UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 19, 2020

 

 

STONEMOR INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-39172   80-0103152

(State or other jurisdiction

of incorporation)

 

(Commission

File No.)

 

(IRS Employer

Identification No.)

3600 Horizon Boulevard
Trevose, Pennsylvania
  19053
(Address of principal executive offices)   (Zip Code)

(215) 826-2800

Registrant’s telephone number, including area code

Not Applicable

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class

 

Trading

Symbol(s)

 

Name of each exchange

on which registered

Common Stock, $0.01 par value per share   STON   New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


Item 1.01 Entry Into a Material Definitive Agreement.

As previously reported, StoneMor Inc. (the “Company”) is a party to a Nomination and Director Voting Agreement dated as of September 17, 2018 (as amended on February 4, 2019, June 27, 2019 and November 3, 2020, the “DVA”) with Axar Capital Management, LP (“Axar”), certain funds and managed accounts for which it serves as investment manager and its general partner, Axar GP, LLC (collectively, the “Axar Entities”), StoneMor GP Holdings LLC and Robert B. Hellman, Jr., as trustee under the Voting and Investment Trust Agreement for the benefit of American Cemeteries Infrastructure Investors LLC (“ACII” and, collectively with StoneMor GP Holdings LLC, the “ACII Entities”). Under the DVA, and subject to certain conditions and exceptions, the Axar Entities and their affiliates are prohibited from acquiring additional shares of the Company’s Common Stock. On November 19, 2020, the Axar Entities, the ACII Entities and the Company entered into a letter agreement (the “Waiver”) pursuant to which the Axar Entities were permitted to acquire up to 10,319,369 additional shares of the Company’s Common Stock from certain investment funds in a single privately negotiated transaction and not in the open market. The terms of the Waiver were approved by both the Company’s Board of Directors and its Compensation, Nominating and Governance Committee. The waiver was subject to certain conditions, including the requirement that the Company, the Axar Entities and the ACII Entities have entered into a further amendment to the DVA to extend the standstill period applicable to the Axar Entities thereunder from December 31, 2022 to December 31, 2023. In addition, Axar agreed that if the additional shares were purchased:

 

   

It would vote or direct the voting of all shares of the Company’s Common Stock it beneficially owns in favor of amendments to Article VIII of the Company’s Certificate of Incorporation (the “Charter”) relating to amendments of the Company’s Bylaws and Article X of the Charter with respect to any amendment or repeal of Article V, Article VI(c), Article VII(a)-(d), Article VIII, Article X or Article XI of the Charter to increase the required stockholder approval required thereunder from “at least sixty six and two thirds percent (66 2/3%)” to “at least seventy-five percent (75%)” (collectively, the “Supermajority Provisions”); and

 

   

Pending the effectiveness of such amendment to Article VIII and Article X of the Charter, Axar would not vote or direct the voting of more than 72,804,944 shares of the Company’s Common Stock in favor of any proposal to which the Supermajority Provisions are applicable unless such proposal has been approved by the Company’s Board of Directors, including a majority of the directors then serving thereon who are not “Axar Designated Directors” under the DVA.

As contemplated by the Waiver, on November 20, 2020, the Company, the Axar Entities and the ACII Entities entered into the Fourth Amendment to the DVA (the “Fourth Amendment”) pursuant to which the standstill period applicable to the Axar Entities thereunder was extended from December 31, 2022 to December 31, 2023.

The foregoing summary is not intended to be complete and is qualified in its entirety by reference to the Waiver and the Fourth Amendment, copies of which are filed as Exhibit 2.1 and Exhibit 2.2, respectively, to this current Report on Form 8-K and are incorporated by reference herein.

Item 9.01 Financial Statements and Exhibits.

 

  (d)

Exhibits:

 

Exhibit
Number

  

Description

2.1    Letter Agreement dated as of November  19, 2020 by and among StoneMor GP LLC, Axar Capital Management, LP, Axar GP, LLC, Axar Master Fund, Ltd., StoneMor GP Holdings, LLC and Robert B. Hellman, Jr., as trustee under the Voting and Investment Trust Agreement for the benefit of American Cemeteries Infrastructure Investors LLC.
2.2    Fourth Amendment to Nomination and Director Voting Agreement dated as of November 20. 2020 by and among StoneMor GP LLC, Axar Capital Management, LP, Axar GP, LLC, Axar Master Fund, Ltd., StoneMor GP Holdings, LLC and Robert B. Hellman, Jr., as trustee under the Voting and Investment Trust Agreement for the benefit of American Cemeteries Infrastructure Investors LLC.


SIGNATURES

Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: November 23, 2020     STONEMOR INC.
    By:  

/s/ Austin K. So

      Austin K. So
      Senior Vice President, Chief Legal Officer and Secretary

Exhibit 2.1

AXAR CAPITAL MANAGEMENT, LP

1330 Avenue of the Americas, 30th Floor

New York, New York 10019

November 19, 2020

STRICTLY CONFIDENTIAL

VIA EMAIL

StoneMor Inc.

3600 Horizon Boulevard

Trevose, Pennsylvania 19053

Attention: General Counsel

Email: Aso@StoneMor.com

With a copy to:

Duane Morris LLP

30 South 17th Street

Philadelphia, Pennsylvania 19103

Attention: Thomas G. Spencer

Email: Tgspencer@duanemorris.com

StoneMor GP Holdings, LLC

Robert B. Hellman, Jr.

c/o American Cemeteries Infrastructure Investors LLC

950 Tower Lane, Suite 800

Foster City, California 94404

Attention: Robert B. Hellman, Jr.

Email: Bhellman@aimlp.com

Re: Waiver and Consent

Reference is made to that certain Nomination and Director Voting Agreement, dated as of September 27, 2018 (as amended by the First Amendment, dated as of February 4, 2019, the Second Amendment, dated as of June 27, 2019 and the Third Amendment, dated as of November 3, 2020, the “Agreement”), by and among StoneMor Inc., a Delaware corporation as successor to StoneMor GP LLC (the “Company”), Axar Capital Management, LP, a Delaware limited partnership (“Axar”), Axar GP LLC, a Delaware limited liability company (“Axar GP”), Axar Master Fund, Ltd., a Cayman Islands exempted limited partnership (together with Axar and Axar GP, the “Axar Entities”), StoneMor GP Holdings, LLC, a Delaware limited liability company (“GP Holdings”), and Robert B. Hellman, Jr., as trustee under the Voting and Investor Trust Agreement for the benefit of American Cemeteries Infrastructure Investors LLC (“ACII,” and together with GP Holdings, the “ACII Entities”). The Company, the Axar Entities and the ACII Entities are referred to herein as the “Parties” and each as a “Party.” Capitalized terms used but not defined herein shall have the meaning assigned to such term in the Agreement.


Pursuant to Section 3(a)(ii) of the Agreement, during the Standstill Period, provided that the Company is not in breach of its obligations under the Agreement (including Section 1 thereof), each of the Axar Entities shall not, and shall cause its controlled Affiliates not to, directly or indirectly, acquire or propose to acquire additional Common Stock or other securities of the Company or any securities of its subsidiaries, subject to certain exceptions. As of the date hereof, the Axar Entities own 61.79% of the outstanding Common Stock of the Company as a result of subsequent purchases of Common Stock approved by the Board of Directors of the Company (the “Board”).

Each of the Parties agrees to permanently and irrevocably waive the requirement that the Axar Entities and their Affiliates hereafter comply with Section 3(a)(ii) of the Agreement with respect to the acquisition of up to 10,319,369 additional shares of Common Stock (the “Additional Shares”) from certain investment funds previously identified to the Board in a single privately negotiated transaction (and not in open market purchases). The Company hereby represents and warrants to the other Parties hereto that the Board has duly approved the purchase by one or more of the Axar Entities of the Additional Shares, this Waiver and Consent and the waiver in the foregoing sentence, subject to the following conditions:

 

  1.

The investment manager of such investment funds from which the Axar Entities would buy the Additional Shares agreeing to terminate or causing to be terminated, effective upon the consummation of such purchase, that certain Consulting Agreement dated as of September 15, 2019 between the Company and an affiliate of such investment manager;

 

  2.

The purchase of the Additional Shares shall have been consummated on or before December 1, 2020. If the purchase of the Additional Shares is not consummated on or before December 1, 2020, this Waiver and Consent shall have no force and effect; and

 

  3.

The Parties shall have entered into an amendment to the Agreement (the “Amendment”) to provide that Section 3(d)(i)(a) of the Agreement shall be amended to read “December 31, 2023.”

If the purchase of the Additional Shares is consummated, then from and after the date of such consummation, Axar agrees that:

 

   

It will vote or direct the voting of all shares of the Company’s Common Stock that it beneficially owns in favor of a proposal to amend (a) Article VIII of the Company’s Certificate of Incorporation, as amended (the “Charter”), relating to amendments of the Company’s Bylaws to increase the required stockholder approval thereunder from “at least sixty six and two thirds percent (66 2/3%)” to “at least seventy-five percent (75%)” and (b) Article X of the Charter relating to amendments of the Charter to increase the required stockholder approval thereunder from “at least sixty six and two thirds percent (66 2/3%)” to “at least seventy-five percent (75%)” solely with respect to any amendment or repeal of Article V, Article VI(c), Article VII(a)-(d), Article VIII, Article X or Article XI of the Charter (collectively, the “Supermajority Provisions”), or the adoption of a provision inconsistent with the Supermajority Provisions; and


   

Pending the effectiveness of such amendment to Article VIII and Article X of the Charter, Axar shall not vote or direct the voting of more than 72,804,944 shares of the Common Stock in favor of any proposal to which the Supermajority Provisions are applicable unless such proposal has been approved by the Board, including a majority of the directors then serving on the Board who are not Axar Designated Directors under the Agreement.

This Waiver and Consent shall be governed by and construed in accordance with the laws of the State of Delaware without reference to the conflict of laws principles thereof. Except as modified by the provisions hereof, the Agreement remains unmodified and in full force and effect in accordance with its terms. This Waiver and Consent may be executed in any number of counterparts, which together shall constitute this Waiver and Consent.

[Signature Page Follows]


Very truly yours,
AXAR CAPITAL MANAGEMENT, LP
By:   Axar GP LLC, its general partner
By:  

/s/ Andrew M. Axelrod

Name: Andrew Axelrod
Title: Sole Member
AXAR GP LLC
By:  

/s/ Andrew M. Axelrod

Name: Andrew Axelrod
Title: Sole Member
AXAR MASTER FUND, LTD.
By:  

/s/ Andrew M. Axelrod

Name: Andrew Axelrod
Title: Authorized Signatory

[Signature Page to Waiver and Consent]


Acknowledged and agreed as of the date first written above by:
STONEMOR INC.
By:  

/s/ Joseph M. Redling

  Name: Joseph Redling
  Title: President and Chief Executive Officer
STONEMOR GP HOLDINGS, LLC
By:  

/s/ Robert B. Hellman, Jr.

Name:   Robert B. Hellman, Jr.
Title:   Authorized Person
ROBERT B. HELLMAN, JR., AS TRUSTEE UNDER THE VOTING AND INVESTMENT TRUST AGREEMENT FOR THE BENEFIT OF AMERICAN CEMETERIES INFRASTRUCTURE INVESTORS, LLC
By:  

/s/ Robert B. Hellman, Jr.

  Name: Robert B. Hellman, Jr.
  Title: Trustee

 

cc:  
  Schulte Roth & Zabel LLP
  919 Third Avenue
  New York, New York 10022
  Attention: Stuart Freedman
  Email: Stuart.Freedman@srz.com

[Signature Page to Waiver and Consent]

Exhibit 2.2

FOURTH AMENDMENT TO NOMINATION

AND DIRECTOR VOTING AGREEMENT

THIS FOURTH AMENDMENT TO NOMINATION AND DIRECTOR VOTING AGREEMENT (this “Amendment”) is entered into on November 20, 2020 (the “Execution Date”), by and among StoneMor Inc., a Delaware corporation (the “Company”), Axar Capital Management, LP, a Delaware limited partnership (“Axar”), Axar GP LLC, a Delaware limited liability company (“Axar GP”), Axar Master Fund, Ltd., a Cayman Islands exempted limited partnership (together with Axar and Axar GP, the “Axar Entities”), StoneMor GP Holdings, LLC, a Delaware limited liability company (“GP Holdings”), and Robert B. Hellman, Jr., as trustee under the Voting and Investment Trust Agreement for the benefit of American Cemeteries Infrastructure Investors LLC (“ACII,” and, together with GP Holdings, the “ACII Entities” and, collectively with the Axar Entities, the “Principal Stockholders”). The Principal Stockholders and the Company are referred to herein as the “Parties” and each as a “Party.”

RECITALS

1. The Parties entered into that certain Nomination and Director Voting Agreement on September 27, 2018, as amended by that certain First Amendment to Nomination and Director Voting Agreement dated as of February 4, 2019, that Second Amendment to Nomination and Director Voting Agreement dated as of June 27, 2019 and that Third Amendment to Nomination and Director Voting Agreement dated as of November 3, 2020 (collectively, the “Agreement”).

2. Pursuant to Section 5(e)(ii) of the Agreement, the Agreement may be amended in writing by the Parties.

3. The Parties desire to further amend the Agreement as set forth herein.

NOW, THEREFORE, in consideration of the mutual promises hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

ARTICLE I

AMENDMENT

1.1 Standstill. Section 3(d)(i)(a) of the Agreement is hereby amended to read “December 31, 2023,”.

ARTICLE II

MISCELLANEOUS PROVISIONS

2.1 Certain Defined Terms. Capitalized terms used in this Amendment that are not defined in the text of the body of this Amendment shall have the meanings given such terms in the Agreement.


2.2 No Other Amendments. All provisions of the Agreement, unless amended by this Amendment, shall remain unchanged.

2.3 Counterparts. This Amendment may be executed simultaneously in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

2.4 Miscellaneous. Section 5 of the Agreement shall apply to this Amendment mutatis mutandis.

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the Parties have caused this Amendment to be duly executed as of the day and year first above written.

 

STONEMOR INC.       STONEMOR GP HOLDINGS, LLC
By:   

/s/ Joseph M. Redling

      By:   

/s/ Robert B. Hellman, Jr.

Name: Joseph M. Redling       Name: Robert B. Hellman, Jr.
Title: President and Chief Executive Officer       Title: Authorized Person
AXAR CAPITAL MANAGEMENT, LP       AXAR GP LLC
By:    Axar GP LLC, its general partner         
By:   

/s/ Andrew M. Axelrod

      By:   

/s/ Andrew M. Axelrod

Name: Andrew Axelrod       Name: Andrew Axelrod
Title: Sole Member       Title: Sole Member
AXAR MASTER FUND, LTD.       ROBERT B. HELLMAN, JR., AS
         TRUSTEE UNDER THE VOTING AND
         INVESTMENT TRUST AGREEMENT
         FOR THE BENEFIT OF AMERICAN
By:   

/s/ Andrew M. Axelrod

      CEMETERIES INFRASTRUCTURE
Name: Andrew Axelrod       INVESTORS, LLC
Title: Authorized Signatory                                          
         By:   

/s/ Robert B. Hellman, Jr.

         Name: Robert B. Hellman, Jr.
         Title: Trustee

 

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