------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM 10-Q
-----------------------
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
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 _____________
---------------------
PRIME SUCCESSION, INC.
(Exact name of registrant as specified in its charter)
---------------------
DELAWARE 13-3904211
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
3940 Olympic Blvd., Suite 500 41018
Erlanger, Kentucky, U.S.A. (Postal Code)
(Address of principal executive offices)
(606) 746-6800
(Registrant's telephone number, including area code)
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 outstanding shares of Common Stock as of May 12, 1998, was 100.
-------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
Page
Part I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS:
CONSOLIDATED BALANCE SHEETS
as of March 31, 1998 and December 31, 1997 1
CONSOLIDATED STATEMENTS OF OPERATIONS
for the Three Months Ended March 31, 1998 and March 31, 1997 3
CONSOLIDATED STATEMENTS of CASH FLOWS
for the Three Months Ended March 31, 1998 and March 31, 1997 4
NOTES to CONSOLIDATED FINANCIAL STATEMENTS 5
Item 2. MANAGEMENT'S DISCUSSION and ANALYSIS
of FINANCIAL CONDITION and RESULTS of OPERATIONS 6
Part II. OTHER INFORMATION
Item 5. OTHER INFORMATION 10
Item 6. EXHIBITS and REPORTS on FORM 8-K 10
SIGNATURES 10
</TABLE>
(i)
<PAGE>
<TABLE>
<CAPTION>
PART I
ITEM 1. FINANCIAL STATEMENTS
<S> <C> <C>
PRIME SUCCESSION, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
March 31, 1998 December 31, 1997
(unaudited)
Assets
Cash and cash equivalents $ 2,002,829 $ 1,555,415
Receivables:
Trade, less allowance of $2,830,447 and $2,647,693 11,520,700 13,073,005
Other 670,088 4,492,005
---------- ----------
Total receivables 12,190,788 17,565,010
---------- ----------
Inventories:
Merchandise 4,067,343 3,836,994
Cemetery lots and mausoleum spaces 1,423,281 1,693,530
---------- ----------
Total inventories 5,490,624 5,530,524
---------- ----------
Prepaids and other current assets 249,271 319,000
Deferred income taxes 723,566 723,566
---------- ----------
Total current assets 20,657,078 25,693,515
---------- ----------
Property and equipment:
Land and land improvements 16,220,700 16,190,801
Buildings and improvements 47,168,583 47,313,605
Equipment, furniture and fixtures 9,557,090 9,051,236
Accumulated depreciation (3,834,032) (3,165,322)
---------- ----------
Net property and equipment 69,112,341 69,390,320
---------- ----------
Developed cemetery properties 13,563,951 12,996,135
Undeveloped cemetery properties 31,902,345 31,902,345
Goodwill, less accumulated amortization of $8,918,519 and $7,482,615 220,650,524 222,086,427
Other intangible assets, less accumulated amortization of
$6,874,261 and $5,866,178 22,128,828 23,147,315
Long-term receivables, less allowance of $3,610,853 and $3,288,268 11,989,503 9,318,513
Other assets 534,646 571,615
----------- -----------
$390,539,216 $395,106,185
============ ============
See accompanying notes to interim consolidated financial statements.
</TABLE>
-1-
<PAGE>
<TABLE>
<CAPTION>
PRIME SUCCESSION, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
<S> <C> <C>
March 31, 1998 December 31, 1997
(unaudited)
Liabilities and Shareholders' Equity
Accounts payable $ 1,456,419 $ 2,679,090
Other accrued expenses 5,222,704 8,441,985
Current installments of obligations under agreements with
former owners 2,305,690 2,369,684
Current installments of long-term debt 1,371,942 1,389,530
Due to related party -- 83,333
----------- ------------
Total current liabilities 10,356,755 14,963,622
----------- -----------
Deferred merchandise liabilities and revenues, less trust fund deposits 17,092,845 17,600,097
Obligations under agreements with former owners, less current
installments 14,571,481 15,259,919
Long-term debt, less current installments 200,790,049 201,580,635
Deferred income taxes 16,770,180 16,770,180
Other long-term liabilities 4,557,254 2,690,510
Shareholders' equity:
Common stock, par value $.01 per share, 1,000 shares authorized;
100 issued and outstanding shares 1 1
Additional paid-in capital 129,025,889 129,047,493
Accumulated deficit (2,625,238) (2,806,272)
----------- -----------
Total shareholders' equity 126,400,652 126,241,222
----------- -----------
$ 390,539,216 $395,106,185
============= ============
See accompanying notes to interim consolidated financial statements.
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
PRIME SUCCESSION, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(unaudited)
Three Months Ended
March 31,
1998 1997
---- ----
Revenues:
<S> <C> <C>
Funeral services $ 20,614,212 $ 19,459,911
Cemetery sales 5,970,361 4,735,379
--------- -----------
26,584,573 24,195,290
Costs and expenses:
Funeral homes 12,732,156 12,100,651
Cemetery 3,978,459 3,413,840
---------- -----------
16,710,615 15,514,491
Corporate and regional general and administrative
expenses 727,045 877,788
Depreciation and amortization 2,842,055 2,731,659
--------- ----------
Operating income 6,304,858 5,071,352
--------- ----------
Other expenses:
Interest expense, including amortization of
deferred loan costs of $438,473 and $438,473 6,106,074 5,991,748
--------- ----------
Income (loss) before income taxes 198,784 (920,396)
Income tax expense (17,500) (29,342)
Net income (loss) $ 181,284 $ (949,738)
========= ===========
See accompanying notes to interim consolidated financial statements.
</TABLE>
-3-
<PAGE>
<TABLE>
<CAPTION>
PRIME SUCCESSION, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(unaudited)
Three Months Ended
March 31,
1998 1997
---- ----
Cash flows from operating activities:
<S> <C> <C>
Net income (loss) $ 181,284 $ (949,738)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 3,415,466 3,170,132
Provision for doubtful accounts 573,434 176,367
Depletion of cemetery property 350,108 544,271
Changes in operating assets and liabilities
net of effects of acquisition of subsidiaries:
Receivables 2,129,798 (1,089,661)
Inventories (878,024) (1,324,543)
Accounts payable and accrued expenses (4,525,285) (2,486,103)
Deferred merchandise liabilities and revenue (743,761) 221,574
Other long-term liabilities 1,866,744 (557,785)
Other 28,986 (489,817)
--------- -----------
Net cash provided by (used in) operating activities 2,398,750 (2,785,303)
--------- -----------
Cash flows from investing activities:
Proceeds from the disposal of assets 319,506 27,956
Purchases of property and equipment (710,236) (498,571)
Net cash paid for purchase of business -- (506,542)
--------- ---------
Net cash used in investing activities (390,730) (977,157)
--------- ---------
Cash flows from financing activities:
Net proceeds (payments) of bank indebtedness under revolving loan (200,000) 3,000,000
Payments on long-term debt (608,174) (3,570,875)
Payments on obligations under agreements with former owners (752,432) (1,541,234)
Decrease in restricted cash -- 3,886,337
--------- ---------
Net cash provided by (used in) financing activities (1,560,606) 1,774,228
---------- ---------
Net increase (decrease) in cash and cash equivalents 447,414 (1,988,232)
Cash and cash equivalents at beginning of period 1,555,415 2,985,704
----------- ---------
Cash and cash equivalents at end of period $ 2,002,829 $ 997,472
=========== ============
See accompanying notes to interim consolidated financial statements.
</TABLE>
-4-
<PAGE>
PRIME SUCCESSION, INC. AND SUBSIDIARIES
Notes to Interim Consolidated Financial Statements
(unaudited)
(1) Footnote disclosure which would substantially duplicate the disclosure
contained in the Annual Report on Form 10-K for the year ended December
31, 1997 has not been included. The unaudited interim consolidated
financial statements reflect all adjustments which, in the opinion of
management, are necessary to reflect a fair statement of the results for
the periods presented and to present fairly the consolidated financial
position of Prime Succession, Inc. and subsidiaries as of March 31,
1998. All such adjustments are of a normal recurring nature.
(2) Certain reclassifications have been made to the 1997 amounts to conform
to the 1998 presentation.
-5-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Overview
On August 26, 1996 (the "Closing Date"), Prime Succession, Inc.'s (Predecessor
Company) capital stock was purchased (the Acquisition) by Blackstone Capital
Partners II Merchant Banking Fund L.P. and affiliates, Loewen Group
International, Inc. and PSI Management Direct L.P. A new entity, Prime
Succession, Inc. (Successor Company), was formed and became a wholly-owned
subsidiary of the Predecessor Company. In connection with the Acquisition, all
of the assets and liabilities of the Predecessor Company were transferred to the
Successor Company. Collectively, the Predecessor Company and Successor Company
are herein referred to as "the Company".
The Company provides merchandise and services in both the funeral home and
cemetery segments of the death care industry in the United States. In addition
to providing merchandise and services at the time of need, the Company also
makes funeral, cemetery and cremation arrangements on a pre-need basis. As of
May 8, 1998, the Company through its subsidiaries owns and operates 143 funeral
homes and 19 cemeteries in 20 states, primarily in non-urban areas of the United
States. The Company commenced operations in 1992 and expanded rapidly through
the aggressive acquisition of funeral homes and cemeteries. The Company's
consolidated revenues and operating income were $26.6 million and $24.2 million
for the three months ended March 31, 1998 and 1997, respectively. Sales of
funeral services of $20.6 million and cemetery sales of $6.0 million accounted
for approximately 77.5% and 22.5%, respectively, of total net sales for the
three months ended March 31, 1998.
The Company had no funeral homes when it began operations in 1992 and grew to
146 funeral homes in 1996. In order to achieve this rapid growth, former
management was primarily focused on identifying funeral homes to be acquired and
consummating acquisitions of such homes rather than on maximizing profitability
of the funeral homes and cemeteries which it had acquired. As a result, former
management did not take advantage of certain opportunities to improve the
efficiency and performance of the funeral homes acquired. New management
substantially eliminated the Company's acquisition program. In addition, in
order to improve the Company's present and long-term operating performance, new
management took advantage of (i) the quality and size of the Company's portfolio
of properties, (ii) the opportunity to operate more efficiently those properties
located in close proximity to one another, and (iii) the shift in focus from
acquisitions to profit maximization at existing locations. The Company's future
results of operations will depend in large part on the ability of management to
successfully maintain its business strategy.
The Company is a party to a supply agreement with Batesville Casket Company,
Inc. ("BCC"), The Forethought Group and Forethought Life Insurance Company
("FLIC"), pursuant to which the Company must purchase caskets exclusively from
BCC and, in connection with its pre-need sales of funeral services funded by
insurance, the Company must offer to its customers in specified markets
exclusively FLIC insurance products. The agreement expires on December 31, 2004,
subject to earlier termination by any party thereto upon 30 days notice
following a material, uncured breach of the agreement or the occurrence of
certain insolvency events. Management of the Company believes that the terms of
such supply agreement are favorable to the Company.
-6-
<PAGE>
<TABLE>
<CAPTION>
Results of Operations
The Company's operations are detailed below for the three months ended March 31,
1998 and 1997 expressed in dollar amounts as well as relevant percentages.
Revenue, gross margin, earnings (loss) from operations and expenses other than
income taxes are presented as a percentage of revenue.
Three Months Ended March 31, 1998 Compared to Three Months Ended March 31, 1997
Three months ended Three months ended
March 31, March 31,
--------- ---------
1998 1997 1998 1997
---- ---- ---- ----
(millions of dollars) (percent)
--------------------- ---------
Revenue
<S> <C> <C> <C> <C>
Funeral $20.6 $19.5 77.4% 80.5%
Cemetery 6.0 4.7 22.6 19.5
--- --- ----- ------
Total 26.6 24.2 100.0% 100.0%
==== ==== ====== ======
Gross Margin
Funeral $ 7.8 $ 7.4 37.9 37.9%
Cemetery 2.0 1.3 33.3 27.7
--- ---
Total 9.8 8.7 36.8% 36.0%
Expenses
General and administrative 0.7 0.9 2.6% 3.7%
Depreciation and amortization 2.8 2.7 10.5 11.2
--- ---
Earnings From Operations 6.3 5.1 23.7 21.1
Interest on long-term debt 6.1 6.0 22.9 24.8
--- ---
Income (loss) Before Income Taxes 0.2 (0.9) 0.8 (3.7)
Income taxes -- -- -- --
----- -----
Net income (loss) $ 0.2 $(0.9) 0.8% (3.7)%
===== =====
</TABLE>
Consolidated revenues increased 9.9% to $26.6 million for the three months ended
March 31, 1998 compared to $24.2 million in the corresponding period for 1997,
with funeral service revenues increasing 5.6% to $20.6 million compared to $19.5
million in the corresponding period in 1997, and cemetery revenues increasing
27.7% to $6.0 million compared to $4.7 million in the corresponding period for
1997. Funeral revenues increased primarily as a result increased pricing,
enhanced merchandising of merchandise display areas. On same-store business,
excluding 1997 acquisitions and dispositions, total calls decreased by 4 from
5,182 calls for the three months ended March 31, 1997 to 5,178 calls for the
three months ended March 31, 1998 and average revenue per call increased by $215
from $3,763 in 1997 to $3,978 in 1998. Cemetery revenues increased primarily due
to increased pre-need sales efforts in Alabama, Florida and Tennessee.
Consolidated operating income increased from $5.1 million for the three months
ended March 31, 1997, to $6.3 million for the three months ended March 31, 1998.
Consolidated contribution margin of $6.3 million increased 23.5% for the three
months ended March 31, 1998 from $5.1 million for the three months ended March
31, 1997, with funeral contribution margin of 37.9% for the three months ended
March 31, 1998 compared to 37.9% for the three months ended March 31, 1997 and
cemetery contribution margin of 33.3% for the three months ended March 31, 1998
compared to 27.7% for the corresponding period in 1997. Contribution margin is
defined as a percentage of funeral revenues or cemetery revenues, as the case
may be, less related cost of sales (including direct operating expenses).
-7-
Corporate general and administrative expense decreased to $0.7 million for the
three months ended March 31, 1998 from $0.9 million for the corresponding period
in 1997. As a percentage of consolidated revenue, general and administrative
expense decreased to 2.6% in 1998 from 3.7% for the corresponding period in
1997. Corporate general and administrative expense decreased primarily due to
restructured, upgraded and more efficient information and accounting systems.
Depreciation and amortization expense increased $0.1 million to $2.8 million for
the three months ended March 31, 1998 compared to $2.7 million for the
corresponding period in 1997. This increase is primarily the result of increased
depreciation on capital expenditures.
Interest expense of $6.1 million for the three months ended March 31, 1998
increased by $0.1 million compared to $6.0 million for the corresponding period
in 1997, primarily as a result of additional borrowings to finance operating
activities of the Company.
Liquidity and Capital Resources
The Company's primary sources of cash since 1995 have been funds provided by
operating activities, proceeds from additional long-term debt and capital
contributions. As of March 31, 1998, the Company had a net working capital
surplus of $10.3 million and a current ratio of 1.99:1, compared to a net
working capital of $2.1 million and a current ratio of 1.82:1 compared to a
working capital surplus of $10.7 million and a current ratio of 1.72:1 as of
December 31, 1997.
The primary uses of cash since 1995 have been for the acquisition of funeral
homes and cemeteries, including the Acquisition, principal payments on long-term
debt and capital expenditures. In the three months ended March 31, 1997, the
Company purchased two cemeteries for an aggregate purchase price of $0.6 million
with no acquisitions occurring in the comparable period in 1998.
In the three months ended March 31, 1998 and 1997, the Company used $0.7 million
and $0.5 million for capital expenditures. In the three months ended March 31,
1998, the Company paid $0.6 million in principal payments on long-term debt,
principally relating to repayment of former owner obligations, compared to $3.6
million in the corresponding period in 1997. In the three months ended March 31,
1997 the Company borrowed $3.0 million on its revolving line of credit compared
a payment of $0.2 million for the same period in 1998.
The Company estimates that capital expenditures will be approximately $1.5
million in 1998 to be used in part for the repair and improvement of existing
facilities. The Company also expects to invest approximately $1.0 million in
1998 for cemetery inventory development.
Contemporaneously with the consummation of the Acquisition, the Company entered
into senior secured credit facilities (the "Bank Credit Facilities") with a
syndicate of financial institutions and The Bank of Nova Scotia, as
administrative agent.
The Bank Credit Facilities provided the Company with senior secured amortization
extended term loan facilities (the "Bank Term Facility") in an aggregate
principal amount of $90 million, the proceeds of which were used to finance the
Acquisition and related transaction costs, to pre-fund certain capital
expenditures and to refinance existing indebtedness of the Company, and a senior
secured revolving credit facility (the "Bank Revolving Facility") in an
aggregate principal amount of up to $25 million, the proceeds of which will be
used for general corporate purposes and a portion of which may be extended (as
agreed upon) in the form of swing line loans or letters of credit for the
account of the Company. The Bank Term Facility will mature 7 years after the
Acquisition Closing Date, and the Bank Revolving Facility will mature 5 years
after the Acquisition Closing Date. The Bank Term Facility is subject to
amortization, subject to certain conditions, in semi-annual installments in the
amounts of $1 million in each of the first three years after the anniversary of
the closing date of the Bank Term Facility (the "Bank Closing"); $4 million in
the fourth year after the Bank Closing; $9 million in the fifth year after the
Bank Closing; $12.5 million in the sixth year after the Bank Closing and $61.5
million upon the maturity of the Bank Term Facility. The Revolving Credit
Facility will be payable in full at maturity, with no prior amortization.
-8-
<PAGE>
All obligations under the Bank Credit Facilities and any interest rate hedging
agreements entered into with the lenders or their affiliates in connection
therewith are unconditionally guaranteed (the "Bank Guarantees") jointly and
severally, by the Company and each of the Company's existing and future domestic
subsidiaries (the "Bank Guarantors"). All obligations of the Company and the
guarantors under the Bank Credit Facilities and the Bank Guarantees are secured
by first priority security interests in all existing and future assets (other
than real property and vehicles covered by certificates of title) of the Company
and the Guarantors. In addition, the Bank Credit Facilities are secured by a
first priority security interest in 100% of the capital stock of the Company and
each subsidiary thereof and all intercompany receivables.
In connection with the Acquisition, the Company also issued $100 million of 10
3/4% Senior Subordinated Notes due 2004, which were exchanged in January 1997
for $100 million of 10 3/4% Senior Subordinated Notes due 2004 (the "Notes")
that were registered under the Securities Act of 1933. The Notes mature on
August 15, 2004. Interest on the Notes is payable semi-annually on February 15
and August 15 at the annual rate of 10 3/4%. The Notes are redeemable in cash at
the option of the Company, in whole or in part, at any time on or after August
15, 2000, at prices ranging from 105.375% with annual reductions to 100% in 2003
plus accrued and unpaid interest, if any, to the redemption date. The proceeds
of the Notes were used, in part, to finance the Acquisition.
The Company and its subsidiaries are subject to certain restrictive covenants
contained in the Indenture relating to the Notes, including, but not limited to,
covenants imposing limitations on the incurrence of additional indebtedness;
certain payments, including dividends and investments; the creation of liens;
sales of assets and preferred stock; transactions with interested persons;
payment restrictions affecting subsidiaries; sale-leaseback transactions; and
mergers and consolidations. In addition, the Bank Credit Facilities contain
certain restrictive covenants that, among other things, limit the ability of the
Company and its subsidiaries to dispose of assets, incur additional
indebtedness, prepay other indebtedness, pay dividends or make certain
restricted payments, create liens on assets, engage in mergers or acquisitions
or enter into leases or transactions with affiliates.
As of March 31, 1998, the Company had approximately $202 million of indebtedness
outstanding and approximately $10 million of borrowing availability under the
Revolving Credit Facility. The Company believes that, based upon current levels
of operations and anticipated growth and availability under the Revolving Credit
Facility, it can adequately service its indebtedness. If the Company cannot
generate sufficient cash flow from operations or borrow under the Revolving
Credit Facility to meet such obligations, then the Company may be required to
take certain actions, including reducing capital expenditures, restructuring its
debt, selling assets or seeking additional equity in order to avoid an Event of
Default. There can be no assurance that such actions could be effected or would
be effective in allowing the Company to meet such obligations.
-9-
<PAGE>
PART II
ITEM 5 - OTHER INFORMATION
Forward-Looking Statements
Certain statements in this Quarterly Report on Form 10-Q include
"forward-looking statements" as defined within the "safe harbor provisions"
of the Private Securities Litigation Reform Act of 1995. All statements
other than statements of historical facts included herein, including,
without limitation, the statements under Item 2 "Management's Discussion
and Analysis of Financial Condition and Results of Operations", and located
elsewhere herein regarding the Company's financial position, plans to
increase revenues, reduce general and administrative expense and take
advantage of synergies, are forward-looking statements. Although the
Company believes that the expectations reflected in such forward-looking
statements are reasonable, it can give no assurance that such expectations
will prove to be correct. Important factors that could cause actual results
to differ materially from the company's expectations ("Cautionary
Statements") are disclosed herein, including, without limitation, in
conjunction with the forward-looking statements included herein. All
subsequent written and oral forward-looking statements included herein. All
subsequent written and oral forward-looking statements attributable to the
Company (as defined herein) or persons acting on its behalf are expressly
qualified in their entirety by the Cautionary Statements.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
Exhibits
The Exhibits, as shown in the "Index of Exhibits", attached hereto as pages
11 and 12, are filed as a part of this Report.
SIGNATURES
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.
PRIME SUCCESSION, INC.
/s/ MYLES S. CAIRNS
Myles S. Cairns
Chief Financial Officer,
Secretary and Treasurer
May 12, 1998
-10-
<PAGE>
INDEX OF EXHIBITS
(a) Exhibit
Number Document Description
3.1* Certificate of Incorporation of Blackhawk Acquisition Corp.
3.2* Certificate of Amendment of Certificate of Incorporation of
Blackhawk Acquisition Corp. changing its name to Prime
Succession Acquisition Corp.
3.3* Certificate of Amendment of Certificate of Incorporation of
Prime Succession Acquisition Corp. changing its name to Prime
Succession, Inc.
3.4* By-Laws of Prime Succession, Inc.
4.1* Indenture dated as of August 15, 1996 between Prime Succession
Acquisition Corp. and United States Trust Company of New York,
as Trustee
4.2* Form of 10 3/4% Senior Subordinated Note due 2004 (included in
Exhibit 4.1)
10.1(a)* Casket Supply Agreement, dated January 1, 1993, between
Batesville Casket Company, Inc. and Prime Succession, Inc.
10.1(b)* Amendment Agreement, dated August 1994, between Batesville
Casket Company, Inc. and Prime Succession, Inc. (with respect
to Casket Supply Agreement)
10.1(c)* Amendment 2, dated May 22, 1995, between Batesville Casket
Company, Inc. and Prime Succession, Inc. (with respect to
Casket Supply Agreement)
10.1(d) Exclusive Supply Agreement, dated January 1, 1998 between
Batesville Casket Company, Inc., The Forethought Group,
Forethought Life Insurance Company and Prime Succession, Inc.
10.2* Stockholders' Agreement dated as of August 26, 1996 among
Prime Succession, Inc. (to be renamed Prime Succession
Holdings, Inc.), Blackstone Capital Partners II Merchant
Banking Fund L.P., Blackstone Offshore Capital Partners II
L.P., Blackstone Family Investment Partnership II L.P., PSI
Management Direct L.P. and Loewen Group International, Inc.
10.3* Administrative Services Agreement dated as of August 26, 1996
between Prime Succession Acquisition Corp. (to be renamed
Prime Succession, Inc.) and Loewen Group International, Inc.
10.4* Credit Agreement dated as of August 26, 1996 among Prime
Succession, Inc. (to be renamed Prime Succession Holdings,
Inc.), Prime Succession Acquisition Corp. (to be renamed Prime
Succession, Inc.), Goldman, Sachs & Co., as syndication agent
and arranging agent, the financial institutions from time to
time parties thereto as lenders and The Bank of Nova Scotia,
as administrative agent for such lenders.
10.5* Letter Agreement dated August 1, 1996 between Prime Succession
Acquisition Corp. (to be renamed Prime Succession, Inc.) and
Gary Wright.
10.6* Letter Agreement dated August 1, 1996 between Prime Succession
Acquisition Corp. (to be renamed Prime Succession, Inc.) and
Myles Cairns.
10.7* Put/Call Agreement, dated as of August 26, 1996, among
Blackstone Capital Partners II Merchant Banking Fund L.P.,
Blackstone Offshore Capital Partners II L.P., Blackstone
Family Investment Partnership II L.P., PSI Management Direct
L.P., Loewen Group International Inc. and the Loewen Group
Inc.
10.8* Stock Purchase Agreement, dated as of June 14, 1996, by and
among Prime Succession, Inc., the individuals or entities
listed on the signature pages thereof, The Loewen Group Inc.
and Blackhawk Acquisition Corp.
-11-
(a) Exhibit
Number Document Description
12 Computation of Ratio of Earnings to Fixed Charges
21* Subsidiaries of Prime Succession, Inc.(formerly known as Prime
Succession Acquisition Corp.)
27 Financial Data Schedule
* Incorporated by reference to the Exhibits to the Company's Registration
Statement on Form S-4 (Registration No. 333-14599).
(b) Reports on Form 8-K
None
-12-
<PAGE>
Exhibit 12
Prime Succession, Inc. and subsidiaries
Ratio of Earnings to Fixed Charges
(Dollars in Thousands)
Three months ended
March 31,
-----------------------------
1998 1997
-----------------------------
Ratio of Earnings to
Fixed Charges
Earnings:
Income (loss) before income taxes 181 (920)
Add: Fixed charges, net 6,375 6,192
Income (loss) before income
taxes and fixed charges, net 6,556 5,272
Fixed Charges:
Total interest expense (1) 6,106 5,992
Interest factor in rents (2) 269 200
Total fixed charges 6,375 6,192
Ratio of earnings to fixed charges 1.03 0.85
Coverage surplus (deficiency) (3) 181 (920)
FN
(1) Total interest expense for each period includes amortization of
loan costs.
(2) Interest factor in rents represents one-third of rent
expense, which is considered representative of the interest
factor.
(3) The Company's earnings are inadequate to cover fixed charges for
the three months ended March 31, 1997. Coverage deficiency
represents the excess of fixed charges over income before income
taxes and fixed charges, net.
EXHIBIT 10.1(d)
THE OMITTED PORTIONS INDICATED BY BRACKETS HAVE BEEN SEPARATELY FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT UNDER RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
EXCLUSIVE SUPPLY AGREEMENT
This Exclusive Supply Agreement (Agreement) is entered into among Prime
Succession, Inc. (Prime), Batesville Casket Co. (BCC), The Forethought Group
(TFG), and Forethought Life Insurance Company (FLIC). BCC, TFG and FLIC may be
collectively referred to as "Sellers".
WHEREAS Prime and BCC are parties to an existing Casket Supply
Agreement dated January 1, 1992, as amended August, 1994, and May, 1995, and
desire to enter into a new agreement effective January 1, 1998, in order to
allow Prime to purchase from BCC certain of its requirements for caskets and
urns.
WHEREAS Prime desires to purchase from TFG and FLIC certain of its
requirements for pre-need funeral planning services and funding products
therefore.
THEREFORE, in mutual consideration, the parties agree as follows:
I. Exclusive Agreement with BCC
Article I
Section 1.01. Exclusive Requirements Supply of Qualified Products.
Prime agrees to purchase exclusively from BCC, and BCC agrees to sell to Prime,
all of Prime's requirements from time to time for Qualified Products (as defined
herein) for sale or use by Prime's licensed funeral homes. The current list of
funeral homes for which this Agreement applies is shown in Exhibit A, Prime's
Funeral Homes.
(a) The term "Goods" shall mean Qualified Products and Other Products.
(b) The term "Qualified Products" shall mean protective metal caskets,
Cloth Products (defined as cloth covered caskets such as Essentials), hardwood
caskets, poplar caskets, and 20 gauge metal protective caskets, cremation
caskets, cremation containers, urns and, when introduced by BCC, non-protective
steel caskets. The term also includes, to the extent available, those caskets
developed and manufactured by BCC for [].
(c) The term "Other Products" shall mean other types of caskets
including, Jobbed Products, defined as products distributed by BCC which are not
manufactured by BCC.
(d) The term "Prime's Funeral Homes" means those firms listed in
Exhibit A and any firms acquired by Prime while this Agreement is in effect.
Funeral homes divested by Prime will cease to be Prime's Funeral Homes at the
time ownership is transferred.
Article Two
Orders and Deliveries
Section 2.01. Placement of Orders. Prime (acting through its local
funeral home) shall place orders for Goods directly with BCC at BCC's nearest
service center or as BCC may otherwise designate. All orders shall specify (a)
the models and quantities of Goods ordered, (b) the requested delivery date and
(c) the delivery location. The requested delivery date shall be the next
regularly scheduled delivery by BCC to that location unless otherwise agreed by
BCC.
Section 2.02. Acceptance of Orders. BCC shall accept Prime's order
unless the requested models and quantities of Goods are not available. For
accepted orders, BCC shall inform Prime of the expected delivery date. If an
ordered Good will not be available for shipment on the requested delivery date,
BCC shall inform Prime and provide BCC's best estimate of the date on which such
Good will be available and delivered or mutually agree upon another Good.
Section 2.03. Delivery. BCC shall deliver Goods to Prime F.O.B. the
ordering funeral home. BCC shall be responsible for all freight and other
shipping charges for the delivery of the Goods. Prime shall pay the shipping
invoices on or before the fifteenth day of the month immediately following the
month in which the shipping invoice is rendered.
Section 2.04. Title and Risk of Loss. Title and risk of loss of Goods shall
be transferred from BCC to Prime at the time and location of delivery.
Section 2.05. Inspection, Rejection and Acceptance. Prime shall inspect
the Goods at its expense upon delivery and promptly notify BCC of any breakage,
shortage, delivery of wrong Good or other discrepancy between the delivered
Goods and the purchase and shipping documents. Prime shall retain and safeguard
any defective or other nonconforming Good for inspection by BCC and its insurer
and, if appropriate, for return shipment to BCC. If the return is initiated
within 30 days of the invoice date, there will be no charge to Prime for the
return. If the return of Goods is initiated more than 30 days but not more than
12 months from the invoice date, there will be no charge to Prime if the Good is
salable and undamaged provided however that if the Good is damaged and/or
requires repairs, Prime will be charged for these damages or repairs at BCC's
cost. If the return of Goods is initiated more than 12 months from the invoice
date, Prime will be charged a minimum refurbishing fee of $25 per unit plus the
costs of any damages or repairs.
Article Three
Section 3.01. Purchase Price. The per unit purchase price (the
"Purchase Price") of a Good purchased by Prime from time to time shall be the
List Price (as defined in Section 3.02) of the Good. (All prices, payments and
rebates referred to in this Agreement shall mean United States Dollars, payable
in cash or its equivalent.)
Section 3.02. List Price. The "List Price" of a Good delivered to Prime
at a particular location shall be the list price, as set forth in CSC Price
List, for BCC's customers in that location or geographic zone generally
(exclusive of all taxes) as determined and adjusted from time to time by BCC.
Section 3.03. Program Amount. The "Program Amount" applicable to a Good
shall be the sum of the Up Front Allowance and the Quarterly Rebate (as such
terms are herein defined) applicable to such Good.
(a) The "Up Front Allowance" shall be the product of (i) the List Price of
a Good, purchased by Prime hereunder as contained in the monthly statements, and
(ii) [], except as set forth in Section 3.04(d). Notwithstanding the foregoing,
the Up Front Allowance shall be zero with respect to any Good if BCC's statement
for such Good is not paid in full on or before the fifteenth day of the month
immediately following the month in which the statement is rendered.
(b) The "Quarterly Rebate" shall be the product of (i) the List Price of a
Good, determined or as adjusted pursuant to Section 3.02, purchased by Prime and
paid for in full during a particular Fiscal Quarter (as herein defined), and
(ii) a percentage applicable to such Good, which shall be as specified opposite
such Good below (the "Applicable Rebate Percentage"):
Good Applicable Rebate Percentage
Bronze and Copper Caskets [ ]%
Hardwood Caskets (other than
Poplar Caskets) and
16 Gauge Metal Caskets [ ]%
18 Gauge Metal Caskets [ ]%
19 and 20 Gauge Metal Caskets
and Poplar Caskets [ ]%
NewPointe Caskets [ ]%
Q Shell, Delray Poplar Caskets [ ]%
Cloth and Jobbed Products or any other Good [ ]%
For purposes of this Agreement, a Fiscal Quarter shall be the three (3)
months period ending March 31, June 30, September 30 and December 31 of a year.
(c) Upon BCC's introduction of nonprotective steel caskets, Prime and
Sellers shall agree on the Program Amount to be applicable to such Goods.
(d) Prime agrees to allow BCC the right to inspect its records, upon
reasonable notice, in order to verify the total amount of purchases of Qualified
Products and to inspect any other records necessary to verify Prime's
obligations pursuant to this Agreement.
(e) The "Up Front Allowance" specified in Section 3.03(a), the "Quarterly
Rebate" specified in Section 3.03(b) and the "Up Front Allowance" specified in
Section 3.04(d) shall be credited or paid with respect to the first [] dollars
($[]) of goods ordered in 1998 where payments are [].
Section 3.04. Volume Rebate for Cremation Caskets, Cremation Containers and
Urns.
(a) BCC agrees to pay to Prime a one-time rebate based upon the volume of
cremation caskets, cremation containers and urns (based upon List Price)
purchased from January 1, 1998, through December 31, 1998, according to the
following schedule:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
Type of Material of Cremation Casket,
Cremation Container of Urn
- ------------------------------------ ----------------------------------------------------------------------------------------------
- ------------------------------------ ------------------------- ----------------------- ------------------- ------------------------
Cast Bronze,
Marble,
Acrylic,
Cloisonne Specie Poplar,
Wood/Sheet Wood Hardboard
Dollar Volume Bronze
- ------------------------------------ ------------------------- ----------------------- ------------------- ------------------------
- ------------------------------------ ------------------------- ----------------------- ------------------- ------------------------
<C> <S> <S> <S> <S>
$1-200,000 []% []% []% []%
- ------------------------------------ ------------------------- ----------------------- ------------------- ------------------------
- ------------------------------------ ------------------------- ----------------------- ------------------- ------------------------
$200,001- 300,000 []% []% []% []%
- ------------------------------------ ------------------------- ----------------------- ------------------- ------------------------
- ------------------------------------ ------------------------- ----------------------- ------------------- ------------------------
$300,001- 400,000 []% []% []% []%
- ------------------------------------ ------------------------- ----------------------- ------------------- ------------------------
- ------------------------------------ ------------------------- ----------------------- ------------------- ------------------------
$400,001- 500,000 []% []% []% []%
- ------------------------------------ ------------------------- ----------------------- ------------------- ------------------------
- ------------------------------------ ------------------------- ----------------------- ------------------- ------------------------
Above $500,001 []% []% []% []%
- ------------------------------------ ------------------------- ----------------------- ------------------- ------------------------
</TABLE>
(b) Keepsake Mementos shall be included in the dollar volume, according to
the material of which it is made.
(c) The one-time rebate shall be paid within fifteen business days after
the end of December 31, 1998.
(d) Prime shall be entitled to an "Up Front Allowance" for cremation
caskets, cremation containers and urns. The "Up Front Allowance" shall be the
product of the List Price of such product and []%. Notwithstanding the
foregoing, the Up Front Allowance shall be zero with respect to any product if
BCC's statement for such product is not paid in full on or before the fifteenth
day of the month immediately following the month in which the statement is
rendered.
Article Four
Section 4.01. Statement. BCC shall render a monthly statement for each
shipment of Goods to Prime of the Goods delivered that month to Prime.
Statements shall be sent to the Prime's Funeral Home which ordered the Goods so
delivered, or such other location as may be designated by Prime. Anything herein
to the contrary notwithstanding, such statements shall be rendered based on
BCC's List Prices as then in effect (the "Actual List Prices"). If any such
aggregate Actual List Prices are in excess of the aggregate List Prices to be
paid by Prime pursuant to Section 3.02 for any Fiscal Quarter, BCC shall pay the
amount of any such excess to Prime in the same manner as provided in Section
4.03 for the Quarterly Rebate.
Section 4.02. Payment of List Price. Prime shall pay the List Price
less the applicable Up Front Allowance, if any, due to BCC under this Agreement
on or before the fifteenth day of the month immediately following the month in
which the statement is rendered. All payments shall be sent to the location as
designated by BCC.
Section 4.03. Remittance of Program Amount. The applicable Up Front
Allowance, if any, for a Good shall be deducted from the List Price otherwise
payable for the Good if the applicable statement is timely paid by Prime. The
Quarterly Rebate, if any, with respect to a particular Fiscal Quarter shall be
remitted to Prime by wire transfer to Prime's Account No. [] at the First
National Bank of Chicago, ABA [], or such other account as may be
designated by Prime, within fifteen (15) business days after the end of that
Fiscal Quarter.
Article Five
Section 5.01. [] with BCC. BCC and Prime agree that, as of
January 1, 1998, [].
Section 5.02. [] Payments in 1998. Prime agrees to pay BCC in
twelve (12) payments, beginning January 1, 1998, [], as set forth in
Exhibit B,[] Table.
Section 5.03. [] Payments and []. BCC agrees to [] the payments for Prime's []
dollars ($[]) of Goods ordered in 1998. Beginning January 1, 1999, Prime agrees
to pay BCC, over a six (6) year time period, the [] dollars, ($[]) referenced in
the preceding sentence, [] to BCC in the amount of [] dollars ($[]) and []%
annual interest. The payments shall be as set forth in Exhibit C, [] Table.
II. Exclusive Marketing Agreement with TFG and FLIC
Section 6.01. Exclusive Marketing Agreement. TFG and FLIC and Prime
agree to enter into this exclusive marketing agreement wherein Prime, as an
insurance agency, will serve as an exclusive preneed seller for its funeral
homes as listed in Exhibit A, Prime's Funeral Homes. Prime shall offer only FLIC
insurance products for all pre-need contracts funded with insurance, whether
directly or indirectly, and for all sales of final expense insurance. Prime
agrees to execute a Participation Agreement (attached as Exhibit D) to cover all
Prime's Funeral Homes.
Section 6.02. Terms.
(a) The marketing agreement between Prime and FLIC will only apply to
business sold, while the arrangement is in effect, through Prime's Funeral Home
owned now or in the future by Prime. Funeral homes divested by Prime or which
otherwise become non-affiliated will cease to be included under this arrangement
as of the time ownership is transferred.
(b) The General Agent Agreement between Prime and FLIC is as set forth
in Exhibit E, General Agent Agreement. The marketing arrangement will be in
effect for an initial term of from January 1, 1998 through December 31, 2004.
During the term of this Agreement, FLIC and Prime will meet annually to set the
following year's target block amount and marketing payment amount.
(c) For the time period from January 1, 1998 and through December 31, 1998,
FLIC and Prime agree on a minimum 1998 calendar target of $[] million dollars in
gross funeral value sold through the use of FLIC products. FLIC and Prime also
agree for any amount of gross funeral value sold by Prime in 1998 in excess of
the target, FLIC will pay Prime an amount equal to []. Any amount therefore will
be paid within 15 days of the end of the calendar year. (Gross funeral value
means the total of an initial funeral price shown on the preneed contract
statement of funeral goods and services sold by Prime's Funeral Homes which are
funded by a FLIC policy.)
(d) FLIC has sole authority to appoint individuals selected by Prime to
serve as agents under the General Agent Agreement and reserves the right to
refuse the appointment of any individual or to terminate the appointment of any
agent at any time. Nonetheless, appointment of individuals as agents will not be
unreasonably withheld by FLIC. The marketing arrangement and the General Agent
Agreement will apply to business in the United States only. Prime shall maintain
all regulatory licenses, registrations and reporting required by any regulatory
agency. The parties agree that FLIC may include affiliated entities.
(e) The marketing arrangement and the General Agent Agreement
Commission Schedules 2372-08(PCS) 0198,, 2797-01-24 (PSC) 0198 (MN only),
1029-14-23 (PSC) 0198 (MI only) and 2908-01-0198 Forethought TrustPlusSM and
Forethought TrustOneSM apply to current product offerings of FLIC as shown in
Exhibit F in all states in which FLIC operates. This does not preclude a
separate arrangement in the event the parties desire to offer additional
products or product innovations at some time in the future. In the event state
or federal laws, regulations or guidelines change so as to require, FLIC will
modify or discontinue the product offerings to the extent necessary to maintain
regulatory compliance or a level of profitability acceptable to FLIC.
(f) The General Agent Agreement Commission Schedules between Prime and
FLIC do not provide for the inclusion of trust rollovers or conversions.
(Commission for these shall be negotiated separately). However, the marketing
arrangement between Prime and FLIC will include the funeral value of bulk trust
rollovers or the conversion of funds from Prime trust accounts to FLIC policies
in determining the gross funeral value sold by Prime in a year.
(g) The Participation Agreement, as set forth in Exhibit D,
Participation Agreement, between TFG and Prime will apply to all of Prime's
Funeral Homes. Prime will notify TFG in writing of any additions or deletions to
the list in a timely manner. TFG will update its records accordingly. Prime will
provide FLIC with a current list of agents which are authorized to represent
Prime and will notify FLIC of any additions or deletions to the list in a timely
manner. Agents will be permitted to sell or offer to sell FLIC insurance after
they are: licensed by appropriate state agencies, duly appointed by FLIC and
operating under an Agent Agreement with Prime.
(h) At the discretion of Prime, it will be eligible to participate in
any and all marketing programs, except the incentive programs (for example
Forethought Peak Performers Program) developed by the Forethought National
Markets SBU. Marketing assistance will include, at no cost, the marketing
consulting provided to Prime through National Markets field-based
representatives, as well as, National Markets home office-based marketing
associates. Marketing programs developed or offered by the National Markets SBU
on a fee basis will be available to Prime at the full fee as determined by TFG
(e.g., Alert Card). Transportation costs and housing related to customized
training programs will be borne solely by Prime. The cost of developing and
staffing the training program will be absorbed by TFG. If Prime elects to
participate in a TFG national advertising program, Prime firms will be required
to pay, in full, for what would otherwise be offered by TFG as cooperative
advertising materials.
III. Other Provisions
Article Seven
Section 7.01. Organization and Power of Prime to Enter into this
Agreement and Non-Contravention. Prime hereby represents and warrants to Sellers
that:
(a) Prime is a corporation duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its organization, with full power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder.
(b) This Agreement has been duly authorized, executed and delivered by
Prime and constitutes a legal, valid and binding obligation enforceable against
it in accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles, and
no other proceeding on the part of it is necessary to authorize this Agreement
and the transactions contemplated hereby.
(c) Neither the execution and the delivery of this Agreement nor compliance
by Prime with its terms and provisions will violate (i) any provision of the
governing instrument or other organizational documents of Prime; (ii) any
contract provision, license, franchise or permit to which Prime is a party or by
which it is bound; or (iii) any law, statute or regulation or, insofar as is
known to Prime, any injunction, order or decree of any government agency or
authority or court to which Prime is subject except where, in all cases, such
violation would not have a material adverse effect or materially impair the
ability of Prime to perform its obligations under this Agreement.
Section 7.02. Representation and Warranty of Signatories'
Authorization. Each individual signing this Agreement on behalf of a party
hereby personally represents and warrants to the other parties that he or she is
duly authorized to do so.
Article Eight
Term and Termination of the Agreement
Section 8.01. Term. This Agreement shall become effective on the
January 1, 1998, and, unless earlier terminated in accordance with this Article,
shall expire on December 31, 2004.
Section 8.02. Termination.
(a) If Sellers committed a breach of any material representation or
warranty contained in this Agreement, or at any time during the term of this
Agreement materially breaches any obligation hereunder and such breach is not
cured within thirty (30) days after delivery of notice from Prime to Sellers
specifying the nature of the material breach, Prime may terminate this Agreement
by giving notice to Sellers within thirty (30) days after the end of such cure
period.
(b) If Prime committed a breach of any material representation or warranty
contained in this Agreement, or at any time during the term of this Agreement
materially breaches any obligation hereunder and such breach is not cured within
thirty (30) days after delivery of notice from Sellers to Prime specifying the
nature of the material breach, Sellers may terminate this Agreement by giving
notice thereof to Prime within thirty (30) days after the end of such cure
period. In such event, Sellers shall have the right, at their option, to
accelerate and call due and payable the []. In addition, Sellers shall be
entitled to all remedies at law or at in equity to which it is entitled as a
result of such breach, as well as [] from the date of said breach at[].
(c) If a trustee in bankruptcy or receiver or similar entity is appointed
for Prime, or if Sellers otherwise determines in its sole discretion that Prime
is financially insolvent, Sellers may immediately terminate this Agreement by
giving notice thereof to Prime.
(d) If a trustee in bankruptcy or receiver or similar entity is appointed
for Sellers, Prime may immediately terminate this Agreement by giving notice
thereof to Sellers.
Section 8.03. No Waiver of Other Rights or Remedies. The exercise by
either party of any right of termination under this Article shall not constitute
a waiver of any other rights or remedies available to such party for violation
of the terms of this Agreement under this Agreement or under applicable law.
Article Nine
Section 9.01. Confidential Information. "Confidential Information"
means any information, written or oral, disclosed to one party (the "Recipient")
by another party (the "Discloser") in the course of performing or operating
under this Agreement, related to Discloser's business, including, but not
limited to, information related to research, inventions, manufacturing,
purchasing, accounting, marketing, selling, customer requirements, and the
existence, terms and conditions of this Agreement and other information and
documents related thereto and the terms thereof with the following exceptions:
(1) information which Recipient can demonstrate in writing was known by
Recipient prior to being disclosed by Discloser to Recipient; (2) information
ascertainable or obtainable from public or published sources; (3) information
received by Recipient from a third party who is not employed or affiliated with
Discloser or is not under an obligation to Discloser to maintain such
information in confidence; and (4) information which is or becomes known to the
public generally other than by a breach of this Agreement by Recipient.
Section 9.02. Non-Disclosure. Recipient acknowledges that all
Confidential Information shall at all times remain the property of Discloser,
and except as required to perform its obligations under this Agreement,
Recipient shall not, during the term of this Agreement or thereafter, directly
or indirectly use, divulge, disseminate, disclose, lecture upon, or publish any
Confidential Information for any purpose whatsoever including, but not limited
to, in connection with divestitures, without having first obtained written
permission from Discloser to do so and shall safeguard and maintain secret all
Confidential Information and all documents and things that include or embody
Confidential Information.
Section 9.03. Other Parties Bounds. In order to comply with its
obligations under this Article, each party shall bind and engage all of its
officers, employees, agents, and the like who might reasonably be expected to
assist in the purchase, sale, delivery or administration of the products to an
agreement having terms the same as or equivalent to the terms of this Article.
Article Ten
Assignments
No party may directly or indirectly assign its rights or obligations
under this Agreement (voluntarily, involuntarily or by operation of law) to any
other person or entity without the prior consent of the other party hereto. [For
this purpose, the acquisition of 50% of the capital stock or assets of Prime by
a third party or a merger of Prime with or into a third party shall be deemed to
constitute an assignment of Prime's rights and obligations under this Agreement.
Notwithstanding the foregoing, if any person or entity proposes to acquire over
fifty percent (50%) of the capital stock or assets of Prime, whether by
purchase, exchange, merger, liquidation or otherwise, Prime shall give Sellers
notice thereof within five (5) days after Prime becomes aware of such proposal
and, if requested by Sellers, shall cause such acquiring person or entity to
accept and assume in writing the rights and obligations of Prime under this
Agreement effective upon the consummation of such acquisition transaction. Prime
agrees that it shall consummate such transaction only after the delivery to
Sellers of such acceptance and assumption executed by the acquiring person or
entity. Prime agrees that, if it should fail to comply with the terms of the
immediately preceding sentence, it would cause irreparable harm to Sellers which
cannot adequately be remedied through monetary damages and would frustrate a
fundamental reason for Sellers to enter into this Agreement, and therefore
authorizes any court of competent jurisdiction upon request by Sellers to
require specific performance of its obligations under such sentence.] This
Agreement shall be binding upon and inure to the benefit of any permitted or
requested successor or assignee of a party hereto, provided, however, that in no
event shall any person or entity which acquires a business or assets from Prime
be entitled to the benefits of this Agreement without the express written
consent of Sellers.
Article Eleven
Miscellaneous Provisions
Section 11.01. Nature of Relationship Between Parties. Prime and
Sellers agree that their relationship is that of buyer and seller only. Prime
and Sellers agree that Prime and Sellers are independent contractors. This
Agreement does not make either Prime or Sellers the agent or legal
representative of the other for any purpose whatsoever. Prime and Sellers
further agree that no representation shall be made by either that would create
an apparent agency, employment, partnership or joint venture. Neither Prime nor
Sellers shall have the power, expressed or implied, to obligate or bind the
other in any manner whatsoever.
Section 11.02. Force Majeure. Sellers shall not be liable for any
failure to perform its obligations hereunder if (and during such time as) such
failure is due to causes beyond the reasonable control of Sellers, including,
but not limited to, acts of God, fires, floods, accidents, strikes or other
labor disputes, wars, plant shutdowns, equipment failures, production
curtailment, inability to obtain, sell, deliver or supply Goods due to
unavailability or scarcity of materials, equipment or transportation breakdowns,
or voluntary or involuntary compliance with any law, order, rule or regulation
of any governmental agency or authority, and similar items. If Sellers are
unable to perform because of any such causes, it shall provide notice to Prime
of such inability as promptly as is feasible under the circumstances. During any
such period of force majeure, Sellers will be excused from the sale obligations
set forth in this Agreement. Sellers shall provide notice to Prime of the
conclusion of such period of force majeure.
Section 11.03. Integration. This Agreement sets forth the entire
understanding of the parties with respect to the subject matter hereof, there
being no oral or other written agreements between them relating to the subject
matter of this Agreement, and supersedes all prior agreements, (specifically
including the Casket Supply Agreement dated January 1, 1992, as amended August,
1994, and May, 1995, between Prime and BCC), understandings, negotiations,
commitments or any other writings or communications with respect to such subject
matter between the parties. Neither party to this Agreement has executed this
Agreement in reliance on any representations, warranties or statements made by
the other party except for those expressly set forth herein.
Section 11.04. Amendment; Waiver. No modification, amendment, waiver or
release of any provision of this Agreement or of any right, obligation, claim or
cause of action arising under this Agreement shall be valid or binding for any
purpose unless in writing and duly executed by the party against whom the same
is sought to be asserted. No waiver by either party of any breach, or the
failure of either party to enforce any of the terms and conditions of this
Agreement, shall in any way affect, limit or waive such party's right thereafter
to enforce and compel compliance with each and every term and condition of this
Agreement, or to terminate this Agreement in accordance with its terms.
Section 11.05. Notices. Except for orders, invoices and payments for
which other provision is made in this Agreement, all notices, waivers and other
communications under this Agreement must be in writing and will be deemed to
have been duly given if, and effective as of such time as, it is (a) delivered
by hand (with written confirmation of receipt); (b) delivered to the addressee,
if sent by a nationally recognized overnight delivery service (receipt
requested); or (c) sent by telecopier (with written confirmation of receipt), in
each case to the appropriate addresses and telecopier numbers set forth below
(or to such other addresses and telecopier numbers as a party may designate by
notice to the other parties):
IF TO PRIME: Prime Succession, Inc.
Attn:
Telecopier:
IF TO SELLERS: Batesville Casket Company, Inc.
One Batesville Blvd.
Batesville, Indiana 47006-9169
Attn: Michael DiBease
Telecopier: (812) 934-8675
The Forethought Group and
Forethought Life Insurance Company
Forethought Center
Batesville, Indiana 47006-4826
Attn: J. Christopher Burke
Telecopier: (812) 934-8564
WITH COPY TO: Hillenbrand Industries, Inc.
700 State Route 46
Batesville, Indiana 47006-9169
Attn: Legal Department
Telecopier: (812) 934-1633
Section 11.06. Governing Law; Venue. This Agreement shall be governed
in all respects, including validity, interpretation and effect, by and construed
in accordance with the internal laws of the State of Indiana, without regard to
principles of conflicts of law. The parties expressly consent to exclusive
personal jurisdiction and venue in the federal and state courts of the State of
Indiana.
Section 11.07. Voidness; Severability. This Agreement shall be void and
of no effect in any jurisdiction in which its execution or performance, as a
whole, would be illegal for any reason. The provisions of the Agreement shall be
severable and, if any provision of this Agreement shall be held or declared to
be illegal, invalid, or unenforceable under the laws of any jurisdiction, such
provision shall be void in that jurisdiction. The illegality, invalidity, or
unenforceability of such void provision shall not affect such provision in any
other jurisdiction or affect any other provision of this Agreement in any
jurisdiction, and the remainder of the Agreement shall continue in full force
and effect as though such void provision had not been contained herein or
therein, unless such continuation would result in a gross inequity or
unreasonable hardship for Prime or Sellers.
Section 11.08. Survival of Obligations. The parties' obligations which
by their nature are intended to continue beyond the termination or expiration of
this Agreement shall survive the termination or expiration of this Agreement.
IN WITNESS WHEREOF, Prime and Sellers have caused this Agreement to be
executed by their duly authorized officers on the date or dates indicated below.
BATESVILLE CASKET COMPANY, INC., PRIME SUCCESSION, INC.
/s/ Michael L. DiBease /s/ MYLES S. CAIRNS
Michael l. DiBease Myles S. Cairns
VP National Markets Chief Financial Officer,
Secretary and Treasurer
THE FORETHOUGHT GROUP
/s/ J. Christopher Burk
J. Christopher Burk
VP National Markets
FORETHOUGHT LIFE INSURANCE COMPANY
/s/ Stephen R. Lang
Stephen R. Lang
Vp & General Manager, FLIC
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
unaudited interim consolidated financial statements of Prime Succession, Inc.
and subsidiaries, for the three months ended March 31, 1998 and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0001023294
<NAME> Prime Succession, Inc.
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 2,003
<SECURITIES> 0
<RECEIVABLES> 30,622
<ALLOWANCES> 6,441
<INVENTORY> 50,957
<CURRENT-ASSETS> 20,657
<PP&E> 72,946
<DEPRECIATION> 3,834
<TOTAL-ASSETS> 390,539
<CURRENT-LIABILITIES> 10,357
<BONDS> 202,162
0
0
<COMMON> 0
<OTHER-SE> 126,401
<TOTAL-LIABILITY-AND-EQUITY> 390,539
<SALES> 26,585
<TOTAL-REVENUES> 26,585
<CGS> 16,711
<TOTAL-COSTS> 16,711
<OTHER-EXPENSES> 3,569
<LOSS-PROVISION> 573
<INTEREST-EXPENSE> 6,106
<INCOME-PRETAX> 199
<INCOME-TAX> 18
<INCOME-CONTINUING> 181
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 181
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
