflict with, or result in a breach of the terms,
conditions or provisions of, or constitute a default under, any agreement or
instrument to which it is now subject; (b) it has all requisite authority to
execute, deliver and perform its obligations under this Subordination Agreement;
and (c) the outstanding principal amount of the Subordinated Debt, as of the
date hereof, is [$37,980,000].
Section 3.02 COVENANTS. The Subordinated Creditor covenants that so long
as any of the Superior Indebtedness remains outstanding and until the
termination of the Commitment, the Subordinated Creditor shall: (a) cause all
Subordinated Debt to be evidenced by a note, debenture or other instrument
evidencing the Subordinated Debt; (b) at the Lender's request promptly
4
surrender or cause to be surrendered any such note, debenture, or instrument
evidencing the Subordinated Debt so that a statement or legend may be entered
thereon to the effect that such note, debenture, or other instrument is
subordinated to the Superior Indebtedness in favor of the Lender in the manner
and to the extent set forth in this Subordination Agreement; (c) mark the books
of Subordinated Creditor to show that the Subordinated Debt is subordinated to
the Superior Indebtedness in the manner and to the extent set forth in this
Subordination Agreement; (d) execute any and all other instruments necessary as
required by the Lender to subordinate the Subordinated Debt to the Superior
Indebtedness as herein provided; (e) not assign or transfer to others any claim
the Subordinated Creditor has or may have against the Borrower as long as any of
the Superior Indebtedness remains outstanding, unless such assignment or
transfer is expressly made subject to this Subordination Agreement; (f) not ask
for, sue for, take, demand, receive or accept any principal or interest on any
of the Subordinated Debt, except as set forth in Section 2.02 hereof; (g) not
amend, supplement or otherwise modify the terms of the Subordinated Debt without
the express written consent of the Lender, which consent will not be
unreasonably withheld, other than to decrease the rate of interest therefor,
decrease the amount of any installment or to extend the maturity dates therefor;
(h) not ask for, take, demand, receive or accept any Property as collateral
security for the Subordinated Debt; and (i) promptly upon either receipt or
delivery, forward to the Lender a true and complete copy of any material notices
or communications either received or delivered with respect to the Subordinated
Debt.
ARTICLE IV
MISCELLANEOUS
Section 4.01 ASSIGNMENT BY LENDER. This Subordination Agreement may be
assigned by the Lender in connection with any assignment or transfer of the
Superior Indebtedness.
Section 4.02 NOTICES. Any notice required or permitted to be given under
or in connection with this Subordination Agreement shall be given as specified
in the Credit Agreement.
Section 4.03 AMENDMENTS AND WAIVERS. The Lender's acceptance of partial or
delinquent payments or any forbearance, failure or delay by the Lender in
exercising any right, power or remedy hereunder shall not be deemed a waiver of
any obligation of the Borrower or the Subordinated Creditor, or of any right,
power or remedy of the Lender; and no partial exercise of any right, power or
remedy shall preclude any other or further exercise thereof. The Lender may
remedy any Event of Default hereunder or in connection with the Superior
Indebtedness without waiving the Event of Default so remedied. The Subordinated
Creditor hereby agrees that if the Lender agrees to a waiver of any provision
hereunder, or an exchange of or release of the Collateral, or the addition or
release of any Person, any such action shall not constitute a waiver of any of
the Lender's other rights or of the Subordinated Creditor's obligations
hereunder. This Subordination Agreement may be amended only by an instrument in
writing executed jointly by Subordinated Creditor and the Lender and may be
supplemented only by documents delivered or to be delivered in accordance with
the express terms hereof.
5
Section 4.04 GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
TRIAL.
(a) THIS SUBORDINATION AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS SUBORDINATION
AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF TEXAS OR OF THE UNITED
STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF TEXAS, AND, BY EXECUTION AND
DELIVERY OF THIS SUBORDINATION AGREEMENT, THE SUBORDINATED CREDITOR HEREBY
ACCEPTS AND (TO THE EXTENT PERMITTED BY LAW) IN RESPECT OF THE PROPERTY OF THE
SUBORDINATED CREDITOR, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE
AFORESAID COURTS. THE SUBORDINATED CREDITOR HEREBY IRREVOCABLY WAIVES ANY
OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH MAY NOW OR HEREAFTER BE
HAD TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE
JURISDICTIONS. THIS SUBMISSION TO JURISDICTION IS NONEXCLUSIVE AND DOES NOT
PRECLUDE THE LENDER FROM OBTAINING JURISDICTION OVER THE SUBORDINATED CREDITOR
IN ANY COURT OTHERWISE HAVING JURISDICTION. THE SUBORDINATED CREDITOR AND THE
LENDER HEREBY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS SUBORDINATION AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
(c) Nothing herein shall affect the right of the Lender or any holder of a
Note to serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against the Subordinated creditor in any other
jurisdiction.
Section 4.05 ENTIRE AGREEMENT. THIS WRITTEN SUBORDINATION AGREEMENT
EMBODIES THE ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN THE LENDER AND THE
SUBORDINATED CREDITOR AND SUPERSEDES ALL OTHER AGREEMENTS AND UNDERSTANDINGS
BETWEEN SUCH PARTIES RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF. THIS
WRITTEN SUBORDINATION AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
[SIGNATURES BEGIN NEXT PAGE]
6
WITNESS THE EXECUTION HEREOF, as of the date first above written.
SUBORDINATED CREDITOR:
T.Y.G. COMPANY, INC.
By:
Name:
Title:
Address:
SENIOR LENDER:
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
By:
Name:
Title:
Address:
712 Main Street, 5-TCBE-78
Houston, Texas 77002
Attention: Senior Vice President, H uston
Corporate Banking
Telephone: (713) 216-5341
Facsimile: (713) 216-6004
S-1