SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
FORM 10-Q
(MARK ONE) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF
[X] THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ______ TO ________
COMMISSION FILE NUMBER: 1-11961
-------------------------
CARRIAGE SERVICES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 76-0423828
(State or other jurisdiction
of incorporation or organization) (I.R.S. Employer Identification No.)
1300 POST OAK BLVD., SUITE 1500, HOUSTON, TX 77056
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (281) 556-7400
------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No[ ]
The number of shares of the Registrant's Class A Common Stock, $.01 par value
per share, and Class B Common Stock, $.01 par value per share, outstanding as of
October 29, 1999 was 13,702,134 and 2,239,989 respectively.
<PAGE>
CARRIAGE SERVICES, INC.
INDEX
PAGE
----
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
Consolidated Balance Sheets as of
December 31, 1998 and September 30, 1999 3
Consolidated Statements of Operations for the
Three Months Ended September 30, 1998 and 1999 and the
Nine Months Ended September 30, 1998 and 1999 4
Consolidated Statements of Cash Flows for the
Nine Months Ended September 30, 1998 and 1999 5
Notes to Consolidated Financial Statements 6
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 10
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES OF MARKET RISK 16
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION 17
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 18
Signature 20
2
<PAGE>
CARRIAGE SERVICES, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1998 1999
----------- ------------
(UNAUDITED)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents ...................................................... $ 2,892 $ 3,877
Accounts receivable --
Trade, net of allowance for doubtful accounts of $3,435 in
1998 and $ 5,967 in 1999 .............................................. 17,835 22,054
Other ...................................................................... 3,696 5,000
-------- --------
21,531 27,054
Inventories and other current assets ........................................... 7,457 9,878
-------- --------
Total current assets ................................................. 31,880 40,809
Property, plant and equipment, at cost, net of accumulated
depreciation of $11,363 in 1999 .................................................. 131,144 151,688
Cemetery property, at cost .......................................................... 63,409 66,426
Names and reputations, net of accumulated amortization of $8,428
in 1998 and $12,693 in 1999 ...................................................... 211,183 225,427
Deferred charges and other noncurrent assets ........................................ 28,528 42,875
-------- --------
$466,144 $527,225
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ............................................................... $ 4,754 $ 5,567
Accrued liabilities ............................................................ 9,168 13,173
Current portion of long-term debt and obligations under capital
leases ...................................................................... 6,394 4,311
-------- --------
Total current liabilities ............................................. 20,316 23,051
Preneed liabilities, net ............................................................. 11,106 9,082
Long-term debt, net of current portion ............................................... 212,972 171,043
Obligations under capital leases, net of current portion ............................. 3,209 3,313
Deferred income taxes ................................................................ 16,474 19,207
-------- --------
Total liabilities ..................................................... 264,077 225,696
-------- --------
Commitments and contingencies
Redeemable preferred stock ........................................................... 1,673 1,172
Company-obligated mandatorily redeemable
convertible preferred securities of Carriage
Services Capital Trust .......................................................... -- 89,881
Stockholders' equity:
Class A Common Stock, $.01 par value; 40,000,000 shares
authorized; 12,028,000 and 12,383,000 issued and outstanding
at December 31, 1998 and September 30, 1999, respectively..................... 120 124
Class B Common Stock, $.01 par value; 10,000,000 shares
authorized; 3,779,000 and 3,525,000 issued and outstanding
at December 31, 1998 and September 30, 1999, respectively..................... 38 35
Contributed capital ............................................................ 194,911 196,097
Retained earnings .............................................................. 5,325 14,220
-------- --------
Total stockholders' equity ............................................ 200,394 210,476
-------- --------
$466,144 $527,225
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
CARRIAGE SERVICES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED AND IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
-------------------- --------------------
1998 1999 1998 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues, net
Funeral .................................................. $ 22,344 $ 29,083 $ 65,956 $ 93,411
Cemetery ................................................. 6,276 11,387 15,995 31,400
--------- --------- --------- ---------
28,620 40,470 81,951 124,811
Costs and expenses
Funeral .................................................. 16,608 21,991 46,934 66,161
Cemetery ................................................. 4,699 8,440 11,920 23,319
--------- --------- --------- ---------
21,307 30,431 58,854 89,480
--------- --------- --------- ---------
Gross profit ............................................. 7,313 10,039 23,097 35,331
General and administrative expenses .......................... 2,041 2,202 5,661 6,915
--------- --------- --------- ---------
Operating income ......................................... 5,272 7,837 17,436 28,416
Interest expense, net ........................................ 2,360 3,145 6,511 10,105
Financing cost of company-obligated securities of
Carriage Services Capital Trust ........................... -- 1,641 -- 2,151
--------- --------- --------- ---------
Total interest and financing costs ..................... 2,360 4,786 6,511 12,256
Income before income taxes and
extraordinary item .................................... 2,912 3,051 10,925 16,160
Provision for income taxes ................................... 1,269 1,312 4,833 6,949
--------- --------- --------- ---------
Income before extraordinary item ......................... 1,643 1,739 6,092 9,211
Extraordinary item:
Loss on early extinguishment of debt, net of
income tax benefit of $151 .......................... -- -- -- (200)
--------- --------- --------- ---------
Net income ................................................... 1,643 1,739 6,092 9,011
Preferred stock dividend requirements ........................ 153 25 454 78
--------- --------- --------- ---------
Net income available to common stockholders .............. $ 1,490 $ 1,714 $ 5,638 $ 8,933
========= ========= ========= =========
Basic earnings per share:
Net income before extraordinary item ..................... $ .10 $ 0.11 $ .44 $ 0.58
Extraordinary item ....................................... $ -- $ -- $ -- $ (0.01)
--------- --------- --------- ---------
Net income ............................................... $ .10 $ 0.11 $ .44 $ 0.57
--------- --------- --------- ---------
Diluted earnings per share:
Net income before extraordinary item ..................... $ .10 $ 0.11 $ .43 $ 0.57
Extraordinary item ....................................... $ -- $ -- $ -- $ (0.01)
--------- --------- --------- ---------
Net income ............................................... $ .10 $ 0.11 $ .43 $ 0.56
--------- --------- --------- ---------
Weighted average number of common and common
equivalent shares outstanding:
Basic .................................................... 14,733 15,906 12,772 15,864
========= ========= ========= =========
Diluted .................................................. 15,224 15,983 13,198 16,049
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
CARRIAGE SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED AND IN THOUSANDS)
FOR THE NINE MONTHS
ENDED SEPTEMBER 30,
---------------------
1998 1999
--------- ---------
Cash flows from operating activities:
Net income ....................................... $ 6,092 $ 9,011
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation .................................... 3,099 4,393
Amortization .................................... 4,547 7,651
Loss on early extinguishment of debt, net of
income taxes .................................. -- 200
Provision for losses on accounts receivable ..... 976 3,294
Deferred income taxes ........................... 1,347 2,161
Other, net ...................................... (38) --
--------- ---------
Net cash provided by operating activities
before changes in assets and liabilities .... 16,023 26,710
Changes in assets and liabilities, net of effects
from acquisitions:
(Increase) in accounts receivables ............... (5,688) (7,003)
(Increase) in inventories and other current assets (1,087) (1,486)
(Increase) in deferred charges and other ......... (430) (1,185)
(Decrease) in accounts payable ................... (302) (703)
Increase in accrued liabilities .................. 1,700 3,474
(Decrease) in preneed liabilities ................ (1,205) (3,190)
--------- ---------
Net cash provided by operating
activities.......................... 9,011 16,617
Cash flows from investing activities:
Prearranged funeral costs ......................... (3,795) (5,695)
Acquisitions, net of cash acquired ................ (105,191) (37,551)
Capital expenditures .............................. (12,327) (13,405)
--------- ---------
Net cash used in investing activities (121,313) (56,651)
Cash flows from financing activities:
Proceeds from long-term debt ...................... 94,455 133,357
Payments on long-term debt and obligations under
capital leases .................................. (52,491) (180,866)
Proceeds from issuance of common stock ............ 68,696 659
Proceeds from issuance of company-obligated
mandatorily redeemable convertible preferred
securities....................................... -- 89,881
Payment of preferred stock dividends .............. (454) (78)
Payment of deferred debt charges and other ........ 70 (1,934)
--------- ---------
Net cash provided by financing
activities ......................... 110,276 41,019
Net increase (decrease) in cash and cash equivalents (2,026) 985
Cash and cash equivalents at beginning of period .... 6,126 2,892
--------- ---------
Cash and cash equivalents at end of period .......... $ 4,100 $ 3,877
========= =========
Supplemental disclosure of cash flow information:
Cash paid for interest and financing costs ........ $ 7,079 $ 11,578
--------- ---------
Cash paid for income taxes ........................ $ 4,537 $ 7,499
========= =========
Non-cash consideration for acquisitions ........... $ 10,166 $ 1,914
========= =========
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
CARRIAGE SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
(a) The Company
Carriage Services, Inc., (the "Company") is the fourth largest
publicly-traded provider of products and services in the death care industry in
the United States. As of September 30, 1999, the Company owned and operated 181
funeral homes and 41 cemeteries in 31 states.
(b) Principles of Consolidation
The accompanying consolidated financial statements include the Company and
its subsidiaries. All significant intercompany balances and transactions have
been eliminated.
(c) Interim Disclosures
The information for the three and nine months ended September 30, 1998 and
1999 is unaudited, but in the opinion of management, reflects all adjustments
which are of a normal, recurring nature necessary for a fair presentation of
financial position and results of operations for the interim periods. The
accompanying consolidated financial statements have been prepared consistent
with the accounting policies described in the Company's report on Form 10-K for
the year ended December 31, 1998, and should be read in conjunction therewith.
Certain prior period amounts in the consolidated financial statements have been
reclassified to conform with current period presentation.
(d) Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
2. ACQUISITIONS
During the nine months ended September 30, 1999, the Company purchased 15
funeral homes and 14 cemeteries. Thirty-four funeral homes and five cemeteries
were acquired during the nine months ended September 30, 1998. These
acquisitions have been accounted for by the purchase method, and their results
of operations are included in the accompanying consolidated financial statements
from the dates of acquisition.
6
<PAGE>
The effect of the above acquisitions on the Consolidated Balance Sheets was
as follows:
SEPTEMBER 30,
--------------------------
1998 1999
--------- ---------
(IN THOUSANDS)
Current assets, net of cash acquired ....... $ 6,148 $ 9,682
Cemetery property .......................... 25,159 4,215
Property, plant and equipment .............. 23,919 12,386
Deferred charges and other noncurrent assets 819 907
Names and reputations ...................... 61,292 17,325
Current liabilities ........................ (466) (2,200)
Other liabilities .......................... (1,514) (2,850)
--------- ---------
Total acquisitions .................... 115,357 39,465
Consideration:
Debt ....................................... 6,556 1,914
Common stock issued ........................ 3,610 --
--------- ---------
Cash used for acquisitions ............ $ 105,191 $ 37,551
--------- ---------
The following table represents, on an unaudited pro forma basis, the combined
operations of the Company and the above noted acquisitions, as if such
acquisitions had occurred as of January 1, 1998. Appropriate adjustments have
been made to reflect the accounting basis used in recording these acquisitions,
however, these unaudited pro forma results are based on the acquired businesses'
historical financial results and do not assume any additional profitability
resulting from the application of the Company's revenue enhancement measures or
cost reduction programs to the historical results of the acquired businesses.
These pro forma results have been prepared for comparative purposes only and do
not purport to be indicative of the results of operations that would have
resulted had the combinations been in effect on the dates indicated, that have
resulted since the dates of acquisition or that may result in the future.
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
-----------------------------------
1998 1999
--------------- -----------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C>
Revenues, net ..................................... $125,310 $133,098
Net income before income taxes and extraordinary
item ............................................ 10,094 16,711
Net income available to common stockholders ....... 5,098 9,218
Earnings per common share:
Basic ........................................ 0.40 0.58
Diluted ...................................... 0.39 0.57
</TABLE>
7
<PAGE>
3. MAJOR SEGMENTS OF BUSINESS
Carriage conducts funeral and cemetery operations only in the United States.
<TABLE>
<CAPTION>
(IN THOUSANDS) FUNERAL CEMETERY CORPORATE CONSOLIDATED
- -------------- ------- -------- --------- ------------
<S> <C> <C> <C> <C>
External revenues:
Nine months ended September 30, 1999 $ 91,707 $ 33,104 -- $124,811
Nine months ended September 30, 1998 63,659 18,292 -- 81,951
Profit and Loss before extraordinary item:
Nine months ended September 30, 1999 $ 15,189 $ 5,345 $(11,323) $ 9,211
Nine months ended September 30, 1998 10,199 2,918 (7,025) 6,092
Total Assets:
September 30, 1999 ................. $384,940 $128,057 $ 14,228 $527,225
September 30, 1998 ................. 301,772 98,721 7,750 408,243
</TABLE>
4. LONG TERM DEBT
During June 1999, the Company replaced and increased its existing credit
facility with a new $250 million line of credit. On September 20, 1999, the
Company again increased its credit facility to $260 million. The new credit
facility is unsecured, is for a term of five years and contains customary
restrictive covenants, including a restriction on the payment of dividends on
common stock, and requires the Company to maintain certain financial ratios.
Interest under the new credit facility is provided at both LIBOR and prime
rate options.
On July 1, 1999, the Company issued $110 million in senior debt notes and
used the proceeds to reduce the amount outstanding under the Company's
revolving line of credit. The notes are unsecured, mature in tranches of
five, seven and nine years and bear interest at the fixed rates of 7.73%,
7.96% and 8.06%, respectively.
5. COMPANY-OBLIGATED MANDATORILY REDEEMABLE CONVERTIBLE
PREFERRED SECURITIES OF CARRIAGE SERVICES CAPITAL TRUST
During June 1999, the Company, through its wholly-owned subsidiary, Carriage
Services Capital Trust, completed the sale of 1,875,000 units of 7%
convertible preferred securities, resulting in approximately $90 million in
net proceeds to the Company. The convertible preferred securities have a
liquidation amount of $50 per unit, and are convertible into the Company's
Class A Common Stock at the equivalent conversion price of $20.4375 per share
of Class A Common Stock. The securities mature in 2029 and are guaranteed on
a subordinated basis by the Company. Distributions are payable quarterly, but
may be deferred at the Company's option for up to twenty consecutive
quarters.
8
<PAGE>
6. SUBSEQUENT EVENTS
On November 4, 1999, the Board of Directors authorized five-year contract
extensions to executive officers of the Company. In connection with the
contract extensions, there will be a special compensation charge to the
Company's earnings in the fourth quarter of 1999 of approximately $1.5
million after tax, or $0.09 per share.
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The Company is a leading provider of death care services and products in
the United States. The Company's focus is on growth through acquisitions and
enhancements at facilities currently owned to increase revenues and gross
profit. That focus has resulted in a successful track record of internal growth
from attractive acquisition opportunities; high standards of service,
operational and financial performance; and an infrastructure containing
measurement and management systems. The operating focus for 1999 includes
institutionalized internal training, internal growth, and making quality
initiatives introduced in 1998 an integral part of the culture.
Income from operations, which the Company defines as earnings before interest
and income taxes, increased, as a percentage of net revenues, from 18.4% for the
third quarter of 1998 to 19.4% for the third quarter of 1999. This improvement
was due largely to the increased gross margins at the individual cemetery
locations and reduction of general and administrative expenses as a percentage
of net revenues. Gross margins for the funeral homes decreased from 25.7% in the
third quarter of 1998 to 24.4% in the third quarter of 1999, while revenues
increased 30%. As a percentage of cemetery net revenues, cemetery gross profit
was 25.9% in the third quarter of 1999 compared to 25.1% in the third quarter in
1998. Revenues and gross profits from cemeteries increased 81% and 87%,
respectively, in the third quarter of 1999 compared to the same period in 1998.
The Company has experienced significant growth through acquisitions.
Forty-four funeral homes and ten cemeteries were acquired during 1997 for
approximately $118 million. During 1998, the Company acquired 48 funeral homes
and seven cemeteries for an aggregate consideration of approximately $159
million. These acquisitions were funded through cash flow from operations,
additional borrowings under the Company's credit facilities and issuance of
preferred and common stock. In addition, as of October 29, 1999, the Company has
acquired 17 funeral homes and 14 cemeteries for an aggregate consideration of
approximately $45 million. During 1999, the Company reduced the price it is
willing to pay for businesses as compared to the two most recent years, which
has resulted in a decline in acquisition spending for 1999.
RESULTS OF OPERATIONS
The following is a discussion of the Company's results of operations for the
three and nine month periods ended September 30, 1998 and 1999. For purposes of
this discussion, funeral homes and cemeteries owned and operated for the
entirety of each period being compared are referred to as "existing operations."
Operations acquired or opened during either period being compared are referred
to as "acquired operations."
FUNERAL HOME SEGMENT. The following table sets forth certain information
regarding the net revenues and gross profit of the Company from its funeral home
operations for the three and nine months ended September 30, 1998 compared to
the three and nine months ended September 30, 1999.
10
<PAGE>
THREE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 1999.
THREE MONTHS ENDED
SEPTEMBER 30, CHANGE
------------------ -----------------
1998 1999 AMOUNT PERCENT
-------- -------- -------- -------
(DOLLARS IN THOUSANDS)
Net revenues:
Existing operations ........ $ 20,544 $ 20,700 $ 156 .8%
Acquired operations ........ 1,800 8,383 6,583 *
-------- -------- -------- ----
Total net revenues $ 22,344 $ 29,083 $ 6,739 30.2%
======== ======== ======== ====
Gross profit:
Existing operations ........ $ 5,167 $ 4,950 $ (217) (4.2%)
Acquired operations ........ 569 2,142 1,573 *
-------- -------- -------- ----
Total gross profit $ 5,736 $ 7,092 $ 1,356 23.6%
======== ======== ======== ====
NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
1999.
THREE MONTHS ENDED
SEPTEMBER 30, CHANGE
------------------ -----------------
1998 1999 AMOUNT PERCENT
-------- -------- -------- -------
(DOLLARS IN THOUSANDS)
Net revenues:
Existing operations ........ $ 59,979 $ 62,876 $ 2,897 4.8%
Acquired operations ........ 5,977 30,535 24,558 *
-------- -------- -------- ----
Total net revenues $ 65,956 $ 93,411 $ 27,455 41.6%
======== ======== ======== ====
Gross profit:
Existing operations ........ $ 16,910 $ 18,235 $ 1,325 7.8%
Acquired operations ........ 2,112 9,015 6,903 *
-------- -------- -------- ----
Total gross profit $ 19,022 $ 27,250 $ 8,228 43.3%
======== ======== ======== ====
- -----------
* Not meaningful
Due to the rapid growth of the Company, existing operations represented 71%
of the total funeral revenues and 70% of the total funeral gross profit for the
three months ended September 30, 1999, as well as 67% of the total funeral
revenues and the total funeral gross profit for the nine months ended September
30, 1999. Total funeral net revenues for the three months ended September 30,
1999 increased $6.7 million or 30.2% over the three months ended September 30,
1998. The higher net revenues reflect an increase of $6.6 million in net
revenues from acquired operations and a slight increase in net revenues from
existing operations. Total funeral net revenues for the nine months ended
September 30, 1999 increased $27.5 million or 41.6% over the nine months ended
September 30, 1998. The higher net revenues reflect an increase of $24.6 million
in net revenues from acquired operations and an increase in net revenues of $2.9
million from existing operations.
Total funeral gross profit for the three months ended September 30, 1999
increased $1.4 million or 23.6% over the comparable three months of 1998. The
higher total gross profit reflected an increase of $1.6 million from acquired
operations and a slight decrease in gross profit from existing operations. Total
funeral gross profit for the nine months ended September 30, 1999 increased $8.2
million or 43.3%
11
<PAGE>
over the comparable nine months of 1998. The higher total gross profit reflected
an increase of $6.9 million from acquired operations and an increase of $1.3
million from existing operations. Gross profit for existing operations increased
for both periods due to the efficiencies gained by consolidation, cost savings,
improved collections experience and the increasing effectiveness of the
Company's training initiatives. Total gross margin decreased from 25.7% for the
third quarter of 1998 to 24.4% for the third quarter of 1999 and increased from
28.8% for the first nine months of 1998 to 29.2% for the first nine months of
1999.
CEMETERY SEGMENT. The following table sets forth certain information
regarding the net revenues and gross profit of the Company from its cemetery
operations for the three and nine months ended September 30, 1998 compared to
the three and nine months ended September 30, 1999.
THREE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 1999.
THREE MONTHS ENDED
SEPTEMBER 30, CHANGE
------------------ -----------------
1998 1999 AMOUNT PERCENT
-------- -------- -------- -------
(DOLLARS IN THOUSANDS)
Net revenues:
Existing operations ... $ 5,014 $ 5,714 $ 700 13.9%
Acquired operations ... 1,262 5,673 4,411 *
------- ------- ------- ----
Total net revenues $ 6,276 $11,387 $ 5,111 81.4%
======= ======= ======= ====
Gross profit:
Existing operations ... $ 1,211 $ 1,351 $ 140 11.6%
Acquired operations ... 366 1,596 1,230 *
------- ------- ------- ----
Total gross profit $ 1,577 $ 2,947 $ 1,370 86.9%
======= ======= ======= ====
- ---------
* Not meaningful.
NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
1999.
NINE MONTHS ENDED
SEPTEMBER 30, CHANGE
------------------ -----------------
1998 1999 AMOUNT PERCENT
-------- -------- -------- -------
(DOLLARS IN THOUSANDS)
Net revenues:
Existing operations ... $14,093 $15,659 $ 1,566 11.1%
Acquired operations ... 1,902 15,741 13,839 *
------- ------- ------- ----
Total net revenues $15,995 $31,400 $15,405 96.3%
======= ======= ======= ====
Gross profit:
Existing operations ... $ 3,501 $ 3,720 $ 219 6.3%
Acquired operations ... 574 4,361 3,787 *
------- ------- ------- ----
Total gross profit $ 4,075 $ 8,081 $ 4,006 98.3%
======= ======= ======= ====
- ---------
* Not meaningful.
12
<PAGE>
Due to the acquisition of relatively significant cemetery properties during
the third quarter of 1998 and at the end of the first quarter of 1999, existing
operations represented only 50% of cemetery revenues and only 46% of cemetery
gross profit for each of the three month and nine month periods ended September
30, 1999.
Total cemetery net revenues for the three months ended September 30, 1999
increased $5.1 million over the three months ended September 30, 1998 and total
cemetery gross profit increased $1.4 million over the comparable three months of
1998. The higher net revenues reflect an increase of $4.4 million in net
revenues from acquired operations and an increase of $0.7 million in revenues
from existing operations. Total cemetery net revenues for the nine months ended
September 30, 1999 increased $15.4 million over the nine months ended September
30, 1998, and total cemetery gross profit increased $4.0 million over the
comparable nine months of 1998. Total gross margin increased from 25.1% for the
three months ended September 30, 1998 to 25.9% for the three months ended
September 30, 1999. These increases were due primarily to the Company's recently
acquired cemeteries, as well as increased preneed marketing efforts. Total gross
margin increased slightly from 25.5% for the nine months ended September 30,
1998 to 25.7% for the nine months ended September 30, 1999.
OTHER.
General and administrative expenses for the nine months ended September 30,
1999 increased $1.3 million or 22% over the first nine months of 1998 due
primarily to the increased personnel expense necessary to support the Company's
growth and acquisition activity. However, as a percentage of net revenues, these
expenses decreased from 6.9% for the nine months ended September 30, 1998 to
5.5% for the nine months ended September 30, 1999, as the expenses were spread
over a larger volume of revenue.
Interest expense and other financing costs for the nine months ended
September 30, 1999 increased $5.7 million over the first nine months of 1998,
principally due to increased borrowings for acquisitions.
Preferred stock dividends of $78,000 were subtracted from the $9.0 million of
net income in computing the net income available to common stockholders of $8.9
million for the nine months ended September 30, 1999. The reduction in preferred
stock dividends from 1998 to 1999 was due to conversions of preferred stock to
common stock.
For the nine months ended September 30, 1999, the Company provided for income
taxes on income before income taxes at a combined state and federal rate of 43%
compared with 44.2% for the same period in 1998.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents totaled $3.8 million at September 30, 1999,
representing an increase of $1.0 million from December 31, 1998. For the nine
months ended September 30, 1999, cash provided by operations was $16.6 million
as compared to cash provided by operations of $9.0 million for the nine months
ended September 30, 1998. The increase in net cash provided by operating
activities was principally due to the increase in net income as adjusted for
non-cash charges, which was partially offset by a net increase in the working
capital accounts. The net increase in the working capital accounts was primarily
related to working capital requirements of recent acquisitions. Cash used in
investing activities was $56.7 million for the nine months ended September 30,
1999 compared to $121.3 million for the
13
<PAGE>
first nine months of 1998, due primarily to a slowing in the number of
acquisitions during the comparable nine month periods.
In the first nine months of 1999, cash flow provided by financing activities
amounted to approximately $41.0 million, primarily due to the net proceeds
generated from the issuance of $110.0 million of senior notes and from the
Company's sale of mandatorily redeemable convertible preferred securities less
repayments of long-term debt.
On June 3, 1999, the Company's subsidiary, Carriage Services Capital Trust,
completed the sale of 1,875,000 units of 7% convertible preferred securities,
resulting in approximately $90 million in net proceeds to the Company, of which
$77.4 million was used to repay outstanding indebtedness under the Company's
credit facility, with the remaining $12.6 million used for general corporate
purposes.
On July 1, 1999, the Company issued $110 million in senior debt notes and
used the proceeds to reduce the amount outstanding under the Company's revolving
line of credit. The notes are unsecured, mature in tranches of five, seven and
nine years and bear interest at the fixed rates of 7.73%, 7.96% and 8.06%,
respectively.
Historically, the Company has financed its acquisitions with proceeds from
debt and the issuance of common and preferred stock. As of September 30, 1998,
the Company had 1,682,500 shares of Series D Preferred Stock issued and
outstanding. The Series D Preferred Stock is convertible into Class B Common
Stock. The holders of Series D Preferred Stock are entitled to receive cash
dividends at an annual rate of $.06-$.07 per share depending upon the date such
shares were issued. The Company may, at its option, redeem all or any portion of
the shares of Series D Preferred Stock outstanding at a redemption price of
$1.00 per share, together with all accrued and unpaid dividends. Such redemption
is subject to the right of each holder of Series D Preferred Stock to convert
such holder's shares into shares of Class B Common Stock. On December 31, 2001,
the Company must redeem all shares of Series D Preferred Stock then outstanding
at a redemption price of $1.00 per share, together with all accrued and unpaid
dividends. During the nine months ended September 30, 1999, holders of Series D
Preferred Stock converted a total of 500,000 shares into 35,238 shares of Class
B Common Stock, and then converted those Class B shares into 35,238 shares of
Class A Common Stock
As of September 30, 1998, the Company had 12,278,285 shares of Series F
Preferred Stock issued and outstanding. The Series F Preferred Stock paid cash
dividends as the annual rate of $.042 per share. On December 31, 1998, all of
the Series F Preferred Stock was converted into an aggregate of 722,250 shares
of Class A Common Stock at the exercise price of $17 per share.
Prior to September 30, 1998, the Company had a credit facility with a group
of banks for a $150 million revolving line of credit. During September 1998, the
Company increased the bank credit facility to $225 million. During June 1999,
the Company entered into a new credit facility for a $250 million revolving line
of credit. On September 20, 1999, the Company amended the credit facility,
increasing the amount available to $260 million. The credit facility has a five
year term, is unsecured and contains customary restrictive covenants, including
a restriction on the payment of dividends on common stock, and requires the
Company to maintain certain financial ratios. Interest under the credit facility
is provided at both LIBOR and prime rate options. The Company has the ability
under the credit facility to increase its total debt outstanding to as much as
60 percent of its total capitalization. As of September 30, 1999, $42.5 million
was outstanding under the credit facility and the Company's debt to total
capitalization was 37 percent.
14
<PAGE>
The Company expects to continue to pursue additional acquisitions of funeral
homes and cemeteries which will require significant levels of funding from
various sources. During the nine months ended September 30, 1999, the Company
incurred approximately $13.4 million in capital expenditures, primarily related
to funeral home improvements. In addition, the Company currently expects to
incur capitalizable costs of approximately $4 million during the remainder of
1999 related primarily to upgrading funeral home facilities and cemetery
construction. The Company believes that cash flow from operations, borrowings
under the new credit facility and its ability to issue additional debt and
equity securities should be sufficient to fund acquisitions and its anticipated
capital expenditures and other operating requirements. The Company has recently
revised its estimate for acquisition spending for 1999 to approximately $50
million. As of October 29, 1999, the Company has spent approximately $46 million
for acquisitions. Acquisition spending during 2000 is anticipated to be
significantly less than the amounts during either of the two preceding years,
excluding the effect of any possible transactions that may occur with other
corporate death care companies. Because future cash flows and the availability
of financing are subject to a number of variables, such as the number and size
of acquisitions made by the Company, there can be no assurance that the
Company's capital resources will be sufficient to fund its capital needs.
Additional debt and equity financings may be required to continue the Company's
acquisition program. The availability and terms of these capital sources will
depend on prevailing market conditions and interest rates and the then-existing
financial condition of the Company.
SEASONALITY
The Company's business can be affected by seasonal fluctuations in the death
rate. Generally, death rates are higher during the winter months. In addition
the quarterly results of the Company may fluctuate depending on the magnitude
and timing of acquisitions.
INFLATION
Inflation has not had a significant impact on the results of operations of
the Company.
YEAR 2000
Our information systems management group is continually reviewing the
management and accounting software packages for internal accounting and
information requirements to keep pace with our continued growth and to achieve
Year 2000 compliance. To address the Year 2000 issue, our program which
encompasses performing an inventory of our information technology and
non-information technology systems, assessing the potential problem areas,
testing the systems for year 2000 readiness, and modifying systems that are not
Year 2000 ready.
To date, inventory and assessment have been completed for all of our core
systems that are essential for business operations. All of these core systems
are believed to be Year 2000 compliant. As of September 30, 1999, management
estimated that we had completed substantially all of the work involved in
modifying, replacing and testing the non-compliant hardware and software. The
inventory and assessment phases for newly acquired businesses is performed
during the acquisition process as part of our due diligence analysis.
We are also communicating with vendors, trustees and other third parties with
which we conduct business to determine the extent to which those companies are
addressing their Year 2000 compliance.
15
<PAGE>
To date, no significant third parties have informed us that any Year 2000 issue
exists which will have a material effect on us.
Although we expect to be ready to continue our business activities without
interruption by a Year 2000 problem, we recognize the general uncertainty
inherent in the Year 2000 issue, in part because of the uncertainty about the
Year 2000 readiness of third parties. Under a "most likely worst case Year 2000
scenario," it may be necessary for us to replace some suppliers, rearrange some
work plans or even temporarily interrupt some normal business activities or
operations. We believe that such circumstances would be isolated and would not
result in a material adverse impact to our operations or pose a material
financial risk to us. Management has concluded that our standard operating
procedures are adequate to deal with most foreseeable contingencies resulting
from the "most likely worst case Year 2000 scenario."
Based on the current assessment, our total costs of becoming Year 2000
compliant are not expected to be significant to our financial position, results
of operations or cash flows. As of September 30, 1999, we have spent
approximately $70,000 related to Year 2000 compliance. The total remaining costs
for addressing the Year 2000 issue are presently estimated to be less than
$25,000.
The estimated costs of the projects are forward-looking statements based on
our best estimates, which were derived utilizing numerous assumptions of future
events. While we believe all necessary work will be completed in a timely
fashion, there can be no assurance that these estimates will be achieved and
actual results could differ materially from those anticipated. Some of the
factors that might cause such material differences include failure by third
parties to adequately solve Year 2000 problems, the cooperation of third parties
and the ability to identify and correct potential problems.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES OF MARKET RISK
There has been no material change in the Company's position regarding
quantitative and qualitative disclosures of market risk from that disclosed in
the Company's 1998 Form 10-K.
16
<PAGE>
PART II -- OTHER INFORMATION
ITEM 5. OTHER INFORMATION
FORWARD-LOOKING STATEMENTS
Certain statements made herein or elsewhere by, or on behalf of, the Company
that are not historical facts are intended to be forward-looking statements
within the meaning of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. These statements are based on assumptions that
the Company believes are reasonable; however, many important factors could cause
the Company's actual results in the future to differ materially from the
forward-looking statements made herein and in any other documents or oral
presentations made by, or on behalf of, the Company.
CAUTIONARY STATEMENTS
The Company cautions readers that the following important factors, among
others, in some cases have affected, and in the future could affect, the
Company's actual consolidated results and could cause the Company's actual
consolidated results in the future to differ materially from the goals and
expectations expressed herein and in any other forward-looking statements made
by or on behalf of the Company.
(1) Achieving revenue growth depends in part upon the level of acquisition
activity experienced by the Company. Higher levels of acquisition activity will
increase anticipated revenues, and lower levels will decrease anticipated
revenues. The level of acquisition activity depends not only on the number of
properties acquired, but also on the size of the acquisitions; for example, one
large acquisition could increase substantially the level of acquisition activity
and, consequently, revenues. Several important factors, among others, affect the
Company's ability to consummate acquisitions:
(a) The Company may be unable to find a sufficient number of businesses
for sale at prices that are favorable to the Company and which the
Company is willing to pay.
(b) In most of its existing markets and in certain new markets that the
Company desires to enter, the Company competes for acquisitions with
other publicly traded and privately owned death care firms. These
competitors, and others, may be willing to pay higher prices for
businesses than the Company or may cause the Company to pay more to
acquire a business than the Company would otherwise have pay in the
absence of such competition. Thus, the aggressiveness of the
Company's competitors in pricing acquisitions affects the Company's
ability to complete acquisitions at prices it finds attractive.
(c) The timing, size and success of the Company's acquisition efforts
depend in large part on the continued availability of financing. The
Company's growth could be negatively impacted if it is unable to
obtain sufficient capital.
(2) Achieving the Company's revenue goals also is affected by the volume and
prices of the properties, products and services sold, as well as the mix of
products and services sold. The annual sales targets set by the Company are
aggressive, and the inability of the Company to achieve planned volume or prices
could cause the Company not to meet anticipated levels of revenue. In certain
markets the Company expects to increase prices, while in other
17
<PAGE>
markets prices will be lowered. The ability of the Company to achieve volume or
price targets at any location depends on numerous factors, including the local
economy, the local death rate, competition and changes in consumer preferences,
including cremations.
(3) Future revenue also is affected by the level of prearranged sales in
prior periods. The level of prearranged sales may be adversely affected by
numerous factors, including deterioration in the economy, which causes
individuals to have less discretionary income, as well as changes in commission
practices and contractual terms.
(4) In addition to the factors discussed above, financial performance may be
affected by other important factors, including the following:
(a) The ability of the Company to successfully integrate acquisitions
into the Company's business and to realize expected revenue
projections and cost savings in connection with the acquisitions.
(b) Whether acquired businesses perform at pro forma levels used by
management in the valuation process, and the rate at which
management is able to increase the profitability of acquired
businesses.
(c) The ability of the Company to manage its growth in terms of
implementing internal controls and information gathering systems,
and retaining or attracting key personnel, among other things.
(d) The amount and rate of growth in the Company's general and
administrative expenses.
(e) Changes in interest rates, which can increase or decrease the amount
the Company pays on borrowings with variable rates of interest.
(f) The Company's debt-to-equity ratio, the number of shares of common
stock outstanding and the portion of the Company's debt that has
fixed or variable interest rates.
(g) The impact on the Company's financial statements of nonrecurring
accounting charges that may result from the Company's ongoing
evaluation of its business strategies, asset valuations and
organizational structures.
(h) Changes in government regulation, including tax rates and their
effects on corporate structure.
(i) Changes in inflation and other general economic conditions
domestically, affecting financial markets (e.g. marketable security
values).
(j) Unanticipated legal proceedings and unanticipated outcomes of legal
proceedings.
(k) Changes in accounting policies and practices adopted voluntarily or
required to be adopted by generally accepted accounting principles,
such as amortization periods for long-lived intangible assets.
(l) The ability of the Company and its significant vendors, financial
institutions and insurers to achieve Year 2000 compliance on a
timely basis.
The Company also cautions readers that it assumes no obligation to update or
publicly release any revisions to forward-looking statements made herein or any
other forward-looking statements made by, or on behalf of, the Company.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
* 10.1-- Amendment No. 1 to Credit Agreement by and among the
Company and Bank of America, N.A., dated July 1, 1999.
18
<PAGE>
* 10.2-- Amendment No. 2 to Credit Agreement by and among the
Company and Bank of America, N.A., dated September 20, 1999.
* 10.3-- Note Purchase Agreement, dated July 1, 1999, for $300
million in Senior Notes Issuable in Series.
+ 10.4-- Amendment No. 2 to 1995 Stock Incentive Plan. (10.1)
+ 10.5-- Amendment No. 2 to 1996 Stock Option Plan. (10.2)
+ 10.6-- Amendment No. 1 to 1996 Directors' Stock Option Plan. (10.3)
+ 10.7-- Amendment No. 2 to 1995 Directors' Stock Option Plan. (10.4)
- 10.8-- 1998 Stock Option Plan for Consultants. (10.1)
* 11.1-- Statement regarding computation of per share earnings.
* 12 -- Calculation of Ratio of Earnings to Fixed Charges
*27.1 -- Financial Data Schedule.
(*) Filed herewith.
(+) Incorporated by reference to the Exhibit number shown in parentheses to the
registrant's Form S-8 Registration Statement No. 333-85961.
(-) Incorporated by reference to the Exhibit number shown in parentheses to the
registrant's Form S-8 Registration Statement No. 333-62593.
(b) Reports on Form 8-K
None.
19
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CARRIAGE SERVICES, INC.
November 12,1999 /s/ THOMAS C. LIVENGOOD
- ------------------ -------------------------
Date Thomas C. Livengood,
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer and
Duly Authorized Officer)
20
EXHIBIT 10.1
AMENDMENT NO. 1
This Amendment No. 1 dated as of July 1, 1999 ("Agreement"), is among
Carriage Services, Inc., a Delaware corporation (the "Borrower"), the lenders
signatory to the Credit Agreement described below (the "Lenders"), and Bank of
America, N.A., as administrative agent (the "Administrative Agent") for the
Lenders.
INTRODUCTION
Reference is made to the Credit Agreement dated as of June 14, 1999 (as
modified, the "Credit Agreement"), among the Borrower, the Lenders, and
NationsBank, N.A. d/b/a Bank of America, N.A., predecessor in interest to the
Administrative Agent. The Borrower, the Lenders, and the Administrative Agent
have agreed to make certain modifications to the Credit Agreement in connection
with the Borrower's execution of the Note Purchase Agreement dated as of July 1,
1999 (the "Note Purchase Agreement"), among the Borrower and the note purchasers
signatories thereto pursuant to which the Borrower is issuing notes, referred to
as Senior Notes under the Credit Agreement, and to make other amendments to the
Credit Agreement as set forth herein in connection therewith.
THEREFORE, in connection with the foregoing and for other good and
valuable consideration, the Borrower, the Administrative Agent, and the Lenders
hereby agree as follows:
Section 1. DEFINITIONS; REFERENCES. Unless otherwise defined in this
Agreement, each term used in this Agreement which is defined in the Credit
Agreement has the meaning assigned to such term in the Credit Agreement.
Section 2. AMENDMENT.
(a) Section 1.01 is amended by replacing the definition of "Material
Adverse Change" in its entirety with the following:
"MATERIAL ADVERSE CHANGE" shall mean (a) a material adverse change on the
business, operations, affairs, financial condition, assets, or properties
of the Borrower and its Subsidiaries, taken as a whole, (b) the occurrence
and continuance of any event or circumstance which could reasonably be
expected to have a material adverse effect on the Borrower's ability to
perform its obligations under this Agreement, any Note, or any other
Credit
<PAGE>
Document, or (c) a material adverse change on the validity or
enforceability of this Agreement, any Note, or any other Credit Document.
(b) Section 1.01 is amended by inserting the following definition for
"Carriage Business Development Program" in the appropriate alphabetical order:
"CARRIAGE BUSINESS DEVELOPMENT PROGRAM" shall mean a program of the
Borrower whereby not more than 20 former owners of funeral homes or
cemeteries receive preferred securities of a Subsidiary pursuant to which
the holder is entitled to receive up to 10% of such Subsidiary's cash flow
in excess of a predetermined level. Not more than ten Subsidiaries will
participate in the program and the recipients of the preferred securities
are individuals whose funeral homes or cemeteries were acquired by the
Borrower or a Subsidiary. The preferred securities entitle the holders to
receive in the aggregate up to 10% of the aggregate excess cash flow of
the participating Subsidiaries as and when earned, do not constitute a
claim on the assets of any Subsidiary, and are subject to mandatory
redemption by the applicable Subsidiary at maturity (not to exceed ten
years) at a redemption price expressed as a multiple of such excess cash
flow.
(c) Section 6.11 is amended by replacing such section in its entirety with
the following:
Section 6.11. MAINTENANCE OF OWNERSHIP OF SUBSIDIARIES. Except as
permitted by Sections 5.03 and 6.04, the Borrower will not, and will not
permit any of its Subsidiaries to, sell or otherwise dispose of any shares
of capital stock of any of its Subsidiaries or permit any of its
Subsidiaries to issue, sell or otherwise dispose of any shares of its
capital stock or the capital stock of any of its Subsidiaries, except
that, (a) where required by applicable law, up to 20% of the outstanding
stock of any of the Borrower's Subsidiaries may be issued to and held by
employees of the Borrower or any such Subsidiary who are licensed funeral
directors, (b) the Trust Subsidiary may issue the Trust Preferred Stock,
and (c) in connection with Carriage Business Development Program not more
than ten Subsidiaries may issue preferred securities to not more than 20
individuals in the aggregate.
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<PAGE>
(d) Section 7.01 is amended by replacing subsection (e) in its entirety
with the following:
(e) INSOLVENCY. (i) The Borrower or any of its Subsidiaries shall
generally not pay its debts as such debts become due, or shall admit in
writing its inability to pay its debts generally, or shall make a general
assignment for the benefit of creditors; (ii) any proceeding shall be
instituted by or against the Borrower or any of its Subsidiaries seeking
to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding
up, reorganization, arrangement, adjustment, protection, relief, or
composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of
an order for relief or the appointment of a receiver, trustee or other
similar official for it or for any substantial part of its property and,
in the case of any such proceeding instituted against the Borrower or any
such Subsidiary, either such proceeding shall remain undismissed for a
period of 60 days or any of the actions sought in such proceeding shall
occur; or (iii) the Borrower or any of its Subsidiaries shall take any
corporate action to authorize any of the actions set forth above in this
paragraph (e);
Section 3. REPRESENTATIONS AND WARRANTIES. The Borrower represents and
warrants that (a) the execution, delivery and performance of this Agreement are
within the corporate power and authority of the Borrower and have been duly
authorized by appropriate proceedings, (b) this Agreement constitutes legal,
valid, and binding obligation of the Borrower enforceable against the Borrower
in accordance with its terms, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or similar laws affecting the rights of
creditors generally and general principles of equity, and (c) upon the
effectiveness of this Agreement and the amendment of the Credit Documents as
provided for herein, no Event of Default shall exist under the Credit Documents
and there shall have occurred no event which with notice or lapse of time would
become an Event of Default under the Credit Documents, as amended.
Section 4. EFFECT ON CREDIT DOCUMENTS. Except as amended herein, the
Credit Agreement and all other Credit Documents remain in full force and effect
as originally executed. Nothing herein shall act as a waiver of the
Administrative Agent's or any Lender's rights under the Credit Documents as
amended, including the waiver of any default or event of default, however
denominated. The Borrower must continue to comply with the terms of the Credit
Documents, as amended. This Agreement is a Credit Document for the purposes of
the provisions of the other Credit Documents. Without limiting the foregoing,
any breach of representations, warranties, and covenants under this Agreement
may be a default or event of default under the other Credit Documents.
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<PAGE>
Section 5. EFFECTIVENESS. This Agreement shall become effective and the
Credit Agreement shall be amended as provided in this Agreement effective on the
date first set forth above when the Administrative Agent shall have received
duly and validly executed counterparts hereof signed by the Borrower, the
Administrative Agent, and the Majority Lenders.
Section 6. MISCELLANEOUS. The miscellaneous provisions of the Credit
Agreement apply to this Agreement. This Agreement may be signed in any number
of counterparts, each of which shall be an original, and may be executed and
delivered by telecopier.
THIS WRITTEN AGREEMENT AND THE CREDIT DOCUMENTS, AS DEFINED IN THIS
AGREEMENT, REPRESENT 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.
EXECUTED as of the date first above written.
BORROWER:
CARRIAGE SERVICES, INC.
By:_________________________________________
Thomas C. Livengood, Executive Vice
President and Chief Financial Officer
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<PAGE>
ADMINISTRATIVE AGENT:
BANK OF AMERICA, N.A.
By:_________________________________________
Craig S. Wall
Senior Vice President
LENDERS:
BANK OF AMERICA, N.A.
By:_________________________________________
Craig S. Wall
Senior Vice President
PROVIDENT SERVICES, INC.
By:_________________________________________
Daniel M. Chong
Vice President
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<PAGE>
BANK ONE, TEXAS, NA
By:_________________________________________
Name:_______________________________________
Title:______________________________________
FIRST UNION NATIONAL BANK
By:_________________________________________
Name:_______________________________________
Title:______________________________________
CHASE BANK TEXAS, N.A.
By:_________________________________________
Name:_______________________________________
Title:______________________________________
WELLS FARGO BANK (TEXAS), NATIONAL
ASSOCIATION
By:_________________________________________
Name:_______________________________________
Title:______________________________________
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<PAGE>
UNION BANK OF CALIFORNIA, N.A.
By:_________________________________________
Name:_______________________________________
Title:______________________________________
SUNTRUST BANK, ATLANTA
By:_________________________________________
Name:_______________________________________
Title:______________________________________
By:_________________________________________
Name:_______________________________________
Title:______________________________________
SOUTHWEST BANK OF TEXAS, N.A.
By:_________________________________________
Name:_______________________________________
Title:______________________________________
-7-
EXHIBIT 10.2
AMENDMENT NO. 2
This Amendment No. 2 dated as of September 20, 1999 ("Agreement"), is
among Carriage Services, Inc., a Delaware corporation (the "Borrower"), the
lenders signatory to the Credit Agreement described below (the "Lenders"), and
Bank of America, N.A., as administrative agent (the "Administrative Agent") for
the Lenders.
INTRODUCTION
Reference is made to the Credit Agreement dated as of June 14, 1999 (as
modified, the "Credit Agreement"), among the Borrower, the Lenders, and
NationsBank, N.A. d/b/a Bank of America, N.A., predecessor in interest to the
Administrative Agent. The Borrower, the Lenders, and the Administrative Agent
have agreed to increase the amount of the Commitments under the Credit Agreement
to $260,000,000 by increasing the Commitment of Wells Fargo Bank (Texas),
National Association from $15,000,000 to $25,000,000, and to make other
amendments to the Credit Agreement as set forth herein in connection therewith.
THEREFORE, in connection with the foregoing and for other good and
valuable consideration, the Borrower, the Administrative Agent, and the Lenders
hereby agree as follows:
Section 1. DEFINITIONS; REFERENCES. Unless otherwise defined in this
Agreement, each term used in this Agreement which is defined in the Credit
Agreement has the meaning assigned to such term in the Credit Agreement.
Section 2. AMENDMENT.
(a) The Commitment of Wells Fargo Bank (Texas), National Association shall
be increased to $25,000,000 such that upon the effectiveness of this Agreement,
the Commitments of each Lender shall be those set forth for such Lender on the
signature pages of this Agreement, and the aggregate amount of such Commitments
shall be $260,000,000. The effective date for this increase shall be October 1,
1999, and following the effectiveness of this Agreement and as of such date, (a)
the Administrative Agent shall record such increased Commitment in the Register
and (b) the Administrative Agent shall reallocate all outstanding Advances and
all participation interests in Letters of Credit, if any, so that the Lenders
hold such Advances and participation interests in Letters of Credit ratably in
accordance with their Commitments.
(b) The following definition of "Amendment No. 2" is added to Section 1.1
of the Credit Agreement in the appropriate alphabetical order:
<PAGE>
"AMENDMENT NO. 2" means the Amendment No. 2 dated as of
September 20, 1999, among the Borrower, the Administrative Agent,
and the Lenders amending the terms of this Agreement.
(c) Section 2.01 is amended by replacing the first sentence of such
section in its entirety with the following:
Section 2.01. COMMITMENT TO MAKE ADVANCES. Each Lender severally
agrees, on the terms and conditions set forth in this Agreement, to make
Advances to the Borrower from time-to-time on any Business Day during the
period from the date of this Agreement until the Maturity Date in an
aggregate amount not to exceed at any time outstanding (a) the amount set
opposite such Lender's name on the signature pages of Amendment No. 2 as
its Commitment, or if such Lender has entered into any Assignment and
Acceptance, the amount set forth for such Lender as its Commitment in the
Register maintained by the Administrative Agent pursuant to Section
9.06(c), as such amount may be reduced pursuant to Section 2.05 (such
Lender's "Commitment") LESS (b) such Lender's Pro Rata Share of the Letter
of Credit Exposure at such time LESS (c) such Lender's Pro Rata Share of
the Swing Line Loan at such time.
Section 3. REPRESENTATIONS AND WARRANTIES. The Borrower represents and
warrants that (a) the execution, delivery and performance of this Agreement are
within the corporate power and authority of the Borrower and have been duly
authorized by appropriate proceedings, (b) this Agreement constitutes legal,
valid, and binding obligation of the Borrower enforceable against the Borrower
in accordance with its terms, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or similar laws affecting the rights of
creditors generally and general principles of equity, and (c) upon the
effectiveness of this Agreement and the amendment of the Credit Documents as
provided for herein, no Event of Default shall exist under the Credit Documents
and there shall have occurred no event which with notice or lapse of time would
become an Event of Default under the Credit Documents, as amended.
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<PAGE>
Section 4. EFFECT ON CREDIT DOCUMENTS. Except as amended herein, the
Credit Agreement and all other Credit Documents remain in full force and effect
as originally executed. Nothing herein shall act as a waiver of the
Administrative Agent's or any Lender's rights under the Credit Documents as
amended, including the waiver of any default or event of default, however
denominated. The Borrower must continue to comply with the terms of the Credit
Documents, as amended. This Agreement is a Credit Document for the purposes of
the provisions of the other Credit Documents. Without limiting the foregoing,
any breach of representations, warranties, and covenants under this Agreement
may be a default or event of default under the other Credit Documents.
Section 5. EFFECTIVENESS. The effectiveness of the amendments in Section 1
of this Agreement are subject to the satisfaction of the condition precedent
that the Borrower shall have delivered or shall have caused to be delivered the
documents and other items listed on the Closing Documents List dated as of even
date with this Agreement, each in form and with substance satisfactory to the
Administrative Agent and where applicable executed by the appropriate parties
thereto. Subject to the foregoing, this Agreement shall become effective and the
Credit Agreement shall be amended as provided in this Agreement effective on the
date first set forth above when the Administrative Agent shall have received
duly and validly executed counterparts hereof signed by the Borrower, the
Administrative Agent, and the Lenders.
Section 6. MISCELLANEOUS. The miscellaneous provisions of the Credit
Agreement apply to this Agreement. This Agreement may be signed in any number
of counterparts, each of which shall be an original, and may be executed and
delivered by telecopier.
[Signatures begin on next page]
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<PAGE>
THIS WRITTEN AGREEMENT AND THE CREDIT DOCUMENTS, AS DEFINED IN THIS
AGREEMENT, REPRESENT THE FINAL AGREEMENT AMONG 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 AMONG THE PARTIES.
EXECUTED as of the date first above written.
BORROWER:
CARRIAGE SERVICES, INC.
By:_________________________________________
Thomas C. Livengood, Executive Vice
President and Chief Financial
Officer
ADMINISTRATIVE AGENT:
BANK OF AMERICA, N.A.
By:_________________________________________
Craig S. Wall
Senior Vice President
-4-
<PAGE>
LENDERS:
BANK OF AMERICA, N.A.
COMMITMENT: By:_________________________________________
Craig S. Wall
$40,000,000 Senior Vice President
PROVIDENT SERVICES, INC.
COMMITMENT: By:_________________________________________
Daniel M. Chong
$50,000,000 Vice President
BANK ONE, TEXAS, NA
COMMITMENT: By:_________________________________________
Name:_______________________________________
$40,000,000 Title:______________________________________
FIRST UNION NATIONAL BANK
COMMITMENT: By:_________________________________________
Name:_______________________________________
$20,000,000 Title:______________________________________
-5-
<PAGE>
CHASE BANK TEXAS, N.A.
COMMITMENT: By:_________________________________________
Name:_______________________________________
$35,000,000 Title:______________________________________
WELLS FARGO BANK (TEXAS), NATIONAL
ASSOCIATION
COMMITMENT: By:_________________________________________
Name:_______________________________________
$25,000,000 Title:______________________________________
UNION BANK OF CALIFORNIA, N.A.
COMMITMENT: By:_________________________________________
Name:_______________________________________
$15,000,000 Title:______________________________________
SUNTRUST BANK, ATLANTA
COMMITMENT: By:_________________________________________
Name:_______________________________________
$25,000,000 Title:______________________________________
By:_________________________________________
Name:_______________________________________
Title:______________________________________
-6-
<PAGE>
SOUTHWEST BANK OF TEXAS, N.A.
COMMITMENT: By:_________________________________________
Name:_______________________________________
$10,000,000 Title:______________________________________
-7-
EXHIBIT 10.3
==============================================================================
CARRIAGE SERVICES, INC.
$300,000,000
Senior Notes Issuable In Series
$25,000,000
7.73% Senior Notes, Series 1999-A
due July 30, 2004
$60,000,000
7.96% Senior Notes, Series 1999-B
due July 30, 2006
$25,000,000
8.06% Senior Notes, Series 1999-C
due July 30, 2008
---------
NOTE PURCHASE AGREEMENT
---------
Dated as of July 1, 1999
==============================================================================
Series 1999-A PPN: 143905 A*8
Series 1999-B PPN: 143905 A@6
Series 1999-C PPN: 143905 A#4
<PAGE>
TABLE OF CONTENTS
SECTION PAGE
- ------- ----
1. AUTHORIZATION OF NOTES.................................................1
1.1. Amount; Establishment of Series..................................1
1.2. The Series 1999 Notes............................................2
2. SALE AND PURCHASE OF SERIES 1999 NOTES.................................3
3. CLOSING................................................................3
4. CONDITIONS TO CLOSING..................................................3
4.1. Representations and Warranties...................................3
4.2. Performance; No Default..........................................4
4.3. Compliance Certificates..........................................4
4.4. Opinions of Counsel..............................................4
4.5. Purchase Permitted By Applicable Law, etc........................4
4.6. Sale of Other Notes..............................................5
4.7. Payment of Special Counsel Fees..................................5
4.8. Private Placement Number.........................................5
4.9. Changes in Corporate Structure...................................5
4.10. Subsidiary Guaranty..............................................5
4.11. Intercreditor Agreement..........................................5
4.12. Proceedings and Documents........................................5
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY..........................6
5.1. Organization; Power and Authority................................6
5.2. Authorization, etc...............................................6
5.3. Disclosure.......................................................7
5.4. Organization and Ownership of Shares of Subsidiaries;
Affiliates.......................................................7
5.5. Financial Statements.............................................8
5.6. Compliance with Laws, Other Instruments, etc.....................8
5.7. Governmental Authorizations, etc.................................9
5.8. Litigation; Observance of Agreements, Statutes and Orders........9
5.9. Taxes............................................................9
5.10. Title to Property; Leases.......................................10
5.11. Licenses, Permits, etc..........................................10
5.12. Compliance with ERISA...........................................10
5.13. Private Offering by the Company.................................11
5.14. Use of Proceeds; Margin Regulations.............................12
5.15. Existing Indebtedness; Future Liens.............................12
5.16. Foreign Assets Control Regulations, etc.........................12
5.17. Status under Certain Statutes...................................13
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5.18. Environmental Matters...........................................13
5.19. Solvency of Subsidiary Guarantors...............................13
5.20. Year 2000 Compliant.............................................14
6. REPRESENTATIONS OF THE PURCHASERS.....................................14
6.1. Purchase for Investment.........................................14
6.2. Source of Funds.................................................14
7. INFORMATION AS TO COMPANY.............................................16
7.1. Financial and Business Information..............................16
7.2. Officer's Certificate...........................................19
7.3. Inspection......................................................20
8. PREPAYMENT OF THE NOTES...............................................20
8.1. Required Prepayments............................................20
8.2. Optional Prepayments with Make-Whole Amount.....................21
8.3. Allocation of Partial Prepayments...............................22
8.4. Maturity; Surrender, etc........................................22
8.5. Purchase of Notes...............................................22
8.6. Make-Whole Amount...............................................23
9. AFFIRMATIVE COVENANTS.................................................24
9.1. Compliance with Law.............................................24
9.2. Insurance.......................................................24
9.3. Maintenance of Properties.......................................25
9.4. Payment of Taxes and Claims.....................................25
9.5. Corporate Existence, etc........................................25
10. NEGATIVE COVENANTS....................................................26
10.1. Adjusted Consolidated Net Worth.................................26
10.2. Consolidated Indebtedness.......................................26
10.3. Indebtedness of Restricted Subsidiaries.........................26
10.4. Fixed Charge Coverage Ratio.....................................26
10.5. Restricted Payments.............................................27
10.6. Liens...........................................................27
10.7. Sale of Assets..................................................28
10.8. Sale-and-Leasebacks.............................................29
10.9. Mergers, Consolidations, etc....................................29
10.10. Disposition of Stock of Restricted Subsidiaries................30
10.11. Designation of Unrestricted and Restricted Subsidiaries........30
10.12. Nature of Business.............................................31
10.13. Transactions with Affiliates...................................31
10.14. Subsidiary Guaranties..........................................31
11. EVENTS OF DEFAULT.....................................................31
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<PAGE>
12. REMEDIES ON DEFAULT, ETC..............................................34
12.1. Acceleration....................................................34
12.2. Other Remedies..................................................34
12.3. Rescission......................................................35
12.4. No Waivers or Election of Remedies, Expenses, etc...............35
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.........................35
13.1. Registration of Notes...........................................35
13.2. Transfer and Exchange of Notes..................................36
13.3. Replacement of Notes............................................36
14. PAYMENTS ON NOTES.....................................................37
14.1. Place of Payment................................................37
14.2. Home Office Payment.............................................37
15. EXPENSES, ETC.........................................................38
15.1. Transaction Expenses............................................38
15.2. Survival........................................................38
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT..........38
17. AMENDMENT AND WAIVER..................................................39
17.1. Requirements....................................................39
17.2. Solicitation of Holders of Notes................................39
17.3. Binding Effect, etc.............................................39
17.4. Notes held by Company, etc......................................40
18. NOTICES...............................................................40
19. REPRODUCTION OF DOCUMENTS.............................................41
20. CONFIDENTIAL INFORMATION..............................................41
21. SUBSTITUTION OF PURCHASER.............................................42
22. RELEASE OF SUBSIDIARY GUARANTY........................................42
23. MISCELLANEOUS.........................................................43
23.1. Successors and Assigns..........................................43
23.2. Payments Due on Non-Business Days...............................43
23.3. Severability....................................................43
23.4. Construction....................................................43
23.5. Counterparts....................................................43
23.6. Governing Law...................................................44
23.7. Intercreditor Agreement.........................................44
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<PAGE>
SCHEDULE A -- Information Relating to Purchasers
SCHEDULE B -- Defined Terms
SCHEDULE B-1 -- Existing Investments
SCHEDULE 5.3 -- Disclosure Materials
SCHEDULE 5.4 -- Subsidiaries of the Company and Ownership of
Subsidiary Stock; Affiliates
SCHEDULE 5.5 -- Financial Statements
SCHEDULE 5.8 -- Certain Litigation
SCHEDULE 5.11 -- Licenses, Permits, etc.
SCHEDULE 5.14 -- Use of Proceeds
SCHEDULE 5.15 -- Existing Indebtedness
SCHEDULE 10.6 -- Existing Liens
EXHIBIT 1.1(a) -- Form of Senior Note
EXHIBIT 1.1(b) -- Form of Subsidiary Guaranty
EXHIBIT 1.1(c) -- Form of Supplement
EXHIBIT 1.2(a) -- Form of Series 1999-A Senior Note
EXHIBIT 1.2(b) -- Form of Series 1999-B Senior Note
EXHIBIT 1.2(c) -- Form of Series 1999-C Senior Note
EXHIBIT 4.4(a) -- Form of Opinion of Counsel for the Company
EXHIBIT 4.4(b) -- Form of Opinion of Special Counsel to the
Purchasers
iv
<PAGE>
CARRIAGE SERVICES, INC.
1300 Post Oak Boulevard
Suite 1500
Houston, TX 77056-3012
(281) 556-7400
Fax: (281) 556-7401
$300,000,000
Senior Notes Issuable In Series
$25,000,000 7.73% Senior Notes, Series 1999-A, due July 30, 2004
$60,000,000 7.96% Senior Notes, Series 1999-B, due July 30, 2006
$25,000,000 8.06% Senior Notes, Series 1999-C,due July 30, 2008
Dated as of July 1, 1999
TO EACH OF THE PURCHASERS LISTED IN
THE ATTACHED SCHEDULE A:
Ladies and Gentlemen:
CARRIAGE SERVICES, INC., a Delaware corporation (the "COMPANY"),
agrees with you as follows:
1. AUTHORIZATION OF NOTES.
1.1. AMOUNT; ESTABLISHMENT OF SERIES.
The Company is contemplating the issue and sale of up to
$300,000,000 aggregate principal amount of its Senior Notes issuable in series
(the "NOTES", such term to include any such Notes issued in substitution
therefor pursuant to Section 13 of this Agreement). The Notes will be
substantially in the form set out in Exhibit 1.1(a), with such changes
therefrom, if any, as may be approved by the purchasers of such Notes, or series
thereof, and the Company. Certain capitalized terms used in this Agreement are
defined in Schedule B; references to a "SCHEDULE" or an "EXHIBIT" are, unless
otherwise specified, to a Schedule or an Exhibit attached to this Agreement. The
Notes may be issued in one or more series. Subject to Section 22, the Notes will
be guaranteed by each Subsidiary that is now or in the future becomes a
signatory to the Bank Guaranty (individually, a "SUBSIDIARY GUARANTOR" and
collectively, the "SUBSIDIARY GUARANTORS") pursuant to a guaranty in
substantially the form of Exhibit 1.1(b) (the "SUBSIDIARY GUARANTY"). Each
series of Notes, other than the initial series, shall be issued pursuant to a
supplement to this Agreement (a "SUPPLEMENT") in substantially the form of
Exhibit 1.1(c), and shall be subject to the following terms and conditions:
<PAGE>
(a) the designation of each series of Notes shall distinguish the
Notes of one series from the Notes of all other series;
(b) the Notes of each series shall rank PARI PASSU with the Notes of
all other series, the Credit Agreement and the Company's other outstanding
unsecured senior Indebtedness;
(c) each series of Notes shall be dated the date of issue, bear
interest at such rate or rates, mature on such date or dates, be subject
to such mandatory prepayments on the dates and with the Make-Whole
Amounts, if any, as are provided in the Supplement under which such Notes
are issued, and shall have such additional or different conditions
precedent to closing and such additional or different representations and
warranties or, subject to Section 1.1(d), other terms and provisions as
shall be specified in such Supplement;
(d) any additional covenants, Defaults, Events of Default, rights or
similar provisions that are added by a Supplement for the benefit of the
series of Notes to be issued pursuant to such Supplement shall apply to
all outstanding Notes, whether or not the Supplement so provides; and
(e) except to the extent provided in foregoing clause (c), all of
the provisions of this Agreement shall apply to the Notes of each series.
The Purchasers of the Series 1999 Notes need not purchase subsequent series of
Notes.
1.2. THE SERIES 1999 NOTES.
The Company has authorized, as the initial series of Notes
hereunder, the issue and sale of $25,000,000 aggregate principal amount of Notes
to be designated as its 7.73% Senior Notes, Series 1999-A, due July 30, 2004
(the "SERIES 1999-A NOTES"), $60,000,000 aggregate principal amount of Notes to
be designated as its 7.96% Senior Notes, Series 1999-B, due July 30, 2006 (the
"SERIES 1999-B NOTES"), and $25,000,000 aggregate principal amount of Notes to
be designated as its 8.06% Senior Notes, Series 1999-C, due July 30, 2008 (the
"SERIES 1999-C NOTES") (the Series 1999-A Notes, Series 1999-B Notes and Series
1999-C Notes are collectively referred to as the "SERIES 1999 NOTES", such term
to include any such Notes issued in substitution therefor pursuant to Section 13
of this Agreement). The Series 1999-A Notes, Series 1999-B Notes and Series
1999-C Notes shall be substantially in the forms set out in Exhibits 1.2(a),
1.2(b) and 1.2(c), respectively, with such changes therefrom, if any, as may be
approved by you and the Company.
2. SALE AND PURCHASE OF SERIES 1999 NOTES.
Subject to the terms and conditions of this Agreement, the Company
will issue and sell to you and each of the other purchasers named in Schedule A
(the "OTHER PURCHASERS"), and you and the Other Purchasers will purchase from
the Company, at the Closing provided for in Section 3, Series 1999 Notes in the
series and principal amount specified opposite your name in Schedule A at the
purchase price of 100% of the principal amount thereof. Your obligation
2
<PAGE>
hereunder and the obligations of the Other Purchasers are several and not joint
obligations and you shall have no liability to any Person for the performance or
non-performance by any Other Purchaser hereunder.
3. CLOSING.
The sale and purchase of the Series 1999 Notes to be purchased by
you and the Other Purchasers shall occur at the offices of Gardner, Carton &
Douglas, Quaker Tower, Suite 3400, 321 North Clark Street, Chicago, Illinois
60610 at 9:00 a.m., Chicago time, at a closing (the "CLOSING") on July 27, 1999
or on such other Business Day thereafter on or prior to July 31, 1999 as may be
agreed upon by the Company and you and the Other Purchasers. At the Closing the
Company will deliver to you the Series 1999 Notes to be purchased by you in the
form of a single Series 1999 Note (or such greater number of Series 1999 Notes
in denominations of at least $500,000 as you may request) dated the date of the
Closing and registered in your name (or in the name of your nominee), against
delivery by you to the Company or its order of immediately available funds in
the amount of the purchase price therefor by wire transfer of immediately
available funds for the account of the Company to account number 1390009472 at
Bank of America, N.A., Houston, Texas, ABA # 111000025. If at the Closing the
Company shall fail to tender such Series 1999 Notes to you as provided above in
this Section 3, or any of the conditions specified in Section 4 shall not have
been fulfilled to your satisfaction, you shall, at your election, be relieved of
all further obligations under this Agreement, without thereby waiving any rights
you may have by reason of such failure or such nonfulfillment.
4. CONDITIONS TO CLOSING.
Your obligation to purchase and pay for the Series 1999 Notes to be
sold to you at the Closing is subject to the fulfillment to your satisfaction,
prior to or at the Closing, of the following conditions:
4.1. REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Company in this Agreement
shall be correct when made and at the time of the Closing.
4.2. PERFORMANCE; NO DEFAULT.
The Company shall have performed and complied with all agreements
and conditions contained in this Agreement required to be performed or complied
with by it prior to or at the Closing and after giving effect to the issue and
sale of the Series 1999 Notes (and the application of the proceeds thereof as
contemplated by Section 5.14) no Default or Event of Default shall have occurred
and be continuing. Neither the Company nor any Subsidiary shall have entered
into any transaction since the date of the Memorandum that would have been
prohibited by Section 10 had such Section applied since such date.
3
<PAGE>
4.3. COMPLIANCE CERTIFICATES.
(a) OFFICER'S CERTIFICATE. The Company shall have delivered to you
an Officer's Certificate, dated the date of the Closing, certifying that
the conditions specified in Sections 4.1, 4.2 and 4.9 have been fulfilled.
(b) SECRETARY'S CERTIFICATE. The Company shall have delivered to you
a certificate certifying as to the resolutions attached thereto and other
corporate proceedings relating to the authorization, execution and
delivery of the Series 1999 Notes, the Agreement and the Subsidiary
Guaranty.
4.4. OPINIONS OF COUNSEL.
You shall have received opinions in form and substance satisfactory
to you, dated the date of the Closing (a) from Snell & Smith, counsel for the
Company, covering the matters set forth in Exhibit 4.4(a) and covering such
other matters incident to the transactions contemplated hereby as you or your
counsel may reasonably request (and the Company instructs its counsel to deliver
such opinion to you) and (b) from Gardner, Carton & Douglas, your special
counsel in connection with such transactions, substantially in the form set
forth in Exhibit 4.4(b) and covering such other matters incident to such
transactions as you may reasonably request.
4.5. PURCHASE PERMITTED BY APPLICABLE LAW, ETC.
On the date of the Closing your purchase of Series 1999 Notes shall
(i) be permitted by the laws and regulations of each jurisdiction to which you
are subject, without recourse to provisions (such as section 1405(a)(8) of the
New York Insurance Law) permitting limited investments by insurance companies
without restriction as to the character of the particular investment, (ii) not
violate any applicable law or regulation (including, without limitation,
Regulation U, T or X of the Board of Governors of the Federal Reserve System)
and (iii) not subject you to any tax, penalty or liability under or pursuant to
any applicable law or regulation, which law or regulation was not in effect on
the date hereof. If requested by you, you shall have received an Officer's
Certificate certifying as to such matters of fact as you may reasonably specify
to enable you to determine whether such purchase is so permitted.
4.6. SALE OF OTHER NOTES.
Contemporaneously with the Closing the Company shall sell to the
Other Purchasers and the Other Purchasers shall purchase the Series 1999 Notes
to be purchased by them at the Closing as specified in Schedule A.
4.7. PAYMENT OF SPECIAL COUNSEL FEES.
Without limiting the provisions of Section 15.1, the Company shall
have paid on or before the Closing the fees, charges and disbursements of your
special counsel referred to in Section 4.4, to the extent reflected in a
statement of such counsel rendered to the Company at least one Business Day
prior to the Closing.
4
<PAGE>
4.8. PRIVATE PLACEMENT NUMBER.
Private Placement numbers issued by Standard & Poor's CUSIP Service
Bureau (in cooperation with the Securities Valuation Office of the National
Association of Insurance Commissioners) shall have been obtained for the Series
1999 Notes by Gardner, Carton & Douglas.
4.9. CHANGES IN CORPORATE STRUCTURE.
The Company shall not have changed its jurisdiction of incorporation
or been a party to any merger or consolidation and shall not have succeeded to
all or any substantial part of the liabilities of any other entity, at any time
following the date of the most recent financial statements referred to in
Schedule 5.5.
4.10. SUBSIDIARY GUARANTY.
Each Subsidiary Guarantor so designated in Schedule 5.4 shall have
executed and delivered the Subsidiary Guaranty.
4.11. INTERCREDITOR AGREEMENT.
You and each of the Other Purchasers shall have entered into an
Intercreditor Agreement satisfactory to you with each of the lenders party to
the Credit Agreement (the "INTERCREDITOR AGREEMENT").
4.12. PROCEEDINGS AND DOCUMENTS.
All corporate and other proceedings in connection with the
transactions contemplated by this Agreement and all documents and instruments
incident to such transactions shall be satisfactory to you and your special
counsel, and you and your special counsel shall have received all such
counterpart originals or certified or other copies of such documents as you or
they may reasonably request.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to you that:
5.1. ORGANIZATION; POWER AND AUTHORITY.
The Company is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation, and is duly
qualified as a foreign corporation and is in good standing in each jurisdiction
in which such qualification is required by law, other than those jurisdictions
as to which the failure to be so qualified or in good standing could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. The Company has the corporate power and authority to own or hold
under lease the properties it purports to own or hold under lease, to transact
the business it transacts and proposes to transact, to execute and deliver this
Agreement and the Series 1999 Notes and to perform the provisions hereof and
thereof.
5
<PAGE>
5.2. AUTHORIZATION, ETC.
This Agreement and the Series 1999 Notes have been duly authorized
by all necessary corporate action on the part of the Company, and this Agreement
constitutes, and upon execution and delivery thereof each Series 1999 Note will
constitute, a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as such enforceability
may be limited by (i) applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and (ii) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
The Subsidiary Guaranty has been duly authorized by all necessary
corporate action on the part of each Subsidiary Guarantor and upon execution and
delivery thereof will constitute the legal, valid and binding obligation of each
Subsidiary Guarantor, enforceable against each Subsidiary Guarantor in
accordance with its terms, except as such enforceability may be limited by (i)
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and (ii) general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
5.3. DISCLOSURE.
The Company, through its agent, Banc of America Securities LLC, has
delivered to you and each Other Purchaser a copy of a Private Placement
Memorandum, dated June 1999 (the "MEMORANDUM"), relating to the transactions
contemplated hereby. The Memorandum fairly describes, in all material respects,
the general nature of the business and principal properties of the Company and
its Subsidiaries. Except as disclosed in Schedule 5.3, the Memorandum, the
documents, certificates or other writings delivered to you by or on behalf of
the Company in connection with the transactions contemplated hereby and the
financial statements listed in Schedule 5.5, taken as a whole, do not contain
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading in light of the
circumstances under which they were made. Except as disclosed in the Memorandum
or as expressly described in Schedule 5.3, or in one of the documents,
certificates or other writings identified therein, or in the financial
statements listed in Schedule 5.5, since December 31, 1998, there has been no
change in the financial condition, operations, business or properties of the
Company or any Subsidiary except changes that individually or in the aggregate
could not reasonably be expected to have a Material Adverse Effect. There is no
fact known to the Company that could reasonably be expected to have a Material
Adverse Effect that has not been set forth herein or in the Memorandum or in the
other documents, certificates and other writings delivered to you by or on
behalf of the Company specifically for use in connection with the transactions
contemplated hereby.
5.4. ORGANIZATION AND OWNERSHIP OF SHARES OF SUBSIDIARIES; AFFILIATES.
(a) Schedule 5.4 contains (except as noted therein) complete and
correct lists (i) of the Company's Subsidiaries, showing, as to each
Subsidiary, the correct name thereof, the jurisdiction of its
organization, the percentage of shares of each class of its
6
<PAGE>
capital stock or similar equity interests outstanding owned by the Company
and each other Subsidiary and whether such Subsidiary is a Subsidiary
Guarantor or a Restricted Subsidiary or both, (ii) to the Company's
knowledge, of the Company's Affiliates, other than Subsidiaries, and (iii)
of the Company's directors and senior officers. Each Subsidiary listed in
Schedule 5.4 is designated a Restricted Subsidiary by the Company.
(b) All of the outstanding shares of capital stock or similar equity
interests of each Subsidiary shown in Schedule 5.4 as being owned by the
Company and its Subsidiaries have been validly issued, are fully paid and
nonassessable and are owned by the Company or another Subsidiary free and
clear of any Lien (except as otherwise disclosed in Schedule 5.4).
(c) Each Subsidiary identified in Schedule 5.4 is a corporation or
other legal entity duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization, and is duly qualified
as a foreign corporation or other legal entity and is in good standing in
each jurisdiction in which such qualification is required by law, other
than those jurisdictions as to which the failure to be so qualified or in
good standing could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. Each such Subsidiary has the
corporate or other power and authority to own or hold under lease the
properties it purports to own or hold under lease and to transact the
business it transacts and proposes to transact.
(d) No Subsidiary is a party to, or otherwise subject to any legal
restriction or any agreement (other than this Agreement, the agreements
listed on Schedule 5.4 and customary limitations imposed by corporate law
statutes) restricting the ability of such Subsidiary to pay dividends out
of profits or make any other similar distributions of profits to the
Company or any of its Subsidiaries that owns outstanding shares of capital
stock or similar equity interests of such Subsidiary.
5.5. FINANCIAL STATEMENTS.
The Company has delivered to you and each Other Purchaser copies of
the financial statements of the Company and its Subsidiaries listed on Schedule
5.5. All of said financial statements (including in each case the related
schedules and notes) fairly present in all material respects the consolidated
financial condition of the Company and its Subsidiaries as of the respective
dates specified in such Schedule and the consolidated results of their
operations and cash flows for the respective periods so specified and have been
prepared in accordance with GAAP consistently applied throughout the periods
involved except as set forth in the notes thereto (subject, in the case of any
interim financial statements, to normal year-end adjustments and the absence of
such notes as may be required under GAAP).
5.6. COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC.
The execution, delivery and performance by the Company of this
Agreement and the Series 1999 Notes will not (i) contravene, result in any
breach of, or constitute a default under, or result in the creation of any Lien
in respect of any property of the Company or any Subsidiary under, any
indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease,
corporate charter or by-laws, or any other Material agreement to which the
Company or
7
<PAGE>
any Subsidiary is bound or by which the Company or any Subsidiary or any of
their respective properties may be bound or affected, (ii) conflict with or
result in a breach of any of the terms, conditions or provisions of any order,
judgment, decree, or ruling of any court, arbitrator or Governmental Authority
applicable to the Company or any Subsidiary or (iii) violate any provision of
any statute or other rule or regulation of any Governmental Authority applicable
to the Company or any Subsidiary.
The execution, delivery and performance by each Subsidiary Guarantor
of the Subsidiary Guaranty will not (i) contravene, result in any breach of, or
constitute a default under, or result in the creation of any Lien in respect of
any property of such Subsidiary Guarantor under, any indenture, mortgage, deed
of trust, loan, purchase or credit agreement, lease, corporate charter or
by-laws, or any other Material agreement to which such Subsidiary Guarantor is
bound or by which such Subsidiary Guarantor or any of its properties may be
bound or affected, (ii) conflict with or result in a breach of any of the terms,
conditions or provisions of any order, judgment, decree, or ruling of any court,
arbitrator or Governmental Authority applicable to such Subsidiary Guarantor or
(iii) violate any provision of any statute or other rule or regulation of any
Governmental Authority applicable to such Subsidiary Guarantor.
5.7. GOVERNMENTAL AUTHORIZATIONS, ETC.
No consent, approval or authorization of, or registration, filing or
declaration with, any Governmental Authority is required in connection with the
execution, delivery or performance by the Company of this Agreement or the
Series 1999 Notes or the execution, delivery or performance by each Subsidiary
Guarantor of the Subsidiary Guaranty.
5.8. LITIGATION; OBSERVANCE OF AGREEMENTS, STATUTES AND ORDERS.
(a) Except as disclosed in Schedule 5.8, there are no actions, suits
or proceedings pending or, to the knowledge of the Company, threatened
against or affecting the Company or any Subsidiary or any property of the
Company or any Subsidiary in any court or before any arbitrator of any
kind or before or by any Governmental Authority that, individually or in
the aggregate, could reasonably be expected to have a Material Adverse
Effect.
(b) Neither the Company nor any Subsidiary is in default under any
term of any agreement or instrument to which it is a party or by which it
is bound, or any order, judgment, decree or ruling of any court,
arbitrator or Governmental Authority or is in violation of any applicable
law, ordinance, rule or regulation (including without limitation
Environmental Laws) of any Governmental Authority, which default or
violation, individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect.
5.9. TAXES.
The Company and its Subsidiaries have filed all tax returns that are
required to have been filed in any jurisdiction, and have paid all taxes shown
to be due and payable on such returns and all other taxes and assessments levied
upon them or their properties, assets, income or franchises, to the extent such
taxes and assessments have become due and payable and before
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they have become delinquent, except for any taxes and assessments (i) the amount
of which is not individually or in the aggregate Material or (ii) the amount,
applicability or validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which the Company or a Subsidiary,
as the case may be, has established adequate reserves in accordance with GAAP.
The Company knows of no basis for any other tax or assessment that could
reasonably be expected to have a Material Adverse Effect. The charges, accruals
and reserves on the books of the Company and its Subsidiaries in respect of
federal, state or other taxes for all fiscal periods are adequate under GAAP.
The federal income tax liabilities of the Company and its Subsidiaries have been
determined by the Internal Revenue Service and paid for all fiscal years up to
and including the fiscal year ended December 31, [ ].
5.10. TITLE TO PROPERTY; LEASES.
The Company and its Subsidiaries have good and sufficient title to
the properties that they own or purport to own and that individually or in the
aggregate are Material, including all such properties reflected in the most
recent audited balance sheet referred to in Section 5.5 or purported to have
been acquired by the Company or any Subsidiary after said date (except as sold
or otherwise disposed of in the ordinary course of business), in each case free
and clear of Liens prohibited by this Agreement. All leases that individually or
in the aggregate are Material are valid and subsisting and are in full force and
effect in all material respects.
5.11. LICENSES, PERMITS, ETC.
Except as disclosed in Schedule 5.11,
(a) the Company and its Subsidiaries own or possess all licenses,
permits, franchises, authorizations, patents, copyrights, service marks,
trademarks and trade names, or rights thereto, that individually or in the
aggregate are Material, without known Material conflict with the rights of
others;
(b) to the best knowledge of the Company, no product of the Company
infringes in any Material respect on any license, permit, franchise,
authorization, patent, copyright, service mark, trademark, trade name or
other right owned by any other Person; and
(c) to the best knowledge of the Company, there is no Material
violation by any Person of any right of the Company or any of its
Subsidiaries with respect to any patent, copyright, service mark,
trademark, trade name or other right owned or used by the Company or any
of its Subsidiaries.
5.12. COMPLIANCE WITH ERISA.
(a) The Company and each ERISA Affiliate have operated and
administered each Plan in compliance with all applicable laws except for
such instances of noncompliance as have not resulted in and could not
reasonably be expected to result in a Material Adverse Effect. Neither the
Company nor any ERISA Affiliate has incurred any liability pursuant to
Title I or IV of ERISA or the penalty or excise tax provisions of the Code
relating to employee benefit plans (as defined in section 3 of ERISA), and
no event,
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transaction or condition has occurred or exists that could reasonably be
expected to result in the incurrence of any such liability by the Company
or any ERISA Affiliate, or in the imposition of any Lien on any of the
rights, properties or assets of the Company or any ERISA Affiliate, in
either case pursuant to Title I or IV of ERISA or to such penalty or
excise tax provisions or to section 401(a)(29) or 412 of the Code, other
than such liabilities or Liens as would not be individually or in the
aggregate Material.
(b) The present value of the aggregate benefit liabilities under
each of the Plans (other than Multiemployer Plans), determined as of the
end of such Plan's most recently ended plan year on the basis of the
actuarial assumptions specified for funding purposes in such Plan's most
recent actuarial valuation report, did not exceed the aggregate current
value of the assets of such Plan allocable to such benefit liabilities.
The term "BENEFIT LIABILITIES" has the meaning specified in section 4001
of ERISA and the terms "CURRENT VALUE" and "PRESENT VALUE" have the
meaning specified in section 3 of ERISA.
(c) The Company and its ERISA Affiliates have not incurred
withdrawal liabilities (and are not subject to contingent withdrawal
liabilities) under section 4201 or 4204 of ERISA in respect of
Multiemployer Plans that individually or in the aggregate are Material.
(d) The expected postretirement benefit obligation (determined as of
the last day of the Company's most recently ended fiscal year in
accordance with Financial Accounting Standards Board Statement No. 106,
without regard to liabilities attributable to continuation coverage
mandated by section 4980B of the Code) of the Company and its Subsidiaries
is not Material or has been disclosed in the most recent audited
consolidated financial statements of the Company and its Subsidiaries.
(e) The execution and delivery of this Agreement and the issuance
and sale of the Notes hereunder will not involve any transaction that is
subject to the prohibitions of section 406 of ERISA or in connection with
which a tax could be imposed pursuant to section 4975(c)(1)(A)-(D) of the
Code. The representation by the Company in the first sentence of this
Section 5.12(e) is made in reliance upon and subject to the accuracy of
your representation in Section 6.2 as to the sources of the funds used to
pay the purchase price of the Notes to be purchased by you.
5.13. PRIVATE OFFERING BY THE COMPANY.
Neither the Company nor anyone acting on its behalf has offered the
Series 1999 Notes or the Subsidiary Guaranty or any similar securities for sale
to, or solicited any offer to buy any of the same from, or otherwise approached
or negotiated in respect thereof with, any Person other than you, the Other
Purchasers and not more than [ ] other Institutional Investors, each of which
has been offered the Series 1999 Notes at a private sale for investment. Neither
the Company nor anyone acting on its behalf has taken, or will take, any action
that would subject the issuance or sale of the Series 1999 Notes or the
execution and delivery of the Subsidiary Guaranty to the registration
requirements of section 5 of the Securities Act.
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5.14. USE OF PROCEEDS; MARGIN REGULATIONS.
The Company will apply the proceeds of the sale of the Series 1999
Notes for general corporate purposes, including repayment of Indebtedness as set
forth in Schedule 5.14. No part of the proceeds from the sale of the Notes will
be used, directly or indirectly, for the purpose of buying or carrying any
margin stock within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System (12 CFR 221), or for the purpose of buying or carrying or
trading in any securities under such circumstances as to involve the Company in
a violation of Regulation X of said Board (12 CFR 224) or to involve any broker
or dealer in a violation of Regulation T of said Board (12 CFR 220). Margin
stock does not constitute more than 1% of the value of the consolidated assets
of the Company and its Subsidiaries and the Company does not have any present
intention that margin stock will constitute more than 1% of the value of such
assets. As used in this Section, the terms "MARGIN STOCK" and "PURPOSE OF BUYING
OR CARRYING" shall have the meanings assigned to them in said Regulation U.
5.15. EXISTING INDEBTEDNESS; FUTURE LIENS.
(a) Except as described therein, Schedule 5.15 sets forth a complete
and correct list of all outstanding Indebtedness of the Company and its
Subsidiaries as of May 31, 1999, since which date there has been no
Material change in the amounts, interest rates, sinking funds, installment
payments or maturities of the Indebtedness of the Company or its
Subsidiaries. Neither the Company nor any Subsidiary is in default and no
waiver of default is currently in effect, in the payment of any principal
or interest on any Indebtedness of the Company or such Subsidiary and no
event or condition exists with respect to any Indebtedness of the Company
or any Subsidiary and that would permit (or that with notice or the lapse
of time, or both, would permit) one or more Persons to cause such
Indebtedness to become due and payable before its stated maturity or
before its regularly scheduled dates of payment.
(b) Except as disclosed in Schedule 5.15, neither the Company nor
any Restricted Subsidiary has agreed or consented to cause or permit in
the future (upon the happening of a contingency or otherwise) any of its
property, whether now owned or hereafter acquired, to be subject to a Lien
not permitted by Section 10.6.
5.16. FOREIGN ASSETS CONTROL REGULATIONS, ETC.
Neither the sale of the Notes by the Company hereunder nor its use
of the proceeds thereof will violate the Trading with the Enemy Act, as amended,
or any of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto.
5.17. STATUS UNDER CERTAIN STATUTES.
Neither the Company nor any Subsidiary is subject to regulation
under the Investment Company Act of 1940, as amended, the Public Utility Holding
Company Act of 1935, as amended, the Interstate Commerce Act, as amended by the
ICC Termination Act, as amended, or the Federal Power Act, as amended.
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5.18. ENVIRONMENTAL MATTERS.
(a) Neither the Company nor any Subsidiary has knowledge of any
liability or has received any notice of any liability, and no proceeding
has been instituted asserting any liability against the Company or any of
its Subsidiaries or any of their respective real properties now owned,
leased or operated by any of them or other assets nor, to the knowledge of
the Company or any Subsidiary, has any such proceeding been instituted
against any of their respective real properties formerly owned, for damage
to the environment or violation of any Environmental Laws, except, in each
case, such as could not reasonably be expected to result in a Material
Adverse Effect.
(b) Neither the Company nor any Subsidiary has knowledge of any
facts that would give rise to any liability for violation of Environmental
Laws or damage to the environment emanating from, occurring on or in any
way related to real properties now or formerly owned, leased or operated
by any of them or to other assets or their use, except, in each case, such
as could not reasonably be expected to result in a Material Adverse
Effect;
(c) Neither the Company nor any Subsidiary has stored any Hazardous
Materials on real properties now or formerly owned, leased or operated by
any of them and has not disposed of any Hazardous Materials in a manner
contrary to any Environmental Laws in each case in any manner that could
reasonably be expected to result in a Material Adverse Effect; and
(d) All buildings on all real properties now owned, leased or
operated by the Company or any Subsidiary are, to the Company's knowledge,
in compliance with applicable Environmental Laws, except where failure to
comply could not reasonably be expected to result in a Material Adverse
Effect.
5.19. SOLVENCY OF SUBSIDIARY GUARANTORS.
After giving effect to the transactions contemplated herein, (i) the
present fair salable value of the assets of each Subsidiary Guarantor is in
excess of the amount that will be required to pay its probable liability on its
existing debts as said debts become absolute and matured, (ii) each Subsidiary
Guarantor has received reasonably equivalent value for executing and delivering
the Subsidiary Guaranty, (iii) the property remaining in the hands of each
Subsidiary Guarantor is not an unreasonably small capital, and (iv) each
Subsidiary Guarantor is able to pay its debts as they mature.
5.20. YEAR 2000 COMPLIANT.
The Company and its Subsidiaries have implemented measures to have
all critical business systems year 2000 compliant in a timely manner and the
advent of the year 2000 and its impact on such computer systems and on the
Company's and its Subsidiaries' suppliers and customers is not expected to have
a Material Adverse Effect.
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6. REPRESENTATIONS OF THE PURCHASERS.
6.1. PURCHASE FOR INVESTMENT.
You represent that you are purchasing the Series 1999 Notes for your
own account or for one or more separate accounts maintained by you or for the
account of one or more pension or trust funds and not with a view to the
distribution thereof, PROVIDED that the disposition of your or their property
shall at all times be within your or their control. You understand that the
Series 1999 Notes have not been registered under the Securities Act and may be
resold only if registered pursuant to the provisions of the Securities Act or if
an exemption from registration is available, except under circumstances where
neither such registration nor such an exemption is required by law, and that the
Company is not required to register the Notes.
6.2. SOURCE OF FUNDS.
You represent that at least one of the following statements is an
accurate representation as to each source of funds (a "SOURCE") to be used by
you to pay the purchase price of the Series 1999 Notes to be purchased by you
hereunder:
(a) if you are an insurance company, the Source does not include
assets allocated to any separate account maintained by you in which any
employee benefit plan (or its related trust) has any interest, other than
a separate account that is maintained solely in connection with your fixed
contractual obligations under which the amounts payable, or credited, to
such plan and to any participant or beneficiary of such plan (including
any annuitant) are not affected in any manner by the investment
performance of the separate account; or
(b) the Source is either (i) an insurance company pooled separate
account, within the meaning of Department of Labor Prohibited Transaction
Class Exemption ("PTE") 90-1 (issued January 29, 1990), or (ii) a bank
collective investment fund, within the meaning of the PTE 91-38 (issued
July 12, 1991) and, except as you have disclosed to the Company in writing
pursuant to this paragraph (b), no employee benefit plan or group of plans
maintained by the same employer or employee organization beneficially owns
more than 10% of all assets allocated to such pooled separate account or
collective investment fund; or
(c) the Source constitutes assets of an "investment fund" (within
the meaning of Part V of the QPAM Exemption) managed by a "qualified
professional asset manager" or "QPAM" (within the meaning of Part V of the
QPAM Exemption), no employee benefit plan's assets that are included in
such investment fund, when combined with the assets of all other employee
benefit plans established or maintained by the same employer or by an
affiliate (within the meaning of section V(c)(1) of the QPAM Exemption) of
such employer or by the same employee organization and managed by such
QPAM, exceed 20% of the total client assets managed by such QPAM, the
conditions of Part I(c) and (g) of the QPAM Exemption are satisfied,
neither the QPAM nor a person controlling or controlled by the QPAM
(applying the definition of "control" in section V(e) of the QPAM
Exemption) owns a 5% or more interest in the Company and (i) the identity
of such QPAM and (ii) the names of all employee benefit plans whose assets
are included in
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such investment fund have been disclosed to the Company in writing
pursuant to this paragraph (c); or
(d) the Source is a governmental plan; or
(e) the Source is one or more employee benefit plans, or a separate
account or trust fund comprised of one or more employee benefit plans,
each of which has been identified to the Company in writing pursuant to
this paragraph (e); or
(f) the Source does not include assets of any employee benefit plan,
other than a plan exempt from the coverage of ERISA; or
(g) the Source is an "insurance company general account" as such
term is defined in the Department of PTE 95-60 (issued July 12, 1995) and
there is no "employee benefit plan" with respect to which the aggregate
amount of such general account's reserves and liabilities for the
contracts held by or on behalf of such employee benefit plan and all other
employee benefit plans maintained by the same employer (and affiliates
thereof as defined in section V(a)(1) of PTE 95-60) or by the same
employee organization (in each case determined in accordance with the
provisions of PTE 95-60) exceeds 10% of the total reserves and liabilities
of such general account (as determined under PTE 95-60) (exclusive of
separate account liabilities) plus surplus as set forth in the National
Association of Insurance Commissioners Annual Statement filed with the
state of domicile of such Purchaser.
As used in this Section 6.2, the terms "EMPLOYEE BENEFIT PLAN", "GOVERNMENTAL
PLAN", "PARTY IN INTEREST" and "SEPARATE ACCOUNT" shall have the respective
meanings assigned to such terms in section 3 of ERISA.
7. INFORMATION AS TO COMPANY.
7.1. FINANCIAL AND BUSINESS INFORMATION
The Company shall deliver to each holder of Notes that is an
Institutional Investor:
(a) QUARTERLY STATEMENTS -- within 60 days after the end of each
quarterly fiscal period in each fiscal year of the Company (other than the
last quarterly fiscal period of each such fiscal year), duplicate copies
of,
(i) a consolidated balance sheet of the Company and its
Subsidiaries as at the end of such quarter, and
(ii) consolidated statements of income, changes in
stockholders' equity and cash flows of the Company and its
Subsidiaries, for such quarter and (in the case of the second and
third quarters) for the portion of the fiscal year ending with such
quarter,
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setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal year, all in reasonable
detail, prepared in accordance with GAAP applicable to quarterly financial
statements generally, and certified by a Senior Financial Officer as
fairly presenting, in all material respects, the financial condition of
the companies being reported on and their results of operations and cash
flows, subject to changes resulting from year-end adjustments, PROVIDED
that delivery within the time period specified above of copies of the
Company's Quarterly Report on Form 10-Q prepared in compliance with the
requirements therefor and filed with the Securities and Exchange
Commission shall be deemed to satisfy the requirements of this Section
7.1(a) so long as such Form 10-Q contains the financial statements
described in clauses (i) and (ii) hereof;
(b) ANNUAL STATEMENTS -- within 105 days after the end of each
fiscal year of the Company, duplicate copies of,
(i) a consolidated balance sheet of the Company and its
Subsidiaries, as at the end of such year, and
(ii) consolidated statements of income, changes in
stockholders' equity and cash flows of the Company and its
Subsidiaries, for such year,
setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail, prepared in accordance
with GAAP, and accompanied
(A) by an opinion thereon of independent certified
public accountants of recognized national standing, which opinion
shall state that such financial statements present fairly, in all
material respects, the financial position of the companies being
reported upon and their results of operations and cash flows and
have been prepared in conformity with GAAP, and that the examination
of such accountants in connection with such financial statements has
been made in accordance with generally accepted auditing standards,
and that such audit provides a reasonable basis for such opinion in
the circumstances, and
(B) a certificate of such accountants stating that they
have reviewed this Agreement and stating further whether, in making
their audit, they have become aware of any condition or event that
then constitutes a Default or an Event of Default, and, if they are
aware that any such condition or event then exists, specifying the
nature and period of the existence thereof (it being understood that
such accountants shall not be liable, directly or indirectly, for
any failure to obtain knowledge of any Default or Event of Default
unless such accountants should have obtained knowledge thereof in
making an audit in accordance with generally accepted auditing
standards or did not make such an audit),
provided that the delivery within the time period specified above of the
Company's Annual Report on Form 10-K for such fiscal year (together with
the Company's annual report to shareholders, if any, prepared pursuant to
Rule 14a-3 under the Exchange Act) prepared in accordance with the
requirements therefor and filed with the Securities and
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Exchange Commission, together with the accountant's certificate described
in clause (B) above, shall be deemed to satisfy the requirements of this
Section 7.1(b) so long as such Form 10-K contains the financial statements
described in clauses (i) and (ii) hereof;
(c) UNRESTRICTED SUBSIDIARIES -- if, at the time of delivery of any
financial statements pursuant to Section 7.1(a) or (b), Unrestricted
Subsidiaries account for more than 10% of (i) the consolidated total
assets of the Company and its Subsidiaries reflected in the balance sheet
included in such financial statements or (ii) the consolidated revenues of
the Company and its Subsidiaries reflected in the consolidated statement
of income included in such financial statements, an unaudited balance
sheet for all Unrestricted Subsidiaries taken as whole as at the end of
the fiscal period included in such financial statements and the related
unaudited statements of income, stockholders' equity and cash flows for
such Unrestricted Subsidiaries for such period, together with
consolidating statements reflecting all eliminations or adjustments
necessary to reconcile such group financial statements to the consolidated
financial statements of the Company and its Subsidiaries;
(d) SEC AND OTHER REPORTS -- promptly upon their becoming available,
one copy of (i) each financial statement, report, notice or proxy
statement sent by the Company or any Restricted Subsidiary to public
securities holders generally, and (ii) each regular or periodic report,
each registration statement (without exhibits except as expressly
requested by such holder), and each prospectus and all amendments thereto
filed by the Company or any Restricted Subsidiary with the Securities and
Exchange Commission and of all press releases and other statements made
available generally by the Company or any Restricted Subsidiary to the
public concerning developments that are Material;
(e) NOTICE OF DEFAULT OR EVENT OF DEFAULT -- promptly, and in any
event within five Business Days after a Responsible Officer obtains actual
knowledge of the existence of any Default or Event of Default or that any
Person has given any notice or taken any action with respect to a claimed
default hereunder or that any Person has given any notice or taken any
action with respect to a claimed default of the type referred to in
Section 11(f), a written notice specifying the nature and period of
existence thereof and what action the Company is taking or proposes to
take with respect thereto;
(f) ERISA MATTERS -- promptly, and in any event within 10 days after
a Responsible Officer becoming aware of any of the following, a written
notice setting forth the nature thereof and the action, if any, that the
Company or an ERISA Affiliate proposes to take with respect thereto:
(i) with respect to any Plan, any reportable event, as defined
in section 4043(b) of ERISA and the regulations thereunder, for
which notice thereof has not been waived pursuant to such
regulations as in effect on the date hereof; or
(ii) the taking by the PBGC of steps to institute, or the
threatening by the PBGC of the institution of, proceedings under
section 4042 of ERISA for the termination of, or the appointment of
a trustee to administer, any Plan, or the receipt by the Company or
any ERISA Affiliate of a notice from a Multiemployer
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Plan that such action has been taken by the PBGC with respect to
such Multiemployer Plan; or
(iii) any event, transaction or condition that could result in
the incurrence of any liability by the Company or any ERISA
Affiliate pursuant to Title I or IV of ERISA or the penalty or
excise tax provisions of the Code relating to employee benefit
plans, or in the imposition of any Lien on any of the rights,
properties or assets of the Company or any ERISA Affiliate pursuant
to Title I or IV of ERISA or such penalty or excise tax provisions,
if such liability or Lien, taken together with any other such
liabilities or Liens then existing, could reasonably be expected to
have a Material Adverse Effect;
(g) NOTICES FROM GOVERNMENTAL AUTHORITY -- promptly, and in
any event within 30 days of receipt thereof, copies of any notice to
the Company or any Restricted Subsidiary from any federal or state
Governmental Authority relating to any order, ruling, statute or
other law or regulation that could reasonably be expected to have a
Material Adverse Effect;
(h) REQUESTED INFORMATION -- with reasonable promptness, such
other data and information relating to the business, operations,
affairs, financial condition, assets or properties of the Company or
any of its Subsidiaries or relating to the ability of the Company to
perform its obligations hereunder and under the Notes as from time
to time may be reasonably requested by any such holder of Notes, so
long as the gathering of such data does not unreasonably interfere
with the Company's or any Subsidiary's ordinary course of business;
and
(i) SUPPLEMENTS TO AGREEMENT -- in the event an additional
series of Notes is, or is proposed to be, issued under this
Agreement, promptly, and in any event within 10 Business Days after
execution and delivery thereof, a true copy of the Supplement
pursuant to which such Notes are to be, or were, issued.
7.2. OFFICER'S CERTIFICATE.
Each set of financial statements delivered to a holder of Notes
pursuant to Section 7.1(a) or (b) shall be accompanied by a certificate of a
Senior Financial Officer setting forth:
(a) COVENANT COMPLIANCE -- the information (including
supporting calculations) required in order to establish whether the
Company was in compliance with the requirements of Section 10.1
through Section 10.14, inclusive, during the quarterly or annual
period covered by the statements then being furnished (including
with respect to each such Section, where applicable, the
calculations of the maximum or minimum amount, ratio or percentage,
as the case may be, permissible under the terms of such Sections,
and the calculation of the amount, ratio or percentage then in
existence); and
(b) EVENT OF DEFAULT -- a statement that such officer has
reviewed the relevant terms hereof and has made, or caused to be
made, under his or her supervision, a review of the transactions and
conditions of the Company and its Restricted Subsidiaries from
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the beginning of the quarterly or annual period covered by the
statements then being furnished to the date of the certificate and
that such review shall not have disclosed the existence during such
period of any condition or event that constitutes a Default or an
Event of Default or, if any such condition or event existed or
exists (including any such event or condition resulting from the
failure of the Company or any Restricted Subsidiary to comply with
any Environmental Law), specifying the nature and period of
existence thereof and what action the Company shall have taken or
proposes to take with respect thereto.
7.3. INSPECTION.
The Company will permit the representatives of each holder of Notes
that is an Institutional Investor:
(a) NO DEFAULT -- if no Default or Event of Default then exists, at
the expense of such holder and upon reasonable prior notice to the
Company, to visit the principal executive office of the Company, to
discuss the affairs, finances and accounts of the Company and its
Restricted Subsidiaries with the Company's officers, and (with the consent
of the Company, which consent will not be unreasonably withheld) its
independent public accountants, and (with the consent of the Company,
which consent will not be unreasonably withheld) to visit the other
offices and properties of the Company and each Restricted Subsidiary, all
at such reasonable times and as often as may be reasonably requested in
writing, but not more often than once a quarter; and
(b) DEFAULT -- if a Default or Event of Default then exists, at the
expense of the Company (provided that such expense is reasonably incurred)
and upon reasonable prior notice to the Company, to visit the principal
executive office of the Company, to discuss the affairs, finances and
accounts of the Company and its Restricted Subsidiaries with the Company's
officers, and its independent public accountants, and to visit the other
offices and properties of the Company and each Restricted Subsidiary, all
at such reasonable times and as often as may be reasonably requested in
writing.
8. PREPAYMENT OF THE NOTES.
8.1. REQUIRED PREPAYMENTS.
(a) NO SCHEDULED PREPAYMENTS. No regularly scheduled prepayments are
due on the Series 1999 Notes prior to their stated maturity.
(b) CHANGE OF CONTROL PREPAYMENTS. Upon the occurrence of a Change
of Control Event, the Company, upon notice as provided below, shall offer
to prepay the entire principal amount of the Notes at 100% of the
principal amount thereof, plus accrued interest and the Make-Whole Amount
determined for the prepayment date with respect to such principal amount.
The Company shall give notice of any offer to prepay the Notes to each
holder of the Notes within 15 days after any Responsible Officer has
knowledge of a Change of Control Event. Such notice shall specify (i) the
nature of the Change of Control Event, (ii) the date fixed for prepayment
which, to the extent practicable, shall be not less than 30 or more than
60 calendar days after the date of such
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notice, but in any event shall not be later than the Effective Date of the
Change of Control if it has not occurred or 15 days thereafter if it has
occurred, (iii) the estimated Effective Date of the Change of Control if
it has not occurred, (iv) the interest to be paid on the prepayment date
with respect to such principal amount being prepaid and (v) the date by
which any holder of a Note that wishes to accept such offer must deliver
notice thereof to the Company, which shall not be sooner than 15 days
after receipt by a holder of such notice. The notice shall be accompanied
by a certificate of a Senior Financial Officer as to the estimated
Make-Whole Amount due in connection with such prepayment (calculated as if
the date of such notice were the date of the prepayment), setting forth
the details of such computation. Failure by a holder of Notes to respond
to an offer made pursuant to this Section 8.1(b) shall be deemed to
constitute acceptance of such offer by such holder. Two Business Days
prior to such prepayment, the Company shall deliver to each holder of
Notes a certificate of a Senior Financial Officer specifying the
calculation of the Make-Whole Amount as of the specified prepayment date.
If any holder of Notes objects to such calculation by written notice to
the Company, the Make-Whole Amount calculated by such holder and specified
in such notice shall be final and binding on the Company, absent
demonstrable error, with respect to the prepayment of the Notes held by
all holders.
The obligation of the Company to prepay Notes pursuant to the offers
required by, and accepted in accordance with, this paragraph (b) is
subject to the effectiveness of the Change of Control Event in respect of
which such offers and acceptances shall have been made. In the event that
the Effective Date of the Change of Control does not occur on the proposed
prepayment date in respect thereof, the prepayment shall be deferred until
and shall be made on the Effective Date of the Change of Control. The
Company shall keep each holder of Notes reasonably and timely informed of
(i) any such deferral of the date of prepayment, (ii) the expected
Effective Date of the Change of Control and (iii) any determination by the
Company that efforts to consummate the change of control constituting the
Change of Control Event have ceased or been abandoned (in which case the
offers and acceptances made pursuant to this Section 8.1(b) shall be
deemed rescinded).
8.2. OPTIONAL PREPAYMENTS WITH MAKE-WHOLE AMOUNT.
The Company may, at its option, upon notice as provided below,
prepay on any Business Day all, or from time to time any part of, the Notes of
any series, including the Series 1999 Notes (but not a separate series within
the Series 1999 Notes; it being understood that any prepayment with respect to
the Series 1999 Notes shall be allocated pro rata among all Series 1999 Notes at
the time outstanding), in an amount not less than $2,000,000 in the aggregate in
the case of a partial prepayment, at 100% of the principal amount so prepaid,
plus accrued interest and the Make-Whole Amount determined for the prepayment
date with respect to such principal amount. The Company will give each holder of
Notes of the series to be prepaid written notice of each optional prepayment
under this Section 8.2 not less than 30 days and not more than 60 days prior to
the Business Day fixed for such prepayment. Each such notice shall specify such
date, the aggregate principal amount of the Notes to be prepaid on such date,
the principal amount of each Note held by such holder to be prepaid (determined
in accordance with Section 8.3), and the interest to be paid on the prepayment
date with respect to such principal amount being prepaid, and shall be
accompanied by a certificate of a Senior Financial Officer as
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to the estimated Make-Whole Amount due in connection with such prepayment
(calculated as if the date of such notice were the date of the prepayment),
setting forth the details of such computation. Two Business Days prior to such
prepayment, the Company shall deliver to each holder of Notes a certificate of a
Senior Financial Officer specifying the calculation of such Make-Whole Amount as
of the specified prepayment date. If any holder of Notes objects to such
calculation by written notice to the Company, the Make-Whole Amount calculated
by such holder and specified in such notice shall be final and binding on the
Company, absent demonstrable error, with respect to the prepayment of the Notes
held by all holders.
8.3. ALLOCATION OF PARTIAL PREPAYMENTS.
In the case of each partial prepayment of the Notes of a series (but
not a separate series within the Series 1999 Notes), the principal amount of the
Notes of such series to be prepaid shall be allocated among all of the Notes of
such series at the time outstanding in proportion, as nearly as practicable, to
the respective unpaid principal amounts thereof not theretofore called for
prepayment. In the case of each prepayment of the Series 1999 Notes, the
principal amount to be prepaid shall be allocated pro rata among all of the
Series 1999 Notes at the time outstanding.
8.4. MATURITY; SURRENDER, ETC.
In the case of each prepayment of Notes pursuant to this Section 8,
the principal amount of each Note to be prepaid shall mature and become due and
payable on the date fixed for such prepayment, together with interest on such
principal amount accrued to such date and the applicable Make-Whole Amount, if
any. From and after such date, unless the Company shall fail to pay such
principal amount when so due and payable, together with the interest and
Make-Whole Amount, if any, as aforesaid, interest on such principal amount shall
cease to accrue. Any Note paid or prepaid in full shall be surrendered to the
Company and canceled and shall not be reissued, and no Note shall be issued in
lieu of any prepaid principal amount of any Note.
8.5. PURCHASE OF NOTES.
The Company will not, and will not permit any Affiliate to,
purchase, redeem, prepay or otherwise acquire, directly or indirectly, any of
the outstanding Notes except upon the payment or prepayment of the Notes in
accordance with the terms of this Agreement and the Notes. The Company will
promptly cancel all Notes acquired by it or any Affiliate pursuant to any
payment, prepayment or purchase of Notes pursuant to any provision of this
Agreement and no Notes may be issued in substitution or exchange for any such
Notes.
8.6. MAKE-WHOLE AMOUNT.
The term "MAKE-WHOLE AMOUNT" means, with respect to any Note, an
amount equal to the excess, if any, of the Discounted Value of the Remaining
Scheduled Payments with respect to the Called Principal of such Note over the
amount of such Called Principal, PROVIDED that the Make-Whole Amount may in no
event be less than zero. For the purposes of determining the Make-Whole Amount,
the following terms have the following meanings:
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"CALLED PRINCIPAL" means, with respect to any Note, the principal of
such Note that is to be prepaid pursuant to Section 8.1(b) or Section 8.2
or has become or is declared to be immediately due and payable pursuant to
Section 12.1, as the context requires.
"DISCOUNTED VALUE" means, with respect to the Called Principal of
any Note, the amount obtained by discounting all Remaining Scheduled
Payments with respect to such Called Principal from their respective
scheduled due dates to the Settlement Date with respect to such Called
Principal, in accordance with accepted financial practice and at a
discount factor (applied on the same periodic basis as that on which
interest on the Notes is payable) equal to the Reinvestment Yield with
respect to such Called Principal.
"REINVESTMENT YIELD" means, with respect to the Called Principal of
any Note, .50% over the yield to maturity implied by (i) the yields
reported, as of 10:00 A.M. (New York City time) on the second Business Day
preceding the Settlement Date with respect to such Called Principal, on
the display designated as the "PX Screen" on the Bloomberg Financial
Market Service (or such other display as may replace the PX Screen on
Bloomberg Financial Market Service) for actively traded U.S. Treasury
securities having a maturity equal to the Remaining Average Life of such
Called Principal as of such Settlement Date, or (ii) if such yields are
not reported as of such time or the yields reported as of such time are
not ascertainable (including by way of interpolation), the Treasury
Constant Maturity Series Yields reported, for the latest day for which
such yields have been so reported as of the second Business Day preceding
the Settlement Date with respect to such Called Principal, in Federal
Reserve Statistical Release H.15 (519) (or any comparable successor
publication) for actively traded U.S. Treasury securities having a
constant maturity equal to the Remaining Average Life of such Called
Principal as of such Settlement Date. Such implied yield will be
determined, if necessary, by (a) converting U.S. Treasury bill quotations
to bond-equivalent yields in accordance with accepted financial practice
and (b) interpolating linearly between (1) the actively traded U.S.
Treasury security with the maturity closest to and greater than the
Remaining Average Life and (2) the actively traded U.S. Treasury security
with the maturity closest to and less than the Remaining Average Life.
"REMAINING AVERAGE LIFE" means, with respect to any Called
Principal, the number of years (calculated to the nearest one-twelfth
year) obtained by dividing (i) such Called Principal into (ii) the sum of
the products obtained by multiplying (a) the principal component of each
Remaining Scheduled Payment with respect to such Called Principal by (b)
the number of years (calculated to the nearest one-twelfth year) that will
elapse between the Settlement Date with respect to such Called Principal
and the scheduled due date of such Remaining Scheduled Payment.
"REMAINING SCHEDULED PAYMENTS" means, with respect to the Called
Principal of any Note, all payments of such Called Principal and interest
thereon that would be due after the Settlement Date with respect to such
Called Principal if no payment of such Called Principal were made prior to
its scheduled due date, PROVIDED that if such Settlement Date is not a
date on which interest payments are due to be made under the terms of the
Notes, then the amount of the next succeeding scheduled interest payment
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will be reduced by the amount of interest accrued to such Settlement Date
and required to be paid on such Settlement Date pursuant to Section 8.2 or
12.1.
"SETTLEMENT DATE" means, with respect to the Called Principal of any
Note, the date on which such Called Principal is to be prepaid pursuant to
Section 8.1(b) or Section 8.2 or has become or is declared to be
immediately due and payable pursuant to Section 12.1, as the context
requires.
9. AFFIRMATIVE COVENANTS.
The Company covenants that so long as any of the Notes are
outstanding:
9.1. COMPLIANCE WITH LAW.
The Company will, and will cause each Subsidiary to, comply with all
laws, ordinances or governmental rules or regulations to which each of them is
subject, including, without limitation, Environmental Laws, and will obtain and
maintain in effect all licenses, certificates, permits, franchises and other
governmental authorizations necessary to the ownership of their respective
properties or to the conduct of their respective businesses, in each case to the
extent necessary to ensure that non-compliance with such laws, ordinances or
governmental rules or regulations or failures to obtain or maintain in effect
such licenses, certificates, permits, franchises and other governmental
authorizations could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
9.2. INSURANCE.
The Company will, and will cause each Restricted Subsidiary to,
maintain, with financially sound and reputable insurers, insurance with respect
to their respective properties and businesses against such casualties and
contingencies, of such types, on such terms and in such amounts (including
deductibles, co-insurance and self-insurance, if adequate reserves are
maintained with respect thereto) as is customary in the case of entities of
established reputations engaged in the same or a similar business and similarly
situated.
9.3. MAINTENANCE OF PROPERTIES.
The Company will and will cause each Restricted Subsidiary to
maintain and keep, or cause to be maintained and kept, their respective
properties in good repair, working order and condition (other than ordinary wear
and tear), so that the business carried on in connection therewith may be
properly conducted at all times, provided that this Section shall not prevent
the Company or any Restricted Subsidiary from discontinuing the operation and
the maintenance of any of its properties if such discontinuance is desirable in
the conduct of its business and the Company has concluded that such
discontinuance could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
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9.4. PAYMENT OF TAXES AND CLAIMS.
The Company will, and will cause each Subsidiary to, file all tax
returns required to be filed in any jurisdiction and to pay and discharge all
taxes shown to be due and payable on such returns and all other taxes,
assessments, governmental charges, or levies imposed on them or any of their
properties, assets, income or franchises, to the extent such taxes and
assessments have become due and payable and before they have become delinquent
and all claims for which sums have become due and payable that have or might
become a Lien on properties or assets of the Company or any Restricted
Subsidiary, provided that neither the Company nor any Subsidiary need file any
such return or pay any such tax or assessment or claims if (i) the amount,
applicability or validity thereof is contested by the Company or such Subsidiary
on a timely basis in good faith and in appropriate proceedings, and the Company
or a Subsidiary has established adequate reserves therefor in accordance with
GAAP on the books of the Company or such Subsidiary or (ii) the nonfiling of all
such returns and the nonpayment of all such taxes and assessments in the
aggregate could not reasonably be expected to have a Material Adverse Effect.
9.5. CORPORATE EXISTENCE, ETC.
Subject to Section 10.9, the Company will at all times preserve and
keep in full force and effect its corporate existence. Subject to Sections 10.7
and 10.9, the Company will at all times preserve and keep in full force and
effect the corporate existence of each Restricted Subsidiary (unless merged into
the Company or a Wholly Owned Restricted Subsidiary) and all rights and
franchises of the Company and its Restricted Subsidiaries unless, in the good
faith judgment of the Company, the termination of or failure to preserve and
keep in full force and effect such corporate existence, right or franchise could
not, individually or in the aggregate, have a Material Adverse Effect. 10.
NEGATIVE COVENANTS.
The Company covenants that so long as any of the Notes are
outstanding:
10.1. ADJUSTED CONSOLIDATED NET WORTH.
The Company will not permit Adjusted Consolidated Net Worth at any
time to be less than the sum of (a) $250,000,000, plus (b) the cumulative sum of
50% of Consolidated Net Income, (but only if a positive number) for each
completed fiscal quarter, or portion thereof, ending after June 30, 1999, plus
(c) 100% of the increases in Adjusted Consolidated Net Worth resulting from any
sale or issuance of any equity securities (other than the Trust Convertible
Preferred Securities), of, or any other additions to capital by, the Company or
its Restricted Subsidiaries during each completed fiscal quarter, or portion
thereof, ending after June 30, 1999.
10.2. CONSOLIDATED INDEBTEDNESS.
The Company will not permit the ratio of Consolidated Indebtedness
to Consolidated Total Capitalization to be greater than 60% at any time.
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10.3. INDEBTEDNESS OF RESTRICTED SUBSIDIARIES.
The Company will not permit any Restricted Subsidiary to create,
assume, incur or otherwise become liable for, directly or indirectly, any
Indebtedness, other than:
(a) Indebtedness owed to the Company or a Wholly Owned Restricted
Subsidiary;
(b) Indebtedness of a Subsidiary outstanding at the time of its
acquisition by the Company and initial designation as a Restricted
Subsidiary, provided that (i) such Indebtedness was not incurred in
contemplation of such Subsidiary becoming a Restricted Subsidiary and (ii)
immediately after giving effect to the designation of such Subsidiary as a
Restricted Subsidiary, no Default or Event of Default would exist;
(c) Guaranties of Indebtedness of the Company by a Subsidiary
Guarantor;
(d) additional Indebtedness, provided that after giving effect to
the incurrence thereof and the application of the proceeds thereof,
Priority Debt does not exceed 25% of Adjusted Consolidated Net Worth.
10.4. FIXED CHARGE COVERAGE RATIO.
The Company will not permit the ratio (calculated as of the end of
each fiscal quarter) of Consolidated Income Available for Fixed Charges to
Consolidated Fixed Charges for the period of four quarters ending as of each
fiscal quarter to be less than 1.75 to 1.00 at any time.
10.5. RESTRICTED PAYMENTS.
The Company will not, and will not permit any Restricted Subsidiary
to, at any time, declare or make, or incur any liability to declare or make, any
Restricted Payment or Restricted Investment unless immediately after giving
effect to such action no Default or Event of Default would exist.
10.6. LIENS.
The Company will not, and will not permit any Restricted Subsidiary
to, permit to exist, create, assume or incur, directly or indirectly, any Lien
on its properties or assets, whether now owned or hereafter acquired, except:
(a) Liens for taxes, assessments or governmental charges not then
due and delinquent or the nonpayment of which is permitted by Section 9.4;
(b) Liens incidental to the conduct of business or the ownership of
properties and assets (including landlords', lessors', carriers',
warehousemen's, mechanics', materialmen's and other similar Liens) and
Liens to secure the performance of bids, tenders, leases or trade
contracts, or to secure statutory obligations (including obligations under
workers compensation, unemployment insurance and other social security
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legislation), surety or appeal bonds or other Liens of like general nature
incurred in the ordinary course of business and not in connection with the
borrowing of money;
(c) any judgment Lien, unless the judgment it secures has not,
within 60 days after the entry thereof, been discharged or execution
thereof stayed pending appeal, or has not been discharged within 60 days
after the expiration of any such stay;
(d) Liens securing Indebtedness of a Restricted Subsidiary to the
Company or to another Wholly Owned Restricted Subsidiary;
(e) Liens existing on property of the Company or any Restricted
Subsidiary as of the date of this Agreement that are described in Schedule
10.6;
(f) Liens in the nature of leases, subleases, zoning restrictions,
easements, rights of way and other rights and restrictions of record on
the use of real property, and defects in title, incidental to the
ownership of property or incurred in the ordinary course of business,
which, individually and in the aggregate, do not materially impair the use
or value of the property subject thereto;
(g) Liens (i) existing on property at the time of its acquisition by
the Company or a Restricted Subsidiary and not created in contemplation
thereof, whether or not the Indebtedness secured by such Lien is assumed
by the Company or a Restricted Subsidiary; or (ii) on property created
contemporaneously with its acquisition or within 270 days of the
acquisition or completion of construction thereof to secure or provide for
all or a portion of the purchase price or cost of construction of such
property; or (iii) existing on property of a Person at the time such
Person is merged or consolidated with, or becomes a Restricted Subsidiary
of, or substantially all of its assets are acquired by, the Company or a
Restricted Subsidiary and not created in contemplation thereof; PROVIDED
that in the case of clauses (i, (ii) and (iii) such Liens do not
extend to additional property of the Company or any Restricted Subsidiary
(other than property that is an improvement to or is acquired for specific
use in connection with the subject property) and, in the case of clause
(ii) only, that the aggregate principal amount of Indebtedness secured by
each such Lien does not exceed the lesser of the fair market value
(determined in good faith by the board of directors of the Company or by
one or more officers of the Company to whom authority to enter into such
transaction has been delegated by the board of directors) or cost of
acquisition or construction of the property subject thereto;
(h) Liens resulting from extensions, renewals or replacements of
Liens permitted by paragraphs (e) and (g), PROVIDED that (i) there is no
increase in the principal amount or decrease in maturity of the
Indebtedness secured thereby at the time of such extension, renewal or
replacement, (ii) any new Lien attaches only to the same property
theretofore subject to such earlier Lien and (iii) immediately after such
extension, renewal or replacement no Default or Event of Default would
exist; and
(i) additional Liens securing Indebtedness not otherwise permitted
by paragraphs (a) through (h) above, provided that, at the time of
creation, assumption or incurrence thereof and immediately after giving
effect thereto and to the application of the
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proceeds therefrom, Priority Debt outstanding does not exceed 25% of
Adjusted Consolidated Net Worth.
10.7. SALE OF ASSETS.
The Company will not, and will not permit any Restricted Subsidiary
to, sell, lease, transfer or otherwise dispose of, including by way of merger
(collectively a "DISPOSITION"), any assets, including capital stock of
Restricted Subsidiaries, in one or a series of transactions, to any Person,
other than (a) Dispositions in the ordinary course of business, (b) Dispositions
by a Restricted Subsidiary to the Company or another Restricted Subsidiary, (c)
Dispositions permitted by Section 10.8, or (d) Dispositions not otherwise
permitted by this Section 10.7, provided that (i) each such Disposition is for a
consideration at least equal to the fair market value of the property subject
thereto and (ii) the aggregate net book value of all assets so disposed of in
any fiscal year pursuant to this Section 10.7(d) does not exceed 10% of
Consolidated Total Assets as of the end of the immediately preceding fiscal
year. Notwithstanding the foregoing, the Company may, or may permit any
Restricted Subsidiary to, make a Disposition and the assets subject to such
Disposition shall not be subject to or included in the foregoing limitation and
computation contained in clause (d) of the preceding sentence to the extent
that, within one year of such Disposition, the net proceeds from such
Disposition are (A) reinvested in productive assets by the Company or a
Restricted Subsidiary or (B) applied to the payment or prepayment of other
outstanding Indebtedness of the Company or any Restricted Subsidiary that is not
subordinated to the Notes and offered by the Company to be applied (not less
than 30 nor more than 60 days following such offer) to the prepayment of the
Notes on a pro rata basis with such other Indebtedness at a price of 100% of the
principal amount of the Notes to be prepaid together with interest accrued to
the date of prepayment, without payment of any Make-Whole Amount; provided that
if any holder of the Notes declines such offer, the proceeds that would have
been paid to such holder shall be offered pro rata to the other holders of the
Notes that have accepted the offer.
10.8. SALE-AND-LEASEBACKS.
The Company will not, and will not permit any Restricted Subsidiary
to, enter into any Sale-and-Leaseback Transaction unless:
(a) immediately after giving effect thereto, the sum of (i) the
aggregate amount of all Attributable Debt of the Company and its
Restricted Subsidiaries and (ii) outstanding Priority Debt does not exceed
25% of Adjusted Consolidated Net Worth; or
(b) the net proceeds of such Sale-and-Leaseback Transaction received
by the Company or such Restricted Subsidiary are applied within 180 days
of consummation thereof to the acquisition of productive assets or to the
payment or prepayment of other outstanding Indebtedness of the Company or
any Restricted Subsidiary that is not subordinated to the Notes and
offered by the Company to be applied (not less than 30 nor more than 60
days following such offer) to the prepayment of the Notes on a pro rata
basis with such other Indebtedness at a price of 100% of the principal
amount of the Notes to be prepaid together with interest accrued to the
date of prepayment, without payment of any Make-Whole Amount; provided
that if any holder of the Notes declines
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such offer, the proceeds that would have been paid to such holder shall be
offered pro rata to the other holders of the Notes that have accepted the
offer.
10.9. MERGERS, CONSOLIDATIONS, ETC.
The Company will not, and will not permit any Restricted Subsidiary
to, consolidate with or merge with any other Person or convey, transfer, sell or
lease all or substantially all of its assets in a single transaction or series
of transactions to any Person except that:
(a) the Company may consolidate or merge with any other Person or
convey, transfer, sell or lease all or substantially all of its assets in
a single transaction or series of transactions to any Person, provided
that:
(i) the successor formed by such consolidation or the survivor
of such merger or the Person that acquires by conveyance, transfer,
sale or lease all or substantially all of the assets of the Company
as an entirety, as the case may be, shall be a solvent corporation
organized and existing under the laws of the United States or any
state thereof (including the District of Columbia), and, if the
Company is not such corporation, such corporation (y) shall have
executed and delivered to each holder of any Notes its assumption of
the due and punctual performance and observance of each covenant and
condition of this Agreement and the Notes and (z) shall have caused
to be delivered to each holder of any Notes an opinion of
independent counsel reasonably satisfactory to the Required Holders,
to the effect that all agreements or instruments effecting such
assumption are enforceable in accordance with their terms and comply
with the terms hereof; and
(ii) immediately before and after giving effect to such
transaction, no Default or Event of Default shall exist; and
(b) Any Restricted Subsidiary may (x) merge into the Company
(provided that the Company is the surviving corporation) or another Wholly
Owned Restricted Subsidiary or (y) sell, transfer or lease all or any part
of its assets to the Company or another Wholly Owned Restricted
Subsidiary, or (z) merge or consolidate with, or sell, transfer or lease
all or substantially all of its assets to, any Person in a transaction
that is permitted by Section 10.7 or, as a result of which, such Person
becomes a Restricted Subsidiary; PROVIDED in each instance set forth in
clauses (x) through (z) that, immediately before and after giving effect
thereto, there shall exist no Default or Event of Default;
10.10. DISPOSITION OF STOCK OF RESTRICTED SUBSIDIARIES.
The Company will not permit any Restricted Subsidiary to issue its
capital stock, or any warrants, rights or options to purchase, or securities
convertible into or exchangeable for, such capital stock, to any Person other
than the Company or another Restricted Subsidiary except that, (i) where
required by applicable law, up to 20% of the outstanding capital stock of a
Restricted Subsidiary may be issued to and held by employees of the Company or
any such
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Restricted Subsidiary who are licensed funeral directors and (ii) in connection
with the Carriage Business Development Program not more than ten Restricted
Subsidiaries may issue preferred securities to not more than 20 individuals in
the aggregate. The Company will not, and will not permit any Restricted
Subsidiary to, sell, transfer or otherwise dispose of any shares of capital
stock of a Restricted Subsidiary if such sale would be prohibited by Section
10.7, except that, where required by applicable law, up to 20% of the
outstanding capital stock of a Restricted Subsidiary may be sold to and held by
employees of the Company or any such Restricted Subsidiary who are licensed
funeral directors. Notwithstanding anything in this Section 10.10 to the
contrary, the Company will not permit more than 20% of the outstanding capital
stock of a Restricted Subsidiary to be held by Persons other than the Company or
another Restricted Subsidiary for purposes of requiring with applicable law. If
a Restricted Subsidiary at any time ceases to be such as a result of a sale or
issuance of its capital stock, any Liens on property of the Company or any other
Restricted Subsidiary securing Indebtedness owed to such Restricted Subsidiary
that is not contemporaneously repaid, together with such Indebtedness, shall be
deemed to have been incurred by the Company or such other Restricted Subsidiary,
as the case may be, at the time such Restricted Subsidiary ceases to be a
Restricted Subsidiary.
10.11. DESIGNATION OF UNRESTRICTED AND RESTRICTED SUBSIDIARIES.
The Company may designate any Restricted Subsidiary as an
Unrestricted Subsidiary and any Unrestricted Subsidiary as a Restricted
Subsidiary; provided that, (a) if such Subsidiary initially is designated a
Restricted Subsidiary, then such Restricted Subsidiary may be subsequently
designated as an Unrestricted Subsidiary and such Unrestricted Subsidiary may be
subsequently designated as a Restricted Subsidiary, but no further changes in
designation may be made, (b) if such Subsidiary initially is designated an
Unrestricted Subsidiary, then such Unrestricted Subsidiary may be subsequently
designated as a Restricted Subsidiary and such Restricted Subsidiary may be
subsequently designated as an Unrestricted Subsidiary, but no further changes in
designation may be made, (c) immediately before and after designation of a
Restricted Subsidiary as an Unrestricted Subsidiary there exists no Default or
Event of Default and (d) a Subsidiary Guarantor may not be designated an
Unrestricted Subsidiary. If a Restricted Subsidiary at any time ceases to be
such as a result of a redesignation, any Liens on property of the Company or any
other Restricted Subsidiary securing Indebtedness owed to such Restricted
Subsidiary that is not contemporaneously repaid, together with such
Indebtedness, shall be deemed to have been incurred by the Company or such other
Restricted Subsidiary, as the case may be, at the time such Restricted
Subsidiary ceases to be a Restricted Subsidiary.
10.12. NATURE OF BUSINESS.
The Company will not, and will not permit any Restricted Subsidiary
to, engage in any business if, as a result, the general nature of the business
in which the Company and its Restricted Subsidiaries, taken as a whole, would
then be engaged would be substantially changed from the general nature of the
business in which the Company and its Restricted Subsidiaries, taken as a whole,
are engaged on the date of this Agreement as described in the Memorandum.
10.13. TRANSACTIONS WITH AFFILIATES.
The Company will not and will not permit any Restricted Subsidiary
to enter into directly or indirectly any Material transaction or Material group
of related transactions (including
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the purchase, lease, sale or exchange of properties of any kind or the rendering
of any service) with any Affiliate (other than the Company or another Restricted
Subsidiary), except upon fair and reasonable terms no less favorable to the
Company or such Restricted Subsidiary than would be obtainable in a comparable
arm's-length transaction with a Person not an Affiliate.
10.14. SUBSIDIARY GUARANTIES.
The Company will not permit any Restricted Subsidiary that is not a
Subsidiary Guarantor to become a signatory to the Bank Guaranty (or otherwise
guarantee bank obligations) or to another Guaranty of Indebtedness of the
Company or another Restricted Subsidiary unless, concurrently therewith, such
Restricted Subsidiary becomes a signatory to the Subsidiary Guaranty.
11. EVENTS OF DEFAULT.
An "EVENT OF DEFAULT" shall exist if any of the following conditions
or events shall occur and be continuing:
(a) the Company defaults in the payment of any principal or
Make-Whole Amount, if any, on any Note when the same becomes due and
payable, whether at maturity or at a date fixed for prepayment or by
declaration or otherwise; or
(b) the Company defaults in the payment of any interest on any Note
for more than five Business Days after the same becomes due and payable;
or
(c) the Company defaults in the performance of or compliance with
any term contained in Sections 7.1(e) or 10.1 through 10.14; or
(d) the Company defaults in the performance of or compliance with
any term contained herein (other than those referred to in paragraphs (a),
(b) and (c) of this Section 11) and such default is not remedied within 30
days after the earlier of (i) a Responsible Officer obtaining actual
knowledge of such default and (ii) the Company receiving written notice of
such default from any holder of a Note; or
(e) any representation or warranty made in writing by or on behalf
of the Company or any Subsidiary Guarantor or by any officer of the
Company or any Subsidiary Guarantor in this Agreement or the Subsidiary
Guaranty or in any writing furnished in connection with the transactions
contemplated hereby proves to have been false or incorrect in any material
respect on the date as of which made; or
(f) (i) the Company or any Subsidiary is in default (as principal or
as guarantor or other surety) in the payment of any principal of or
premium or make-whole amount or interest on any Indebtedness that is
outstanding in an aggregate principal amount in excess of the lesser of
$20,000,000 or 5% of Adjusted Consolidated Net Worth beyond any period of
grace provided with respect thereto, or (ii) the Company or any Subsidiary
is in default in the performance of or compliance with any term of any
evidence of any Indebtedness that is outstanding in an aggregate principal
amount in excess of the lesser of $20,000,000 or 5% of Adjusted
Consolidated Net Worth or of any
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mortgage, indenture or other agreement relating thereto or any other
condition exists, and as a consequence of such default or condition such
Indebtedness has become, or has been declared, due and payable before its
stated maturity or before its regularly scheduled dates of payment, or
(iii) as a consequence of the occurrence or continuation of any event or
condition (other than the giving of notice of optional redemption, the
passage of time or the right of the holder of Indebtedness to convert such
Indebtedness into equity interests), the Company or any Subsidiary has
become obligated to purchase or repay Indebtedness before its regular
maturity or before its regularly scheduled dates of payment in an
aggregate outstanding principal amount in excess of the lesser of
$20,000,000 or 5% of Adjusted Consolidated Net Worth; or
(g) the Company or any Subsidiary (i) is generally not paying, or
admits in writing its inability to pay, its debts as they become due, (ii)
files, or consents by answer or otherwise to the filing against it of, a
petition for relief or reorganization or arrangement or any other petition
in bankruptcy, for liquidation or to take advantage of any bankruptcy,
insolvency, reorganization, moratorium or other similar law of any
jurisdiction, (iii) makes an assignment for the benefit of its creditors,
(iv) consents to the appointment of a custodian, receiver, trustee or
other officer with similar powers with respect to it or with respect to
any substantial part of its property, (v) is adjudicated as insolvent or
to be liquidated, or (vi) takes corporate action for the purpose of any of
the foregoing; or
(h) a court or governmental authority of competent jurisdiction
enters an order appointing, without consent by the Company or any
Subsidiary, a custodian, receiver, trustee or other officer with similar
powers with respect to it or with respect to any substantial part of its
property, or constituting an order for relief or approving a petition for
relief or reorganization or any other petition in bankruptcy or for
liquidation or to take advantage of any bankruptcy or insolvency law of
any jurisdiction, or ordering the dissolution, winding-up or liquidation
of the Company or any Subsidiary, or any such petition shall be filed
against the Company or any Subsidiary and such petition shall not be
dismissed within 60 days; or
(i) a final judgment or judgments for the payment of money
aggregating in excess of the lesser of $20,000,000 or 5% of Adjusted
Consolidated Net Worth are rendered against one or more of the Company and
its Subsidiaries, which judgments are not, within 60 days after entry
thereof, bonded, discharged or stayed pending appeal, or are not
discharged within 60 days after the expiration of such stay; or
(j) if (i) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any plan year or part thereof or a
waiver of such standards or extension of any amortization period is sought
or granted under section 412 of the Code, (ii) a notice of intent to
terminate any Plan shall have been or is reasonably expected to be filed
with the PBGC or the PBGC shall have instituted proceedings under ERISA
section 4042 to terminate or appoint a trustee to administer any Plan or
the PBGC shall have notified the Company or any ERISA Affiliate that a
Plan may become a subject of any such proceedings, (iii) the aggregate
"amount of unfunded benefit liabilities" (within the meaning of section
4001(a)(18) of ERISA) under all Plans, determined in accordance with Title
IV of ERISA, shall exceed the lesser of $20,000,000 or 5% of Adjusted
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Consolidated Net Worth, (iv) the Company or any ERISA Affiliate shall have
incurred or is reasonably expected to incur any liability pursuant to
Title I or IV of ERISA or the penalty or excise tax provisions of the Code
relating to employee benefit plans, (v) the Company or any ERISA Affiliate
withdraws from any Multiemployer Plan, or (vi) the Company or any
Subsidiary establishes or amends any employee welfare benefit plan that
provides post-employment welfare benefits in a manner that would increase
the liability of the Company or any Subsidiary thereunder; and any such
event or events described in clauses (i) through (vi) above, either
individually or together with any other such event or events, could
reasonably be expected to have a Material Adverse Effect; or
(k) any Subsidiary Guarantor defaults in the performance of or
compliance with any term contained in the Subsidiary Guaranty or the
Subsidiary Guaranty ceases to be in full force and effect as a result of
acts taken by the Company or any Subsidiary Guarantor, except as provided
in Section 22, or is declared to be null and void in whole or in Material
part by a court or other governmental or regulatory authority having
jurisdiction or the validity or enforceability thereof shall be contested
by any of the Company or any Subsidiary Guarantor or any of them renounces
any of the same or denies that it has any or further liability thereunder.
As used in Section 11(j), the terms "EMPLOYEE BENEFIT PLAN" and "EMPLOYEE
WELFARE BENEFIT PLAN" shall have the respective meanings assigned to such terms
in section 3 of ERISA.
12. REMEDIES ON DEFAULT, ETC.
12.1. ACCELERATION.
(a) If an Event of Default with respect to the Company described in
paragraph (g) or (h) of Section 11 (other than an Event of Default
described in clause (i) of paragraph (g) or described in clause (vi) of
paragraph (g) by virtue of the fact that such clause encompasses clause
(i) of paragraph (g)) has occurred, all the Series 1999 Notes then
outstanding shall automatically become immediately due and payable.
(b) If any other Event of Default has occurred and is continuing,
any holder or holders of a majority or more in principal amount of the
Series 1999 Notes at the time outstanding may at any time at its or their
option, by notice or notices to the Company, declare all the Notes then
outstanding to be immediately due and payable.
(c) If any Event of Default described in paragraph (a) or (b) of
Section 11 has occurred and is continuing, any holder or holders of Series
1999 Notes at the time outstanding affected by such Event of Default may
at any time, at its or their option, by notice or notices to the Company,
declare all the Notes held by it or them to be immediately due and
payable.
Upon any Notes becoming due and payable under this Section 12.1,
whether automatically or by declaration, such Notes will forthwith mature and
the entire unpaid principal amount of such Notes, plus (x) all accrued and
unpaid interest thereon and (y) the Make-Whole Amount determined in respect of
such principal amount (to the full extent permitted by
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applicable law), shall all be immediately due and payable, in each and every
case without presentment, demand, protest or further notice, all of which are
hereby waived. The Company acknowledges, and the parties hereto agree, that each
holder of a Note has the right to maintain its investment in the Notes free from
repayment by the Company (except as herein specifically provided for) and that
the provision for payment of a Make-Whole Amount by the Company in the event
that the Notes are prepaid or are accelerated as a result of an Event of
Default, is intended to provide compensation for the deprivation of such right
under such circumstances.
12.2. OTHER REMEDIES.
If any Default or Event of Default has occurred and is continuing,
and irrespective of whether any Notes have become or have been declared
immediately due and payable under Section 12.1, the holder of any Note at the
time outstanding may proceed to protect and enforce the rights of such holder by
an action at law, suit in equity or other appropriate proceeding, whether for
the specific performance of any agreement contained herein or in any Note, or
for an injunction against a violation of any of the terms hereof or thereof, or
in aid of the exercise of any power granted hereby or thereby or by law or
otherwise.
12.3. RESCISSION.
At any time after any Series 1999 Notes have been declared due and
payable pursuant to clause (b) or (c) of Section 12.1, the holders of not less
than a majority in principal amount of the Series 1999 Notes then outstanding,
by written notice to the Company, may rescind and annul any such declaration and
its consequences if (a) the Company has paid all overdue interest on the Series
1999 Notes, all principal of and Make-Whole Amount, if any, on any Notes that
are due and payable and are unpaid other than by reason of such declaration, and
all interest on such overdue principal and Make-Whole Amount, if any, and (to
the extent permitted by applicable law) any overdue interest in respect of the
Notes, at the Default Rate, (b) all Events of Default and Defaults, other than
non-payment of amounts that have become due solely by reason of such
declaration, have been cured or have been waived pursuant to Section 17, and (c)
no judgment or decree has been entered for the payment of any monies due
pursuant hereto or to the Series 1999 Notes. No rescission and annulment under
this Section 12.3 will extend to or affect any subsequent Event of Default or
Default or impair any right consequent thereon.
12.4. NO WAIVERS OR ELECTION OF REMEDIES, EXPENSES, ETC.
No course of dealing and no delay on the part of any holder of any
Note in exercising any right, power or remedy shall operate as a waiver thereof
or otherwise prejudice such holder's rights, powers or remedies. No right, power
or remedy conferred by this Agreement or by any Note upon any holder thereof
shall be exclusive of any other right, power or remedy referred to herein or
therein or now or hereafter available at law, in equity, by statute or
otherwise. Without limiting the obligations of the Company under Section 15, the
Company will pay to the holder of each Note on demand such further amount as
shall be sufficient to cover all costs and expenses of such holder incurred in
any enforcement or collection under this Section 12, including, without
limitation, reasonable attorneys' fees, expenses and disbursements.
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13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
13.1. REGISTRATION OF NOTES.
The Company shall keep at its principal executive office a register
for the registration and registration of transfers of Notes. The name and
address of each holder of one or more Notes, each transfer thereof and the name
and address of each transferee of one or more Notes shall be registered in such
register. Prior to due presentment for registration of transfer, the Person in
whose name any Note shall be registered shall be deemed and treated as the owner
and holder thereof for all purposes hereof, and the Company shall not be
affected by any notice or knowledge to the contrary. The Company shall give to
any holder of a Note that is an Institutional Investor, promptly upon request
therefor, a complete and correct copy of the names and addresses of all
registered holders of Notes.
13.2. TRANSFER AND EXCHANGE OF NOTES.
Upon surrender of any Note at the principal executive office of the
Company for registration of transfer or exchange (and in the case of a surrender
for registration of transfer, duly endorsed or accompanied by a written
instrument of transfer duly executed by the registered holder of such Note or
his attorney duly authorized in writing and accompanied by the address for
notices of each transferee of such Note or part thereof), the Company shall
execute and deliver within five Business Days, at the Company's expense (except
as provided below), one or more new Notes (as requested by the holder thereof)
of the same series in exchange therefor, in an aggregate principal amount equal
to the unpaid principal amount of the surrendered Note. Each such new Note shall
be payable to such Person as such holder may request and shall be substantially
in the form of Note established for such series. Each such new Note shall be
dated and bear interest from the date to which interest shall have been paid on
the surrendered Note or dated the date of the surrendered Note if no interest
shall have been paid thereon. The Company may require payment of a sum
sufficient to cover any stamp tax or governmental charge imposed in respect of
any such transfer of Notes. Notes shall not be transferred in denominations of
less than $500,000, PROVIDED that if necessary to enable the registration of
transfer by a holder of its entire holding of Notes, one Note may be in a
denomination of less than $500,000. Any transferee, by its acceptance of a Note
registered in its name (or the name of its nominee), shall be deemed to have
made the representation set forth in Section 6.2.
13.3. REPLACEMENT OF NOTES.
Upon receipt by the Company of evidence reasonably satisfactory to
it of the ownership of and the loss, theft, destruction or mutilation of any
Note (which evidence shall be, in the case of an Institutional Investor, notice
from such Institutional Investor of such ownership and such loss, theft,
destruction or mutilation), and
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (PROVIDED that if the holder of such Note
is, or is a nominee for, an original Purchaser or another Institutional
Investor holder of a Note with a minimum net worth of at least
$50,000,000, such Person's own unsecured agreement of indemnity shall be
deemed to be satisfactory), or
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(b) in the case of mutilation, upon surrender and cancellation
thereof,
the Company at its own expense shall execute and deliver within five Business
Days, in lieu thereof, a new Note of the same series, dated and bearing interest
from the date to which interest shall have been paid on such lost, stolen,
destroyed or mutilated Note or dated the date of such lost, stolen, destroyed or
mutilated Note if no interest shall have been paid thereon.
14. PAYMENTS ON NOTES.
14.1. PLACE OF PAYMENT.
Subject to Section 14.2, payments of principal, Make-Whole Amount,
if any, and interest becoming due and payable on the Notes shall be made in
Chicago, Illinois at the principal office of Bank of America in such
jurisdiction. The Company may at any time, by notice to each holder of a Note,
change the place of payment of the Notes so long as such place of payment shall
be either the principal office of the Company in such jurisdiction or the
principal office of a bank or trust company in such jurisdiction.
14.2. HOME OFFICE PAYMENT.
So long as you or your nominee shall be the holder of any Note, and
notwithstanding anything contained in Section 14.1 or in such Note to the
contrary, the Company will pay all sums becoming due on such Note for principal,
Make-Whole Amount, if any, and interest by the method and at the address
specified for such purpose below your name in Schedule A, or by such other
method or at such other address as you shall have from time to time specified to
the Company in writing for such purpose, without the presentation or surrender
of such Note or the making of any notation thereon, except that upon written
request of the Company made concurrently with or reasonably promptly after
payment or prepayment in full of any Note, you shall surrender such Note for
cancellation, reasonably promptly after any such request, to the Company at its
principal executive office or at the place of payment most recently designated
by the Company pursuant to Section 14.1. Prior to any sale or other disposition
of any Note held by you or your nominee you will, at your election, either
endorse thereon the amount of principal paid thereon and the last date to which
interest has been paid thereon or surrender such Note to the Company in exchange
for a new Note or Notes pursuant to Section 13.2. The Company will afford the
benefits of this Section 14.2 to any Institutional Investor that is the direct
or indirect transferee of any Note purchased by you under this Agreement and
that has made the same agreement relating to such Note as you have made in this
Section 14.2.
15. EXPENSES, ETC.
15.1. TRANSACTION EXPENSES.
Whether or not the transactions contemplated hereby are consummated,
the Company will pay all costs and expenses (including reasonable attorneys'
fees of special counsel for you and the Other Purchasers collectively and, if
reasonably required, local or other counsel) incurred by you and each Other
Purchaser or holder of a Note in connection with such transactions and in
connection with any amendments, waivers or consents under or in respect of
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this Agreement or the Notes (whether or not such amendment, waiver or consent
becomes effective), including, without limitation: (a) the reasonable costs and
expenses incurred in enforcing or defending (or determining whether or how to
enforce or defend) any rights under this Agreement or the Notes or in responding
to any subpoena or other legal process or informal investigative demand issued
in connection with this Agreement or the Notes, or by reason of being a holder
of any Note, and (b) the costs and expenses, including financial advisors' fees,
incurred in connection with the insolvency or bankruptcy of the Company or any
Subsidiary or in connection with any work-out or restructuring of the
transactions contemplated hereby and by the Notes. The Company will pay, and
will save you and each other holder of a Note harmless from, all claims in
respect of any fees, costs or expenses if any, of brokers and finders (other
than those retained by you).
15.2. SURVIVAL.
The obligations of the Company under this Section 15 will survive
the payment or transfer of any Note, the enforcement, amendment or waiver of any
provision of this Agreement or the Notes, and the termination of this Agreement.
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein shall survive
the execution and delivery of this Agreement and the Notes, the purchase or
transfer by you of any Note or portion thereof or interest therein and the
payment of any Note, and may be relied upon by any subsequent holder of a Note,
regardless of any investigation made at any time by or on behalf of you or any
other holder of a Note. All statements contained in any certificate or other
instrument delivered by or on behalf of the Company pursuant to this Agreement
shall be deemed representations and warranties of the Company under this
Agreement. Subject to the preceding sentence, this Agreement and the Notes
embody the entire agreement and understanding between you and the Company and
supersede all prior agreements and understandings relating to the subject matter
hereof.
17. AMENDMENT AND WAIVER.
17.1. REQUIREMENTS.
This Agreement, the Series 1999 Notes, the Subsidiary Guaranty and
the Intercreditor Agreement may be amended, and the observance of any term
hereof or of the Series 1999 Notes may be waived (either retroactively or
prospectively), with (and only with) the written consent of the Company and the
Required Holders, except that (a) no amendment or waiver of any of the
provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof, or any defined term (as it
is used therein), will be effective as to you unless consented to by you in
writing, and (b) no such amendment or waiver may, without the written consent of
the holder of each Series 1999 Note at the time outstanding affected thereby,
(i) subject to the provisions of Section 12 relating to acceleration or
rescission, change the amount or time of any prepayment or payment of principal
of, or change the rate or time of payment or method of computation of interest
or of the Make-
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Whole Amount on, the Series 1999 Notes, (ii) change the percentage of the
principal amount of the Series 1999 Notes the holders of which are required to
consent to any such amendment or waiver, or (iii) amend any of Sections 8,
11(a), 11(b), 12, 17 or 20.
17.2. SOLICITATION OF HOLDERS OF NOTES.
(a) SOLICITATION. The Company will provide each holder of the Notes
(irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is
required, to enable such holder to make an informed and considered
decision with respect to any proposed amendment, waiver or consent in
respect of any of the provisions hereof or of the Notes. The Company will
deliver executed or true and correct copies of each amendment, waiver or
consent effected pursuant to the provisions of this Section 17 to each
holder of outstanding Notes promptly following the date on which it is
executed and delivered by, or receives the consent or approval of, the
requisite holders of Notes.
(b) PAYMENT. The Company will not directly or indirectly pay or
cause to be paid any remuneration, whether by way of supplemental or
additional interest, fee or otherwise, or grant any security, to any
holder of Notes as consideration for or as an inducement to the entering
into by any holder of Notes or any waiver or amendment of any of the terms
and provisions hereof unless such remuneration is concurrently paid, or
security is concurrently granted, on the same terms, ratably to each
holder of Notes then outstanding even if such holder did not consent to
such waiver or amendment.
17.3. BINDING EFFECT, ETC.
Any amendment or waiver consented to as provided in this Section 17
applies equally to all holders of Notes and is binding upon them and upon each
future holder of any Note and upon the Company without regard to whether such
Note has been marked to indicate such amendment or waiver. No such amendment or
waiver will extend to or affect any obligation, covenant, agreement, Default or
Event of Default not expressly amended or waived or impair any right consequent
thereon. No course of dealing between the Company and the holder of any Note nor
any delay in exercising any rights hereunder or under any Note shall operate as
a waiver of any rights of any holder of such Note. As used herein, the term
"THIS AGREEMENT" or "THE AGREEMENT" and references thereto shall mean this
Agreement as it may from time to time be amended or supplemented.
17.4. NOTES HELD BY COMPANY, ETC.
Solely for the purpose of determining whether the holders of the
requisite percentage of the aggregate principal amount of Notes then outstanding
approved or consented to any amendment, waiver or consent to be given under this
Agreement or the Notes, or have directed the taking of any action provided
herein or in the Notes to be taken upon the direction of the holders of a
specified percentage of the aggregate principal amount of Notes then
outstanding, Notes directly or indirectly owned by the Company or any of its
Affiliates shall be deemed not to be outstanding.
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18. NOTICES.
All notices and communications provided for hereunder shall be in
writing and sent (a) by telecopy if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), or (b) by a recognized overnight delivery service (with
charges prepaid). Any such notice must be sent:
(i) if to you or your nominee, to you or it at the address
specified for such communications in Schedule A, or at such other
address as you or it shall have specified to the Company in writing,
(ii) if to any other holder of any Note, to such holder at
such address as such other holder shall have specified to the
Company in writing, or
(iii) if to the Company, to the Company at its address set
forth at the beginning hereof to the attention of Chief Financial
Officer, or at such other address as the Company shall have
specified to the holder of each Note in writing.
Notices under this Section 18 will be deemed given only when actually received.
19. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto, including (a)
consents, waivers and modifications that may hereafter be executed, (b)
documents received by you at the Closing (except the Notes themselves), and (c)
financial statements, certificates and other information previously or hereafter
furnished to you, may be reproduced by you by any photographic, photostatic,
microfilm, microcard, miniature photographic or other similar process and you
may destroy any original document so reproduced. The Company agrees and
stipulates that, to the extent permitted by applicable law, any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by you in the regular
course of business) and any enlargement, facsimile or further reproduction of
such reproduction shall likewise be admissible in evidence. This Section 19
shall not prohibit the Company or any other holder of Notes from contesting any
such reproduction to the same extent that it could contest the original, or from
introducing evidence to demonstrate the inaccuracy of any such reproduction.
20. CONFIDENTIAL INFORMATION.
For the purposes of this Section 20, "CONFIDENTIAL INFORMATION"
means information delivered to you by or on behalf of the Company or any
Subsidiary in connection with the transactions contemplated by or otherwise
pursuant to this Agreement that is proprietary in nature and that was clearly
marked or labeled or otherwise adequately identified in writing when received by
you as being confidential information of the Company or such Subsidiary,
PROVIDED that such term does not include information that (a) was publicly known
or otherwise known to you prior to the time of such disclosure, (b) subsequently
becomes publicly known through no act or omission by you or any person acting on
your behalf, (c) otherwise becomes
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known to you other than through disclosure by the Company or any Subsidiary or
(d) constitutes financial statements delivered to you under Section 7.1 that are
otherwise publicly available. You will maintain the confidentiality of such
Confidential Information in accordance with procedures adopted by you in good
faith to protect confidential information of third parties delivered to you,
PROVIDED that you may deliver or disclose Confidential Information to (i) your
directors, trustees, officers, employees, agents, attorneys and affiliates (to
the extent such disclosure reasonably relates to the administration of the
investment represented by your Notes), (ii) your financial advisors and other
professional advisors who agree to hold confidential the Confidential
Information substantially in accordance with the terms of this Section 20, (iii)
any other holder of any Note, (iv) any Institutional Investor to which you sell
or offer to sell such Note or any part thereof or any participation therein (if
such Person has agreed in writing prior to its receipt of such Confidential
Information to be bound by the provisions of this Section 20), (v) any Person
from which you offer to purchase any security of the Company (if such Person has
agreed in writing prior to its receipt of such Confidential Information to be
bound by the provisions of this Section 20), (vi) any federal or state
regulatory authority having jurisdiction over you, (vii) the National
Association of Insurance Commissioners or any similar organization, or any
nationally recognized rating agency that requires access to information about
your investment portfolio or (viii) any other Person to which such delivery or
disclosure may be necessary or appropriate (w) to effect compliance with any
law, rule, regulation or order applicable to you, (x) in response to any
subpoena or other legal process, (y) in connection with any litigation to which
you are a party or (z) if an Event of Default has occurred and is continuing, to
the extent you may reasonably determine such delivery and disclosure to be
necessary or appropriate in the enforcement or for the protection of the rights
and remedies under your Notes and this Agreement. Each holder of a Note, by its
acceptance of a Note, will be deemed to have agreed to be bound by and to be
entitled to the benefits of this Section 20 as though it were a party to this
Agreement. On reasonable request by the Company in connection with the delivery
to any holder of a Note of information required to be delivered to such holder
under this Agreement or requested by such holder (other than a holder that is a
party to this Agreement or its nominee), such holder will enter into an
agreement with the Company embodying the provisions of this Section 20.
21. SUBSTITUTION OF PURCHASER.
You shall have the right to substitute any one of your Affiliates as
the purchaser of the Notes that you have agreed to purchase hereunder, by
written notice to the Company, which notice shall be signed by both you and such
Affiliate, shall contain such Affiliate's agreement to be bound by this
Agreement and shall contain a confirmation by such Affiliate of the accuracy
with respect to it of the representations set forth in Section 6. Upon receipt
of such notice, wherever the word "you" is used in this Agreement (other than in
this Section 21), such word shall be deemed to refer to such Affiliate in lieu
of you. In the event that such Affiliate is so substituted as a purchaser
hereunder and such Affiliate thereafter transfers to you all of the Notes then
held by such Affiliate, upon receipt by the Company of notice of such transfer,
wherever the word "you" is used in this Agreement (other than in this Section
21), such word shall no longer be deemed to refer to such Affiliate, but shall
refer to you, and you shall have all the rights of an original holder of the
Notes under this Agreement.
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22. RELEASE OF SUBSIDIARY GUARANTY
You and each subsequent holder of a Note agree to release any
Subsidiary Guarantor from the Subsidiary Guaranty at such time as the lenders
party to the Credit Agreement release such Subsidiary from the Bank Guaranty;
provided, however, that (a) you and each subsequent holder shall not be required
to release a Subsidiary Guarantor from the Subsidiary Guaranty if (i) such
Subsidiary Guarantor is, or is to become, a borrower under the Credit Agreement
or (ii) such release is part of a plan of financing that contemplates such
Subsidiary Guarantor guaranteeing any other Indebtedness of the Company, and (b)
your obligation to release a Subsidiary Guarantor from the Subsidiary Guaranty
is conditioned upon your prior receipt of a certificate from a Senior Financial
Officer of the Company stating that neither of the circumstances described in
clauses (a)(i) and (a)(ii) above are true. 23. MISCELLANEOUS.
23.1. SUCCESSORS AND ASSIGNS.
All covenants and other agreements contained in this Agreement by or
on behalf of any of the parties hereto bind and inure to the benefit of their
respective successors and assigns (including, without limitation, any subsequent
holder of a Note) whether so expressed or not.
23.2. PAYMENTS DUE ON NON-BUSINESS DAYS.
Anything in this Agreement or the Notes to the contrary
notwithstanding, any payment of principal of or Make-whole Amount or interest on
any Note that is due on a date other than a Business Day shall be made on the
next succeeding Business Day without including the additional days elapsed in
the computation of the interest payable on such next succeeding Business Day.
23.3. SEVERABILITY.
Any provision of this Agreement that is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.
23.4. CONSTRUCTION.
Each covenant contained herein shall be construed (absent express
provision to the contrary) as being independent of each other covenant contained
herein, so that compliance with any one covenant shall not (absent such an
express contrary provision) be deemed to excuse compliance with any other
covenant. Where any provision herein refers to action to be taken by any Person,
or which such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person.
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23.5. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each
of which shall be an original but all of which together shall constitute one
instrument. Each counterpart may consist of a number of copies hereof, each
signed by less than all, but together signed by all, of the parties hereto.
23.6. GOVERNING LAW.
This Agreement shall be construed and enforced in accordance with,
and the rights of the parties shall be governed by, the law of the State of
Illinois excluding choice-of-law principles of the law of such State that would
require the application of the laws of a jurisdiction other than such State.
23.7. INTERCREDITOR AGREEMENT.
Each holder of a Note agrees to execute a counterpart of the
Intercreditor Agreement and to be bound thereby.
* * * * *
40
<PAGE>
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to the
Company, whereupon the foregoing shall become a binding agreement between you
and the Company.
Very truly yours,
CARRIAGE SERVICES, INC.
By:______________________________________
Name:____________________________________
Title:___________________________________
S-1
<PAGE>
The foregoing is agreed to as of the date thereof.
AMERICAN GENERAL ANNUITY INSURANCE COMPANY
MERIT LIFE INSURANCE CO.
THE FRANKLIN LIFE INSURANCE COMPANY
By:______________________________________
Name:____________________________________
Title:___________________________________
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
By:______________________________________
Name:____________________________________
Title:___________________________________
C.M. LIFE INSURANCE COMPANY
By:______________________________________
Name:____________________________________
Title:___________________________________
BAYSTATE HEALTH SYSTEMS INC.
By:______________________________________
Name:____________________________________
Title:___________________________________
MINNESOTA LIFE INSURANCE COMPANY
By: ADVANTUS CAPITAL MANAGEMENT, INC.
By:______________________________________
Name:____________________________________
Title:___________________________________
S-2
<PAGE>
GREAT WESTERN INSURANCE COMPANY
By: ADVANTUS CAPITAL MANAGEMENT, INC.
By:______________________________________
Name:____________________________________
Title:___________________________________
THE CATHOLIC AID ASSOCIATION
By: ADVANTUS CAPITAL MANAGEMENT, INC.
By:______________________________________
Name:____________________________________
Title:___________________________________
PROTECTED HOME MUTUAL LIFE INSURANCE COMPANY
By: ADVANTUS CAPITAL MANAGEMENT, INC.
By:______________________________________
Name:____________________________________
Title:___________________________________
GUARANTEE RESERVE LIFE INSURANCE COMPANY
By: ADVANTUS CAPITAL MANAGEMENT, INC.
By:______________________________________
Name:____________________________________
Title:___________________________________
NATIONAL TRAVELERS LIFE COMPANY
By: ADVANTUS CAPITAL MANAGEMENT, INC.
By:______________________________________
Name:____________________________________
Title:___________________________________
S-3
<PAGE>
MUTUAL TRUST LIFE INSURANCE COMPANY
By: ADVANTUS CAPITAL MANAGEMENT, INC.
By:______________________________________
Name:____________________________________
Title:___________________________________
FARM BUREAU LIFE INSURANCE COMPANY OF
MICHIGAN
By: ADVANTUS CAPITAL MANAGEMENT, INC.
By:______________________________________
Name:____________________________________
Title:___________________________________
FARM BUREAU MUTUAL INSURANCE COMPANY OF
MICHIGAN
By: ADVANTUS CAPITAL MANAGEMENT, INC.
By:______________________________________
Name:____________________________________
Title:___________________________________
FARM BUREAU GENERAL INSURANCE COMPANY OF
MICHIGAN
By: ADVANTUS CAPITAL MANAGEMENT, INC.
By:______________________________________
Name:____________________________________
Title:___________________________________
S-4
<PAGE>
UNITY MUTUAL LIFE INSURANCE COMPANY -
ANNUITY PORTFOLIO
By: ADVANTUS CAPITAL MANAGEMENT, INC.
By:______________________________________
Name:____________________________________
Title:___________________________________
MONY LIFE INSURANCE COMPANY
By:______________________________________
Name:____________________________________
Title:___________________________________
THE TRAVELERS INSURANCE COMPANY
By:______________________________________
Name:____________________________________
Title:___________________________________
THE TRAVELERS INSURANCE COMPANY, for one of
its separate accounts
By:______________________________________
Name:____________________________________
Title:___________________________________
THE CANADA LIFE ASSURANCE COMPANY
By:______________________________________
Name: Paul English
Title: Associate Treasurer
CANADA LIFE INSURANCE COMPANY OF AMERICA
By:______________________________________
Name: Paul English
Title: Assistant Treasurer
S-5
<PAGE>
CANADA LIFE INSURANCE COMPANY OF NEW YORK
By:______________________________________
Name: Paul English
Title: Assistant Treasurer
GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY
By:______________________________________
Name:____________________________________
Title:___________________________________
By:______________________________________
Name:____________________________________
Title:___________________________________
S-6
<PAGE>
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
PRINCIPAL AMOUNT OF
NAME OF PURCHASER NOTES TO BE PURCHASED
- ----------------- ---------------------
AMERICAN GENERAL ANNUITY PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED
INSURANCE COMPANY -------------------------------------------
SERIES 1999-A SERIES 1999-B SERIES 1999-C
------------- ------------- -------------
$10,000,000
Register Notes in the name of: American General Annuity Insurance Company
(1) All payments to be by wire transfer of immediately available funds, with
sufficient information (including PPN#, interest rate, maturity date,
interest amount, principal amount and premium amount, if applicable) to
identify the source and application of such funds, to:
ABA #011000028
State Street Bank and Trust Company
Boston, MA 02101
Re: American General Annuity Insurance Company
AC-7215-132-7
OBI=PPN# and description of payment
Fund Number WE1B
(2) Payment notices to:
American General Annuity Insurance Company and WE1B
c/o State Street Bank and Trust Company
Insurance Services WES2S
105 Rosemont Road
Westwood, MA 02090
Fax: (781) 302-8005
(3) Duplicate payment notices and ALL OTHER CORRESPONDENCES to:
American General Annuity Insurance Company
c/o American General Corporation
Attn: Investment Research Department, A37-01
P.O. Box 3247
Houston, Texas 77253-3247
Overnight Mail Address: 2929 Allen Parkway, A37-01
Houston, Texas 77019-2155
Fax: (713) 831-1366
Schedule A
<PAGE>
(4) Deliver Notes to:
State Street Bank and Trust Company
Securities Services
225 Franklin Street
Boston, MA 02105
Attention: Mr. David A. Kay - Receive and Deliver
with transmittal letter requesting that State Street confirm receipt of
the security and transmit by regular mail photocopies of such securities
to:
Carolyn Lee
American General Investment Management, L.P.
P.O. Box 3247
Houston, TX 77253-3247
(713) 831-1217
Tax I.D. #75-0770838
2
Schedule A
<PAGE>
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
PRINCIPAL AMOUNT OF
NAME OF PURCHASER NOTES TO BE PURCHASED
- ----------------- ---------------------
MERIT LIFE INSURANCE CO. PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED
-------------------------------------------
SERIES 1999-A SERIES 1999-B SERIES 1999-C
------------- ------------- -------------
$5,000,000
Register Notes in the name of: Merit Life Insurance Company
(1) All payments to be by wire transfer of immediately available funds, with
sufficient information (including PPN#, interest rate, maturity date,
interest amount, principal amount and premium amount, if applicable) to
identify the source and application of such funds, to:
ABA #011000028
State Street Bank and Trust Company
Boston, MA 02101
Re: Merit Life Insurance Company
AC-4653-082-0
OBI=PPN# and description of payment
Fund Number PA 20
(2) Payment notices to:
Merit Life Insurance Company and PA 20
c/o State Street Bank and Trust Company
Insurance Services WES2S
105 Rosemont Road
Westwood, MA 02090
Fax: (781) 302-8005
(3) Duplicate payment notices and ALL OTHER CORRESPONDENCES to:
Merit Life Insurance Company
c/o American General Corporation
Attn: Investment Research Department, A37-01
P.O. Box 3247
Houston, Texas 77253-3247
Overnight Mail Address: 2929 Allen Parkway, A37-01
Houston, Texas 77019-2155
Fax: (713) 831-1366
3
Schedule A
<PAGE>
(4) Deliver Notes to:
State Street Bank and Trust Company
Securities Services
225 Franklin Street
Boston, MA 02105
Attention: Mr. David A. Kay - Receive and Deliver
with transmittal letter requesting that State Street confirm receipt of
the security and transmit by regular mail photocopies of such securities
to:
Carolyn Lee
American General Investment Management, L.P.
P.O. Box 3247
Houston, TX 77253-3247
(713) 831-1217
Tax I.D. #35-1005090
4
Schedule A
<PAGE>
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
PRINCIPAL AMOUNT OF
NAME OF PURCHASER NOTES TO BE PURCHASED
- ----------------- ---------------------
THE FRANKLIN LIFE INSURANCE PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED
-------------------------------------------
SERIES 1999-A SERIES 1999-B SERIES 1999-C
------------- ------------- -------------
$10,000,000
Register Notes in the name of: The Franklin Life Insurance Company
(1) All payments to be by wire transfer of immediately available funds, with
sufficient information (including PPN#, interest rate, maturity date,
interest amount, principal amount and premium amount, if applicable) to
identify the source and application of such funds, to:
ABA #011000028
State Street Bank and Trust Company
Boston, MA 02101
Re: The Franklin Life Insurance Company
AC-2492-440-9
OBI=PPN# and description of payment
Fund Number PA 37
(2) Payment notices to:
The Franklin Life Insurance Company and PA 37
c/o State Street Bank and Trust Company
Insurance Services WES2S
105 Rosemont Road
Westwood, MA 02090
Fax: (781) 302-8005
(3) Duplicate payment notices and ALL OTHER CORRESPONDENCES to:
The Franklin Life Insurance Company
c/o American General Corporation
Attn: Investment Research Department, A37-01
P.O. Box 3247
Houston, Texas 77253-3247
Overnight Mail Address: 2929 Allen Parkway, A37-01
Houston, Texas 77019-2155
Fax: (713) 831-1366
5
Schedule A
<PAGE>
(4) Deliver Notes to:
State Street Bank and Trust Company
Securities Services
225 Franklin Street
Boston, MA 02105
Attention: Mr. David A. Kay - Receive and Deliver
with transmittal letter requesting that State Street confirm receipt of
the security and transmit by regular mail photocopies of such securities
to:
Carolyn Lee
American General Investment Management, L.P.
P.O. Box 3247
Houston, TX 77253-3247
(713) 831-1217
Tax I.D. #37-0281650
6
Schedule A
<PAGE>
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
PRINCIPAL AMOUNT OF
NAME OF PURCHASER NOTES TO BE PURCHASED
- ----------------- ---------------------
MASSACHUSETTS MUTUAL LIFE PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED
INSURANCE COMPANY -------------------------------------------
SERIES 1999-A SERIES 1999-B SERIES 1999-C
------------- ------------- -------------
$4,300,000 $4,300,000
Register Notes in the name of: Massachusetts Mutual Life Insurance Company
(1) All payments on account of the Note shall be made by crediting in the form
of bank wire transfer of Federal or other immediately available funds
(identifying each payment as Carriage Services, Inc., 7.73% Senior Notes,
Series 1999-A, due July 30, 2004 OR 7.96% Senior Notes, Series 1999-B, due
July 30, 2006 (as appropriate) interest and principal) to:
Citibank, N.A.
111 Wall Street
New York, NY 10043
ABA No. 021000089
For MassMutual Spot Priced Contract
Account No. 3890-4953
Re: Carriage Services, Inc., 7.73% Senior Notes, Series 1999-A, due
July 30, 2004 OR 7.96% Senior Notes, Series 1999-B, due July 30,
2006 (as appropriate), principal and interest split
With telephone advice of payment to the Securities Custody and
Collection Department of Massachusetts Mutual Life Insurance Company at
(413) 744-3561
(2) All notices and communications (except notices with respect to payments)
to:
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, MA 01111
Attn: Securities Investment Division
(3) Notices with respect to payments:
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, MA 01111
Attention: Securities Custody and Collection Department F 381
Tax ID #04-1590850
7
Schedule A
<PAGE>
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
PRINCIPAL AMOUNT OF
NAME OF PURCHASER NOTES TO BE PURCHASED
- ----------------- ---------------------
MASSACHUSETTS MUTUAL LIFE PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED
INSURANCE COMPANY -------------------------------------------
SERIES 1999-A SERIES 1999-B SERIES 1999-C
------------- ------------- -------------
$2,600,000 $2,800,000
Register Notes in the name of: Massachusetts Mutual Life Insurance Company
(1) All payments on account of the Note shall be made by crediting in the form
of bank wire transfer of Federal or other immediately available funds
(identifying each payment as Carriage Services, Inc., 7.73% Senior Notes,
Series 1999-A, due July 30, 2004 OR 7.96% Senior Notes, Series 1999-B, due
July 30, 2006 (as appropriate) interest and principal) to:
Citibank, N.A.
111 Wall Street
New York, NY 10043
ABA No. 021000089
For MassMutual Long-Term Pool
Account No. 4067-3488
Re: Carriage Services, Inc., 7.73% Senior Notes, Series 1999-A, due
July 30, 2004 OR 7.96% Senior Notes, Series 1999-B, due July 30,
2006 (as appropriate), principal and interest split
With telephone advice of payment to the Securities Custody and
Collection Department of Massachusetts Mutual Life Insurance Company at
(413) 744-3561
(2) All notices and communications (except notices with respect to payments)
to:
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, MA 01111
Attn: Securities Investment Division
(3) Notices with respect to payments:
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, MA 01111
Attention: Securities Custody and Collection Department F 381
Tax ID #04-1590850
8
Schedule A
<PAGE>
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
PRINCIPAL AMOUNT OF
NAME OF PURCHASER NOTES TO BE PURCHASED
- ----------------- ---------------------
MASSACHUSETTS MUTUAL LIFE PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED
INSURANCE COMPANY -------------------------------------------
SERIES 1999-A SERIES 1999-B SERIES 1999-C
------------- ------------- -------------
$1,900,000 $1,900,000
Register Notes in the name of: Massachusetts Mutual Life Insurance Company
(1) All payments on account of the Note shall be made by crediting in the form
of bank wire transfer of Federal or other immediately available funds
(identifying each payment as Carriage Services, Inc., 7.73% Senior Notes,
Series 1999-A, due July 30, 2004 OR 7.96% Senior Notes, Series 1999-B, due
July 30, 2006 (as appropriate) interest and principal) to:
Chase Manhattan Bank, N.A.
4 Chase MetroTech Center
New York, NY 10081
ABA No. 021000021
For MassMutual Pension Management
Account No. 910-2594018
Re: Carriage Services, Inc., 7.73% Senior Notes, Series 1999-A, due
July 30, 2004 OR 7.96% Senior Notes, Series 1999-B, due July 30,
2006 (as appropriate), principal and interest split
With telephone advice of payment to the Securities Custody and
Collection Department of Massachusetts Mutual Life Insurance Company at
(413) 744-3561
(2) All notices and communications (except notices with respect to payments) to:
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, MA 01111
Attn: Securities Investment Division
(3) Notices with respect to payments:
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, MA 01111
Attention: Securities Custody and Collection Department F 381
Tax ID #04-1590850
9
Schedule A
<PAGE>
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
PRINCIPAL AMOUNT OF
NAME OF PURCHASER NOTES TO BE PURCHASED
- ----------------- ---------------------
C.M. LIFE INSURANCE COMPANY PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED
INSURANCE COMPANY -------------------------------------------
SERIES 1999-A SERIES 1999-B SERIES 1999-C
------------- ------------- -------------
$1,000,000 $1,000,000
Register Notes in the name of: C.M. Life Insurance Company
(1) All payments on account of the Note shall be made by crediting in the form
of bank wire transfer of Federal or other immediately available funds
(identifying each payment as Carriage Services, Inc., 7.73% Senior Notes,
Series 1999-A, due July 30, 2004 OR 7.96% Senior Notes, Series 1999-B, due
July 30, 2006 (as appropriate) interest and principal) to:
Citibank, N.A.
111 Wall Street
New York, NY 10043
ABA No. 021000089
For Segment 43 - Universal Life
Account No. 4068-6561
Re: Carriage Services, Inc., 7.73% Senior Notes, Series 1999-A, due
July 30, 2004 OR 7.96% Senior Notes, Series 1999-B, due July 30,
2006 (as appropriate), principal and interest split
With telephone advice of payment to the Securities Custody and
Collection Department of Massachusetts Mutual Life Insurance Company at
(413) 744-3561
(2) All notices and communications (except notices with respect to payments) to:
C.M. Life Insurance Company
c/o Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, MA 01111
Attn: Securities Investment Division
(3) Notices with respect to payments:
C.M. Life Insurance Company
c/o Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, MA 01111
Attention: Securities Custody and Collection Department F 381
Tax ID #06-1041383
10
Schedule A
<PAGE>
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
PRINCIPAL AMOUNT OF
NAME OF PURCHASER NOTES TO BE PURCHASED
- ----------------- ---------------------
BAYSTATE HEALTH SYSTEMS INC. PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED
-------------------------------------------
SERIES 1999-A SERIES 1999-B SERIES 1999-C
------------- ------------- -------------
$200,000 $1,000,000
Register Notes in the name of: MAC & CO.
(1) All payments on account of the Note shall be made by crediting in the form
of bank wire transfer of Federal or other immediately available funds
(identifying each payment as Carriage Services, Inc., 7.73% Senior Notes,
Series 1999-A, due July 30, 2004 OR 7.96% Senior Notes, Series 1999-B, due
July 30, 2006 (as appropriate) interest and principal) to:
Boston Safe Deposit and Trust Company
ABA No. 011001234
DDA No. 108111
Ref: BayState Health Systems Intermediate Aggregate
A/C #BPOF3001002
(2) All notices and communications, including notices with respect to
payments, to be addressed:
Boston Safe Deposit and Trust Company
Attention: Jack Dahlsted
Mail Stop 0280032
One Cabot Road
Medford, MA 02155
(3) Send Note to:
Mellon Securities Trust Company
120 Broadway, 13th Floor
New York, NY 10271
Re: BayState Health Systems Intermediate Aggregate
A/C #BPOF3001002
Tax ID #04-2105941
11
Schedule A
<PAGE>
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
PRINCIPAL AMOUNT OF
NAME OF PURCHASER NOTES TO BE PURCHASED
- ----------------- ---------------------
MINNESOTA LIFE INSURANCE COMPANY PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED
-------------------------------------------
SERIES 1999-A SERIES 1999-B SERIES 1999-C
------------- ------------- -------------
$5,000,000
Register Notes in the name of: Minnesota Life Insurance Company
(1) All payments by wire transfer of immediately available funds to:
U.S. Bank Trust N.A.
Minneapolis, Minnesota
ABA #091000022
BNF Minnesota Life Insurance Company
Account #1801-10-00600-4
With sufficient information to identify the source and application of such
funds.
(2) The Notes and all other documents and notices should be sent to:
Minnesota Life Insurance Company
400 Robert Street North
St. Paul, Minnesota 55101
Attention: Advantus Capital Management, Inc.
Fax: (651) 223-5959
Tax I.D. #41-0417830
12
Schedule A
<PAGE>
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
PRINCIPAL AMOUNT OF
NAME OF PURCHASER NOTES TO BE PURCHASED
- ----------------- ---------------------
GREAT WESTERN INSURANCE PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED
COMPANY -------------------------------------------
SERIES 1999-A SERIES 1999-B SERIES 1999-C
------------- ------------- -------------
$500,000
Register Notes in the name of: Zions First National Bank for Great Western
Insurance Company
(1) All payments on account of the Notes shall be made by wire transfer of
immediately available funds to:
Zions First National Bank
Salt Lake City, UT
ABA #124-0000-54
For credit to: Great Western Insurance Company, Account Number:
80-00005-2
Reference sufficient information to identify the source and application of
such funds.
Any checks (in lieu of wire transfer) should be sent to the following
address:
Zions First National - Bank Trust Department
P.O. Box 30880
Salt Lake City, UT 84130
Ref: Great Western Insurance Company
(2) All notices and statements should be sent to the following address:
Great Western Insurance Company
c/o Advantus Capital Management, Inc.
400 Robert Street North
St. Paul, MN 55101
Attn: Client Administrator
(3) Deliver original Note to:
Bank of Utah
P.O. Box 231
Ogden, UT 84402
Attn: Richard Carroll, Trust Department
Tax I.D. #87-0395954
13
Schedule A
<PAGE>
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
Principal Amount of
NAME OF PURCHASER NOTES TO BE PURCHASED
PRINCIPAL AMOUNT OF
NAME OF PURCHASER NOTES TO BE PURCHASED
- ----------------- ---------------------
THE CATHOLIC AID ASSOCIATION PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED
-------------------------------------------
SERIES 1999-A SERIES 1999-B SERIES 1999-C
------------- ------------- -------------
$1,000,000
Register Notes in the name of: VAR & CO.
(1) All payments on account of the Notes shall be made by wire transfer of
immediately available funds to:
U.S. Bank, N.A.
Minneapolis, MN
ABA #091-000-022
For credit to: U.S. Bank Trust, N.A.
Account Number: 180121167365,
TSU: 47300050
For further credit to: Catholic Aid Association (The)
Account Number: 12614950
Attn: Juleah Foss (651) 244-5958
Reference sufficient information to identify the source and application of
such funds.
(2) All notices and statements should be sent to the following address:
Catholic Aid Association (The)
c/o Advantus Capital Management, Inc.
400 Robert Street North
St. Paul, MN 55101
Attn: Client Administrator
(3) Deliver original Note to:
U.S. Bank Trust, N.A.
180 East Fifth Street
St. Paul, MN 55101
Attn: Marilyn Goldberg (SPFT 0901)
Tax I.D. #41-0182070
14
Schedule A
<PAGE>
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
PRINCIPAL AMOUNT OF
NAME OF PURCHASER NOTES TO BE PURCHASED
- ----------------- ---------------------
PROTECTED HOME MUTUAL LIFE PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED
INSURANCE COMPANY -------------------------------------------
SERIES 1999-A SERIES 1999-B SERIES 1999-C
------------- ------------- -------------
$500,000
Register Notes in the name of: Norwest Bank MN as Custodian for
Protected Home Mutual Life Insurance Co.
(1) All payments on account of the Notes shall be made by wire transfer of
immediately available funds to:
Norwest Bank Minnesota, N.A.
ABA No. 091-000-019
BNF=Norwest Trust Clearing Mpls
BNFA=0840245
OBI=FFC to: Norwest Client Acct. No. 13371700
Norwest Client Account Name: Protected Home Mutual Life Insurance
Company
Reference sufficient information to identify the source and application of
such funds.
(2) All notices and statements should be sent to the following address:
Protected Home Mutual Life Insurance Company
c/o Advantus Capital Management, Inc.
400 Robert Street North
St. Paul, MN 55101
Attn: Client Administrator
(3) Deliver original Note to:
Norwest Bank MN, N.A.
733 Marquette Ave. Lower Level 1
Security Control and Transfer
Minneapolis, MN 55479-0051
Attn: Terrie Loosen (612) 667-0540
Tax I.D. #25-0740310
15
Schedule A
<PAGE>
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
PRINCIPAL AMOUNT OF
NAME OF PURCHASER NOTES TO BE PURCHASED
- ----------------- ---------------------
GUARANTEE RESERVE LIFE PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED
INSURANCE COMPANY -------------------------------------------
SERIES 1999-A SERIES 1999-B SERIES 1999-C
------------- ------------- -------------
$1,000,000
Register Notes in the name of: GANT & CO.
(1) All payments on account of the Notes shall be made by wire transfer of
immediately available funds to:
Mercantile National Bank of Indiana
Hammond, IN
ABA #071-912-813
For credit to: Guarantee Reserve Life Insurance Company
Attn: Trust Department, Geneva DeVine
Account Number: 287000
Reference sufficient information to identify the source and application of
such funds.
(2) All notices and statements should be sent to the following address:
Guarantee Reserve Life Insurance Company
c/o Advantus Capital Management, Inc.
400 Robert Street North
St. Paul, MN 55101
Attn: Client Administrator
(3) Deliver original Note to:
Mercantile National Bank of Indiana
Ref: Guarantee Reserve Life Insurance Company
5243 Hohman Avenue
Hammond, IN 46320
Tax I.D. #35-0815760
16
Schedule A
<PAGE>
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
PRINCIPAL AMOUNT OF
NAME OF PURCHASER NOTES TO BE PURCHASED
- ----------------- ---------------------
NATIONAL TRAVELERS LIFE COMPANY PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED
-------------------------------------------
SERIES 1999-A SERIES 1999-B SERIES 1999-C
------------- ------------- -------------
$1,000,000
Register Notes in the name of: VAR & CO.
(1) All payments on account of the Notes shall be made by wire transfer of
immediately available funds to:
U.S. Bank, N.A.
Minneapolis, MN
ABA #091-000-022
For credit to: U.S. Bank Trust, N.A.
Account Number: 180121167365,
TSU: 47300050
For further credit to: National Travelers Life Company
Account Number: 12609110
Attn: Juleah Foss (651) 244-5958
Reference sufficient information to identify the source and application of
such funds.
(2) All notices and statements should be sent to the following address:
National Travelers Life Company
c/o Advantus Capital Management, Inc.
400 Robert Street North
St. Paul, MN 55101
Attn: Client Administrator
(3) Deliver original Note to:
U.S. Bank Trust, N.A.
180 East Fifth Street
St. Paul, MN 55101
Attn: Connie Kemp (SPFT 0901)
Tax I.D. #42-0432940
17
Schedule A
<PAGE>
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
PRINCIPAL AMOUNT OF
NAME OF PURCHASER NOTES TO BE PURCHASED
- ----------------- ---------------------
MUTUAL TRUST LIFE INSURANCE PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED
COMPANY -------------------------------------------
SERIES 1999-A SERIES 1999-B SERIES 1999-C
------------- ------------- -------------
$1,500,000
Register Notes in the name of: ELL & CO.
(1) All payments on account of the Notes shall be made by wire transfer of
immediately available funds to:
The Northern Chgo/Trust
ABA #071-000-152
For credit to: Account Number 5186041000
For further credit to: Mutual Trust Life Insurance Company
Account Number: 26-00621
Attn: Income Collections
Reference sufficient information to identify the source and application of
such funds.
(2) All notices and statements should be sent to the following address:
Mutual Trust Life Insurance Company
c/o Advantus Capital Management, Inc.
400 Robert Street North
St. Paul, MN 55101
Attn: Client Administrator
(3) Deliver original Note to:
Northern Trust Company of New York
40 Broad Street, 8th Floor
New York, NY 10004
Attn: Settlements for Account #26-00621,
Mutual Trust Life Ins. Company
Tax I.D. #36-1516780
18
Schedule A
<PAGE>
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
PRINCIPAL AMOUNT OF
NAME OF PURCHASER NOTES TO BE PURCHASED
- ----------------- ---------------------
FARM BUREAU LIFE INSURANCE PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED
COMPANY OF MICHIGAN -------------------------------------------
SERIES 1999-A SERIES 1999-B SERIES 1999-C
------------- ------------- -------------
$4,000,000
Register Notes in the name of: Farm Bureau Life Insurance Company of Michigan
(1) All payments on account of the Notes shall be made by wire transfer of
immediately available funds to:
Comerica Bank
Detroit, MI
ABA #072-000-096
For credit to: Trust Operation - Fixed Income
Unit Cost Center 98530
Account Number: 21585-98530
For further credit to: Farm Bureau Life Insurance Company of Michigan
Account Number: 011000312124
Reference sufficient information to identify the source and application of
such funds.
(2) All notices and statements should be sent to the following address:
Farm Bureau Life Insurance Company of Michigan
c/o Advantus Capital Management, Inc.
400 Robert Street North
St. Paul, MN 55101
Attn: Client Administrator
(3) Deliver original Note to:
Comerica Bank
Attn: Dan Molnar MC 3404
411 West Lafayette
Detroit, MI 48275-3404
Reference: Farm Bureau Life Insurance Company of Michigan
Internal Account Number: 011000312124
Tax I.D. #38-6053670
19
Schedule A
<PAGE>
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
PRINCIPAL AMOUNT OF
NAME OF PURCHASER NOTES TO BE PURCHASED
- ----------------- ---------------------
FARM BUREAU LIFE INSURANCE PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED
COMPANY OF MICHIGAN -------------------------------------------
SERIES 1999-A SERIES 1999-B SERIES 1999-C
------------- ------------- -------------
$1,000,000
Register Notes in the name of: Farm Bureau Mutual Insurance Company of
Michigan
(1) All payments on account of the Notes shall be made by wire transfer of
immediately available funds to:
Comerica Bank
Detroit, MI
ABA #072-000-096
For credit to: Trust Operation - Fixed Income
Unit Cost Center 98530
Account Number: 21585-98530
For further credit to: Farm Bureau Mutual Insurance Company of Michigan
Account Number: 011000312132
Reference sufficient information to identify the source and application of
such funds.
(2) All notices and statements should be sent to the following address:
Farm Bureau Mutual Insurance Company of Michigan
c/o Advantus Capital Management, Inc.
400 Robert Street North
St. Paul, MN 55101
Attn: Client Administrator
(3) Deliver original Note to:
Comerica Bank
Trust Securities Services MC 3404
411 West Lafayette
Detroit, MI 48275-3404
Reference: Farm Bureau Mutual Insurance Company of Michigan
Internal Account Number: 011000312132
Attn: Dan Molnar (313) 222-7946
Tax I.D. #38-1316179
20
Schedule A
<PAGE>
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
PRINCIPAL AMOUNT OF
NAME OF PURCHASER NOTES TO BE PURCHASED
- ----------------- ---------------------
FARM BUREAU LIFE INSURANCE PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED
COMPANY OF MICHIGAN -------------------------------------------
SERIES 1999-A SERIES 1999-B SERIES 1999-C
------------- ------------- -------------
$500,000
Register Notes in the name of: Farm Bureau General Insurance Company of
Michigan
(1) All payments on account of the Notes shall be made by wire transfer of
immediately available funds to:
Comerica Bank
Detroit, MI
ABA #072-000-096
For credit to: Trust Operation - Fixed Income
Unit Cost Center 98530
Account Number: 21585-98530
For further credit to: Farm Bureau General Insurance Company of Michigan
Account Number: 011000312140
Reference sufficient information to identify the source and application of
such funds.
(2) All notices and statements should be sent to the following address:
Farm Bureau General Insurance Company of Michigan
c/o Advantus Capital Management, Inc.
400 Robert Street North
St. Paul, MN 55101
Attn: Client Administrator
(3) Deliver original Note to:
Comerica Bank
Attn: Dan Molnar MC 3462
411 West Lafayette
Detroit, MI 48226-3462
Reference: Farm Bureau General Insurance Company of Michigan
Internal Account Number: 011000312140
Tax I.D. #38-6056228
21
Schedule A
<PAGE>
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
PRINCIPAL AMOUNT OF
NAME OF PURCHASER NOTES TO BE PURCHASED
- ----------------- ---------------------
UNITY MUTUAL LIFE INSURANCE PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED
COMPANY-ANNUITY PORTFOLIO -------------------------------------------
SERIES 1999-A SERIES 1999-B SERIES 1999-C
------------- ------------- -------------
$1,000,000
Register Notes in the name of: TRULIN & CO.
(1) All payments on account of the Notes shall be made by wire transfer of
immediately available funds to:
Chase NYC
ABA #021-000-021
For credit to: Chase Rochester
DDA# 0000400044
Attn: Ms. Roni Norkus (716) 258-7784
For further credit to: Unity Mutual Life Insurance Company Annuity
Portfolio
Advantus-611002310
reference sufficient information to identify the source and application
of funds.
(2) All notices and statements should be sent to the following address:
Unity Mutual Life Insurance Company-Annuity Portfolio
c/o Advantus Capital Management, Inc.
400 Robert Street North
St. Paul, MN 55101
Attn: Client Administrator
(3) Deliver original Note to:
Chase Manhattan Bank
Attn: Ms. Roni Norkus
One Chase Square T-10
Rochester, NY 14643
Tax I.D. #15-0475585
22
Schedule A
<PAGE>
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
PRINCIPAL AMOUNT OF
NAME OF PURCHASER NOTES TO BE PURCHASED
- ----------------- ---------------------
MONY LIFE INSURANCE COMPANY PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED
COMPANY-ANNUITY PORTFOLIO -------------------------------------------
SERIES 1999-A SERIES 1999-B SERIES 1999-C
------------- ------------- -------------
$15,000,000
Register Notes in the name of: J. ROMEO & CO.
(1) All payments on account of the Notes shall be made by bank wire or
intra-bank transfer of Federal or other funds (identifying the issue as
Carriage Services, Inc. Senior Notes, Series 1999-B, due July 30, 2006,
and the application of the payment as between interest, principal and
premium) to:
Chase Manhattan Bank, ABA #021000021
For credit to Private Income Processing Account No. 544-755102
(2) All notices and confirmations relating to payment:
A. IF BY REGISTERED MAIL, CERTIFIED MAIL OR FEDERAL EXPRESS:
The Chase Manhattan Bank
4 New York Plaza, 13th Floor
New York, NY 10004
Attn: Income Processing - J. Piperato, 13th Floor
IF BY REGULAR MAIL:
The Chase Manhattan Bank
Dept. 3492
P.O. Box 50000
Newark, NJ 07101-8006
B. WITH A SECOND COPY TO:
Telecopy Confirms and Notices:
(212) 708-2152
Attention: Securities Custody
Mailing Confirms and Notices:
MONY Life Insurance Company
1740 Broadway
New York, New York 10019
Attention: Securities Custody
Mail Drop 6-39A
(3) Address for all other communications:
MONY Life Insurance Company
23
Schedule A
<PAGE>
1740 Broadway
New York, New York 10019
Attention: MONY Capital Management Unit
Telecopy No.: (212) 708-2491
(4) Deliver Notes to the Law Department of MONY Life Insurance Company:
1740 Broadway - 7th floor
New York, NY 10019
Attention: Shannon Cloney, Esq.
Tax I.D. #13-1632487
24
Schedule A
<PAGE>
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
PRINCIPAL AMOUNT OF
NAME OF PURCHASER NOTES TO BE PURCHASED
- ----------------- ---------------------
THE TRAVELERS INSURANCE COMPANY PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED
COMPANY-ANNUITY PORTFOLIO -------------------------------------------
SERIES 1999-A SERIES 1999-B SERIES 1999-C
------------- ------------- -------------
5,000,000 5,000,000
Register Notes in the name of: TRAL & CO.
(1) All payments to be made by crediting (in the form of federal funds bank
wire transfer, with sufficient information to identify the source and
application of funds) to following account:
The Travelers Insurance Company - Consolidated Private
Placement Account No. 910-2-587434
The Chase Manhattan Bank, N.A.
One Chase Manhattan Plaza
New York, New York 10081
ABA No. 021000021
(2) All notices with respect to payment should be directed to:
The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183-2030
Attention: Investment Group - Cashier 10 PB
Facsimile: 860-277-2299
(3) All other communications should be directed to:
The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183-2030
Attention: Investment Group - Private Placements 9 PB
Facsimile: 860-954-5243
Tax I.D. #06-0566090
25
Schedule A
<PAGE>
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
PRINCIPAL AMOUNT OF
NAME OF PURCHASER NOTES TO BE PURCHASED
- ----------------- ---------------------
THE TRAVELERS INSURANCE COMPANY, PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED
FOR ONE OF ITS SEPARATE ACCOUNTS -------------------------------------------
SERIES 1999-A SERIES 1999-B SERIES 1999-C
------------- ------------- -------------
4,000,000
Register Notes in the name of: TRAL & CO.
(1) All payments to be made by crediting (in the form of federal funds bank
wire transfer, with sufficient information to identify the source and
application of funds) to following account:
The Travelers Insurance Company - Separate Account TLAC
Account No. 910-2-739365
The Chase Manhattan Bank, N.A.
One Chase Manhattan Plaza
New York, New York 10081
ABA No. 021000021
(2) All notices with respect to payment should be directed to:
The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183-2030
Attention: Investment Group - Cashier 10 PB
Facsimile: 860-277-2299
(3) All other communications should be directed to:
The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183-2030
Attention: Investment Group - Private Placements 9 PB
Facsimile: 860-954-5243
Tax I.D. #06-0566090
26
Schedule A
<PAGE>
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
PRINCIPAL AMOUNT OF
NAME OF PURCHASER NOTES TO BE PURCHASED
- ----------------- ---------------------
THE TRAVELERS INSURANCE COMPANY, PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED
FOR ONE OF ITS SEPARATE ACCOUNTS -------------------------------------------
SERIES 1999-A SERIES 1999-B SERIES 1999-C
------------- ------------- -------------
1,000,000
Register Notes in the name of: The Travelers Insurance Company, for one of
its separate accounts
(1) All payments to be made by crediting (in the form of federal funds bank
wire transfer, with sufficient information to identify the source and
application of funds) to following account:
The Travelers Insurance Company - Separate Account SMGA
Account No. 910-2-720464
The Chase Manhattan Bank, N.A.
One Chase Manhattan Plaza
New York, New York 10081
ABA No. 021000021
(2) All notices with respect to payment should be directed to:
The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183-2030
Attention: Investment Group - Cashier 10 PB
Facsimile: 860-277-2299
(3) All other communications should be directed to:
The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183-2030
Attention: Investment Group - Private Placements 9 PB
Facsimile: 860-954-5243
Tax I.D. #06-0566090
27
Schedule A
<PAGE>
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
PRINCIPAL AMOUNT OF
NAME OF PURCHASER NOTES TO BE PURCHASED
- ----------------- ---------------------
THE CANADA LIFE ASSURANCE COMPANY PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED
-------------------------------------------
SERIES 1999-A SERIES 1999-B SERIES 1999-C
------------- ------------- -------------
$4,000,000
Register Notes in the name of: J. ROMEO & CO.
(1) All payments regarding the Note(s) by bank wire transfer of Federal or
other immediately available funds:
FOR REGULAR PRINCIPAL AND INTEREST
Chase Manhattan Bank
ABA 021-000-021
A/C #900-9-000200
Trust Account No. G52708, The Canada Life Assurance Company
Attn: Doll Balbadar
Refer to: PPN#, name of issuer, rate, maturity date, type of security,
whether principal and/or interest and due date.
FOR OUR SALE TO A BROKER (FEDERAL WIRE TRANSFERS - CASH):
Chase Manhattan Bank
ABA 021-000-021
A/C #900-9-000168
Trust Account No. G52708, The Canada Life Assurance Company
Attn: Doll Balbadar
Refer to: PPN#, name of issuer, rate, maturity date, settlement date
FOR CALL OR MATURITY:
Chase Manhattan Bank
ABA 021-000-021
A/C #900-9-000192
Trust Account No. G52708, The Canada Life Assurance Company
Attn: Doll Balbadar
Refer to: PPN#, name of issuer, rate, maturity date, whether principal
and/or interest and effective date of call or maturity.
(2) Send notices of payments and written confirmation of wire transfers to:
28
Schedule A
<PAGE>
Chase Manhattan Bank
North America Insurance
3 Chase MetroTech Centre - 6th Floor
Brooklyn, NY 11245
Attn: Doll Balbadar
WITH A COPY TO:
The Canada Life Assurance Company
330 University Avenue, SP-12
Toronto, Ontario, Canada M5G 1R8
Attn: Supervisor, Securities Accounting
(3) Send financial statements and all other communications to:
The Canada Life Assurance Company
Corporate Treasury, SP-11
330 University Avenue
Toronto, Ontario, Canada M5G 1R8
Attn: Paul English, Associate Treasurer, U.S. Private Placements
(4) Delivery of Notes:
FOR NOTES DELIVERED FREE BY LAWYER (PRIMARY MARKET); COURIER
Chase Manhattan Bank
4 New York Plaza - 11th Floor
Receive Window
New York, NY 10004-2477
Attention: Larry Zimmer (212) 623-0987
For: The Canada Life Assurance Company
Trust Account No. G52708
FOR BROKER DELIVERY AGAINST PAYMENT (SECONDARY MARKET)
Chase Manhattan Bank
4 New York Plaza
Receive Window, Ground Floor
New York, NY 10004-2477
For delivery problem, call: Doll Balbadar (718) 242-1774
For: The Canada Life Assurance Company
Trust Account No. G52708
Tax I.D. #38-0397420
29
Schedule A
<PAGE>
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
PRINCIPAL AMOUNT OF
NAME OF PURCHASER NOTES TO BE PURCHASED
- ----------------- ---------------------
CANADA LIFE ASSURANCE PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED
COMPANY OF AMERICA -------------------------------------------
SERIES 1999-A SERIES 1999-B SERIES 1999-C
------------- ------------- -------------
$500,000 $4,000,000
Register Notes in the name of: J. ROMEO & CO.
(1) All payments regarding the Note(s) by bank wire transfer of Federal or
other immediately available funds:
FOR REGULAR PRINCIPAL AND INTEREST
Chase Manhattan Bank
ABA 021-000-021
A/C #900-9-000200
Trust Account No. G52709, Canada Life Insurance Company of America
Attn: Doll Balbadar
Refer to: PPN#, name of issuer, rate, maturity date, type of security,
whether principal and/or interest and due date.
FOR OUR SALE TO A BROKER (FEDERAL WIRE TRANSFERS - CASH):
Chase Manhattan Bank
ABA 021-000-021
A/C #900-9-000168
Trust Account No. G52709, Canada Life Insurance Company of America
Attn: Doll Balbadar
Refer to: PPN#, name of issuer, rate, maturity date, settlement date
FOR CALL OR MATURITY:
Chase Manhattan Bank
ABA 021-000-021
A/C #900-9-000192
Trust Account No. G52709, Canada Life Insurance Company of America
Attn: Doll Balbadar
Refer to: PPN#, name of issuer, rate, maturity date, whether principal
and/or interest and effective date of call or maturity.
(2) Send notices of payments and written confirmation of wire transfers to:
<PAGE>
Chase Manhattan Bank
North America Insurance
3 Chase MetroTech Centre - 6th Floor
Brooklyn, NY 11245
Attn: Doll Balbadar
WITH A COPY TO:
The Canada Life Assurance Company
330 University Avenue, SP-12
Toronto, Ontario, Canada M5G 1R8
Attn: Supervisor, Securities Accounting
(3) Send financial statements and all other communications to:
The Canada Life Assurance Company
Corporate Treasury, SP-11
330 University Avenue
Toronto, Ontario, Canada M5G 1R8
Attn: Paul English, Assistant Treasurer, U.S. Private Placements
(4) Delivery of Notes:
FOR NOTES DELIVERED FREE BY LAWYER (PRIMARY MARKET); COURIER
Chase Manhattan Bank
4 New York Plaza - 11th Floor
Receive Window
New York, NY 10004-2477
Attention: Larry Zimmer (212) 623-0987
For: Canada Life Insurance Company of America
Trust Account No. G52709
FOR BROKER DELIVERY AGAINST PAYMENT (SECONDARY MARKET)
Chase Manhattan Bank
4 New York Plaza
Receive Window, Ground Floor
New York, NY 10004-2477
For delivery problem, call: Doll Balbadar (718) 242-1774
For: Canada Life Insurance Company of America
Trust Account No. G52709
Tax I.D. #38-2816473
31
Schedule A
<PAGE>
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
PRINCIPAL AMOUNT OF
NAME OF PURCHASER NOTES TO BE PURCHASED
- ----------------- ---------------------
CANADA LIFE ASSURANCE PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED
COMPANY OF NEW YORK -------------------------------------------
SERIES 1999-A SERIES 1999-B SERIES 1999-C
------------- ------------- -------------
$500,000
Register Notes in the name of: J. ROMEO & CO.
(1) All payments regarding the Note(s) by bank wire transfer of Federal or
other immediately available funds:
FOR REGULAR PRINCIPAL AND INTEREST
Chase Manhattan Bank
ABA 021-000-021
A/C #900-9-000200
Trust Account No. G52685, Canada Life Insurance Company of New York
Attn: Doll Balbadar
Refer to: PPN#, name of issuer, rate, maturity date, type of security,
whether principal and/or interest and due date.
FOR OUR SALE TO A BROKER (FEDERAL WIRE TRANSFERS - CASH):
Chase Manhattan Bank
ABA 021-000-021
A/C #900-9-000168
Trust Account No. G52685, Canada Life Insurance Company of New York
Attn: Doll Balbadar
Refer to: PPN#, name of issuer, rate, maturity date, settlement date
FOR CALL OR MATURITY:
Chase Manhattan Bank
ABA 021-000-021
A/C #900-9-000192
Trust Account No. G52685, Canada Life Insurance Company of New York
Attn: Doll Balbadar
Refer to: PPN#, name of issuer, rate, maturity date, whether principal
and/or interest and effective date of call or maturity.
(2) Send notices of payments and written confirmation of wire transfers to:
32
Schedule A
<PAGE>
Chase Manhattan Bank
North America Insurance
3 Chase MetroTech Centre - 6th Floor
Brooklyn, NY 11245
Attn: Doll Balbadar
WITH A COPY TO:
The Canada Life Assurance Company
330 University Avenue, SP-12
Toronto, Ontario, Canada M5G 1R8
Attn: Supervisor, Securities Accounting
(3) Send financial statements and all other communications to:
The Canada Life Assurance Company
Corporate Treasury, SP-11
330 University Avenue
Toronto, Ontario, Canada M5G 1R8
Attn: Paul English, Assistant Treasurer, U.S. Private Placements
(4) Delivery of Notes:
FOR NOTES DELIVERED FREE BY LAWYER (PRIMARY MARKET)
Chase Manhattan Bank
4 New York Plaza - 11th Floor
Receive Window
New York, NY 10004-2477
Attention: Larry Zimmer (212) 623-0987
For: Canada Life Insurance Company of New York
Trust Account No. G52685
FOR BROKER DELIVERY AGAINST PAYMENT (SECONDARY MARKET)
Chase Manhattan Bank
4 New York Plaza
Receive Window, Ground Floor
New York, NY 10004-2477
For delivery problem, call: Doll Balbadar (718) 242-1774
For: Canada Life Insurance Company of New York
Trust Account No. G52685
Tax I.D. #13-2690792
33
Schedule A
<PAGE>
SCHEDULE A
INFORMATION RELATING TO PURCHASERS
PRINCIPAL AMOUNT OF
NAME OF PURCHASER NOTES TO BE PURCHASED
- ----------------- ---------------------
GREAT-WEST LIFE & ANNUITY PRINCIPAL AMOUNT OF NOTES TO BE PURCHASED
INSURANCE COMPANY -------------------------------------------
SERIES 1999-A SERIES 1999-B SERIES 1999-C
------------- ------------- -------------
$9,000,000
Register Notes in the name of: Great-West Life & Annuity Insurance Company
(1) Payments of principal and interest - wire instructions:
ABA #021-000-018 BKofNYC/CTR/BBK=IOC565
Instit. Custody Department - GWL #640935
Special Instructions: 1) security description (PPN#)
2) allocation of payment between principal and
interest, and
3) confirmation of principal balance.
(2) Notice of payments:
The Bank of New York
Institutional Custody Department, 14th Floor
One Wall Street
New York, New York 10286
Telecopier: (212) 635-8844
(3) Notice for other communications, financial statements, trustee reports,
etc.
Great-West Life & Annuity Insurance Company
8515 East Orchard Road
3rd Floor, Tower 2
Englewood, Colorado 80111
Attention: Corporate Finance Investments
Telecopier: (303) 689-6193
(4) Physical delivery of securities - New issue
The Bank of New York
3rd Floor, Window A
One Wall Street
New York, New York 10286
Attention: Receive/Deliver Department - GWL #640935
Tax I.D. #84-0467907
34
Schedule A
<PAGE>
SCHEDULE B
DEFINED TERMS
As used herein, the following terms have the respective meanings set
forth below or set forth in the Section hereof following such term:
"ADJUSTED CONSOLIDATED NET WORTH" means, as of any date,
consolidated stockholders' equity of the Company and its Restricted Subsidiaries
on such date, determined in accordance with GAAP, plus the amount of outstanding
Trust Convertible Preferred Securities that are reflected on the consolidated
balance sheet of the Company as of such date in accordance with GAAP, less the
amount by which outstanding Restricted Investments on such date exceed 15% of
consolidated stockholders' equity of the Company and its Restricted Subsidiaries
on such date.
"AFFILIATE" means, at any time, and with respect to any Person, (a)
any other Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person, and (b) any Person beneficially owning or holding, directly
or indirectly, 10% or more of any class of voting or equity interests of the
Company or any Subsidiary or any corporation of which the Company and its
Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly,
10% or more of any class of voting or equity interests. As used in this
definition, "CONTROL" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
Unless the context otherwise clearly requires, any reference to an "Affiliate"
is a reference to an Affiliate of the Company.
"ATTRIBUTABLE DEBT" means, as to any particular lease relating to a
Sale-and-Leaseback Transaction, the present value of all lease rentals required
to be paid by the Company or any Restricted Subsidiary under such lease during
the remaining term thereof (determined in accordance with generally accepted
financial practice using a discount factor equal to the interest rate implicit
in such lease if known or, if not known, of 8% per annum).
"BANK GUARANTY" means the Guaranty dated June 14, 1999 from the
Subsidiaries party thereto in favor of the banks party to the Credit Agreement,
as such agreement may be amended, restated or otherwise modified, and any
successor thereto, and any other Guaranty that any Subsidiary may issued in
favor of any parties to the Credit Agreement.
"BUSINESS DAY" means (a) for the purposes of Section 8.6 only, any
day other than a Saturday, a Sunday or a day on which commercial banks in New
York City are required or authorized to be closed, and (b) for the purposes of
any other provision of this Agreement, any day other than a Saturday, a Sunday
or a day on which commercial banks in Chicago, Illinois or New York City are
required or authorized to be closed.
Schedule B
<PAGE>
"CAPITAL LEASE" means, at any time, a lease with respect to which
the lessee is required concurrently to recognize the acquisition of an asset and
the incurrence of a liability in accordance with GAAP.
"CAPITAL LEASE OBLIGATION" means, with respect to any Person and a
Capital Lease, the amount of the obligation of such Person as the lessee under
such Capital Lease which would, in accordance with GAAP, appear as a liability
on a balance sheet of such Person.
"CARRIAGE BUSINESS DEVELOPMENT PROGRAM" a program of the Company
whereby not more than 20 former owners of funeral homes or cemeteries receive
preferred securities of a Restricted Subsidiary pursuant to which the holder is
entitled to receive up to 10% of a Restricted Subsidiary's cash flow in excess
of a predetermined level. Not more than ten Restricted Subsidiaries will
participate in the program and the recipients of the preferred securities are
individuals whose funeral homes or cemeteries were acquired by the Company or a
Restricted Subsidiary. The preferred securities entitle the holder to receive
only up to 10% of excess cash flow as and when earned, do not constitute a claim
on the assets of the Restricted Subsidiary and are subject to mandatory
redemption by the Restricted Subsidiary at maturity (not more than ten years) at
a redemption price expressed as a multiple of such excess cash flow.
"CHANGE OF CONTROL EVENT" means, the (i) acquisition through
purchase or otherwise by any Person, or group of Persons acting in concert,
directly or indirectly, in one or more transactions, of beneficial ownership or
control of securities representing more than 50% of the combined voting power of
the Company's Voting Stock (including the agreement to act in concert by Persons
who beneficially own or control securities representing more than 50% of the
combined voting power of the Company's Voting Stock), or (ii) entering into by
the Company of a written agreement providing for or contemplating an acquisition
described in clause (i) hereof. For purposes of the foregoing sentence, "Person"
or "group of Persons" shall not include a Restricted Subsidiary, the Current
Management of the Company or a "group of Persons" that includes all of the
Current Management of the Company, so long as such Current Management has active
decision or policy making roles in such group and a significant investment in
connection with such acquisition. The date on which the acquisition described in
clause (i) of the first sentence occurs is referred to as the "EFFECTIVE DATE OF
THE CHANGE OF CONTROL."
"CLOSING" is defined in Section 3.
"CODE" means the Internal Revenue Code of 1986, as amended from time
to time, and the rules and regulations promulgated thereunder from time to time.
"COMPANY" means Carriage Services, Inc., a Delaware corporation.
"CONFIDENTIAL INFORMATION" is defined in Section 20.
"CONSOLIDATED FIXED CHARGES" means, for any period, the sum of (i)
Consolidated Rentals for such period under all leases other than Capital Leases,
(ii) Consolidated
2
Schedule B
<PAGE>
Interest Expense for such period and (iii) all capitalized interest of the
Company and its Restricted Subsidiaries incurred during such period.
"CONSOLIDATED INCOME AVAILABLE FOR FIXED CHARGES" means, for any
period, Consolidated Net Income for such period, plus, to the extent deducted in
determining such Consolidated Net Income, (i) all provisions for federal, state
and other income taxes made by the Company and its Restricted Subsidiaries
during such period, (ii) depreciation and amortization expense of the Company
and its Restricted Subsidiaries for such period, and (iii) Consolidated Fixed
Charges for such period.
"CONSOLIDATED INDEBTEDNESS" means, as of any date, Indebtedness of
the Company and its Restricted Subsidiaries as of such date, determined on a
consolidated basis in accordance with GAAP.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, the
consolidated interest expense of the Company and its Restricted Subsidiaries for
such period determined in accordance with GAAP (including imputed interest on
Capital Lease Obligations); provided that interest accruing on the Company's
Trust Debentures following an interest payment deferment by the Company on the
Trust Debentures in accordance with the terms thereof shall not be deemed
interest expense during the period of such deferral.
"CONSOLIDATED NET INCOME" means, for any period, the net income (or
deficit) of the Company and its Restricted Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP, but excluding in any
event (a) any gain or loss on the sale or disposition of Investments or fixed or
capital assets, including any tax effect; (b) the proceeds of life insurance
policies; (c) net earnings and losses of any Person accrued prior to the date it
became a Restricted Subsidiary; (d) net earnings and losses of any Person (other
than a Restricted Subsidiary), substantially all the assets of which have been
acquired in any manner, realized by such other Person prior to the date of such
acquisition; (e) net earnings and losses of any Person (other than a Restricted
Subsidiary) with which the Company or a Restricted Subsidiary shall have
consolidated or which shall have merged into or with the Company or a Restricted
Subsidiary prior to the date of such consolidation or merger; (f) net earnings
of any business entity (other than a Restricted Subsidiary) in which the Company
or any Restricted Subsidiary has an ownership interest unless such net earnings
shall have actually been received by the Company or such Restricted Subsidiary
in the form of cash distributions; (g) the undistributed earnings of any
Restricted Subsidiary to the extent that the declaration or payment of dividends
or similar distributions by such Restricted Subsidiary is not at the time
permitted by the terms of its charter or any applicable agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation; (h) any gains
resulting from any reappraisal, revaluation or write-up of any assets; (i) any
deferred or other credit representing the excess of equity in any Restricted
Subsidiary at the date of acquisition over the cost of the investment in such
Restricted Subsidiary; (j) any gain arising from the acquisition of any security
or the extinguishment, under GAAP, of any Indebtedness of the Company or any
Restricted Subsidiary; (k) any restoration to income of any contingency reserve,
except to the extent that provision for such reserve was made
3
Schedule B
<PAGE>
out of income accrued during such period; and (l) any extraordinary, unusual or
non-recurring gain or loss (net of any tax effect).
"CONSOLIDATED RENTALS" means, for any period, the rentals of the
Company and its Restricted Subsidiaries for such period under all leases,
determined on a consolidated basis in accordance with GAAP.
"CONSOLIDATED TOTAL ASSETS" means, as of any date, the assets and
properties of the Company and its Restricted Subsidiaries as of such date
determined on a consolidated basis in accordance with GAAP.
"CONSOLIDATED TOTAL CAPITALIZATION" means, as of any date, the sum
of Consolidated Indebtedness and Adjusted Consolidated Net Worth as of such
date.
"CREDIT AGREEMENT" means the Credit Agreement dated as of June 14,
1999 between the Company and the lenders party thereto, as such agreement may be
hereafter amended, restated, refinanced, increased or reduced from time to time,
and any successor or replacement credit agreement or similar facility.
"CURRENT MANAGEMENT OF THE COMPANY" means Melvyn Payne and Mark
Duffy.
"DEFAULT" means an event or condition the occurrence or existence of
which would, with the lapse of time or the giving of notice or both, become an
Event of Default.
"DEFAULT RATE" means that rate of interest that is the greater of
(i) 2% per annum above the rate of interest stated in clause (a) of the first
paragraph of the Notes or (ii) 2% over the rate of interest publicly announced
by Bank of America in Chicago, Illinois or its successor as its "base" or
"prime" rate.
"DISTRIBUTION" means, in respect of any Person:
(a) dividends or other distributions or payments on capital stock or
other equity interests of such Person (except distributions in such stock
or other equity interests); and
(b) the redemption or acquisition of such stock or other equity
interests or of warrants, rights or other options to purchase such stock
or other equity interests (except when solely in exchange for such stock
or other equity interests) unless made, contemporaneously, from the net
proceeds of a sale of such stock or other equity interests.
"ENVIRONMENTAL LAWS" means any and all federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including but
4
Schedule B
<PAGE>
not limited to those related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the rules and regulations promulgated
thereunder from time to time in effect.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) that is treated as a single employer together with the Company
under section 414 of the Code.
"EVENT OF DEFAULT" is defined in Section 11.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"GAAP" means generally accepted accounting principles as in effect
from time to time in the United States of America.
"GOVERNMENTAL AUTHORITY" means
(a) the government of
(i) the United States of America or any state or other
political subdivision thereof, or
(ii) any jurisdiction in which the Company or any Subsidiary
conducts all or any part of its business, or which asserts
jurisdiction over any properties of the Company or any Subsidiary,
or
(b) any entity exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, any such
government.
"GUARANTY" means, with respect to any Person, any obligation (except
the endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
indebtedness, dividend or other obligation of any other Person in any manner,
whether directly or indirectly, including (without limitation) obligations
incurred through an agreement, contingent or otherwise, by such Person:
(a) to purchase such indebtedness or obligation or any property
constituting security therefor;
(b) to advance or supply funds (i) for the purchase or payment of
such indebtedness or obligation, or (ii) to maintain any working capital
or other balance sheet condition or any income statement condition of any
other Person or otherwise to advance or make available funds for the
purchase or payment of such indebtedness or obligation;
5
Schedule B
<PAGE>
(c) to lease properties or to purchase properties or services
primarily for the purpose of assuring the owner of such indebtedness or
obligation of the ability of any other Person to make payment of the
indebtedness or obligation; or
(d) otherwise to assure the owner of such indebtedness or obligation
against loss in respect thereof.
In any computation of the indebtedness or other liabilities of the obligor under
any Guaranty, the indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.
"HAZARDOUS MATERIAL" means any and all pollutants, toxic or
hazardous wastes or any other substances that might pose a hazard to health or
safety, the removal of which may be required or the generation, manufacture,
refining, production, processing, treatment, storage, handling, transportation,
transfer, use, disposal, release, discharge, spillage, seepage, or filtration of
which is or shall be restricted, prohibited or penalized by any applicable law
(including, without limitation, asbestos, urea formaldehyde foam insulation and
polychlorinated biphenyls).
"HOLDER" means, with respect to any Note, the Person in whose name
such Note is registered in the register maintained by the Company pursuant to
Section 13.1.
"INDEBTEDNESS" with respect to any Person means, at any time,
without duplication,
(a) its liabilities for borrowed money;
(b) its liabilities for the deferred purchase price of property
acquired by such Person (excluding accounts payable and other accrued
liabilities arising in the ordinary course of business but including all
liabilities created or arising under any conditional sale or other title
retention agreement with respect to any such property);
(c) all liabilities appearing on its balance sheet in respect
of Capital Lease Obligations;
(d) all liabilities for borrowed money secured by any Lien with
respect to any property owned by such Person (whether or not it has
assumed or otherwise become liable for such liabilities);
(e) any Guaranty of such Person with respect to liabilities of a
type described in any of clauses (a) through (e) hereof.
Indebtedness of any Person shall include all obligations of such Person of the
character described in clauses (a) through (e) to the extent such Person remains
legally liable in respect thereof notwithstanding that any such obligation is
deemed to be extinguished under GAAP.
6
Schedule B
<PAGE>
"INSTITUTIONAL INVESTOR" means (a) any original purchaser of a Note,
(b) any holder of a Note holding more than $2,000,000 in aggregate principal
amount of the Notes, and (c) any bank, trust company, savings and loan
association or other financial institution, any pension plan, any investment
company, any insurance company, any broker or dealer, or any other similar
financial institution or entity, regardless of legal form.
"INTERCREDITOR AGREEMENT" is defined in Section 4.11.
"INVESTMENTS" means any investment made, in cash or by delivery of
property, directly or indirectly, by any Person, in (i) any other Person,
whether by acquisition of shares of capital stock, indebtedness or other
obligations or securities or by loan, advance, capital contribution or otherwise
or (ii) any property.
"LIEN" means, with respect to any Person, any mortgage, lien,
pledge, charge, security interest or other encumbrance, or any interest or title
of any vendor, lessor, lender or other secured party to or of such Person under
any conditional sale or other title retention agreement or Capital Lease, upon
or with respect to any property or asset of such Person (including in the case
of stock, stockholder agreements, voting trust agreements and all similar
arrangements).
"MAKE-WHOLE AMOUNT" is defined in Section 8.6.
"MATERIAL" means material in relation to the business, operations,
affairs, financial condition, assets or properties of the Company and its
Restricted Subsidiaries taken as a whole.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of the
Company and its Restricted Subsidiaries taken as a whole, or (b) the ability of
the Company to perform its obligations under this Agreement and the Notes, or
(c) the validity or enforceability of this Agreement, the Notes or the
Subsidiary Guaranty.
"MEMORANDUM" is defined in Section 5.3.
"MULTIEMPLOYER PLAN" means any Plan that is a "multiemployer plan"
(as such term is defined in section 4001(a)(3) of ERISA).
"NOTES" is defined in Section 1.1.
"OFFICER'S CERTIFICATE" means a certificate of a Senior Financial
Officer or of any other officer of the Company whose responsibilities extend to
the subject matter of such certificate.
"OTHER PURCHASERS" is defined in Section 2.
7
Schedule B
<PAGE>
"PBGC" means the Pension Benefit Guaranty Corporation referred to
and defined in ERISA or any successor thereto.
"PERSON" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
"PLAN" means an "employee benefit plan" (as defined in section 3(3)
of ERISA) that is or, within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five years,
have been made or required to be made, by the Company or any ERISA Affiliate or
with respect to which the Company or any ERISA Affiliate may have any liability.
"PRIORITY DEBT" means, as of any date, the sum (without duplication)
of (a) Indebtedness of Restricted Subsidiaries on such date (other than
Indebtedness of Restricted Subsidiaries incurred pursuant to Section 10.3(a) or
(b)), (b) Indebtedness of the Company that has been guaranteed by any Restricted
Subsidiary that is not a Subsidiary Guarantor, (c) Indebtedness of the Company
and its Restricted Subsidiaries secured by Liens not otherwise permitted by
Section 10.6(a) through (h) on such date and (d) Attributable Debt.
"PROPERTY" or "PROPERTIES" means, unless otherwise specifically
limited, real or personal property of any kind, tangible or intangible, choate
or inchoate.
"PURCHASER" means each purchaser listed in Schedule A.
"QPAM EXEMPTION" means Prohibited Transaction Class Exemption 84-14
issued by the United States Department of Labor.
"REQUIRED HOLDERS" means, at any time, the holders of at least a
majority in principal amount of the Series 1999 Notes at the time outstanding
(exclusive of Notes then owned by the Company or any of its Affiliates).
"RESPONSIBLE OFFICER" means any Senior Financial Officer and any
other officer of the Company with responsibility for the administration of the
relevant portion of this agreement.
"RESTRICTED INVESTMENTS" means all Investments of the Company and
its Restricted Subsidiaries, other than:
(a) property or assets to be used or consumed in the ordinary
course of business;
(b) current assets arising from the sale of goods or services in the
ordinary course of business;
8
Schedule B
<PAGE>
(c) Investments in Restricted Subsidiaries or in any Person that, as
a result thereof, becomes a Restricted Subsidiary;
(d) Investments existing as of the date of this Agreement that are
listed in the attached Schedule B-1;
(e) Investments in:
(i) obligations, maturing within one year from the date of
acquisition, of or fully guaranteed by the United States of America
or an agency thereof;
(ii) state, or municipal securities having an effective
maturity within one year from the date of acquisition that are rated
in one of the top two rating classifications by at least one
nationally recognized rating agency;
(iii) certificates of deposit or banker's acceptances maturing
within one year from the date of acquisition of or issued by Bank of
America or other commercial banks whose long-term unsecured debt
obligations (or the long-term unsecured debt obligations of the bank
holding company owning all of the capital stock of such bank) are
rated in one of the top two rating classifications by at least one
nationally recognized rating agency;
(iv) commercial paper maturing within 270 days from the date
of issuance that, at the time of acquisition, is rated in one of the
top two rating classifications by at least one credit rating agency
of recognized national standing; and
(v) money market instrument programs that are properly
classified as current assets in accordance with GAAP; and
(f) Investments in or by any perpetual care trust, merchandise
trust, preneed trust, preconstruction trust or other trust arrangement
established by the Company or any Restricted Subsidiary as required by
applicable law and regulations with a Person that is not an Affiliate
serving as trustee and managing the investments of such trust in
accordance with and as required by applicable law and regulation; and
(g) Investments in less than 50% of the outstanding Voting Stock of
Persons that own or operate funeral homes or cemeteries in jurisdictions
that prohibit ownership of 50% or more of such Voting Stock by the Company
or a Restricted Subsidiary and in which the cost of each such Investment
does not exceed $10,000.
"RESTRICTED PAYMENT" means any Distribution in respect of the
Company or any Restricted Subsidiary of the Company (other than on account of
capital stock or other equity interests of a Restricted Subsidiary owned legally
and beneficially by the Company or another
9
Schedule B
<PAGE>
Restricted Subsidiary), including any Distribution resulting in the acquisition
by the Company of securities that would constitute treasury stock.
"RESTRICTED SUBSIDIARY" means CHC Insurance Agency of Ohio, Inc. and
any other Subsidiary (a) of which at least 80% of the voting securities are
owned by the Company and/or one or more Wholly Owned Restricted Subsidiaries and
of which the Company has management control and (b) that the Company has not
designated an Unrestricted Subsidiary by notice in writing (including
designation in Section 5.4) given to the holders of the Notes.
"SALE AND LEASEBACK TRANSACTION" means a transaction or series of
transactions pursuant to which the Company or any Restricted Subsidiary shall
sell or transfer to any Person (other than the Company or a Restricted
Subsidiary) any property, whether now owned or hereafter acquired, and, as part
of the same transaction or series of transactions, the Company or any Restricted
Subsidiary shall rent or lease as lessee (other than pursuant to a Capital
Lease), or similarly acquire the right to possession or use of, such property or
one or more properties that it intends to use for the same purpose or purposes
as such property.
"SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time.
"SENIOR FINANCIAL OFFICER" means the chief financial officer,
principal accounting officer, treasurer or comptroller of the Company.
"SERIES 1999 NOTES" is defined in Section 1.2.
"SERIES 1999-A NOTES" is defined in Section 1.2.
"SERIES 1999-B NOTES" is defined in Section 1.2.
"SERIES 1999-C NOTES" is defined in Section 1.2.
"SOURCE" is defined in Section 6.2
"SUBSIDIARY" means, as to any Person, any corporation, association
or other business entity in which such Person or one or more of its Subsidiaries
or such Person and one or more of its Subsidiaries owns sufficient equity or
voting interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if more
than a 50% interest in the profits or capital thereof is owned by such Person or
one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries (unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one or more of its
Subsidiaries). Unless the context otherwise clearly requires, any reference to a
"Subsidiary" is a reference to a Subsidiary of the Company.
"SUBSIDIARY GUARANTOR" is defined in Section 1.1.
10
Schedule B
<PAGE>
"SUBSIDIARY GUARANTY" is defined in Section 1.1.
"SUPPLEMENT" is defined in Section 1.1.
"THIS AGREEMENT" OR "THE AGREEMENT" is defined in Section 17.3.
"TRUST DEBENTURES" means the Company's 7% Convertible Junior
Subordinated Debentures due 2029 issued to the Company's Subsidiary, Carriage
Services Capital Trust, in the original principal amount of $93,500,000.
"TRUST CONVERTIBLE PREFERRED SECURITIES" means the 7% Convertible
Preferred Securities, Term Income Deferrable Equity Securities issued by
Carriage Services Capital Trust in the aggregate liquidation amount of
$93,500,000.
"UNRESTRICTED SUBSIDIARY" means any Subsidiary of the Company that
has not been designated a Restricted Subsidiary.
"VOTING STOCK" means securities of any class or classes, the holders
of which are ordinarily, in the absence of contingencies, entitled to elect a
majority of the corporate directors (or Persons performing similar functions).
"WHOLLY OWNED SUBSIDIARY" or "WHOLLY OWNED RESTRICTED SUBSIDIARY"
mean, at any time, any Subsidiary, or Restricted Subsidiary, as the case may be,
100% of all of the equity interests (except directors' qualifying shares) and
voting interests of which are owned by any one or more of the Company and the
Company's other Wholly Owned Subsidiaries or Wholly Owned Restricted
Subsidiaries, as the case may be, at such time.
11
Schedule B
<PAGE>
SCHEDULE B-1
EXISTING INVESTMENTS
Schedule B-1
<PAGE>
SCHEDULE 5.3
DISCLOSURE MATERIALS
Schedule 5.3
<PAGE>
SCHEDULE 5.4
SUBSIDIARIES AND OWNERSHIP
OF SUBSIDIARY STOCK
Schedule 5.4
<PAGE>
SCHEDULE 5.5
FINANCIAL STATEMENTS
Schedule 5.5
<PAGE>
SCHEDULE 5.8
LITIGATION
Schedule 5.8
<PAGE>
SCHEDULE 5.11
LICENSES, PERMITS, ETC.
Schedule 5.11
<PAGE>
SCHEDULE 5.14
USE OF PROCEEDS
Schedule 5.14
<PAGE>
SCHEDULE 5.15
EXISTING INDEBTEDNESS
Schedule 5.15
<PAGE>
SCHEDULE 10.2
EXISTING LIENS
Schedule 10.2
EXHIBIT 1.1(A)
[FORM OF SENIOR NOTE]
CARRIAGE SERVICES, INC.
[____]% SENIOR NOTE DUE [__________, ____]
No. [_____] [Date]
$[_______] PPN[______________]
FOR VALUE RECEIVED, the undersigned, CARRIAGE SERVICES, INC. (herein
called the "Company"), a corporation organized and existing under the laws of
the State of Delaware, promises to pay to [ ], or registered assigns, the
principal sum of $[ ] on [ ], [ ], with interest (computed on the basis of a
360-day year of twelve 30-day months) (a) on the unpaid balance thereof at the
rate of [____]% per annum from the date hereof, payable semiannually, on
[______] [____] and [______][____] in each year, commencing with the [______]
[____] or [______] [____] next succeeding the date hereof, until the principal
hereof shall have become due and payable, and (b) to the extent permitted by law
on any overdue payment (including any overdue prepayment) of principal, any
overdue payment of interest and any overdue payment of any Make-Whole Amount (as
defined in the Note Purchase Agreement referred to below), payable semiannually
as aforesaid (or, at the option of the registered holder hereof, on demand), at
a rate per annum from time to time equal to the greater of (i) [_____]% or (ii)
2% over the rate of interest publicly announced by Bank of America or its
successor from time to time in Chicago, Illinois as its "base" or "prime" rate.
Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of the United States of
America at the principal office of Bank of America in Chicago, Illinois or at
such other place as the Company shall have designated by written notice to the
holder of this Note as provided in the Note Purchase Agreement referred to
below.
This Note is one of a series of Senior Notes (herein called the
"Notes") issued pursuant to a Note Purchase Agreement dated as of July 1, 1999
[and a Supplement thereto dated as of [ ], [ ]](as from time to time further
amended and supplemented, the "Note Purchase Agreement"), between the Company
and the respective Purchasers named therein and is entitled to the benefits
thereof. Each holder of this Note will be deemed, by its acceptance hereof, (i)
to have agreed to the confidentiality provisions set forth in Section 20 of the
Note Purchase Agreement and (ii) to have made the representation set forth in
Section 6.2 of the Note Purchase Agreement.
Exhibit 1.1(a)
<PAGE>
This Note is a registered Note and, as provided in the Note Purchase
Agreement, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.
[The Company will make required prepayments of principal on the
dates and in the amounts specified in the Note Purchase Agreement.] This Note is
[also] subject to optional prepayment, in whole or from time to time in part, at
the times and on the terms specified in the Note Purchase Agreements but not
otherwise.
If an Event of Default, as defined in the Note Purchase Agreement,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount) and with the effect provided in the Note Purchase
Agreement.
Payment of the principal of, and interest and Make-Whole Amount, if any,
on this Note, and all other amounts due under the Note Purchase Agreement, is
guaranteed pursuant to the terms of a Guaranty dated [ ], 1999 of certain
Subsidiaries of the Company1.
This Note shall be construed and enforced in accordance with, and
the rights of the parties shall be governed by, the law of the State of Illinois
excluding choice-of-law principles of the law of such State that would require
the application of the laws of a jurisdiction other than such State.
CARRIAGE SERVICES, INC.
By:_________________________________
Name:_______________________________
Title:______________________________
- --------------------
(1) This paragraph must be removed at such time as there are no Subsidiary
Guarantors.
2
EXHIBIT 1.1(B)
[FORM OF SUBSIDIARY GUARANTY]
THIS GUARANTY (this "Guaranty") dated [ ] is made by each of the
undersigned (each, a "Guarantor"), in favor of the holders from time to time of
the Notes hereinafter referred to, including each purchaser named in the Note
Purchase Agreement hereinafter referred to, and their respective successors and
assigns (collectively, the "Holders" and each individually, a "Holder").
W I T N E S S E T H:
WHEREAS, CARRIAGE SERVICES, INC., a Delaware corporation (the "Company"),
and the initial Holders have entered into a Note Purchase Agreement dated as of
July 1, 1999 (the Note Purchase Agreement as amended, supplemented, restated or
otherwise modified from time to time in accordance with its terms and in effect,
the "Note Purchase Agreement");
WHEREAS, the Note Purchase Agreement contemplates the issuance by the
Company of up to $300,000,000 aggregate principal amount of Notes (as defined in
the Note Purchase Agreement) in series;
WHEREAS, the Company owns all of the issued and outstanding capital stock
of each Guarantor and, by virtue of such ownership and otherwise, such Guarantor
will derive substantial benefits from the purchase by the Holders of the
Company's Notes;
WHEREAS, each Guarantor derives substantial financial, management and
other benefits as a Subsidiary of the Company and expects to continue to do so
in the future;
WHEREAS, each Guarantor may reasonably be expected to benefit, directly or
indirectly, from this Guaranty.
WHEREAS, it is a condition precedent to the obligation of the Holders to
purchase the Notes that each Guarantor shall have executed and delivered this
Guaranty for the benefit of the Holders and it is and will be a condition to the
sale of subsequent series of the Notes that this Guaranty run in favor of the
holders of such subsequent series of Notes; and
WHEREAS, each Guarantor finds it advantageous, desirable and in its best
interests to execute and deliver this Guaranty to satisfy the conditions
described in the preceding paragraph;
NOW, THEREFORE, in consideration of the premises and other benefits to the
Guarantors, and of the purchase of the Company's Notes by the Holders, and for
other good and valuable consideration, the receipt and sufficiency of which are
acknowledged, each Guarantor makes this Guaranty as follows:
Exhibit 1.1(b)
<PAGE>
SECTION 1. DEFINITIONS. Any capitalized terms not otherwise herein
defined shall have the meanings attributed to them in the Note Purchase
Agreement.
SECTION 2. GUARANTY. Each Guarantor unconditionally and irrevocably
guarantees to the Holders the due, prompt and complete performance and payment
by the Company of the principal of, Make-Whole Amount, if any, and interest on,
and each other amount due under, the Notes or the Note Purchase Agreement (the
Notes and the Note Purchase Agreement being sometimes hereinafter collectively
referred to as the "Note Documents") when and as the same shall become due and
payable (whether at stated maturity or by required or optional prepayment or by
declaration or otherwise) in accordance with the terms thereof, including
interest and other amounts owed under the terms thereof for which the Company
has obtained relief under bankruptcy or other laws providing for relief from
creditors (such amounts payable by the Company under the terms of the Note
Documents, and all other monetary obligations of the Company thereunder, being
sometimes collectively hereinafter referred to as the "Obligations"). This
Guaranty is a guaranty of payment and not just of collectibility and is in no
way conditioned or contingent upon any attempt to collect from the Company or
upon any other event, contingency or circumstance whatsoever. If for any reason
whatsoever the Company shall fail or be unable duly, punctually and fully to pay
such amounts as and when the same shall become due and payable, each Guarantor,
without demand, presentment, protest or notice of any kind, will forthwith pay
or cause to be paid such amounts to the Holders under the terms of such Note
Documents, in lawful money of the United States, at the place specified in the
Note Purchase Agreement, or perform or comply with the same or cause the same to
be performed or complied with, together with interest (to the extent provided
for under such Note Documents) on any amount due and owing from the Company.
Each Guarantor, promptly after demand, will pay to the Holders the reasonable
costs and expenses of collecting such amounts or otherwise enforcing this
Guaranty, including, without limitation, the reasonable fees and expenses of
counsel. Notwithstanding the foregoing, the right of recovery against each
Guarantor under this Guaranty is limited to the extent it is judicially
determined with respect to any Guarantor that entering into this Guaranty would
violate Section 548 of the United States Bankruptcy Code or any comparable
provisions of any state law, in which case such Guarantor shall be liable under
this Guaranty only for amounts aggregating up to the largest amount that would
not render such Guarantor's obligations hereunder subject to avoidance under
Section 548 of the United States Bankruptcy Code or any comparable provisions of
any state law.
SECTION 3. GUARANTOR'S OBLIGATIONS UNCONDITIONAL. The obligations of each
Guarantor under this Guaranty shall be primary, absolute and unconditional
obligations of such Guarantor, shall not be subject to any counterclaim,
set-off, deduction, diminution, abatement, recoupment, suspension, deferment,
reduction or defense based upon any claim such Guarantor or any other Person may
have against the Company or any other Person, and to the full extent permitted
by applicable law shall remain in full force and effect without regard to, and
shall not be released, discharged or in any way affected by, any circumstance or
condition whatsoever (whether or not such Guarantor or the Company shall have
any knowledge or notice thereof), including:
2
Exhibit 1.1(b)
<PAGE>
(a) any termination, amendment or modification of or deletion from
or addition or supplement to or other change in any of the Note Documents
or any other instrument or agreement applicable to any of the parties to
any of the Note Documents;
(b) any furnishing or acceptance of any security, or any release of
any security, for the Obligations, or the failure of any security or the
failure of any Person to perfect any interest in any collateral;
(c) any failure, omission or delay on the part of the Company to
conform or comply with any term of any of the Note Documents or any other
instrument or agreement referred to in paragraph (a) above, including,
without limitation, failure to give notice to any Guarantor of the
occurrence of a "Default" or an "Event of Default" under any Note
Document;
(d) any waiver of the payment, performance or observance of any of
the obligations, conditions, covenants or agreements contained in any Note
Document, or any other waiver, consent, extension, indulgence, compromise,
settlement, release or other action or inaction under or in respect of any
of the Note Documents or any other instrument or agreement referred to in
paragraph (a) above or any obligation or liability of the Company, or any
exercise or non-exercise of any right, remedy, power or privilege under or
in respect of any such instrument or agreement or any such obligation or
liability;
(e) any failure, omission or delay on the part of any of the Holders
to enforce, assert or exercise any right, power or remedy conferred on
such Holder in this Guaranty, or any such failure, omission or delay on
the part of such Holder in connection with any Note Document, or any other
action on the part of such Holder;
(f) any voluntary or involuntary bankruptcy, insolvency,
reorganization, arrangement, readjustment, assignment for the benefit of
creditors, composition, receivership, conservatorship, custodianship,
liquidation, marshaling of assets and liabilities or similar proceedings
with respect to the Company, any Guarantor or to any other Person or any
of their respective properties or creditors, or any action taken by any
trustee or receiver or by any court in any such proceeding;
(g) any discharge, termination, cancellation, frustration,
irregularity, invalidity or unenforceability, in whole or in part, of any
of the Note Documents or any other agreement or instrument referred to in
paragraph (a) above or any term hereof;
(h) any merger or consolidation of the Company or any Guarantor into
or with any other corporation, or any sale, lease or transfer of any of
the assets of the Company or any Guarantor to any other Person;
3
Exhibit 1.1(b)
<PAGE>
(i) any change in the ownership of any shares of capital stock of
the Company or any change in the corporate relationship between the
Company and any Guarantor, or any termination of such relationship;
(j) any release or discharge, by operation of law, of any Guarantor
from the performance or observance of any obligation, covenant or
agreement contained in this Guaranty; or
(k) any other occurrence, circumstance, happening or event
whatsoever, whether similar or dissimilar to the foregoing, whether
foreseen or unforeseen, and any other circumstance that might otherwise
constitute a legal or equitable defense or discharge of the liabilities of
a guarantor or surety or that might otherwise limit recourse against any
Guarantor.
SECTION 4. FULL RECOURSE OBLIGATIONS. The obligations of each Guarantor
set forth herein constitute the full recourse obligations of such Guarantor
enforceable against it to the full extent of all its assets and properties.
SECTION 5. WAIVER. Each Guarantor unconditionally waives, to the extent
permitted by applicable law, (a) notice of any of the matters referred to in
Section 3, (b) notice to such Guarantor of the incurrence of any of the
Obligations, notice to such Guarantor or the Company of any breach or default by
the Company with respect to any of the Obligations or any other notice that may
be required, by statute, rule of law or otherwise, to preserve any rights of the
Holders against such Guarantor, (c) presentment to or demand of payment from the
Company or such Guarantor with respect to any amount due under any Note Document
or protest for nonpayment or dishonor, (d) any right to the enforcement,
assertion or exercise by any of the Holders of any right, power, privilege or
remedy conferred in the Note Purchase Agreement or any other Note Document or
otherwise, (e) any requirement of diligence on the part of any of the Holders,
(f) any requirement to exhaust any remedies or to mitigate the damages resulting
from any default under any Note Document, (g) any notice of any sale, transfer
or other disposition by any of the Holders of any right, title to or interest in
the Note Purchase Agreement or in any other Note Document and (h) any other
circumstance whatsoever that might otherwise constitute a legal or equitable
discharge, release or defense of a guarantor or surety or that might otherwise
limit recourse against such Guarantor.
SECTION 6. SUBROGATION, CONTRIBUTION, REIMBURSEMENT OR INDEMNITY. Until
one year and one day after all Obligations have been indefeasibly paid in full,
each Guarantor agrees not to take any action pursuant to any rights that may
have arisen in connection with this Guaranty to be subrogated to any of the
rights (whether contractual, under the United States Bankruptcy Code, as
amended, including section 509 thereof, under common law or otherwise) of any of
the Holders against the Company or against any collateral security or guaranty
or right of offset held by the Holders for the payment of the Obligations. Until
one year and one day after all Obligations have been indefeasibly paid in full,
each Guarantor agrees not to take any action pursuant to any contractual, common
law, statutory or other rights of reimbursement, contribution, exoneration or
indemnity (or any similar right) from or against the Company that
4
Exhibit 1.1(b)
<PAGE>
may have arisen in connection with this Guaranty. So long as the Obligations
remain, if any amount shall be paid by or on behalf of the Company to such
Guarantor on account of any of the rights waived in this paragraph, such amount
shall be held by such Guarantor in trust, segregated from other funds of such
Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over
to the Holders (duly endorsed by such Guarantor to the Holders, if required), to
be applied against the Obligations, whether matured or unmatured, in such order
as the Holders may determine. The provisions of this paragraph shall survive the
term of this Guaranty and the payment in full of the Obligations.
SECTION 7. EFFECT OF BANKRUPTCY PROCEEDINGS, ETC. This Guaranty shall
continue to be effective or be automatically reinstated, as the case may be, if
at any time payment, in whole or in part, of any of the sums due to any of the
Holders pursuant to the terms of the Note Purchase Agreement or any other Note
Document is rescinded or must otherwise be restored or returned by such Holder
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of
the Company or any other Person, or upon or as a result of the appointment of a
custodian, receiver, trustee or other officer with similar powers with respect
to the Company or other Person or any substantial part of its property, or
otherwise, all as though such payment had not been made. If an event permitting
the acceleration of the maturity of the principal amount of the Notes shall at
any time have occurred and be continuing, and such acceleration shall at such
time be prevented by reason of the pendency against the Company or any other
Person of a case or proceeding under a bankruptcy or insolvency law, each
Guarantor agrees that, for purposes of this Guaranty and its obligations
hereunder, the maturity of the principal amount of the Notes and all other
Obligations shall be deemed to have been accelerated with the same effect as if
any Holder had accelerated the same in accordance with the terms of the Note
Purchase Agreement or other applicable Note Document, and such Guarantor shall
forthwith pay such principal amount, Make-Whole Amount, if any, and interest
thereon and any other amounts guaranteed hereunder without further notice or
demand.
SECTION 8. TERM OF AGREEMENT. This Guaranty and all guaranties, covenants
and agreements of each Guarantor contained herein shall continue in full force
and effect and shall not be discharged until such time as all of the Obligations
shall be paid and performed in full and all of the agreements of each Guarantor
hereunder shall be duly paid and performed in full.
SECTION 9. REPRESENTATIONS AND WARRANTIES. Each Guarantor represents
and warrants to each Holder that:
(a) such Guarantor is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of organization
and has the corporate power and authority to own and operate its property,
to lease the property it operates as lessee and to conduct the business in
which it is currently engaged;
(b) such Guarantor has the corporate power and authority and the
legal right to execute and deliver, and to perform its obligations under,
this Guaranty, and has taken all necessary corporate action to authorize
its execution, delivery and performance of this Guaranty;
5
Exhibit 1.1(b)
<PAGE>
(c) this Guaranty constitutes a legal, valid and binding obligation
of such Guarantor enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law);
(d) the execution, delivery and performance of this Guaranty will
not violate any provision of any requirement of law or material
contractual obligation of such Guarantor and will not result in or require
the creation or imposition of any Lien on any of the properties, revenues
or assets of such Guarantor pursuant to the provisions of any material
contractual obligation of such Guarantor or any requirement of law;
(e) no consent or authorization of, filing with, or other act by or
in respect of, any arbitrator or Governmental Authority is required in
connection with the execution, delivery, performance, validity or
enforceability of this Guaranty;
(f) no litigation, investigation or proceeding of or before any
arbitrator or Governmental Authority is pending or, to the knowledge of
such Guarantor, threatened by or against such Guarantor or any of its
properties or revenues (i) with respect to this Guaranty or any of the
transactions contemplated hereby or (ii) that could reasonably be expected
to have a material adverse effect upon the business, operations or
financial condition of such Guarantor and its Subsidiaries taken as a
whole;
(g) the execution, delivery and performance of this Guaranty will
not violate any provision of any order, judgment, writ, award or decree of
any court, arbitrator or Governmental Authority, domestic or foreign, or
of the charter or by-laws of such Guarantor or of any securities issued by
such Guarantor; and
(h) after giving effect to the transactions contemplated herein, (i)
the present fair salable value of the assets of such Guarantor is in
excess of the amount that will be required to pay its probable liability
on its existing debts as said debts become absolute and matured, (ii) such
Guarantor has received reasonably equivalent value for executing and
delivering this Guaranty, (iii) the property remaining in the hands of
such Guarantor is not an unreasonably small capital, and (iv) such
Guarantor is able to pay its debts as they mature.
SECTION 10. NOTICES. All notices under the terms and provisions hereof
shall be in writing, and shall be delivered or sent by telex or telecopy or
mailed by first-class mail, postage prepaid, addressed (a) if to the Company or
any Holder at the address set forth in, the Note Purchase Agreement or (b) if to
any Guarantor, in care of the Company at the Company's address set forth in the
Note Purchase Agreement, or in each case at such other address as the Company,
any Holder or a Guarantor shall from time to time designate in writing to the
other parties. Any notice so addressed shall be deemed to be given when actually
received.
6
Exhibit 1.1(b)
<PAGE>
SECTION 11. SURVIVAL. All warranties, representations and covenants made
by each Guarantor herein or in any certificate or other instrument delivered by
it or on its behalf hereunder shall be considered to have been relied upon by
the Holders and shall survive the execution and delivery of this Guaranty,
regardless of any investigation made by any of the Holders. All statements in
any such certificate or other instrument shall constitute warranties and
representations by such Guarantor hereunder.
SECTION 12. SUBMISSION TO JURISDICTION. Each Guarantor irrevocably submits
to the jurisdiction of the courts of the State of Illinois and of the courts of
the United States of America having jurisdiction in the State of Illinois for
the purpose of any legal action or proceeding in any such court with respect to,
or arising out of, this Guaranty, the Note Purchase Agreement or the Notes. Each
Guarantor consents to process being served in any suit, action or proceeding by
mailing a copy thereof by registered or certified mail, postage prepaid, return
receipt requested, to the address of such Guarantor specified in or designated
pursuant to the Note Purchase Agreement. Each Guarantor agrees that such service
upon receipt (i) shall be deemed in every respect effective service of process
upon it in any such suit, action or proceeding and (ii) shall, to the fullest
extent permitted by law, be taken and held to be valid personal service upon and
personal delivery to such Guarantor.
SECTION 13. MISCELLANEOUS. Any provision of this Guaranty that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, each Guarantor hereby waives any provision of law that
renders any provisions hereof prohibited or unenforceable in any respect. The
terms of this Guaranty shall be binding upon, and inure to the benefit of, each
Guarantor and the Holders and their respective successors and assigns. No term
or provision of this Guaranty may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by each Guarantor and the
Holders. The section and paragraph headings in this Guaranty and the table of
contents are for convenience of reference only and shall not modify, define,
expand or limit any of the terms or provisions hereof, and all references herein
to numbered sections, unless otherwise indicated, are to sections in this
Guaranty. This Guaranty shall in all respects be governed by, and construed in
accordance with, the laws of the State of Illinois, including all matters of
construction, validity and performance.
7
Exhibit 1.1(b)
<PAGE>
IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be
duly executed as of the day and year first above written.
[ ]
By:_________________________________
Name:_______________________________
Title:______________________________
[Add Signature Block of each Subsidiary Guarantor]
8
Exhibit 1.1(b)
EXHIBIT 1.1(C)
[FORM OF SUPPLEMENT]
SUPPLEMENT TO NOTE PURCHASE AGREEMENT
THIS SUPPLEMENT is entered into as of [ ], [ ] (this "Supplement") between
CARRIAGE SERVICES, INC., a Delaware corporation (the "COMPANY"), and the
Purchasers listed in the attached Schedule A (the "PURCHASERS").
R E C I T A L S
A. The Company has entered into a Note Purchase Agreement dated as of July
1, 1999 with the purchasers listed in Schedule A thereto [and one or more
supplements or amendments thereto] (as heretofore amended and supplemented, the
"NOTE PURCHASE AGREEMENT"); and
B. The Company desires to issue and sell, and the Purchasers desire to
purchase, an additional series of Notes (as defined in the Note Purchase
Agreement) pursuant to the Note Purchase Agreement and in accordance with the
terms set forth below;
NOW, THEREFORE, the Company and the Purchasers agree as follows:
1. AUTHORIZATION OF THE NEW SERIES OF NOTES. The Company has authorized
the issue and sale of $[ ] aggregate principal amount of Notes to be designated
as its [__]% Senior Notes, Series [ ], due [ ], [ ] (the "SERIES [ ] NOTES",
such term to include any such Notes issued in substitution therefor pursuant to
Section 13 of the Note Purchase Agreement). The Series [ ] Notes shall be
substantially in the form set out in Exhibit 1, with such changes therefrom, if
any, as may be approved by you and the Company.
2. SALE AND PURCHASE OF SERIES [ ] NOTES. Subject to the terms and
conditions of this Supplement and the Note Purchase Agreement, the Company will
issue and sell to each of the Purchasers, and the Purchasers will purchase from
the Company, at the Closing provided for in Section 3, Series [ ] Notes in the
principal amount specified opposite their respective names in Schedule A at the
purchase price of 100% of the principal amount thereof. The obligations of the
Purchasers hereunder are several and not joint obligations and no Purchaser
shall have any liability to any Person for the performance or non-performance by
any other Purchaser hereunder.
3. CLOSING. The sale and purchase of the Series [ ] Notes to be purchased
by the Purchasers shall occur at the offices of Gardner, Carton & Douglas,
Quaker Tower, Suite 3400, 321 North Clark Street, Chicago, Illinois 60610 at
9:00 a.m., Chicago time, at a closing (the "CLOSING") on [ ], [ ] or on such
other Business Day thereafter on or prior to [ ], [ ] as
Exhibit 1.1(c)
<PAGE>
may be agreed upon by the Company and the Purchasers. At the Closing the Company
will deliver to each Purchaser the Series [ ] Notes to be purchased by it in the
form of a single Note (or such greater number of Series [ ] Notes in
denominations of at least $500,000 as such Purchaser may request) dated the date
of the Closing and registered in its name (or in the name of its nominee),
against delivery by such Purchaser to the Company or its order of immediately
available funds in the amount of the purchase price therefor by wire transfer of
immediately available funds for the account of the Company to account number
[__________] at [_________________] Bank, [INSERT BANK ADDRESS, ABA NUMBER FOR
WIRE TRANSFERS, AND ANY OTHER RELEVANT WIRE TRANSFER INFORMATION]. If at the
Closing the Company shall fail to tender such Series [ ] Notes to a Purchaser as
provided above in this Section 3, or any of the conditions specified in Section
4 of the Note Purchase Agreement, as modified or expanded by Section 4 hereof,
shall not have been fulfilled to such Purchaser's satisfaction, such Purchaser
shall, at its election, be relieved of all further obligations under this
Agreement, without thereby waiving any rights it may have by reason of such
failure or such nonfulfillment.
4. CONDITIONS TO CLOSING. Each Purchasers obligation to purchase and pay
for the Series [ ] Notes to be sold to it at the Closing is subject to the
fulfillment to its satisfaction, prior to or at the Closing, of the conditions
set forth in Section 4 of the Note Purchase Agreement, as hereafter modified,
and to the following additional conditions:
[Set forth any modifications and additional conditions.]
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to the Purchasers that each of the representations and warranties
contained in Section 5 of the Note Purchase Agreement is true and correct as of
the date hereof (i) except that all references to "Purchaser" and "you" therein
shall be deemed to refer to the Purchasers hereunder, all references to "this
Agreement" shall be deemed to refer to the Note Purchase Agreement as
supplemented by this Supplement, all references to "Notes" therein shall be
deemed to include the Series [ ] Notes, and (ii) except for changes to such
representations and warranties or the Schedules referred to therein, which
changes are set forth in the attached Schedule 5.
6. REPRESENTATIONS OF THE PURCHASERS. Each Purchaser confirms to the
Company that the representations set forth in Section 6 of the Note Purchase
Agreement are true and correct as to such Purchaser.
7. MANDATORY PREPAYMENT OF THE SERIES [ ] NOTES. [The Series [ ] Notes are
not subject to mandatory prepayment by the Company.] [On [ ], [ ] and on each
[ ] thereafter to and including [ ], [ ] the Company will prepay $[ ] principal
amount (or such lesser principal amount as shall then be outstanding) of the
Series [ ] Notes at par and without payment of the Make-Whole Amount or any
premium.]
8. APPLICABILITY OF NOTE PURCHASE AGREEMENT. Except as otherwise expressly
provided herein (and expressly permitted by the Note Purchase Agreement), all of
the provisions of the Note Purchase Agreement are incorporated by reference
herein and shall apply to the Series [ ] Notes as if expressly set forth in this
Supplement.
2
Exhibit 1.1(c)
<PAGE>
IN WITNESS WHEREOF, the Company and the Purchasers have caused this
Supplement to be executed and delivered as of the date set forth above.
CARRIAGE SERVICES, INC.
By:___________________________________
Name:_________________________________
Title:________________________________
[ADD PURCHASER SIGNATURE BLOCKS]
3
Exhibit 1.1(c)
<PAGE>
SCHEDULE A
TO SUPPLEMENT
INFORMATION RELATING TO PURCHASERS
Principal Amount of Series
NAME AND ADDRESS OF PURCHASER [ ] NOTES TO BE PURCHASED
[NAME OF PURCHASER] $
(1) All payments by wire transfer
of immediately available
funds to:
with sufficient information
to identify the source and
application of such funds.
(2) All notices of payments and
written confirmations of such
wire transfers:
(3) All other communications:
4
Exhibit 1.1(c)
<PAGE>
SCHEDULE 5
TO SUPPLEMENT
EXCEPTIONS TO REPRESENTATIONS
AND WARRANTIES
5
Exhibit 1.1(c)
<PAGE>
EXHIBIT 1 TO
SUPPLEMENT
[FORM OF SERIES [ ] NOTE]
6
Exhibit 1.1(c)
EXHIBIT 1.2(A)
[FORM OF SERIES 1999-A NOTE]
CARRIAGE SERVICES, INC.
7.73% Senior Note
due July 30, 2004
No. [_____] [Date]
$[_______] PPN[______________]
FOR VALUE RECEIVED, the undersigned, CARRIAGE SERVICES, INC. (herein
called the "Company"), a corporation organized and existing under the laws of
the State of Delaware, promises to pay to [ ], or registered assigns, the
principal sum of $[ ] on July 30, 2004, with interest (computed on the basis of
a 360-day year of twelve 30-day months) (a) on the unpaid balance thereof at the
rate of 7.73% per annum from the date hereof, payable semiannually, on July 30
and January 30 in each year, commencing with the January 30 next succeeding the
date hereof, until the principal hereof shall have become due and payable, and
(b) to the extent permitted by law on any overdue payment (including any overdue
prepayment) of principal, any overdue payment of interest and any overdue
payment of any Make-Whole Amount (as defined in the Note Purchase Agreement
referred to below), payable semiannually as aforesaid (or, at the option of the
registered holder hereof, on demand), at a rate per annum from time to time
equal to the greater of (i) 9.73% or (ii) 2% over the rate of interest publicly
announced by Bank of America from time to time in Chicago, Illinois as its
"base" or "prime" rate.
Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of the United States of
America at the principal office of Bank of America in Chicago, Illinois or at
such other place as the Company shall have designated by written notice to the
holder of this Note as provided in the Note Purchase Agreement referred to
below.
This Note is one of a series of Notes (herein called the "Notes")
issued pursuant to a Note Purchase Agreement, dated as of July 1, 1999 as from
time to time amended and supplemented, the "Note Purchase Agreement"), between
the Company and the respective Purchasers named therein and is entitled to the
benefits thereof. Each holder of this Note will be deemed, by its acceptance
hereof, (i) to have agreed to the confidentiality provisions set forth in
Section 20 of the Note Purchase Agreement and (ii) to have made the
representation set forth in Section 6.2 of the Note Purchase Agreement.
This Note is a registered Note and, as provided in the Note Purchase
Agreement, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a
Exhibit 1.2(a)
<PAGE>
written instrument of transfer duly executed, by the registered holder hereof or
such holder's attorney duly authorized in writing, a new Note for a like
principal amount will be issued to, and registered in the name of, the
transferee. Prior to due presentment for registration of transfer, the Company
may treat the person in whose name this Note is registered as the owner hereof
for the purpose of receiving payment and for all other purposes, and the Company
will not be affected by any notice to the contrary.
The Company will make required offers to prepay principal on the
dates and in the amounts specified in the Note Purchase Agreement. This Note is
also subject to optional prepayment, in whole or from time to time in part, at
the times and on the terms specified in the Note Purchase Agreement but not
otherwise.
If an Event of Default, as defined in the Note Purchase Agreement,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount) and with the effect provided in the Note Purchase
Agreement.
Payment of the principal of, and interest and Make-Whole Amount, if
any, on this Note, and all other amounts due under the Note Purchase Agreement,
is guaranteed pursuant to the terms of a Subsidiary Guaranty dated July 26, 1999
of certain Subsidiaries of the Company.
This Note shall be construed and enforced in accordance with, and
the rights of the parties shall be governed by, the law of the State of Illinois
excluding choice-of-law principles of the law of such State that would require
the application of the laws of a jurisdiction other than such State.
CARRIAGE SERVICES, INC.
By:________________________________
Name:______________________________
Title:_____________________________
2
Exhibit 1.2(a)
EXHIBIT 1.2(B)
[FORM OF SERIES 1999-B NOTE]
CARRIAGE SERVICES, INC.
7.96% Senior Note
due July 30, 2006
No. [_____] [Date]
$[_______] PPN[______________]
FOR VALUE RECEIVED, the undersigned, CARRIAGE SERVICES, INC. (herein
called the "Company"), a corporation organized and existing under the laws of
the State of Delaware, promises to pay to [ ], or registered assigns, the
principal sum of $[ ] on July 30, 2006, with interest (computed on the basis of
a 360-day year of twelve 30-day months) (a) on the unpaid balance thereof at the
rate of 7.96% per annum from the date hereof, payable semiannually, on July 30
and January 30 in each year, commencing with the January 30 next succeeding the
date hereof, until the principal hereof shall have become due and payable, and
(b) to the extent permitted by law on any overdue payment (including any overdue
prepayment) of principal, any overdue payment of interest and any overdue
payment of any Make-Whole Amount (as defined in the Note Purchase Agreement
referred to below), payable semiannually as aforesaid (or, at the option of the
registered holder hereof, on demand), at a rate per annum from time to time
equal to the greater of (i) 9.96% or (ii) 2% over the rate of interest publicly
announced by Bank of America from time to time in Chicago, Illinois as its
"base" or "prime" rate.
Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of the United States of
America at the principal office of Bank of America in Chicago, Illinois or at
such other place as the Company shall have designated by written notice to the
holder of this Note as provided in the Note Purchase Agreement referred to
below.
This Note is one of a series of Notes (herein called the "Notes")
issued pursuant to a Note Purchase Agreement, dated as of July 1, 1999 as from
time to time amended and supplemented, the "Note Purchase Agreement"), between
the Company and the respective Purchasers named therein and is entitled to the
benefits thereof. Each holder of this Note will be deemed, by its acceptance
hereof, (i) to have agreed to the confidentiality provisions set forth in
Section 20 of the Note Purchase Agreement and (ii) to have made the
representation set forth in Section 6.2 of the Note Purchase Agreement.
This Note is a registered Note and, as provided in the Note Purchase
Agreement, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a
Exhibit 1.2(b)
<PAGE>
written instrument of transfer duly executed, by the registered holder hereof or
such holder's attorney duly authorized in writing, a new Note for a like
principal amount will be issued to, and registered in the name of, the
transferee. Prior to due presentment for registration of transfer, the Company
may treat the person in whose name this Note is registered as the owner hereof
for the purpose of receiving payment and for all other purposes, and the Company
will not be affected by any notice to the contrary.
The Company will make required offers to prepay principal on the
dates and in the amounts specified in the Note Purchase Agreement. This Note is
also subject to optional prepayment, in whole or from time to time in part, at
the times and on the terms specified in the Note Purchase Agreement but not
otherwise.
If an Event of Default, as defined in the Note Purchase Agreement,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount) and with the effect provided in the Note Purchase
Agreement.
Payment of the principal of, and interest and Make-Whole Amount, if
any, on this Note, and all other amounts due under the Note Purchase Agreement,
is guaranteed pursuant to the terms of a Guaranty dated July 26, 1999 of certain
Subsidiaries of the Company.
This Note shall be construed and enforced in accordance with, and
the rights of the parties shall be governed by, the law of the State of Illinois
excluding choice-of-law principles of the law of such State that would require
the application of the laws of a jurisdiction other than such State.
CARRIAGE SERVICES, INC.
By:______________________________
Name:____________________________
Title:___________________________
2
Exhibit 1.2(b)
EXHIBIT 1.2(C)
[FORM OF SERIES 1999-C NOTE]
CARRIAGE SERVICES, INC.
8.06% Senior Note
due July 30, 2008
No. [_____] [Date]
$[_______] PPN[______________]
FOR VALUE RECEIVED, the undersigned, CARRIAGE SERVICES, INC. (herein
called the "Company"), a corporation organized and existing under the laws of
the State of Delaware, promises to pay to [ ], or registered assigns, the
principal sum of $[ ] on July 30, 2008, with interest (computed on the basis of
a 360-day year of twelve 30-day months) (a) on the unpaid balance thereof at the
rate of 8.06% per annum from the date hereof, payable semiannually, on July 30
and January 30 in each year, commencing with the January 30 next succeeding the
date hereof, until the principal hereof shall have become due and payable, and
(b) to the extent permitted by law on any overdue payment (including any overdue
prepayment) of principal, any overdue payment of interest and any overdue
payment of any Make-Whole Amount (as defined in the Note Purchase Agreement
referred to below), payable semiannually as aforesaid (or, at the option of the
registered holder hereof, on demand), at a rate per annum from time to time
equal to the greater of (i) 10.06% or (ii) 2% over the rate of interest publicly
announced by Bank of America from time to time in Chicago, Illinois as its
"base" or "prime" rate.
Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of the United States of
America at the principal office of Bank of America in Chicago, Illinois or at
such other place as the Company shall have designated by written notice to the
holder of this Note as provided in the Note Purchase Agreement referred to
below.
This Note is one of a series of Notes (herein called the "Notes")
issued pursuant to a Note Purchase Agreement, dated as of July 1, 1999 as from
time to time amended and supplemented, the "Note Purchase Agreement"), between
the Company and the respective Purchasers named therein and is entitled to the
benefits thereof. Each holder of this Note will be deemed, by its acceptance
hereof, (i) to have agreed to the confidentiality provisions set forth in
Section 20 of the Note Purchase Agreement and (ii) to have made the
representation set forth in Section 6.2 of the Note Purchase Agreement.
This Note is a registered Note and, as provided in the Note Purchase
Agreement, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a
Exhibit 1.2(c)
<PAGE>
written instrument of transfer duly executed, by the registered holder hereof or
such holder's attorney duly authorized in writing, a new Note for a like
principal amount will be issued to, and registered in the name of, the
transferee. Prior to due presentment for registration of transfer, the Company
may treat the person in whose name this Note is registered as the owner hereof
for the purpose of receiving payment and for all other purposes, and the Company
will not be affected by any notice to the contrary.
The Company will make required offers to prepay principal on the
dates and in the amounts specified in the Note Purchase Agreement. This Note is
also subject to optional prepayment, in whole or from time to time in part, at
the times and on the terms specified in the Note Purchase Agreement but not
otherwise.
If an Event of Default, as defined in the Note Purchase Agreement,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount) and with the effect provided in the Note Purchase
Agreement.
Payment of the principal of, and interest and Make-Whole Amount, if
any, on this Note, and all other amounts due under the Note Purchase Agreement,
is guaranteed pursuant to the terms of a Guaranty dated July 26, 1999 of certain
Subsidiaries of the Company.
This Note shall be construed and enforced in accordance with, and
the rights of the parties shall be governed by, the law of the State of Illinois
excluding choice-of-law principles of the law of such State that would require
the application of the laws of a jurisdiction other than such State.
CARRIAGE SERVICES, INC.
By:_______________________________
Name:_____________________________
Title:____________________________
2
Exhibit 1.2(c)
EXHIBIT 4.4(a)
FORM OF OPINION OF COUNSEL
TO THE COMPANY
The opinion of Snell & Smith, counsel for the Company, shall be to the
effect that:
1. Each of the Company and each Subsidiary Guarantor is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation, and each has all requisite corporate power and
authority to own and operate its properties, to carry on its business as now
conducted, and, in the case of the Company, to enter into and perform the Note
Purchase Agreement and to issue and sell the Notes, and, in the case of each
Subsidiary Guarantor, to execute, deliver and perform the Subsidiary Guaranty.
2. The Note Purchase Agreement and the Notes have been duly authorized by
proper corporate action on the part of the Company, have been duly executed and
delivered by an authorized officer of the Company, and constitute the legal,
valid and binding agreements of the Company, enforceable in accordance with
their terms, except to the extent that enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws of
general application relating to or affecting the enforcement of the rights of
creditors or by equitable principles, regardless of whether enforcement is
sought in a proceeding in equity or at law.
3. The Subsidiary Guaranty has been duly authorized by proper corporate
action on the part of each Subsidiary Guarantor, has been duly executed and
delivered by an authorized officer of each Subsidiary Guarantor, and constitutes
the legal, valid and binding obligation of each Subsidiary Guarantor,
enforceable in accordance with its terms, except to the extent the enforcement
thereof may be limited by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar laws of general application
relating to or affecting the enforcement of the rights of creditors or by
equitable principles, regardless of whether enforcement is sought in a
proceeding in equity or at law.
4. A Texas court, or a federal court sitting in Texas, would honor the
choice of Illinois law to govern the Agreement, the Notes and the Subsidiary
Guaranty.
5. The offering, sale and delivery of the Notes and delivery of the
Subsidiary Guaranty do not require the registration of the Notes or the
Subsidiary Guaranty under the Securities Act of 1933, as amended, or the
qualification of an indenture under the Trust Indenture Act of 1939, as amended.
6. No authorization, approval or consent of, and no designation, filing,
declaration, registration and/or qualification with, any Governmental Authority
is necessary or required in connection with the execution, delivery and
performance by the Company of the Note Purchase
Exhibit 4.4(a)
<PAGE>
Agreement or the offering, issuance and sale by the Company of the Notes, and no
authorization, approval or consent of, and no designation, filing, declaration,
registration and/or qualification with, any Governmental Authority is necessary
or required in connection with the execution, delivery and performance by any
Subsidiary Guarantor of the Subsidiary Guaranty.
7. The issuance and sale of the Notes by the Company, the performance of
the terms and conditions of the Notes and the Note Purchase Agreement and the
execution and delivery of the Note Purchase Agreement do not conflict with, or
result in any breach or violation of any of the provisions of, or constitute a
default under, or result in the creation or imposition of any Lien on, the
property of the Company or any Subsidiary pursuant to the provisions of (i) the
certificate or articles of incorporation or bylaws of the Company or any
Subsidiary, (ii) any loan agreement known to such counsel to which the Company
or any Subsidiary is a party or by which any of them or their property is bound,
(iii) any other Material agreement or instrument known to such counsel to which
the Company or any Subsidiary is a party or by which any of them or their
property is bound, (iv) any law (including usury laws) or regulation applicable
to the Company, or (v) to the knowledge of such counsel, any order, writ,
injunction or decree of any court or Governmental Authority applicable to the
Company.
8. The execution, delivery and performance of the Subsidiary Guaranty will
not conflict with, or result in any breach or violation of any of the provisions
of, or constitute a default under, or result in the creation or imposition of
any Lien on, the property of any Subsidiary Guarantor pursuant to the provisions
of (i) its certificate of incorporation or by-laws, (ii) any loan agreement
known to such counsel to which any Subsidiary Guarantor is a party or by which
it or its property is bound, (iii) any other Material agreement or instrument
known to such counsel to which any Subsidiary Guarantor is a party or by which
it or its property is bound, (iv) any law or regulation applicable to any
Subsidiary Guarantor, or (v) to the knowledge of such counsel, any order, writ,
injunction or decree of any court or Governmental Authority applicable to any
Subsidiary Guarantor.
9. Except as disclosed in Schedule 5.4 to the Note Purchase Agreement, all
of the issued and outstanding shares of capital stock of each Subsidiary are
owned directly or indirectly by the Company free and clear of any perfected
pledge or, to the knowledge of such counsel, any other perfected Lien.
10. Except as disclosed in Schedule 5.8 to the Note Purchase Agreement,
there are no actions, suits or proceedings pending, or, to such counsel's
knowledge, threatened against, or affecting the Company or any Subsidiary, at
law or in equity or before or by any Governmental Authority, which are likely to
result, individually or in the aggregate, in a Material Adverse Effect.
11. Neither the Company nor any Subsidiary is (i) a "public utility
company" or a "holding company," or an "affiliate" or a "subsidiary company" of
a "holding company," or an "affiliate" of such a "subsidiary company," as such
terms are defined in the Public Utility Holding Company Act of 1935, as amended
(the "1935 Act"), (ii) a "public utility" as defined in the Federal Power Act,
as amended, or (iii) an "investment company" or an "affiliated person"
2
Exhibit 4.4(a)
<PAGE>
thereof, as such terms are defined in the Investment Company Act of 1940, as
amended (the "1940 Act").
12. The issuance of the Notes and the intended use of the proceeds of the
sale of the Notes do not violate or conflict with Regulation U, T or X of the
Board of Governors of the Federal Reserve System.
The opinion of Snell & Smith shall cover such other matters relating to the sale
of the Notes as the Purchasers may reasonably request. With respect to matters
of fact on which such opinion is based, such counsel shall be entitled to rely
on appropriate certificates of public officials and officers of the Company and
with respect to matters governed by the laws of any jurisdiction other than the
United States of America, the laws of the State of Texas or the Delaware General
Corporation Law, such counsel may rely upon the opinions of counsel deemed (and
stated in their opinion to be deemed) by them to be competent and reliable. For
purposes of their opinion as to enforceability in paragraphs 2 and 3, Snell &
Smith may assume that Illinois law is substantially identical to Texas law.
3
Exhibit 4.4(a)
EXHIBIT 4.4(b)
FORM OF OPINION OF SPECIAL COUNSEL
TO THE PURCHASERS
The opinion of Gardner, Carton & Douglas, special counsel to the
Purchasers, shall be to the effect that:
1. The Company is a corporation organized and validly existing in good
standing under the laws of its jurisdiction of incorporation, with all requisite
corporate power and authority to enter into the Agreement and to issue and sell
the Notes.
2. The Agreement and the Notes have been duly authorized by proper
corporate action on the part of the Company, have been duly executed and
delivered by an authorized officer of the Company, and constitute the legal,
valid and binding agreements of the Company, enforceable in accordance with
their terms, except to the extent that enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws of
general application relating to or affecting the enforcement of the rights of
creditors or by equitable principles, regardless of whether enforcement is
sought in a proceeding in equity or at law.
3. The Subsidiary Guaranty is enforceable against each Subsidiary
Guarantor in accordance with its terms, except to the extent that enforcement
thereof may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws of general application relating to or affecting the
enforcement of the rights of creditors or by equitable principles, regardless of
whether enforcement is sought in a proceeding in equity or at law.
4. Based upon the representations set forth in the Agreement, the
offering, sale and delivery of the Notes and the issuance and delivery of the
Subsidiary Guaranty do not require the registration of the Notes or the
Subsidiary Guaranty under the Securities Act of 1933, as amended, nor the
qualification of an indenture under the Trust Indenture Act of 1939, as amended.
5. The issuance and sale of the Notes and compliance with the terms and
provisions of the Notes and the Agreement will not conflict with or result in
any breach of any of the provisions of the certificate of incorporation or
by-laws of the Company.
6. No approval, consent or withholding of objection on the part of, or
filing, registration or qualification with, any governmental body, federal or
state, is necessary in connection with the execution and delivery of the Note
Purchase Agreement or the Notes or the execution and delivery of the Subsidiary
Guaranty.
Exhibit 4.4(b)
<PAGE>
Gardner Carton & Douglas may rely, as to matters of Texas law and as to the due
organization and corporate power of each Subsidiary Guarantor, the due execution
and delivery by each Subsidiary Guarantor of the Subsidiary Guaranty and the
binding nature of the Subsidiary Guaranty on each Subsidiary Guarantor, upon the
opinion of Snell & Smith. The opinion of Gardner, Carton & Douglas shall state
that such opinion is satisfactory in form and scope to Gardner, Carton &
Douglas, and, in its opinion, the Purchasers and it are justified in relying
thereon and shall cover such other matters relating to the sale of the Notes as
the Purchasers may reasonably request.
2
Exhibit 4.4(b)
EXHIBIT 11.1
CARRIAGE SERVICES, INC.
COMPUTATION OF PER SHARE EARNINGS
(UNAUDITED AND IN THOUSANDS, EXCEPT PER SHARE DATA)
Earnings per share for the three and nine month periods ended September 30,
1999 and 1998 is calculated based on the weighted average number of common and
common equivalent shares outstanding during the period as prescribed by SFAS
128. The following table sets forth the computation of the basic and diluted
earnings per share for the three and nine month periods ended September 30, 1998
and 1999:
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
------------------ ------------------
1998 1999 1998 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net income before extraordinary item ........... $ 1,643 $ 1,739 $ 6,092 $ 9,211
Extraordinary item ............................. -- -- -- (200)
-------- -------- -------- --------
Net income ..................................... 1,643 1,739 6,092 9,011
Preferred stock dividends ...................... 153 25 454 78
-------- -------- -------- --------
Net income available to common stockholders
for basic EPS computation .................... 1,490 1,714 5,638 8,933
Effect of dilutive securities .................. -- -- -- --
-------- -------- -------- --------
Net income available to common stockholders for
diluted EPS computation ...................... $ 1,490 $ 1,714 $ 5,638 $ 8,933
======== ======== ======== ========
Weighted average number of common shares
outstanding for basic EPS computation ........ 14,733 15,906 12,772 15,864
Effect of dilutive securities:
Stock options ............................. 491 77 426 185
Assumed conversion of preferred stock ..... -- -- -- --
-------- -------- -------- --------
Weighted average number of common and common
equivalent shares outstanding for diluted EPS
computation 15,224 15,983 13,198 16,049
======== ======== ======== ========
Basic earnings per share:
Net income before extraordinary item ...... $ .10 $ .11 $ .44 $ .58
Extraordinary item ........................ -- -- -- (.01)
-------- -------- -------- --------
Net income ................................ $ .10 $ .11 $ .44 $ .57
-------- -------- -------- --------
Diluted earnings per share:
Net income before extraordinary item ...... $ .10 $ .11 $ .43 $ .57
Extraordinary item ........................ -- -- -- (.01)
-------- -------- -------- --------
Net income ................................ $ .10 $ .11 $ .43 $ .56
-------- -------- -------- --------
</TABLE>
EXHIBIT 12
CARRIAGE SERVICES, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(UNAUDITED AND IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER
30,
-------
1994* 1995* 1996* 1997 1998 1999
------- ------- ------- ------ ------- -------
<S> <C> <C> <C> <C> <C> <C>
Fixed charges:
Interest expense ......... $ 2,671 $3,684 $4,347 $ 5,889 $ 9,720 $12,256
Amortization of
capitalized expenses
related to debt .......... 30 50 150 200 150 150
Rental expense ........... 245 317 308 629 720 677
------- ------- ------- ------ ------- -------
Total fixed charges before
capitalized interest and
preferred stock dividends 2,946 4,051 4,805 6,718 10,590 13,083
Capitalized interest ........... 100 175 250 450 600 473
------- ------- ------- ------ ------- -------
Total fixed charges .... 3,046 4,226 5,055 7,168 11,190 13,556
Preferred stock dividends ...... -- -- 1,037 1,627 1,082 137
------- ------- ------- ------ ------- -------
Total fixed charges
plus preferred dividends 3,046 4,226 6,092 8,795 12,272 13,693
------- ------- ------- ------ ------- -------
Earnings available for fixed
charges:
Earnings (loss) before income
taxes and extraordinary
item ........................ (923) (1,800) 345 8,217 17,023 16,160
Add fixed charges before
capitalized interest and
preferred stock dividends 2,946 4,051 4,805 6,718 10,590 13,083
------- ------- ------- ------ ------- -------
Total earnings available
for fixed charges ........... $ 2,023 $ 2,251 $ 5,150 $14,935 $27,613 $29,243
======= ======= ======= ======= ======= =======
Ratio of earnings to
fixed charges (1) ........... 0.66 0.53 1.02 2.08 2.47 2.16
------- ------- ------- ------ ------- -------
Ratio of earnings to fixed
charges plus dividends (1)... 0.66 0.53 0.85 1.70 2.25 2.14
------- ------- ------- ------ ------- -------
</TABLE>
(1) For purposes of computing the ratios of earnings to fixed charges and
earnings to fixed charges plus dividends: (i) earnings consist of income before
provision for income taxes plus fixed charges (excluding capitalized interest)
and (ii) "fixed charges" consist of interest expensed and capitalized,
amortization of debt discount and expense relating to indebtedness and the
portion of rental expense representative of the interest factor attributable to
leases for rental property. There were no dividends paid or accrued on the
Company's Common Stock during the periods presented above.
* Earnings were inadequate to cover fixed charges. The coverage deficiency was
$1,023,000, $1,975,000 and $942,000 for 1994, 1995 and 1996 respectively.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM 10-Q FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCES TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 3,877
<SECURITIES> 0
<RECEIVABLES> 33,221
<ALLOWANCES> 5,967
<INVENTORY> 5,393
<CURRENT-ASSETS> 39,372
<PP&E> 167,287
<DEPRECIATION> 15,599
<TOTAL-ASSETS> 527,225
<CURRENT-LIABILITIES> 23,051
<BONDS> 171,043
89,881
1,172
<COMMON> 159
<OTHER-SE> 210,476
<TOTAL-LIABILITY-AND-EQUITY> 527,225
<SALES> 124,811
<TOTAL-REVENUES> 124,811
<CGS> 89,480
<TOTAL-COSTS> 89,480
<OTHER-EXPENSES> 6,915
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,256
<INCOME-PRETAX> 16,160
<INCOME-TAX> 6,949
<INCOME-CONTINUING> 9,211
<DISCONTINUED> 0
<EXTRAORDINARY> (200)
<CHANGES> 0
<NET-INCOME> 9,011
<EPS-BASIC> .58
<EPS-DILUTED> .57
</TABLE>
